Enough passive income to quit job, but what about benefits?

Question

I am new to real estate and my plan is to have enough passive income to quit my job in 10-15 years. While this is the goal, what happens when I quit my job and I do not have a benefits package that includes various insurance plans?

David M. · Answer

@Chris Howie

Hmmm...  well, you need to buy your own insurance or have a spouse who has a plan you can fall under...  so, that goes into your calcs for how much passive income you really need.

Joe S. · Answer

In all due respect there are tons and tons of people that live a happy normal life without health insurance. Some peoples health insurance premiums cost more than a lot of the hard working class make per year. @Jason Bott said that his was 30 to 40,000 a year. Do you realize there’s tons of people that make less than $30,000-$40,000 a year? If you can live a happy life and know that you have all of your health insurance needs met and that means more to you than working on your own business then maybe that is the road you should take. I know one gentleman that drives a school bus for the sole purpose of insurance. I considered it for about 10 minutes. LOL

Steve Morris · Answer

what happens when I quit my job and I do not have a benefits package that includes various insurance plans?

You don't get sick?  That's just the way stuff is when you become a 1099 person.

Maybe time to rethink your financial planning.

Jason Bott · Answer

If you want to be financial independent and not be controlled by an employer, you need to factor that cost in.

Heath insurance is expensive!  No way around it.

My family of 6 annual cost (premium+deductible) for ALL dental, doctor, chiropractor, physical therapy, medication, eye, etc runs between $30k-$40k.  And keep in mind I'm an insurance agent who has access to all sorts of plans.

If you have the spare time to pick up a job @ Home Depot or Starbucks part time and get that covered, it's probably worth it.

Mike Cumbie · Answer

Hi @Chris Howie

That is a piece of a puzzle 10-15 years down the road. In my opinion don't get caught up in the details of a plan that far off. It's no different than joining the fire department and asking "What if the union doesn't fight for our benefits in 10-15 years"? Work with what you know and make adjustments as you need. Before considering leaving a career with benefits for full time RE (Way down the road), get to where you have made it an option. Make your goal overcoming that now and when the question is a reality you will have a decision to make.

Good luck!

Jason Pedersen · Answer

+1 on the Health Savings Account (HSA). Does your employer currently offer a high deductible health plan with an HSA? You may want to consider it. Your premiums will be lower now, you will get the tax benefit (triple tax benefit, actually) for funding it ($3,550 for individual/$7,100 for family contribution limits for 2020), and many employers will help contribute to it. Over 15 years, you will very likely have a large amount saved up. While you will still need your own health insurance plan once you leave the employer, you may be able to save a lot of money on premiums by getting a plan with a higher deductible/out of pocket maximum without the typical risk because you have all this money saved in your HSA.

If you have regular medical expenses now (chronic conditions or young children, for example), an HSA might not be for you, but it is definitely worth looking into. I "took a chance" on it a couple years ago and thanks to being young and healthy I now have more money in my HSA than my out of pocket maximum for the year, which helps me sleep great at night!

Note: my wife and my two young children are on her work's more typical PPO insurance. Wasn't willing to take the risk to put the whole family on it now, but as my HSA and children grow, I might consider moving the family over. If I do that, you better believe I'm going to use all $7,100 of that tax deduction!

Carl Fischer · Answer

@Chris Howie

Try a health savings account and have it make more passive income to cover your health care. It worked great for our family and keeps on giving tax free to this day.  Not many people understand how good it is-take the time to understand it .

Chris Howie · Answer

@David M.

Wow, that’s crazy lol. I do like Home Depot, so that could work 😌

Once I do quit my job and achieve financial freedom, I still plan on working/doing something that I love. Even if it’s for a small pay check. Who knows, maybe benefits could be involved...

David M. · Answer

@Chris Howie

Pretty much..  that’s why it’s rare, not impossible, to find a husband and wife Realtors.  Usually one holds a salary day job with the benefits.

It’s tough to be truly self-employed because benefits are derived from your employer instead of a free market.

I knew an attorney that worked part time at Home Depot to help pay for his kids’ college who said it was also usedul because their health plan was better than his firm’s plan.  😜

Chris Howie · Answer

@David M.

That make sense. My father was telling me that it wouldn’t be worth quitting a job in X amount of years because the benefits from a job would be needed.

Enough passive income to quit job, but what about benefits?

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