S/O Poll - retired or not?

[china mom]

Insurance from a government job alone usually makes it worth one person working into retirement. Trying to buy a plan for an older family on the open market is pricey and usually poor coverage.

One of my husband's co-workers and I chare the same condition and, oddly, are both having a flair up at the same time. She had to jump through many hoops for and MRI to determine if she is in the active phase or not. And that is not even getting into co-pays, deductibles and co-insurance. OTOH, I have never had any issues getting the proper tests or treatment. I LOVE my government job insurance.

 

[china mom]

You may want to take a look at ACA insurance. It gets a lot cheaper for people in their late 50's and older.

That will be something to look into down the road but right now, I still enjoy working and am still able to.

 

[dvcgirl67]

You may want to take a look at ACA insurance. It gets a lot cheaper for people in their late 50's and older.

We're 55 and 54 and will definitely retire within 5 years if not sooner, so will need to purchase insurance on the ACA marketplace. In just glancing some of the policies awhile back, a platinum plan (the equivalent to what my husband has for us at work), would set us back around $2,600 a month. That comes with a $2,500 deductible as well.

The Wall Street Journal has been running a series of articles, "What it Looks Like to Retire with....500K, 1 million, 2 million, and recently ran the 5 million dollar scenario. There are usually four people or individuals and you get a glimpse into what their lives are like. That is just their nest egg (or close to it) in most cases, not their net worth and almost all were either receiving SS or would in the future. Some had pensions as well.

In the 5 million dollar group, one couple employed an interesting strategy. They are 61 and 60, had a nest egg of 4.3 million, lived in Cary NC with a house worth 975K. Half of their investments were in tax advantaged funds, half taxable. They spent 130K per year. The article didn't say that they were doing this on purpose, but my guess is that they were.....but they were mostly living on cash reserves and therefore were receiving subsidized healthcare and paying $1,000 a month. I would guess that they're saving easily 18K a year, possibly more, by deploying that strategy.

I guess one could debate the ethics of this, but on the other hand, it's smart. There is no means testing for ACA with respect to net worth....only income. The government mandates that you purchase health insurance. You can be fined if you don't. And if you're living on a pile of cash in the early years of retirement and not touching taxable investments like a traditional 401K or a taxable account (capital gains)....it makes sense to spend cash and keep your modified adjusted gross income very low. The "return" on your money is fabulous. In some ways, it's like the "backdoor Roth IRA"....that my DH and I have been taking advantage of for years. It's a loophole that should be closed...but hasn't been.

 

[robinb]

We're 55 and 54 and will definitely retire within 5 years if not sooner, so will need to purchase insurance on the ACA marketplace. In just glancing some of the policies awhile back, a platinum plan (the equivalent to what my husband has for us at work), would set us back around $2,600 a month. That comes with a $2,500 deductible as well.

The Wall Street Journal has been running a series of articles, "What it Looks Like to Retire with....500K, 1 million, 2 million, and recently ran the 5 million dollar scenario. There are usually four people or individuals and you get a glimpse into what their lives are like. That is just their nest egg (or close to it) in most cases, not their net worth and almost all were either receiving SS or would in the future. Some had pensions as well.

In the 5 million dollar group, one couple employed an interesting strategy. They are 61 and 60, had a nest egg of 4.3 million, lived in Cary NC with a house worth 975K. Half of their investments were in tax advantaged funds, half taxable. They spent 130K per year. The article didn't say that they were doing this on purpose, but my guess is that they were.....but they were mostly living on cash reserves and therefore were receiving subsidized healthcare and paying $1,000 a month. I would guess that they're saving easily 18K a year, possibly more, by deploying that strategy.

I guess one could debate the ethics of this, but on the other hand, it's smart. There is no means testing for ACA with respect to net worth....only income. The government mandates that you purchase health insurance. You can be fined if you don't. And if you're living on a pile of cash in the early years of retirement and not touching taxable investments like a traditional 401K or a taxable account (capital gains)....it makes sense to spend cash and keep your modified adjusted gross income very low. The "return" on your money is fabulous. In some ways, it's like the "backdoor Roth IRA"....that my DH and I have been taking advantage of for years. It's a loophole that should be closed...but hasn't been.

In my area the Platinum plans run about $1800-$1900. You're right, The ACA premiums are based on income and people you were talking about were probably living off of cash reserves to keep their "income" low. I know someone who retired early and is doing that very thing. If my husband retires before he or I are 65 we will do the same thing for our medical care. I mentioned the ACA because I was very surprised at how affordable it really is for people nearing retirement.

 

[Ronaldo17]

Retired Firefighter now part time fire safety consultancy, couldn't give it up completely!

 

[dvcgirl67]

In my area the Platinum plans run about $1800-$1900. You're right, The ACA premiums are based on income and people you were talking about were probably living off of cash reserves to keep their "income" low. I know someone who retired early and is doing that very thing. If my husband retires before he or I are 65 we will do the same thing for our medical care. I mentioned the ACA because I was very surprised at how affordable it really is for people nearing retirement.

That is cheaper than what I’ve seen, but I haven’t done a deep dive yet and it could be more because of where we live.

And yes…I agree that they are spending cash reserves to qualify for the cheaper subsidized healthcare. We’re also planning to live off mostly cash reserves for the first 4-5 years which will likely take our reported income down to a level low enough that we’d qualify.

I guess it feels kind of weird…having a mult-million dollar net worth…and qualifying for subsidies. But as I said, we haven’t technically qualified for a Roth IRA for many years but have taken advantage of the back door loophole every year. I don’t make the rules.

 

[robinb]

That is cheaper than what I’ve seen, but I haven’t done a deep dive yet and it could be more because of where we live.

And yes…I agree that they are spending cash reserves to qualify for the cheaper subsidized healthcare. We’re also planning to live off mostly cash reserves for the first 4-5 years which will likely take our reported income down to a level low enough that we’d qualify.

I guess it feels kind of weird…having a mult-million dollar net worth…and qualifying for subsidies. But as I said, we haven’t technically qualified for a Roth IRA for many years but have taken advantage of the back door loophole every year. I don’t make the rules.

I just read the "$5 Million" article. It was very interesting that all the retirees had a healthy travel budget. That is one of the things I am really looking forward to once my DH retires. He has a ton of vacation time, but it can still be hard for him to step away from work.

 

[Lumpy1106]

Not retiring any time soon, but DW and I came to the realization that we made a compromise and located to live near where we both work, but that is certainly not living where we always dreamed of living. That was 30 years ago. I wanted to call it a 5-year plan to make a move, but a lot of the Olympic events will be within walking distance of where we live now and we've always wanted to go to the Olympics - so holding that off and calling it the 2028 plan. We'll be the age that many here have said they retired (or at least started drawing from a pension) but I don't think retiring is the plan either. We'll see, it just won't be here.

 

[dvcgirl67]

I just read the "$5 Million" article. It was very interesting that all the retirees had a healthy travel budget. That is one of the things I am really looking forward to once my DH retires. He has a ton of vacation time, but it can still be hard for him to step away from work.

We're in exactly the same boat. My husband gets 5 weeks, but we definitely don't get to use all of that for vacation. Sometimes he can't get away....sometimes I can't. We're making more of an effort though. One of the deals we've made in keeping working even though we're financially ready....is that we'd travel more, and so we'll use four of those weeks next year and won't settle for less than three for as long as we work. Travel is going be one of the bigger line item expenses in retirement for us, which is why working up to 5 additional years will help to pad that expense beyond what we've even planned for.

I love that series....it's really enlightening to see what a 500K retirement looks like versus 5 million. 500K was a bit tight and while everyone seemed reasonably happy, in that category I'd say they had a smaller travel footprint for sure, or they needed to be a bit more creative...like volunteer travel...etc. The commenters on the WSJ were quite happy for the million and two million dollar club, but when we got to the 5 million dollar club....some resentments surfaced...lol. One commenter said something like..."but what are the fees and taxes??". But looking at their expenses and burn rate, all were significantly underspending their nest egg. Even this doctor who was spending 100K a year....if he stays on that budget, would leave a nice inheritance.