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Texas Hold’em

A few weeks ago, my neighbor, Dan, invited me to a Texas Hold‘em fundraiser at his cardstemple. Normally, gambling isn’t my thing; in fact, the only card game I play now is Uno with my daughter, Taylor.

“I’m not sure,” I said.  “I’m not much of a gambler.”

“Come on.  It’s for charity,” he coaxed, “and the buy-in is only $25.”

“OK,” I said, “but I have to leave by nine o’clock.”

“No problem,” he laughed.  “You’ll probably be out of money by then anyway.”

Since I’m pretty much a novice, I thought it might be a good idea to brush up on the rules, so the night before the event, I went online for a quick refresher course.

We arrived at the temple with 48 other players and were evenly divided into six eight-player tables.  (Dan and I didn’t play together.)

I introduced myself to my competitors and quickly realized this was not their first rodeo. They looked serious.  I thought it would be a good idea to let them know that I was sort of a rookie.

“I’ve never played in one of these,” I offered, taking my seat.

No response.  I guess I was fresh meat.

The dealer passed out the cards.  I looked at mine: 3 and 6.  Not much of a hand, so of course, I bet.  Three other guys went in with me.  The flop came. I can’t exactly remember what the cards were, but I know I had zilch.

“All in,” I said, pushing my chips into the middle like I saw the guys do online.

One by one, each of the three players looked at me, then at their cards, and folded.

I had won.

“Sooo, you don’t know how to play, huh?” one guy asked as I pulled my chips toward me.

“No, not really,” I replied, stacking my chips like pros did.

“Sure. We run into someone like you all the time,” he added.

I won the next hand.

And the next one.

“Guys, I’m serious,” I said timidly, stacking my winnings.  “I never play.”

Obviously, no one believed me.  I sensed I was making some enemies.

As the night wore on, my chips multiplied.  Needless to say, I was not the most popular guy at the event.

The clock ticked to 8:55.

“Guys, it’s been fun, but I have to go.  Where do I cash out?” I asked.

“WHAT?” one guy asked incredulously.  “It’s only 9:00.  You’re not going to give us a chance to win our chips back?”

“Am I supposed to?”  I asked.

Crickets.

“OK.” I said.  “Why not?”

The dealer passed the cards.  I didn’t even look at mine.

“All in,” I said.

“You didn’t even look at your cards,” a gentleman to my left advised.

“I don’t care,” I said.  “I have to go.”

A player opposite me with a pretty big chip stack looked at me.  “I call,” he smiled.

We turned the cards over.  He had jacks.  I had the 4 and 8 of hearts.  The flop was 8, 2, Queen.  Then the turn (the fourth card).

Another 8.  I had three of a kind.  The guy threw up his hands.  I smiled sheepishly.  The last card was a 2.  I had won again.

“Now what do I do?” I asked.

“You keep playing,” the others goaded me.

It was 8:57.

“Fine,” I said.  The dealer dealt the cards.  “I’m all in,” I said again.

“You gotta be kidding me!” The guy I had just knocked out exclaimed.

Another big stack accepted the challenge.  We flipped the cards.  Flop, turn, river…

I won again.

I threw my hands up in a shrug, embarrassed.  “Guys, I swear!  I never play!”  This was getting embarrassing.

It was 9:00.

“Listen.  This has to be my last hand,” I said.  The cards were dealt.

“All in,” I said before she finished.

You guessed it.

“OK! OK!”  I got up.  “Listen, just take all the money and put it towards the charity.  I’m out of here.”  I made my way towards the door.

For some, this would have been an epic evening, but like I said before, I’m not much of a gambler.

It was easy for me to take on a significant level of risk when thousands of dollars in chips only cost me $25.  However, it’s a lot harder to take those risks when we are talking about retirement.

So if you don’t want to gamble away your future, make sure that you start putting away some money for future health care costs, no matter how old you are.

HealthView is projecting retirement health care inflation to rise by between 5-6% per year for the foreseeable future.  In addition to inflation, we can tack on an additional 3% for supplemental insurance premiums (also compounded annually), which is directly related to age.

This year, Social Security benefits increased by a measly 0.3%, and are projected to rise by an average of 2.6% annually – approximately half of the health care inflation rate.  Consequently, health care costs will erode Social Security benefits for future retirees by around 3% per year.

A 65-year-old couple retiring today will be responsible for over $322,000 in premiums, or $404,000 in total lifetime health care costs – in today’s dollars.  This average couple will need to dedicate 59% of their Social Security income to cover health care; for a 55-year-old couple, 92% will be required; and a 45-year-old couple will see medical expenses that up 122% of their benefits. These costs can be managed with the help of a financial professional.

Finally, there’s another potential gamble on the horizon – repealing and replacing the ACA.  It appears that Congress seeks to give consumers more choice, which will actually lower health insurance premiums.  (On the other hand, this will likely equate to higher out-of-pocket costs.  We can’t have it both ways.)

What we don’t know is if legislators will take a similar approach to Medicare.  The ACA primarily impacts pre-retirees (though it does provide free annual wellness visits and some specialized services, such as mammograms, to Medicare recipients).  If Congress continues to shift costs to consumers, will they take the same approach to protect the Medicare Trust Fund and place more financial responsibility on retirees?

“Going all in” on cost shifting may succeed in making health care expenses more manageable.

On the other hand, this approach might take a big chunk out of your stack.

Only time will tell.

 

 

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