NA - Retirement recon? NA

[FORANE]

The gap I always look at is the time where I am between my current health insurance and Medicare.

Every year I postpone retirement is one more year I don't have to come up with approx $2k/month (with no subsidy) for an ACA plan.

I have about 7 yrs before Medicare, 7*12*2000 = $168k in today's premium dollars.

So my early "retirement" might consist of working to offset those premiums.

The penalty for not having an ACA plan is ending as of January 1 2019. In the interim we have found a non compliant plan that fits our needs with a second fill in the gaps plan to make us compliant until the end of the year. The fill in plan costs us less than $100 per month. They call it minimum essential coverage.

 

[Matthew]

Another investment vehicle is HSA; Health Savings Account. If you have a high deductible medical insurance plan you should also be able to save money in an HSA. HSA savings can be invested. The funds going into an HSA are pre-tax dollars. If spent on qualified medical expenses the withdrawals are tax free as well.

There are often significant medical expenses late in life.

And after 65, you can withdraw for any reason without a penalty. It will be taxable income, though, if it isn't for a qualified medical expense. So it basically works as another 401(k) at that point.

 

[Matthew]

The penalty for not having an ACA plan is ending as of January 1 2019. In the interim we have found a non compliant plan that fits our needs with a second fill in the gaps plan to make us compliant until the end of the year. The fill in plan costs us less than $100 per month. They call it minimum essential coverage.

That's good that non-compliant plans are starting to become available again. A catastrophic plan should be affordable.

 

[Bill]

And after 65, you can withdraw for any reason without a penalty. It will be taxable income, though, if it isn't for a qualified medical expense. So it basically works as another 401(k) at that point.

True, it's just another way to defer taxes if you're already maxed out on 401k/Roth.

 

[Matthew]

That's exactly why retirees need to still be invested for growth, especially so at the beginning of retirement.

You can see this on a good retirement planning graph. They show the savings amount growing early in retirement and then later finally going down. The overall goal is to have it not hit zero until after you die.

A lot of people don't think that they could be retired for 30 yrs and get too conservative.

My retirement guy ran two graphs. One was, "If you lived on a planned retirement income of $x, this is how much you might have left at 90." The other was, "If you want to have $0 left at 90, your retirement income could be $y." And y turned out to be greater than x by a large enough amount I almost retired on the spot. Life can change things, though, so I'm taking it one year at a time right now.

 

[weilke]

The fill in plan costs us less than $100 per month. They call it minimum essential coverage.

Bbut does it cover you for maternity, sex change, sex change reversal and public intoxication ?

 

[Piperonca]

Hmm, an interesting quote from someone who killed themselves at 67...

Similar to Hemingway -- brilliant writer, life not so brilliant. At least his ashes were shot out of a cannon. Quite festive.

 

[Rushie]

You're a girl? Am I the only one here who didn't know this?

Not that it matters, but I just keep mental notes on which pilots wear the bumpy flight jackets so I know when to suck in my gut when posting.

If you consider a 62 year old grandmother a "girl", well then yes!

 

[wayne]

And after 65, you can withdraw for any reason without a penalty. It will be taxable income, though, if it isn't for a qualified medical expense. So it basically works as another 401(k) at that point.

Oh yeah, I forgot about the after 65 part.

The great part is the amount in there (principal plus growth) can be withdrawn with zero taxes for qualifying medical needs (which is very broad). So, no taxes on dollars going in (income) or out (medical expenses), which is even better than 401k or IRA as you're paying dollars going out (401k or IRA) or going in (roth-401k or roth-IRA).

 

[Rushie]

All you folks are hitting on all the decisions we have to make right now. Hubby is almost 64 and I turn 62 this month and we are in the middle of making a bunch of crucial retirement decisions. I have a pension that just kicked in and I had to decide about survivorship, hubby has a pension where he needs to decide about taking the COLA and survivorship, we both need to decide when to start the social security flowing and officially retire. Continuing to work after you pull the social security trigger has consequences, there are earnings limitations or they reduce your benefit. It's all very convoluted and you need to tailor your decisions to your individual circumstances. There are also decisions such as whether to take my SS or take the spousal one. And on and on and on.

For survivorship you need to figure out which of you is going to die first. All of this would be a whole lot easier if we could see the future. Is social security going to be cut without those already on it being grandfathered? I wouldn't put it past our slimy government. Pensions aren't reliable either but to the extent they are, if you're going to live a long time might be much better than taking the lump sum.

We are both healthy and life projections have both of us living well into our 90s so we need to make the money last. We are working closely with financial planners. The projection charts all have "assumptions" built in, mostly on the economy and return, and based on worst case to best case we will either run out of money in our late 90s or have a multi-million dollar estate to leave our children. If we can live on pensions, SS and less income from our investments than their growth, we don't have to draw down the principle or it can even grow. That's the goal. Or we can blow it all on "fun" and let the kids fend for themselves. Or disaster could strike and all our money end up in the hands of doctors, lawyers and nursing homes (even with long term care insurance).

We aren't rich enough that none of this is a concern and we aren't poor enough to throw up our hands and let God and the government take care of everything. We are like probably most of you on this board, in the middle area where each decision we make now will have big consequences for how comfortable we end up when we are too old to do anything more about it.

That's a lot of pressure and this is one of the most stressful transition points in life.

 

[N3368K]

I'm 55 and planning to retire in 2-3 years. I'll likely do something part-time just to keep me going. I'm a terrible procrastinator and if I don't have anything vying for my time whatsoever, I know I'll put off doing things I enjoy, just because I can "do it tomorrow." I want to retire while I can still go and do things we enjoy while I still can. I had some pretty bad injuries in the Army due to line of duty non-combat injuries, which will likely one day preclude getting around well. I am about to get an ankle fused so I can hopefully walk without pain for a few years.

I keep talking to my investment manager and ask, "When can I retire?" and his response is always, "When do you want to retire.? Early on, when I said, tomorrow, he didn't bat an eye and said we can make that happen... When I told him 5-6 years (a few years ago), he said, "even better."

Due to being a military retiree with the equivalent to 30 year (disability/tax-free) retirement I have a fairly substantial pension. It also provides health insurance my wife and I very cheaply. That is a huge factor for many folks I know...and many in this thread have said the same. For the last 15 years, I have a 401k from my current job. I also have a large investment portfolio due to stock options issued before company stock exploded. My only debt is a very low rate mortgage, which I will have paid off in two years or less.

My wife, 51, is a public school teacher with 25 years experience. Because of Department of Defense Dependent Schools teaching and State of Oklahoma which pays SS and no teacher retirement system, coupled with both Texas and Tennessee teacher retirement, she will be eligible for both. Neither will be huge, but they are still good income sources.

Both daughters have finished undergraduate degrees (in 4 years, Summa Cum Laude with 4.00 and 3.99 GPAs, yes just bragging on them a bit). Older is married, working and off the payroll. Younger is starting grad school this month, but has a GA position which covers most tuition and her stipend pays rent/utilities. She also still has about 3 semesters worth of VA Educational Benefits which go a long ways.

All the above said, I'm still on the fence about being able to retire and have enough money. I know it all looks good on paper, but I have the heebie-jeebies about actually making the leap. I've had a full-time paying job since 18. The idea of no longer having a payroll income is scary. Assuming I'm 58 1/2 when I pull the handle, I'll only have one year before I start drawing on my 401k. I need that to last until I'm 67 and can start drawing SS, but would rather wait until 70 to max it out...and I've paid in max the last decade plus.

I am hoping what everyone says about having enough money is true since airplanes and wives are expensive

This is truly the unknown...

 

[mscard88]

That's a lot of pressure and this is one of the most stressful transition points in life.

Appears you're very prepared Rushie. I think you'll be pleasantly surprised and glad you made the retirement decision once you retire. I have! Good luck.

 

[mscard88]

I am hoping what everyone says about having enough money is true since airplanes and wives are expensive

This is truly the unknown...

As I said to Rushie above, you're prepared and although it's an unknown, you'll be surprised too after you pull the trigger. I'm also military retired (taxable pension though) and Tricare For Life (w/Medicare primary, Tricare secondary) and pharmacy benefit is sweet. They went to $7 for a 90 day supply but still no charge if you fill/refill at a military facility.

 

[wayne]

The overall goal is to have it not hit zero until after you die.

The goal will be different based on a persons desires. Some, like myself and I believe @EdFred prefer to not touch our investment. For me, this means my children will get something when I'm gone...and that's important to me.

Makes it a heap harder to retire early though lol.
But as many have said, several folks retire only to end up working again later.
I doubt that will be me. I have many interests....a couple of very expensive ones dang it.

Yes, different goals for different people. I didn't mean zero the day after you die, but rather that it's positive while you are still living. Not good to run out of money very late in life.

Nice that you are leaving something for your children.

We talked with one financial adviser that was a bit surprised that we ranked "legacy" down at the bottom of our list. To us that meant "leaving money to institutions". We plan on enjoying it. Not all of it as we don't have a crystal ball for how long we'll live, so we don't want to run out of money and put a burden on our kids. Which means there will be something left to leave to them. We gave to / spent on them early. Private school from middle school on and then we paid for college. Now they have the ability to earn a good income and no student loans. If we are doing well financially we will probably help fund college for grandkids, or something like that. My wife's parents loaned us money when we were building our current home and living in the prior one. We would do the same for our kids. Things like that. Giving large sums to our Alma Maters, not so much.

 

[weilke]

My kids get love and an education out of me. I have yet to see where trans-generational wealth has worked out well for the recipient.

 

[Matthew]

I'm 55 and planning to retire in 2-3 years. I'll likely do something part-time just to keep me going.

...

I know it all looks good on paper, but I have the heebie-jeebies about actually making the leap. I've had a full-time paying job since 18. The idea of no longer having a payroll income is scary.

...

This is truly the unknown...

I'm 57.5, so I'm where you are about to be.

Yeah, it does look good on paper here, too. But I've never NOT worked as far back as I can remember. Mowing lawns and raking leaves as a kid, washing dishes in high school, doing whatever odd jobs I could find in college, and then working on my own ever since. The idea of stopping just doesn't feel right, and that security of both a paycheck and being able to save is going to be a hard thing to let go.

But life goes on, and the journey continues. What happens next will be different, that's for sure, but we plan to make it fun.

 

[N3368K]

My kids grew up wanting for nothing and had most of the "in" things growing up. Both had vehicles and college paid for. They both graduated and began or will begin adulthood with zero debt. That is my gift to them. I'm sure there will be some inheritance left to them, but I'm not planning to scrimp and save in retirement to make them wealthy.

 

[NealRomeoGolf]

My kids get love and an education out of me. I have yet to see where trans-generational wealth has worked out well for the recipient.

But it may be my path to a Bonanza, so.....

 

[NealRomeoGolf]

In retirement I wouldn't mind just flying dogs across the country 5 days a week.

 

[chemgeek]

And most of the money will be paid out at a point when you have little opportunity to spend it. You also have to trust the .gov not to curtail your benefit down the line through scams like 'means testing'.
Take it when you are eligible, use it to pay the tax bill on your house and keep your own investments until you need them.

Au contraire. You may need a lot more money in advanced age to pay for additional health care. The idea is to maximize your life payout. For some that will mean deferring SS, for others, maybe not. You have to look at the whole ball of wax. Sure, the government is likely to trim benefits at some point, but it is very unlikely they will disappear. I'm not counting on SS, which means if I get anything, I'm good.

 

[weilke]

Au contraire. You may need a lot more money in advanced age to pay for additional health care. The idea is to maximize your life payout.

But who are you going to Max it out for ? The nursing home administrator ? Your heirs ?

When I am 95 and drooling on myself in a nursing home, my happiness won't be any better if I know that 3153 vs. 2788 per month go from one account to the other without me ever seeing any of it. Between 67 and 70, when I hope to be in good health that 2788 in my account every month vs not having it will make a difference.

 

[chemgeek]

But who are you going to Max it out for ?

Well, maximizing your life payout might make it possible to, for example, financially survive if a spouse needs long-term care. It's not a simple decision to decide how to structure payout and minimize future risks. Some will want to leave legacies to heirs or charity. Others hope to make it to EOL with 5 cents in the bank. Lots of things to consider. No one solution will serve everyone.

The only sure thing is that if you are young, you need to start saving yesterday.

 

[paflyer]

That's good that non-compliant plans are starting to become available again. A catastrophic plan should be affordable.

Agree 100%. MAGA.

 

[weilke]

Well, maximizing your life payout might make it possible to, for example, financially survive if a spouse needs long-term care. It's not a simple decision to decide how to structure payout and minimize future risks. Some will want to leave legacies to heirs or charity. Others hope to make it to EOL with 5 cents in the bank. Lots of things to consider. No one solution will serve everyone.

The only sure thing is that if you are young, you need to start saving yesterday.

The last couple of days I spent some time driving my aged parents to doctors appointments. It has reinforced in me that there is an inverse time-value of money in retirement. While early in life, the more you put away, the better off you are, in retirement, you can save yourself into misery.

For all my growing up, dad was whining on how he couldn't have the BMW 2002 tii he wanted because we (his offspring) came around and forced him into a series of bland station wagons. Right around retirement, my dad had some 'fat years' income wise and my folks were able to retire with a comfortable cushion beyond his pension and investment income. I told him at the time to go down to the BMW dealer and order himself todays equivalent of the 2002 tii, a M3, or at least a 325i. Out of the 10 reasons he could give me why not, 9 involved the 1920s monetary crisis. He was just so bent on 'saving' even at that point in his life, that getting the car he supposedly always wanted was out of the question. Now, 23 years later, the money he 'saved' is sitting in his bank account and makes exactly zero difference in his daily happiness. A hug from his granddaughter or just getting out of bed without pain are the things that matter.

So no, I dont worry about the money I may or may not have in my late 80s. I hope to be in good health and tied into strong relationships with my kids and grandkids. At 67 otoh, I hope to have a condo in the mountains, another one at the beach and an old TBM850 to travel between the two. I'll gladly take the SSI check to pay for the $12/gallon jet-A to keep the thing flying.

 

[paflyer]

At 67 otoh, I hope to have a condo in the mountains, another one at the beach and an old TBM850 to travel between the two.

Sounds like a plan, but by the time you get your TBM you'll no longer be in a hurry to get somewhere.

 

[Rushie]

Appears you're very prepared Rushie. I think you'll be pleasantly surprised and glad you made the retirement decision once you retire. I have! Good luck.

"Our" retirement decision is mostly hubby's. I plan to do my contract work indefinitely because it is so much fun. But you are right, once we get over the hurdle of his retirement, and get all the decisions behind us, and get adjusted to the new cash flow situation I'm sure we'll be much happier. What I earn after that will just be gravy.

 

[Rushie]

But who are you going to Max it out for ? The nursing home administrator ? Your heirs ?

When I am 95 and drooling on myself in a nursing home, my happiness won't be any better if I know that 3153 vs. 2788 per month go from one account to the other without me ever seeing any of it. Between 67 and 70, when I hope to be in good health that 2788 in my account every month vs not having it will make a difference.

What bothers me is that the 3153 nursing home might be more comfortable than the 2788 nursing home or closer to relatives who can then visit more often or get you a private room vs having to share or whether your bedsores are cared for properly. The more money you have when you need this care the more options you will have even if you aren't the one aware or handling the details although you will still be aware of the daily quality of life. Just because you might not remember discomforts from minute to minute doesn't mean you don't suffer them. Drooling old people still have a feeling being in there.

Of course ideally, I'd want the 2788 today too, and the better nursing home when the time comes. I agree completely with your point, we want to enjoy our money while we are healthy. I don't want to live frugally and scrimp and save in my 60s and 70s just so I can have a better nursing home in my 90s. That's why this is such a dilemma and makes me regret not scrimping and saving more in my 20s, 30s, 40s and 50s. If we had, instead of buying boats and airplanes all along, we'd have multiple times the nest egg. But then we wouldn't have enjoyed the boats and airplanes throughout our youth.

I cashed out my very first 401(k) to buy one of our first boats. STUPID STUPID STUPID STUPID!

There I've confessed one of my biggest financial mistakes. I was 30ish years old and it was not a huge amount but I did not "get it". I had a vague notion that maybe I shouldn't ought to have done that, so I hung on to the next one.

Another big mistake was not getting a STEM degree first; wasted six years on a worthless liberal arts double major before seeing the light and getting the BS in engineering. So I started earning late. On the plus side I managed to get through nine years of college without much debt.

If only I could go back to being 20 years old but have the knowledge in my head that I now have.

 

[wayne]

"Our" retirement decision is mostly hubby's. I plan to do my contract work indefinitely because it is so much fun. But you are right, once we get over the hurdle of his retirement, and get all the decisions behind us, and get adjusted to the new cash flow situation I'm sure we'll be much happier. What I earn after that will just be gravy.

Good for you! It's great you have some you enjoy doing that also brings income. Plus you probably have a lot of flexibility on the work and workload.

I've told my wife that once we've downsized the house and the kids are out of college her retirement date should be set by how much she enjoys work. If she likes it, keep working. Once it's no more fun, tell them you're done.

At that point my income should carry us fine and if there's some big thing we want beyond my income (most likely traveling) we can dip into her retirement funds if my income doesn't cover all of it. Between significantly lower outbound cash flow (no mortgage, lower property taxes, no college/kid expenses) and lower income taxes we should be in great shape while I'm working.

 

[Rushie]

Good for you! It's great you have some you enjoy doing that also brings income. Plus you probably have a lot of flexibility on the work and workload.

I've told my wife that once we've downsized the house and the kids are out of college her retirement date should be set by how much she enjoys work. If she likes it, keep working. Once it's no more fun, tell them you're done.

At that point my income should carry us fine and if there's some big thing we want beyond my income (most likely traveling) we can dip into her retirement funds if my income doesn't cover all of it. Between significantly lower outbound cash flow (no mortgage, lower property taxes, no college/kid expenses) and lower income taxes we should be in great shape while I'm working.

Thanks, yes I have complete flexibility, I can work as much or as little as I like, and whatever hours I want. It wouldn't be fun otherwise. Good advice to your wife. It looks like you've got a good plan.

 

[Ghery]

I retired from industry 3 years ago. I'm still active in national and international standards bodies and consult enough to generally pay for the travel. Otherwise, my time is taken up spoiling grandkids, pulling weeds and traveling with my wife (married 45 years last Saturday). We're returning this evening from Long Beach, CA where my professional society had its annual symposium. It will be good to get home, I can use the rest. As a past President of the IEEE EMC Society this week was not relaxing.

But, remember, WORK is a four letter word. I can't recommend retirement highly enough. I don't know how I had time to go into the office before I pulled the plug. You'll love it!

 

[Pilawt]

(married 45 years last Saturday)

Congrats! We hit 45 years about six weeks ago.

 

[Artimas]

A little off topic, but how do you find a good retirement consultant?

 

[chemgeek]

A little off topic, but how do you find a good retirement consultant?

Ask a retired colleague who is retired and financially healthy. Humor aside, do get personal references.

But seriously, seek out a certified financial planner who is a "fiduciary", which means they are ethically and legally bound to act in your best financial interest. (The alternative, for example, is someone who represents a particular type of investment product and might earn commissions for selling it to you.) Many financial planners will charge a small fee based on the value of your portfolio, perhaps 0.75%. They make more money if you make more money.

My wife and I interviewed several firms before selecting one that did an outstanding job for us. Hence we are now retired early. Our employer retirement program is a large org that also has good planners. We have used them, too, and they are better at tax strategies.

 

[Matthew]

My 401k provider has planners and one of my insurance agents also does planning. They work on commission and sell the products they work with. That's one option. They generally can put together a plan at no charge so you can get a general idea of where you stand before any commitment.

We talked with a different guy that charges a fee based on the value of our savings with him. It isn't much of a percentage, but the more we make the more he does. It reduces the temptation to churn for commissions. And fiduciary duties are a high standard.

 

[gkainz]

I turned 60 this year, and we just recently switched our financial planner from a traditional to a fiduciary agency. I had been trying to get our prior guy to talk about retirement with me and he said "I don't talk retirement with my clients until they have a long term health care plan. Let me show you what we have." A few friends in the same age group and decision process introduced us to the new company, who really clicked the light on for me when they said "most traditional institutions are focused only on wealth accumulation. They don't know how to talk distribution." This group laid out a plan that made sense to us and we switched.

I'm still struggling with a lot of decisions and timelines, as we're only weeks into the process of transferring funds and putting together plans, but I'm working today ... we'll see what tomorrow brings!

 

[Crashnburn]

My wife and I have a living trust, life insurance, and long term care. I'm 64, and she's 58. If I didn't want to commit aviation when I retire, I would do it on my next birthday. As it is, I think we'll have the financial wherewithal in 3 years. Of course, I've been saying that for the last 11.

I plan my retirement income at about 4% of our investments. The 3% margin between withdrawal, and return takes care of inflation, more or less. I'm not including SSI in my calculations. I have maxed out contributions for several years, so I'll get the maximum payout. My full SSI age is 66.

I plan to have about $100K in cash when I retire. It'll be a buffer for when the market is down, and the withdrawal is less, and will build up when the market is up, and the withdrawal is more. Considering most of our income will be coming from tax deferred plans, I don't think the RMD will force us to withdraw more than we spend.

I have lots of plans for my retirement. My wife is a big factor in me getting enough sleep and eating right, and I try to get enough exercise. I was recently diagnosed with sleep apnea, which if left untreated can lead to significant complications. I have read a lot on the subject lately, and as long as I continue to use my CPAP machine, I'll be able to get a SI when I get my medical renewed.

 

[FormerHangie]

I turned 60 last year, and I'm hoping I can stay in the workforce for 10 or 11 more years. I'd rather not have that long event horizon between the end of earning a living and end of life, there are just too many things that can happen.

I still have two daughters that are still in school to support, so early retirement would not be an option. Also, it sounds like many of you have had pension coverage, I've never worked for a company that offered one. My wife was briefly covered under one, but it was converted to a defined contribution plan when she'd only been employed for a few years, so any benefit she'll ultimately receive will probably not ever cover the electric bill. The most matching I've ever received is three percent, and that's just been true for the last 12 years. Prior to that, the matching rate had been lower, and for many years my employers didn't offer any plan. We do have significant savings in our retirement accounts, but that's because we funded themselves ourselves, mostly with after tax dollars. I would like to give these funds another 10 years to grow, hopefully Wall Street won't cook up another asset bubble that takes the rest of the economy with it.

 

[455 Bravo Uniform]

Let me ask a question about those of you only a few years from retirement, say 1-5 years.

What happens, other than compounding or the next tier of SS that outweighs the variable of economic changes that may occur in that same period between now and retirement? (Not to speak of the economy after retirement.)

I ask because I don’t want to be that “perfect” with my math...I want to either be sure I have more than enough (retire) or be sure that I don’t have enough (keep working). Does that last 1-5 years launch everyone way over the top? Or does it barely get you over the hump?

 

[Half Fast]

If you consider a 62 year old grandmother a "girl", well then yes!

In some cases yes, you grandmothers are girls. In other cases you’re babes. The older I get, more and more fall into the “babe” category. (And I’m married to a 61yo hot babe...)

 

[chemgeek]

Let me ask a question about those of you only a few years from retirement, say 1-5 years.

What happens, other than compounding or the next tier of SS that outweighs the variable of economic changes that may occur in that same period between now and retirement? (Not to speak of the economy after retirement.)

I ask because I don’t want to be that “perfect” with my math...I want to either be sure I have more than enough (retire) or be sure that I don’t have enough (keep working). Does that last 1-5 years launch everyone way over the top? Or does it barely get you over the hump?

Actually, it is not so much how much you save in the last few years before retirement than it is the extra years of draw from your portfolio and the extra health care costs prior to retirement age. Depending on your employment/health insurance situation, you could encounter exceptional costs prior to certain age breakpoints, say age 62 or 65. When you can meet your income goals for your likely expected lifespan and costs, you can pull the plug and retire. Those last few years of saving for me did not hurt at all, but didn't make all that much difference. There was some investment growth, but mainly it was health insurance costs and extra years of income draw that delayed retirement a few years for me. Plus the fact I actually enjoyed my work, although I wasn't planning on doing it forever, or even until my SS retirement age. A good financial planner can help examine these issues and make some probability projections about the likelihood of your portfolio lasting long enough. You can try to do this yourself, but you won't know everything, like structuring income to minimize future risk and tax burden, etc.