149: Financial Life Planning with Carolyn McClanahan
When physician Carolyn McClanahan tried to find a financial planner several decades ago, she only encountered investment managers and glorified salespeople. However, these experiences led her to fall in love with financial planning.
She’s now the Director of Financial Planning at Life Planning Partners in Jacksonville, Florida. She has been quoted in numerous publications, including The Wall Street Journal, Money, Kiplinger’s, Smart Money, and has appeared on CNBC and NPR. In 2009 she was named a “Mover & Shaker” in the financial planning profession by Financial Planning.
Carolyn brings a unique perspective and approach to our industry, especially when it comes to retirement and the role it plays in living a happy, sustainable, and fulfilled life. Today, she joins the podcast to share the story of her unique journey into the world of financial services, why the best financial planners need to be able to talk about their clients’ health, and how anyone can become a better use of our healthcare system.
In this podcast interview, you’ll learn:
- The big difference between health and finance – and why financial advisors are often so bad at putting people at ease when they talk about money.
- Why the best financial planners can think like family doctors, therapists, and career counselors – often all at once.
- The difference between a traditional financial plan and a financial life plan.
- Why it’s so important to have a great primary care doctor – and the serious problems facing the healthcare industry in the United States.
- Why Carolyn believes retirement is a word that needs to go away – and why people need to stop planning for retirement and plan for life transitions instead.
- “To me, people need to plan for life transitions and quit planning for retirement.” – Carolyn McClanahan
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Casey Weade: Carolyn, welcome to the podcast.
Carolyn McClanahan: Thank you so much for having me. I'm excited to be here.
Casey Weade: Well, Carolyn, I am very excited to have this discussion with you. You know, I've talked with some physicians in the past. I've talked to financial planners in the past. I very rarely do I get the opportunity to interview someone that has some quite a depth of experience in both of those fields. And so, I think the thing we have to kick it off with is the obvious question, why did you make this transition from a practicing physician into the world of financial planning?
Carolyn McClanahan: Well, it's not as glamorous as it sounds. And back in the mid-90s, my husband inherited a bit of money from his parents, and we invested it and we thought we were absolutely brilliant because we turned that little bit into a good amount. Now, we were in our mid-30s at that point, and he hated his job. He was an aerospace engineer, and I did not dislike my job. I love patient care but we tried to find a financial planner to decide whether he could switch from being an engineer to being a track coach and photographer. And I said, “Honey, I'm not going to support you. So, I would love to figure out whether this money your parents left you is enough for us to have our lifestyle that we have, and you change jobs.” So, we interviewed all these financial planners. This was like in 2000 now, and our people who call themselves financial planners, and they actually were just mostly investment managers or salespeople. They didn't do real planning. And all we wanted to know was, is this money enough?
So, I went back to school for fun to learn about financial planning, and I fell in love with it. And so, that was like from 2000 to 2004 and I went part-time in medicine and worked for a firm for a little bit just to see if this was something I wanted to do and nobody out there did what I really wanted to do, which was provide comprehensive financial planning of which investment management is a part. So, to me, it was important to deliver the whole picture and opened my own firm in 2004. And here I am.
Casey Weade: That's awesome. So, is the engineer now a photographer? That's kind of a strange transition. For most of the engineers I know, not two of them want to get into photography. They're not too artsy.
Carolyn McClanahan: Yeah. Well, he always had that part of his brain. And in reality, his parents kind of made him become an engineer. So, they loved him and stuff. They said, "You need a job where you can always get a job,” and he's got a great science type brain but he loved photography and he was an athlete. He was a pole vaulter at UCLA and he wanted to coach tracks. So, yes, he coached high school track for 10 years and got sick of the parents and now he just does photography. So, he actually mostly takes care of me. It's worked out beautifully in the end.
Casey Weade: So, he does photography full-time now?
Carolyn McClanahan: Well, it's actually more part-time he’s been with jobs. I’m the full-time job.
Casey Weade: Okay. Yeah. But you're both following your dream jobs.
Carolyn McClanahan: Yeah. We have a good life. It was a good transition.
Casey Weade: That's awesome. I wonder what type of experience you had during your time practicing, that you've carried over into your financial planning practice? Where do these two things intersect health care and financial planning?
Carolyn McClanahan: Well, it's very interesting. Being a financial planner is just like being a doctor, except you're doing it for a person's finances instead of their health. And so, a lot of what I learned through the years was it's just like being a doctor. So, you're going in, you're taking a financial history. So, like, we take a medical history and then you're doing a physical exam, you're looking at all their objective financial data, and then you're making an assessment, how are they doing, and then you're prescribing a plan. So, same exact thing. You're just taking care of the money and both are important. Of course, health is more important but if people don't have good financial health, it makes it harder to keep good physical health and vice versa.
Casey Weade: This just popped into my head and I wondered how you would have addressed this situation. I had this conversation with a potential client, probably six months, maybe a year ago. And when she came in, you were asking a lot of questions, right? It can seem very intrusive to the average individual. And she just keeps saying, “Tell me what you're going to do with my money. I don't want to tell you anything. Tell me what you're going to do with my money.” And I'm just wondering, how do you address those situations where some say, "Just tell me what you're going to do with my money. I don't want to get financially naked here?”
Carolyn McClanahan: Well, for the first part, you have to be very clear as a financial advisor, what it is you deliver upfront. And so, for example, when somebody calls us to be a client, we have these client engagement standards and it clearly states that we do comprehensive planning and we're going to ask a lot of questions and that we're going to really delve into their goals in their life. Because it's important to understand what a person's goals are and their financial history to be able to tell them, "What are you going to do with your investments?” And so, if I had a client that insisted or a potential client that insisted on just telling me what we're going to do with their money, without providing us the needed information, then we wouldn't take that person as a client.
Casey Weade: And we didn't take that person as a client. I wonder why is it such a foreign concept to so many to walk into an advisor’s office and ask them their feelings about money? Ask them their biggest priorities in life. Why is that such an uncomfortable or maybe I shouldn't say as much uncomfortable as an unusual conversation for most to go into?
Carolyn McClanahan: Well, I think they've been trained. The public's been trained to think of financial planners as just money managers. And so, they don't really know what to expect and it's only the people who have done their homework and they understand what a real financial planner does, that's ready to get naked basically about that. And it's also incumbent on the advisor to learn how to have these conversations in a comfortable way. And so, I used to teach the bedside manner class at University of Florida for physicians, and you have to learn how to do a lot of appreciative inquiry and setting the stage, not having judgment, to make people feel comfortable about their finances. The big difference between health and finance is a lot of people are actually more comfortable talking about their health than they are about their finances. Because your health, they think you don't have a lot of control over, and in reality, you can live a healthy lifestyle but most disease just happens. Whereas finances, you're supposed to be smart throughout your life and make good decisions. And if you haven't made a good decision, you feel stupid. So, you don't want to talk about it. So, advisors really need to learn how to put people at ease with those conversations around money.
Casey Weade: I know you asked a lot of good questions and I am familiar with appreciative inquiry but our listener may not be. Maybe you can kind of talk about what appreciative inquiry is in the context of what it should look like in your first visit with a financial planner and maybe some of your favorite questions that you like to ask that retirees, pre-retirees, clients should be thinking about?
Carolyn McClanahan: Well, basically, the advisors should be interested in use. An advisor that practices good appreciative inquiry is going to ask a lot of personal questions like, “Tell me what's important to you in your day-to-day.” One of my favorite questions is, “Are you happy now?” because you'll get somebody who's in mid-career and they totally hate their job. And the reason they're coming to see you is because they want to retire as quickly as possible because they hate their job. And that's the wrong answer. You know, that person needs to spend time on career management so they find a job they're happier in that they're willing to work long before. And so, other things like, “Tell me what you do to take care of your health,” and that’s a nice non-intrusive way to get people to open up about their health because if you're an unhealthy person and you're there for financial planning, the advisor needs to know about that because that greatly affects so many different parts of your financial plan.
So, appreciative inquiry is just making certain that you're asking questions, get people open up in a non-threatening way, in a non-judgmental way, and getting to them to talk about and share their life so the advisor can do a better job.
Casey Weade: And along those lines, talking about current life satisfaction, you're talking about how happy are you today? And this seems kind of obvious, but how are you using that information? What kind of answers do you hear? And where does that direct you?
Carolyn McClanahan: So, the most important thing is if a client isn't happy now, why are we focusing so much on the future? And what I tell advisors, in general, is right now advisors spend about 80% of time planning for the future, 20% of the time thinking about the present, and we need to flip that. We need to make certain people, you know, taking care of themselves now that they're having life enjoyment now. As an emergency room physician and family physician, we just saw people, all of a sudden, you get diagnosed with something. And before you know it, you're down this whole new path you didn't expect or people they just die way too young for no cause. It just happens. And so, for people who live more fully in the present, makes their life more meaningful and then when the time comes to quit or when they die, there's not going to be any regrets.
Casey Weade: Well, what about those individuals who sit down with that aren't really sure what they want out of life? They say, “I'm not real happy, but I'm not sure what I really want.” How do you help guide someone through that type of process? Because I've seen that so many times where, “Yeah, I don't know what my purpose is. I don't know what I enjoy. I don't know what I want to spend my time doing.” Do you have a process to help individuals get on that track?
Carolyn McClanahan: Absolutely. I think of a financial planner as a family doctor. Family doctors in medicine know how to deal with 90% to 95% of the things that come their way. And it's important for them to know the common, the critical, the normal, and when something doesn't fit into common, critical, and normal, that's when you have to refer and get help. And critical, you have to learn to recognize that so you get help very quickly. And so, when you have a client that has that much of a deep dissatisfaction, where they don't even know where to start, if we can't help guide them and tease out some of that, we actually use therapists. So, we refer them to career therapists, depending on what the situation is it was to why they're not happy. Is it their personal life? Is it their work-life? And get them the appropriate help to start them on a path where they can find better enjoyment now.
Casey Weade: It's really neat to hear you say that you're referring people out to a real therapist, right? I mean, I think quite often we are acting like psychologists when we're sitting down as financial planners, but there are certain things we probably shouldn't be talking about, and sometimes that is medically related but it could also be that they're not a good fit for your practice and they're not a good fit for what you do. And I think most advisors they really struggle with trying to refer those people out to somebody else, out of fear that maybe they're going to miss out on an opportunity. They didn't need maybe in the first place. So, I know you're good friends with Michael Kitces and I know he's talked about this extensively as well.
Carolyn McClanahan: Right. The key is, is you have to know, as an advisor, know who you are and what you do and what you deliver well. And that's why for us, we use client engagement standards. And so, when people first call us before we even agreed to meet with them, we send them a copy of our client engagement standards, we send them our investment philosophy, because if people don't get that from the beginning, we're not going to take them and they're not going to be a good fit. So, send them those documents first and make them read them, and that really sets the tone for what we're going to be delivering. If they call back and make an appointment after that, it's highly likely they are a good fit. And then in that first meeting, that's when we do, we explore what are the goals? Are they happy now? What's their health like? And they come to expect that and then that client who actually embraces that and appreciates that, they end up being a great fit. Some people just aren't ready and you can't help everybody.
Casey Weade: Well, you so often use the analogy, when you're shopping for a car, if you're looking for a small sports car, you probably wouldn't drive into the Hummer dealership. It's got the big sign that says Hummer.
Carolyn McClanahan: Yeah.
Casey Weade: In the financial industry, all the signs look the same but I think that's one of the keys is you'll look for someone like you that's putting up a billboard, look for someone like you that's putting up a sign that says, "Hey, this is what we do. These are the types of people that we're a good fit for.” And I think that's good advice for those that are out looking for the right advisor. Don't go to the generalist that’s not willing to specify who they are a good fit for. And that kind of goes into your financial life plan that you build for the clients you work with, which wouldn't be the right fit for everyone out there. But I wonder, can you just tell us a little bit about the difference between a traditional financial plan and a financial life plan?
Carolyn McClanahan: Well, the financial life plan really focuses truly more on the goals. And it doesn't try to project a future that's unknowable. And so, we do a deep dive into everything about the client, what are their goals? What's their family like? Are they happy with their job? Or where do they see that they need life improvement? And do we collect all the data just like any regular financial plan? And in our financial plan, we basically list the goal and where there are in relation to that goal, and what needs to be done to fix that, if they're not on the right track for that goal. And one of the things where it's really different is we really focus on current goals more than anything. Are they spending wisely and thoughtfully? So, we actually break down all their spending to see, where's your money going, and is that bringing meaning to you? Because a lot of people do what I call thoughtless spending. And if they just kind of rethink their relationship to money and how they're using money, it often makes it much easier to get them to save for the future.
And the reason we have people save is not for retirement. I warned you I'm very controversial on how we think about retirement. We have people say for life transitions and I'd rather if I have a client who comes in who isn't happy in their job, and most of them who've come to us have saved some money, we'll get them to like quit work and go back to school or, I mean, we've had a number of physicians especially who have gone back and done new fellowships in their 40s and 50s, so that they can find jobs that are more meaningful to them. And that allows them to work longer.
Casey Weade: That goes along the lines of the whole escaping something or retiring from something rather than retiring to something. You really have to find happiness no matter where you're at in life. And you said that most advisors are focusing 80% of the time on these future goals. But I would say in my experience, it's the same way for clients or potential clients, they are focusing 80% of their time in the future. And we'll never get to the future if we don't focus on the right now. And that means we need to understand where you are today in order to get you to where you want to be in the future. And I think that explains why you and I take this approach of asking some questions about your current life and status that maybe most are uncomfortable with. I want to go back towards the health care discussion here. And I want to get back to your experience as a health care provider or a practicing physician and I'm wondering, as you've met with so many advisors, you do a lot of coaching with financial planners speaking for FPA, etcetera, and I'm wondering what you often see advisors missing on the interplay between the health care world and the financial world.
Carolyn McClanahan: Well, first off, most of them are so afraid of even going there to the health care issues. And that's been my big agenda is to get advisors just to open up the conversation. So, my other favorite question that we talk about is, tell me what you do to take care of your health. And you might have a client say to you, “I do 12-ounce curls.” I actually did have somebody say that to me once or others, I had one guy say to me, “Well, I used to be 50 pounds overweight and about three years ago, I started exercising, eating right, and I just ran my first half marathon.” That tells you so much about a person. And then that lets them know if a client knows that you're comfortable talking about health, then they become comfortable talking about it with you. And the reason it's important is people think of it just for longevity projections but that is only the start of it. It matters for health care costs, it matters for insurance planning, it matters for estate planning. There's all these different nuances where knowing how a client lives and their health history, helps the financial planner do a much better job.
Casey Weade: I know one of the ways that you like to stay in shape is a little unusual. You throw the javelin I hear.
Carolyn McClanahan: Yeah. I picked that up. My husband, he did sports photography, too. So, we went to the 2008 Olympic trials just to attend and he actually had an art show at the trials and went to the javelin event and I never really paid attention much to javelin. He's a pole vaulter and it was all these really tall women, short women, fat women, skinny women out there throwing, I'm like, "What skills do you need to have to be a javelin thrower?” My husband said, "You have to be fast, flexible, and explosive,” and he said, "Not your type of explosive,” but I just thought it looks so cool and I was 40 something at the time and I thought, “I want to try that.” And so, he bought me a javelin and I just fell in love with it. And so, I throw at these meets and I won all the ribbons because nobody's in my age group, so there you go.
Casey Weade: I always thought I would enjoy throwing the javelin but that really interrupted my regular sports schedule.
Carolyn McClanahan: And what’s that?
Casey Weade: I still think I would really enjoy throwing a really long sharp object long distance.
Carolyn McClanahan: Yeah. People say they want me on their team in Armageddon because practicing javelin, you have to practice for accuracy because that helps your distance.
Casey Weade: Yeah. Well, I'm an archer and I love playing darts. I love playing darts. I love archery. So, yeah, I probably love doing this too. Anyway, so I think we've gotten off track, but I think we can incorporate this. So, once you ask these questions, you're asking people how they're staying in shape, what their exercise is, what their health care regimen is, and maybe it's javelin throwing. Once you figure that out, how does that help you? Maybe it does, maybe it doesn't, but how does that help you maybe how do you coach other advisors or clients to incorporate that information and actually projecting their health care costs in retirement or implementing that as part of the plan?
Carolyn McClanahan: Yeah. So, you have to look when thinking about future health care costs, there are a number of factors you have to look at. So, not just health. People with chronic illness who don't take care of themselves, they don't have as much longevity. So, they might have higher health care costs in the short term but in the long term, they're not going to be alive. So, health care costs aren't going to be as high. And you have to have that honest conversation with the client. The other actually bigger factor with health care costs is how people utilize the healthcare system. You have what I call low health care users versus high health care users. And people are actually on a spectrum. A perfect example, I had this 98-year-old patient as a doctor and she was a new patient to me. I’ve never seen her before and she came in and she looked like she was early 70s and she was just dressed impeccably, and I saw the charm like this is your 98 as in always asked by people, "What’s your secret?”
And so, she actually got together with friends. They wrote plays during the week and they got together every Friday night to act out those plays. She said, "That part I hate is they always make me play the old woman.” And so, she was just this delightful woman and she said, "And I haven't been to the doctor in decades. Decades.” And I said, “Well, why are you here to see me now?” She says, “I have this big thick toenail that my shoe won't fit and I need you to use those industrial toenail clippers to cut my toenail.” That was it. So, you got to think about that. She was a low health care user and if you look at the Employee Benefit Research Institute, they come out with these numbers every year on what people can expect to pay out-of-pocket for their health care expenses as they age, and they actually break it down into percentiles. She would be on a very, very low percentile.
Likewise, you can have people who are very healthy, who tend to overutilize health care, they want to maximize everything so they have all the latest gadgets, they go for chiropractic care, acupuncture and they always want to get a second, third opinion, even though they're perfectly healthy. And so, that person is going to face higher health care costs, one, because they're going to live a long time, but two, they like to overutilize the health care system. And so, one of the things that I coach advisors and I dream of advisors doing is having seminars on patient empowerment on how to be a better health care consumer because that alone would go a long way towards reducing your health care costs.
Casey Weade: So, is that the tool you use to project health care costs and build them into the plan? Are you using the EBRI research numbers?
Carolyn McClanahan: Yes and no. So, yes, but actually it depends on where people are in their life cycle. If you have a younger person and to me retirement projections for somebody in their 30s, 40s, if they're really kind of bogus because you can't project for 2030. You can’t even project five years out. It’s just kind of crazy. And so, we focus more on that. We just lump everything together and focus on getting them to save as much as they comfortably can without sacrificing current lifestyle. And so, you're making certain that in showing them the projections are more about how close will you be to having enough based on what you spend now. Because you and I both know, the biggest determinant of successful retirement is actually spending. So, people who have lower spending need less money. So, we use those earlier years to shape the spending conversation and to shape the health care utilization conversation.
So, if we see that a client uses a lot of health care, and they're not good health care consumers, we would educate them on how important to use this, are you willing to become a better health care consumer. Now, when somebody gets into their 50s and 60s, it's a different conversation, especially they're getting close to wanting to quit and our number one conversation is trying to keep them doing something as long as possible because that reduces health care costs. If you work for an employer until you’re 70, that's a huge, huge cost reduction in health care premiums and out-of-pocket costs. And so, we have conversations like that but what we then do is we actually look at their health care spending and we plug in the actual numbers for them. And then we use the projections on actual health care insurance costs. So, for example, we plug in the numbers, estimated cost for Medicare, Medicare Supplement, Medicare D plans for that person in those projections.
Casey Weade: Well, along those lines, it really depends on the choices you make, right? Which Medicare Supplement are you going to choose? Maybe you’re pre-65. What plan are you going to choose? And I was just wondering how you help people choose the right plan and maybe you could, I've got a lot of families are asking me these days about health care sharing programs. And I don't know if what your guidance would be to those families.
Carolyn McClanahan: They're not real insurance. And so, you have to be very careful. And in fact, there's been a lot of articles out recently, I think the health sharing ministries, they started out trying to be a good thing, but with the trajectory of health care costs that more and more people were looking to them and they really can't handle the volume and most people don't understand that there's no guarantee. So, with regular health insurance, it’s a contract. You know you're going to get the coverage. You know what they're going to pay for. With health sharing ministries, they can change their mind at any time about what's being paid for. So, you just have to be really careful because it's not real insurance. You know, for early retirees, the big thing that people miss out and advisors miss out on this all the time is this is actually fairly easy even when you have people with up to a few million dollars, you can help them qualify for tax credits for the ACA. I mean, we have people who have plenty of money, that they're getting $500, $600 a month tax care credits and paying next to nothing for their insurance. Is that right?
Casey Weade: So, great design, isn't it?
Carolyn McClanahan: Right. And I've written about that extensively, and I'm a fiduciary for my clients. And so, I help them utilize that just like any other tax deduction, and unfortunately, though, most people don't have an advisor that can help them navigate how to do that. But that's where advisors really shine is helping them take advantage of those situations.
Casey Weade: Now, you said something about being a better health care consumer. What do you mean by that exactly? How can we better consume health care?
Carolyn McClanahan: So, people think of doctors and thank goodness this is going away but doctors used to be the god and you do what the doctor tells you. And some medicine used to be very paternalistic. If the doctor say, "Take this pill, go home, you'll be better. Sweet little lady, you'll be just fine.” And we don't accept that anymore. More medicine now is informational. The doctor will say, "Here are your choices. Pick one.” It's like, "Well, how in the heck do you know?” And the doctors themselves don't really understand costs. They don't know and they don't care. They just want to practice medicine and more and more learning to care because the patients have to care. The type of doctor that you want is a collaborative doctor, one where they're willing to talk to you about your goals, your values, around your health, and help you pick the best type of health care based on that.
So, for example, often, doctors won't talk to you about lifestyle changes. If you have early diabetes or early hypertension, a lot of times all you got to do and it's not all you got, it’s hard, but it's what you should do is start exercising, eat a healthy diet, and avoid toxic substances and talk to people. That is the recipe for good health. But doctors don't want to talk about how to lose weight and all that because it's time-consuming. Most patients aren't going to follow it. And so, if you are a serious patient about controlling your health care costs and having a better health, learning that information and applying it and letting the doctor know, “I'm willing to do things to help get better.” The other thing is to question your doctor on things like lab work. A lot of stuff is ordered just because it's protocol, and you might not fit protocol. And the problem that you have, people don't understand that lab testing is not exact. They think it's like this holy grail of, oh, this is going to give you your answer and your diagnosis.
90% of diagnosis is based on history in physical, and unfortunately, doctors are not very good now about talking to patients because they've been so constrained in their time and have to see so many patients by the business of medicine now, which to me is a travesty. And so, the way to better prepare is write out your history for your doctor. So, type it out and send it to them in advance, bring another copy with you, just in case they didn't read it. Make them read your history. Write the whole narrative of everything going on with you before they even talk to you and then that way, they can ask you better questions. And so, then when it's time to order tests, say, "How is this test going to change what you do for me?” And if they can't give you a good answer, you probably don't need that test. Oftentimes, you have what's called false positives, where you'll have a test and they'll show something and there's nothing really there. Because all of us have little things in our body that aren't exactly normal, but they're not bad. So, undergoing testing, radiological testing, lab testing isn't always the right thing. So, they need to have a reason to order lab.
And the same for medicine. It's like they say, "Oh, take this medicine," say, "Is there any other things I could do other than medicine to help? Cost-effective medicine that I can use?” You know, because they'll write expensive prescriptions all the time, and not think about it, and where there may be a perfectly good generic that'll do just the job and being a fraction of the cost.
Casey Weade: So, what you're referring to is this type of physician and I'm not real familiar with all the different types but would this be integrative medicine? I struggled with finding a good physician for my mom, then I struggled to find a good general practitioner for myself. I've bounced around to a lot of different doctors. I still haven't found one that does what you're talking about that has the type of planning conversations that we're talking about having with our clients, right? Most of them are in there for no more than five minutes if that and I've got six prescriptions, which I'm not even sure I really needed in the first place.
Carolyn McClanahan: Yeah. And so, this is what's wrong with the medicine in the United States. Countries that have a strong base of primary care, well-trained primary care doctors, are much healthier and have lower health care costs than our specialist-based system. And so, it's good for you to keep trying to find a good primary care doctor. Unfortunately, what's happened is a lot of those primary care doctors have been so constrained by insurance companies that they are required to see you for five minutes. And so, one option is it's a movement now. It's called direct primary care, where you're basically paying a subscription service to a doctor to spend more time. And I hate that it's come to that but, especially for those who can afford it, it's a great option and they're very reasonable that you get more time with the doctor. And they actually include a lot of services that you normally would have to like pay for separately like laboratory work.
So, you need to continue your search to find a good primary care doctor. And again, though, part of it is on you is making certain that you write out your history and write out your values. So, for example, I say to doctors, “I am a minimizer. I do not like to take medicine. I want to do things as much as I can without drugs. So, tell me what I need to do first,” and say, “I don't want testing just for testing. I want to make sure that what we're doing is going to be of utility.” And so, if they know that you are okay with not doing everything, they're more likely to just do what's needed.
Casey Weade: Well, in talking about health care costs being a little out of control, we're hearing more and more about health care tourism. And my mom's actually in Mexico right now as we speak getting some major dental work done. My dad has been doing this for years and there's a lot of controversy around that. And I've got other family members of mine going, “I can't believe your mom would do that. She's going to come back plus infections. You're going to have all these problems.” I'm wondering from a professional with your experience, what is your opinion on the whole health care tourism movement and the impact that might have on health care in the US?
Carolyn McClanahan: Yeah. I think it's a sad statement to how health care in the United States has just declined. I think there's a lot of good care out there, but it's fragmented, it's unaffordable, and your mom goes for dental care is a huge issue because it's not insurable and it's expensive here. And so, there are a lot of great providers around the world and they're definitely going to cost less than what we have. The problem that you get into is even the best provider, you can have bad outcomes. And that's another thing people don't realize about medicine is still there's a lot of science to it. There's still an art to it. And there's luck to it. Sometimes you just have bad luck and bad outcomes. And so, the problem is, is if you have a bad outcome, what's going to happen then? Is your insurance going to cover you back in the United States or are you going to be able to get home? What happens if you have a bad event and die in the other country? So, you've got to really plan if you're going to do that. I am not averse to it if that's your only option, but definitely make certain you understand the risk.
Casey Weade: That's good information. I'll make sure that mom and dad give this a listen right away.
Carolyn McClanahan: Yeah.
Casey Weade: So, since we're still on the health care topic, and I follow you on Twitter, and it seems like every other tweet these days has to do with health care reform. You're really getting involved as the election year comes on here. Why have you taken such an interest in health care reform?
Carolyn McClanahan: Well, actually, I've been involved in health care reform for over a decade now. I've been writing for Forbes for a very long time. And so, this all actually started when I was doing talks for NAPFA and FPA. And I had a talk that was how to find health insurance for uninsurable clients. And this was before the ACA. So, once the ACA passed, I thought, well, gosh, somebody in our profession needs to understand it. So, I read the entire ACA, all 2,000 something pages, and I put together a talk.
Casey Weade: You’re 2,000 pages ahead of me.
Carolyn McClanahan: Yeah.
Casey Weade: I'm so glad we've got people like you.
Carolyn McClanahan: Yeah. Well, I love this stuff. And so, I put together a talk and of course, that talk just kind of took off. So, now I travel nationally. I do 20 to 30 speaking engagements a year. And so, I've talked to easily over a couple hundred-thousand people about health care reform. And so, I started writing for Forbes. That's how I got connected with them. They were in the audience of one of my speeches early on and I started writing about different health policies and what was wrong and the joke was that I got the most hate mail because I'm the moderate because I would talk about the good things in the ACA, so I get hate mail from the right. I talk about bad things in the ACA, so I get hate mail from the left. But in reality, that's what we need to be doing. We need to like the ACA would have worked had it been implemented correctly and had there been a public option. Medicare for all would work if our country would get behind it. There are dozens of successful health care systems all over the world that are actually much better than ours, and in much less expensive. And the problem is, is that our country because half of us are individualists who think it's that bootstrap mentality, everybody needs to take care of themselves. And half of us are collectivists, which says we need to at least provide a basic care for everybody so we all have a fighting chance. And because we're so conflicted, that's why we've had a hard time coming together on health care.
So, I actually wrote a health care plan back in 2012 during the Romney election, and it basically is that we need to provide primary care for all as a public service. It's very cheap. We can do it for primary care, dental care, mental health care for less than $1,000 per person per year, through well-funded community health centers and we have led our community health system, basically, can I say go to H through the past many decades, and we used to have just this robust community health system in this country. And it's always been shoestring funded since the 90s basically.
Casey Weade: Well, on that note, I read one of your articles on community health care, and I guess I wasn't really even aware of the community health care things we have going on in our own community. I wasn't aware of the community health care. So, can you just talk a little bit about what community health care is, the impact it makes, and how that is somehow a solution to the health care crisis?
Carolyn McClanahan: Right. And so, what it is it's basically the health departments. People remember health departments. But they provide a base of care. They can take care of minor chronic illnesses like hypertension, diabetes. They can address our obesity crisis. They can address our epidemic opioid epidemic and they can serve as centers for epidemics and bioterrorism prevention like coronavirus now. And so, every community has these. It's just that they are given such a shoestring budget, they have to beg Congress for money every couple of years, and so they just get a short shrift. And so, Spain did this in 1982. They put a community health center within 15 minutes of everybody and everybody got to go for free as a public service. See, because primary care is not insurable. Insurance is meant to take care of catastrophic or high-cost illnesses. And so, having some regular checkups, sore throat, or hypertension, those aren't catastrophic and those aren't high costs. So, they're not insurable.
Casey Weade: But they're expensive when you go to the doctor.
Carolyn McClanahan: Now they are, but they don't have to be.
Casey Weade: Yeah. They don’t have to be.
Carolyn McClanahan: Yeah. And so, we're paying, basically, because the overhead in this country is so high, most countries, it's like 15%. Our overhead it’s 5% to 15%. Our overhead is 25% to 30%. So, we're paying this huge premium in overhead for things that aren't even insurable. And so, I wrote this policy a long time ago, and a number of politicians picked up on it. So, I've worked with a number of politicians informally through the years about this idea. And so, that's how I got involved with health policy and so I've kept up with it since. I write about it periodically. I get frustrated with politicians, especially after President Obama was reelected. It's like, okay, the ACA is here to stay but of course, and again, both Republicans and Democrats have done horrible things and good things in health care. So, I just want to make that clear. But the Republicans sabotaged the ACA all along the way, and the Democrats had to keep giving up on certain things that would have made the ACA successful.
So, I've written about that, but I kind of gave up. It's like, okay, it's either going to go or fail. We'll see what happens. When Trump was elected, it's like, hmm, it'll be interesting to see what he does and, of course, he did all the wrong things. The health care plan that the Republicans put in place wouldn't protect pre-existing conditions and they say we're going to protect pre-existing conditions, but none of their legislation does. So, it's a lie. I'll just say it. Nothing that they've put out is going to protect pre-existing conditions. So, back to the community health centers, now that the election’s back on full swing and the Republicans have proven that they're really not going to take health care seriously like I'm being very active in pushing the community health proposal. I'm actually working with a number of politicians just to talk about it because at least providing a basic care for everybody is good for capitalism. If we can keep people healthy, if we can take care of their minor illnesses for very cheaply, why aren't we doing it? And then we can argue about fixing the payer system of do we go with ACA with a public option? Do we go for Medicare for all? Both would work.
None of the Republican plans would work, I hate to tell you. There's no other country that provides universal care that has what the things they're proposing. So, what I laugh about is Richard Nixon actually had a fantastic health care plan that would have passed had Watergate not happen. And do you know what that plan ended up becoming? The ACA. Really, yeah.
Casey Weade: There are so many complexities to these plans and you talk about 2,000 pages. And there are such strong opinions out there on health care reform. Well, that'll never work or that'll never work but it's so complex that how could the average individual with barely a fraction of the knowledge that you have in the history of health care and the different options that we have, the cost of health care, actually practicing health care, how could the average American really determine what the best solution is and who they should really be voting for on that particular topic?
Carolyn McClanahan: Right. So, first off, is you need to go to unbiased sources. Well, I don't think any source is totally unbiased but to the least unbiased sources. So, Kaiser Health News is just absolutely fantastic. The Commonwealth Foundation, absolutely fantastic. They tell you the good and bad of every proposal out there. They help you keep up with the news of what's in there. And so, I have my own website, which I'm running a financial planning practice and helping a lot and speaking and stuff. So, I do what I can, but I write articles periodically and I actually have a synopsis of all my articles that are out at Forbes and at financial planning magazine of things that I've written, and I'm trying to write more for my own blog, but just about what proposals are out there. And it's important what I tell people is and the thing I have learned is politicians actually do listen. And so, if you look at the Moms Demand group, do you know who I'm talking about with gun advocacy? So, Moms Demand is this grassroots group to put in common-sense gun laws. And they are fantastic because whenever there's a gun law out there to help some of the craziness going on out there, they actually like text you and say, "Call this legislator,” and you just say call and it connects you directly with your representative or whoever, even statehouse, your statehouse in the Senate.
And so, I tell people just take five minutes a week. That's it, five minutes a week, and contact a different representative or senator, or the president, or your local state government about something. Just learn about one thing, take five minutes a week, because they actually do pay attention to how many calls and emails they're receiving about that. Not all of them act on it. If you have somebody that is just so stuck in their ideology in their candidate, for example, my representative, he doesn't listen about, he doesn't vote for anything that the constituents want. It's what his party wants. But if they get enough pushback, maybe they'll change. And some of them do. A lot of the politicians out there actually do listen.
Casey Weade: Given how much you know about the history of health care and what do you know about current policies, I'm wondering if I'm sitting down with someone that's getting ready to make the retirement transition, maybe they're 60, 65, do you incorporate any of the potential changes in health care into your planning?
Carolyn McClanahan: Oh, absolutely. Of 65 not so much because Medicare is just not going to go away. That voting bloc is too huge. It's not going to go away soon at least. But people who are looking at early retirement and they're having to rely on the individual market, I caution them because right now, we have guaranteed issue health insurance through the Affordable Care Act. So, it doesn't matter what illness you have. You're going to pay the same as everybody else for your health insurance policy because there is no underwriting. And this is what I tell people and I did a tweet on this the other day, my public service announcement tweet. If somebody says that they are protecting pre-existing conditions, you have to ask, is the insurance going to be guaranteed issue, and is it going to be medically underwritten? If it's not guaranteed issue, and if it's going to be medically underwritten, it is not protecting pre-existing conditions.
And so, that's the number one question, when you look at a politician's policy, not the health insurance policy is to ask them, are things going to be medically underwritten? And if so, that's going to be an issue. And so, I caution people who are going to have to rely on guaranteed issue coverage that's not medically underwritten. If Trump gets reelected, that's probably going to go away because they will strip pre-existing conditions.
Casey Weade: So, if that's the case, if that does potentially happen, we just need to make sure we're getting a health care plan as soon as possible. So, for those that are maybe they're on COBRA, they need to get on an individual plan as soon as possible. Is that being incorporated in your practice?
Carolyn McClanahan: Well, it didn’t work that way. Yeah. So, you have to look at their age. If somebody's 63 ½, I don't worry because it's very unlikely COBRA will go away. So, they'll get 18 months from their insurance. But if they're 60, now you're looking at three-and-a-half years. Just because they get an individual policy doesn't mean that the rules won't change around that policy as far as the pricing and the underwriting. So, it's really important for them just to think about that, and that's why I tell people to keep your skills up just in case you got to get a job back just for health insurance, but ideally, our country fixes health care. That's the key. The other thing is though, just so you know when you go off on COBRA, when you quit your job, you have the choice to go on COBRA immediately or on an ACA-based plan. If you go on COBRA, you cannot go on an ACA-based plan until either open enrollment or until your COBRA runs out. So, you can’t do COBRA for six months and in March say, “Oh, I don't want to be on COBRA anymore.” You got to wait it out until the end of the year.
Casey Weade: Now, it sounds like you're saying, hey, just keep an extra little stash of cash over here. And we can project given the current policies and options you have. This is how much it's going to cost between 60 and 65. However, you're retiring at 60. Why don't we just set a little additional buffer aside just in case there are some changes. Is that your guidance?
Carolyn McClanahan: Well, the money, but I do worry especially if somebody has health conditions of whether they'll be able to continue to get health insurance before Medicare. That is a worry. And it's not a big one right now because I think people would really, there would be a lot of screaming if that happens but it's just such an unknown. And one of the things that I'm hoping for, and I write about constantly is the country has to come together on what we can agree on. It's like, “Do we agree on universal health care?” and when people, especially the people who are called the bootstrappers, the individualist, they go, “No, everybody shouldn't.” But one of those people gets sick, then they immediately change sides. I mean, you could read story after story of people who hated the ACA, and then it saved their life. And so, to get politicians to own up to the fact that our country is much better prepared if we have a basic health care system that's functioning, that this serves as a basic for everybody. I mean, we wouldn't be worrying about this coronavirus epidemic to the extent that we are if we had a great functioning public health system that we no longer have.
Casey Weade: Well, we ourselves had some problems with the ACA with our second-born child. We had quite a scare that we weren't going to be able to get coverage. We had lost coverage so we had a gap in coverage. We couldn't enroll until the enrollment period started. We were looking into getting divorced temporarily and that just sounded like a horrible way to go. We were trying to jump through hoops to get covered. Luckily, he was born late enough that we were able to escape some of the bulk of those expenses. But, yeah, there's definitely still a problem to this day. I think we can agree on that. I'm sure there's much we don't agree on but I bet we agree on one thing and that has to do with retirement and what retirement means. I'd love to wrap our discussion up with this. What does retirement mean to you?
Carolyn McClanahan: It's a word that needs to go away. To me, retirement is when we basically are giving up our ability to earn an income. And so, you have to be real careful with that. You've got to make sure that you're thoughtful about what you're going to do with your time because a sense of purpose gives people meaning, and if people have their sense of purpose wrapped up in their work, and then they quit, that's not good. They're not going to enjoy their retirement. And so, to me, people need to plan for life transitions and quit planning for retirement.
Casey Weade: Yeah, I like that. We're going to continue to go through transitions. So, I think the strange thing is, I mean, if we look at the different transitions that we have in our lives, what's the one that typically lasts the longest that you actually plan for? You think about college, right? That's usually one that comes to mind, yeah, we've been planning for college for 18 years to be able to fund it for four. And most people aren't thinking about it until five years before. But then you think about retirement and now we're talking about planning for something that might last 30 years or more. It's hard to plan for, and we should be spending more time planning for that than our next vacation. We should be spending more time planning for that than funding college, and we should spend a lot of our time just trying to figure out if retirement is really for us in the first place.
Carolyn McClanahan: Exactly.
Casey Weade: So, Carolyn, thanks so much for joining us. If there's individuals out there that want to get in contact with you, they want to follow up with you, they want to engage, what's the best way to do that?
Carolyn McClanahan: Yes. Just go to CarolynMcClanahan.com.
Casey Weade: Well, easy enough. We will make sure we put a link right there in the show notes. Carolyn, thank you so much for your time. It was a real pleasure.
Carolyn McClanahan: It was my pleasure. Thank you.