Financial Planning for Retirement

[rosarugosa]

Last year I started a FIRE folder (I love folders and lists and such!), did some calculations and came up with a target retirement date of 5/1/20 - so close and yet so far! I will be 62 YO, which certainly isn't early by MMM standards, but a little bit early by the standards of many. I am fortunate to work for an employer who offers a defined benefit pension as well as a 401k with a decent company match. DH will be eligible for a couple of modest pensions, has an IRA, and an extremely small 403b with the hospital where he works part-time (also a decent employer match). My company currently offers retiree health insurance, but the cost for that continues to escalate sharply, and might not even be available by the time I retire. So health insurance is the real wild card. I think the biggest challenge will be to cover medical costs from age 62 to age 65 and Medicare eligibility, and DH is two years younger than I am. Employer health insurance costs would go way down once we file for Medicare. I am trying to position us to live on my pension and 4% of 401k/IRA, and part-time employment, and hold off on SS until our full benefit eligibility dates. I think I would be happy to work in a part-time job like DH as long as I don't have to commute in & out of Boston and no @#$% meetings! I've started building a modest CD ladder since we are heavily skewed towards stocks in our retirement accounts. I'm trying to plan out work that needs to be done to the house so we can do these things while I'm still working full time. I would be interested in hearing from others on their thoughts, plans and considerations.

[Lainey]

rosarugosa,
I'm a few years older than you are. I'm turning 62 next year and expect to retire May 2017. But, like you, I have a small defined pension benefit, so that plus SS will be ok for monthly expenses. No spouse, and our retiree medical benefits were stopped several years ago.

I've also done the major maintenance on the house like a new roof 2 years ago so that there won't be any surprises during retirement years.

I agree that the health insurance between 62 and 65 is the wild card. I really wish that this country would gradually lower the age for Medicare from 65 to 64 to 63,etc. until we get a Medicare-for-all universal system. Maybe that's the compromise needed to finally ditch the country's Rube Goldberg health care system.

[iris lilies]

I retired at 60. My desired number was 55, but thats when the stock market was in the tank, and besides, I didnt hate my job until 2011, and then a whole new wave washed in at work and made it interesting for a couple of years. But still I was ready to get out, so I did.

Theoretically, we can pull enough Social Security income and pensions to nearly cover our rather high (by simplicity standards) expenses beginning next year. However, I may not turn on my spigot of Social Security income next year, when I am 62, because I am not sure how that will affect our Obamacare subsidies. We are not now on Obamacare, will do that next fall. It is entirely possible that our expenses will drop 10% getting off COBRA and onto Obamacare.

I want some professional analysis of our income streams that looks at several options before we decide how and when to take SS income.

So, our living expenses are nearly covered with potential income.

And then, we meet the formula of 25 x annual expenses in financial instruments as our stash. From that stash comes large vacations, new automobiles, major house repairs. And while that sonds like a lot of money, and it is, it is also DH's retirement fund.

when I die the large portion of our pension/SS dies with me. He will be left with his modest SS and a lot of stash, some in retirement vehicles, some in financial instruments, some in cash.

[iris lilies]

To add, my philosophies and assumptions are these:

1. I dont mind spending down our stash. Theoretically, I would die broke if possible.

2. We assume DH will live at least a decade longer than me

3. I am prepared for a stint of 5 years in a nursing home for me, self funded, since between my income and our stash, we can swing that. I Have Alzheimer's disease in my family

4. DH will have a SS income of around $20,000. Thats not much, but he can live very simply, thats his natural lifestyle. He will have a fair amount of stash. plus he can do light handyman work into his 70's if he chooses.

5. I am very willing to spend $100,000 on health insurance between ages 63 and 65 (the magical Medicare number) if the ACA goes away.

[herbgeek]

Medical costs are the big what-if in my planning. My husband will be 62 this year, and last time we self insured, his premiums were much larger than mine, just due to age. Hubby is really retired, but hasn't admitted it. He still occasionally interviews for contractor positions in his industry but hasn't worked for about 18 months.

I will have no pension of any sort, just 401K's, IRA's, and taxable investments. No kids to leave an inheritance to, so I don't care if I spend it all, but hubby is super conservative and only wants to live off the interest which is why I'm still working - to increase savings. I may do a part time job- not sure if it would be consulting in my current industry or just some hourly job like working in a greenhouse. I would like to quit full time in 2 years or less, but given such uncertain financial markets, I don't know if that will be possible. I'd really like to quit tomorrow because my boss is a jerk, but I know that is not possible.

We both have longevity on our side. My paternal grandma was 92, my dad is still in relatively good health for being diabetic at 86. My mothers side of the family not as healthy, there is stroke and cancer. My husband's grandpa also made it to early 90s and was in good health until the end. So that is potentially a lot of years to plan for, so I understand my husband's conservatism, even as it aggravates me as /I'm/ the one who is still working.

[Geila]

I'm so glad to see this thread this morning! I might not have time to chat online today but will try to do so tomorrow.

But I saw this and wanted to comment before I forget or lose it among the posts:




when I die the large portion of our pension/SS dies with me. He will be left with his modest SS and a lot of stash, some in retirement vehicles, some in financial instruments, some in cash.

From my limited understanding of SS, I believe wives can choose to collect on their spouse's SS after the death of said spouse, rather than their own, thereby receiving a larger benefit if the spouse's SS benefits are greater than hers. Is this not the case for husband's? It would seem only fair to allow it for both spouses.

In fact, I remember someone telling me that if a woman (I don't know if it extends to a man) is married longer than 8 years I believe, she can choose to petition SS benefits based on the earnings of an ex-husband. Again, provided they were married than 8 years, or whatever the current timeline is. This could have significant impact on divorcees, especially those who were SAHM during their marriage or prime earning years.

[SteveinMN]

Health care is the wild card for us, too. Right now we're covered under DW's plan, which can continue into retirement but may not be the most cost-effective option for us.

DW would like to retire in three years. She would not be averse to getting a "package" to leave early (her boss is a graduate of the Pointy Haired Boss School of Management) but she might choose to work more years in a different capacity or at a different county or the state. Working later would provide continued health coverage and likely include either an additional pension (albeit small) or more time in a defined-contribution plan, so there is that carrot. We're trying to stay flexible through that.

When I left work I was not considered a retiree, so I did not qualify for retiree medical. Which may not be such a big deal, either, as the company has whittled away mightily at that benefit according to the retirees I know. I did qualify for early distribution of my pension there (mentioned about a year ago on this board). It's not much money (because I went for the 401(k) option), but I did vest and that money has been our "capital" fund for major home repairs, car repairs/purchase (if need be), and so on. We still have about the same "war chest" we amassed before I left work, so that is a further emergency fund which probably could carry us for a year if the very very worst happened.

I am cognizant of the desire many here have to not "humblebrag". But if we're going to discuss how this works, I have to be accurate. Keeping in mind that six M&Ms are not the same as one pan of lasagna ;) , between us DW and me have three pensions (two of mine very small because I just vested, one very early in my career), two small Roth IRAs (begun when I left work and receiving $50 a month each), a rollover IRA from my previous employments, and an annuity (two, actually, to diversify) that we got as a hedge against the vagaries of the stock market.

The cost of health care being a wild card, we should have about the same income at 65 as we do now. The challenge will be the road between here and there (57 for me; 55 for DW) and not suffering a major illness or disease. Life in government service and municipal pensions are no sure thing anymore and I think it has yet to be seen how Obamacare (or any other proper health-care program) will work out. We're also looking at some large house expenses this year and next -- new water heater, new furnace, and all the appliances except the dishwasher (already replaced) are at least 10 years old. My car is 13 years old; DW's is 5. Both are in good condition and not driven that much, but we just spent a fair amount last year on mine (new suspension, new exhaust system, new clutch) and we'll be spending money on hers as she surpasses 50,000 miles. We may look at using just one car, but we're not there yet.

We are invested in the majority in the stock market; that's a wild card, too, but -- practically speaking -- there is no avoiding that to some degree. This is money that has to last us 30+ years; look at consumer prices from 1986 and the challenge will be obvious. I'll be looking to transition some of the more stock- and bond-related holdings to other media as we move on, to include more CDs or REITs (or real estate outright), maybe some other kinds of investments.

So we think we're OK. Granted, there are some assumptions there. But you have to make some or you'll never do anything.

Input/comments are welcome.

[iris lilies]

I'm so glad to see this thread this morning! I might not have time to chat online today but will try to do so tomorrow.

But I saw this and wanted to comment before I forget or lose it among the posts:



From my limited understanding of SS, I believe wives can choose to collect on their spouse's SS after the death of said spouse, rather than their own, thereby receiving a larger benefit if the spouse's SS benefits are greater than hers. Is this not the case for husband's? It would seem only fair to allow it for both spouses.

In fact, I remember someone telling me that if a woman (I don't know if it extends to a man) is married longer than 8 years I believe, she can choose to petition SS benefits based on the earnings of an ex-husband. Again, provided they were married than 8 years, or whatever the current timeline is. This could have significant impact on divorcees, especially those who were SAHM during their marriage or prime earning years.
Yes, thats true.

I am playing with approximates here. My own SS income stream is a few thousand dollars higher annually than his is now and will be in the future.

So, after I am dead he will have one income and that income is Social Security. He needs to maximize his SS income.

related topic:

In a previous thread some months ago we hashed over the latest screwover from
Congress that would have allowed DH to file and suspend his SS benefits, starting next October when he turns 62, and then he could have elected to receive his part of my benefits. In real numbers this means (a close approximation) of this scenario:

Next October, DH can draw an easy $10,000 annually because that is 50% of my benefit.

Meanwhile, his own SS benefit grows because he is not drawing it. It goes up about 8% a year. It grows like this:

At age 62 his own benedit is $18,000

At age 63 it s $19,440

At age 64 it is $20,880

At age 65 it is $22, 320

At age 66 it is $23,760

and etc

However, as I said Congress fooked us over by removing this benefit for those born after April 1, 1954. I was born the following month. Yaya, me.

But I spell this out for anyone reading here: this is an option for you if your birthdate / spouses date is prior to April 1 1954. I dont know the deadlines, but I imagine that those loops are closing soon. Its a hell of a great benefit that few used.

edited to fix math

[iris lilies]

Medical costs are the big what-if in my planning. My husband will be 62 this year, and last time we self insured, his premiums were much larger than mine, just due to age....

For clarity purposes, I think you mean ( but tell me if you do not mean this) that you had private health insurance, not somethng through work.

I say this because truly being "self insured" means that you dont have premiums, you are not paying an insurance company, you are accepting the risk and will pay for treatment out of your pocket.

I am bringing this up because its close to home. in December we were talking to a friend who said she is "self insured." Since I know her financial background, her political views, and her health history, that seems bold but reasonable for her.

Three weeks later she was hit by a car while walking, and now is still in the hospital with many broken bones but her head and internal organs are ok. It will be interesting to see how that all shakes out.

[herbgeek]

Yes I didn't mean what I said. I meant there was a point where I was unemployed and I was paying the entire insurance premium on my own, unsubsidized by an employer. And that the cost of those premiums are a big unknown over the next few years, if I had to pay them on my own.

[pinkytoe]

I just turned 61 and am retiring in one week. About three years ago, I finally saw the light of retirement possibilities and began saving like crazy. We have been living off of DH's income during that time and saving all of mine. We decided not to do any house upgrades or new furniture etc during that time. Just maintenance. We plan on moving in 2016 and paying cash for housing in a lower priced market. I knew we would need a car so I started saving for it a year prior and then paid cash for a three yr old car with very low mileage. DH plans to work a little longer; he has health insurance through his company but I can add him to mine for $240 a month if he quits before 65. My pension is just under 2/3 of my salary so along with SS and various savings pots we should be OK. I will continue to have health insurance provided by my employer until Medicare kicks in and then it will be secondary. I was looking forward to a few months off to enjoy retirement but have been offered a fun part-time position so back I go. I feel like we are very fortunate given that neither one of us ever made more than a middle income salary. For us, living simply has been crucial to this outcome. Of course, fate may throw us a monkey wrench as there are no guarantees.

[rosarugosa]

A quick note about the whole "Humblebrag" thing: We are naturally going to have a variety of means here, and that's going to come out to some degree if we're going to have a meaningful discussion. I'm certainly not offended if it becomes clear in discussion that someone has more than me, hell those are the people that are the most likely to teach me something useful. I think as long as it's discussed in a straightforward manner and not in a bragging way, and people are considerate of the fact that others may not have the same means (e.g. don't assume everyone is rich and able to use tools/strategies that are only available to the wealthy), then I don't see any problem with talking about this stuff.

[Teacher Terry]

4 years ago my hubby & I retired each with a pension of $20,000 but health insurance took $10,000/year. That first year we did not want to touch our other $ so lived very frugally. The last 3 years we have done a combination of consulting, teaching uni class, etc to increase our income another 40-60K/year. This year we decided to slow down on some of the work and figure we can live comfortably on about $65K/year. I will be 62 this summer and he will be 58 so the last few years we have concentrated heavily on traveling. WE have spent 15K each year on travel because we have seen too many people put it off and never get to do it. My hubby had prostrate cancer at 49 so you just never know. WE did everything possible to our house a few years ago and bought 2 used fairly new cars 2 years ago. By the time they die we figure in our 70's we will only need 1. Some days neither car leaves the driveway. Unfortunately I will be 65 five years before him and we may have to look to the ACA to cover him. My health insurance would still make him pay 2/3 of what we pay together to stay on it so probably not worth it. I don't think the ACA will go away unless single payer happens which I think will be unlikely. I also read that many people don't want to travel by their 70's very much so this is our decade to have no regrets. WE intend to keep up the consulting until I am 70 and then I will take my SS. He is uncertain when he will take his. If we are not working at all then he may take it earlier then 70. Retiring is complicated.

[rodeosweetheart]

Neither of us has a pension and I find myself feeling very nervous about retirement.
I gave up my full time job a few weeks ago for health reasons and work part-time and am currently planning to gross 24k this year working part-time, so with husband we will gross something like 65k. I'll be 60 in a couple of months and am concerned about money.

I wish we had pensions; we have 401k/IRA but not enough to maintain a comfortable retirement.

[Teacher Terry]

RS: I am really grateful for our pensions because with a combined $40,000 coming in we could live on that if we wanted to. We each took a reduction for the survivor benefits for each other. Although, our SS gets cut by 2/3 because we worked for a government that did not pay into SS. They don't care if you worked for other places where you paid in. It is a weird law. However, you and your hubby's combined SS may be the same as many people's pensions so have you factored that into your planning?

[rodeosweetheart]

Teacher Terry, our combined ss is pretty low, not anything like other people's pensions from what I see here.
My plan is to get our scale of living down now to the level at which we would be living in retirement, to be able to live on less than 24k a year.

And I am finding this really difficult.
Basically, I am trying to reach decisions now that allow for sustainable living, housing decisions, etc. so that when we do retire it will not be so much of a scaling back. So trying to learn to scale back now.

But I am getting discouraged, especially when I consider that we will not have the pensions that others are referencing here.

I know what you mean about ss--if I were to take a teaching job in Maine, for instance, K-12, it would affect my ss, even though I have paid in for years in other states.

[Teacher Terry]

RS: I am sorry to hear that. Is your house paid for? Could you downsize into a condo etc? Maybe go down to 1 car? You have probably thought of those things. I can see why you are worried.

[herbgeek]

so that when we do retire it will not be so much of a scaling back. So trying to learn to scale back now.

Me too. I've been looking at various ways to reduce food expenses, such as more vegetarian, particularly ethnic, meals. That's the discretionary expense that I think has the most wiggle room for me. I don't really do a lot of clothes shopping these days, I already have a good wardrobe so its maybe a handful of new (aka consignment shop) items a year. I need to make room in my budget for hobbies and classes, as that is something I really enjoy and hope to do more of in retirement. I will live in a smaller house in retirement so less upkeep, taxes, heating etc.

One big expense I expect in retirement is to buy a smallish RV (bigger than a teardrop, but not a full size RV) but that would enable me to travel cheaper and stay places longer than I would if I was in a hotel.

[rodeosweetheart]

I like the rv idea, too, to make it possible to visit family in other states with the dogs in tow. And I am also going after that food category with a vengeance.

Teacher terry, we paid cash for a foreclosure house, but we are discussing moving closer to one set of kids. This current house will require some expensive maintenance like a new roof, and I'd prefer to be doing the work on something I thought we would be growing older in place in, if that makes sense.

[Geila]

Yes, thats true.

I am playing with approximates here. My own SS income stream is a few thousand dollars higher annually than his is now and will be in the future.

So, after I am dead he will have one income and that income is Social Security. He needs to maximize his SS income.

related topic:

In a previous thread some months ago we hashed over the latest screwover from
Congress that would have allowed DH to file and suspend his SS benefits, starting next October when he turns 62, and then he could have elected to receive his part of my benefits. In real numbers this means (a close approximation) of this scenario:

Next October, DH can draw an easy $10,000 annually because that is 50% of my benefit.

Meanwhile, his own SS benefit grows because he is not drawing it. It goes up about 8% a year. It grows like this:

At age 62 his own benedit is $18,000

At age 63 it s $19,440

At age 64 it is $20,880

At age 65 it is $22, 320

At age 66 it is $23,760

and etc

However, as I said Congress fooked us over by removing this benefit for those born after April 1, 1954. I was born the following month. Yaya, me.

But I spell this out for anyone reading here: this is an option for you if your birthdate / spouses date is prior to April 1 1954. I dont know the deadlines, but I imagine that those loops are closing soon. Its a hell of a great benefit that few used.

edited to fix math

That is a shame about the SS benefit change.

Now, wouldn't your spouse continue to receive your pension in the event of your death? I have been assuming that spouses get survivor benefits (dh has a modest pension, I have none; well, I have a modest IRA from a small mandatory pension payout when I left an employer) but maybe that varies by employer?

[Teacher Terry]

Well if you are moving to a lcol that would be helpful for you guys. Also maybe compare renting versus owning at your new location or condo versus house, etc. Although, I know with dogs depending on size and how many it makes things more complicated. I should know since I have 4.

[Teacher Terry]

For pensions to go to a survivor you usually have to take a reduced pension in exchange for the spouse getting some of it when the other person dies.

[rodeosweetheart]

Yeah, I would not do condo with the dogs, that's for sure. If I were alone, I would consider a condo, but not with my husband, and I don't want to rent if I can help it.
One problem is kids live in a higher col area, which is a bummer and annoying. I would not have picked where they moved, but have other family there, so it makes sense, but I'm not very happy about it in the abstract.
Moving is expensive, too.

[Geila]

Teacher Terry, our combined ss is pretty low, not anything like other people's pensions from what I see here.
My plan is to get our scale of living down now to the level at which we would be living in retirement, to be able to live on less than 24k a year.

And I am finding this really difficult.
Basically, I am trying to reach decisions now that allow for sustainable living, housing decisions, etc. so that when we do retire it will not be so much of a scaling back. So trying to learn to scale back now.

But I am getting discouraged, especially when I consider that we will not have the pensions that others are referencing here.



I'm sorry to hear you're feeling discouraged. This year I my goal is for us to live on appx $28k a year, not including the premiums for our health insurance, just the basic living expenses. I might even try to go down to $25k, but with 4 pets it will be hard to control in case of illness. We also have most of our appliances reaching the age where they will likely start to break down, hence the extra cushion. But I will say that this amount does not feel like it will be too difficult - I'm kind of excited about it, the way I was when I first read YMOYL. But notice that I haven't tried it yet, I've been thinking about it only! Theory is one thing, practice another!

However, we do not have kids and I think that's a huge difference.

It might be fun to do a thread about under $30k per year living... a place to vent frustrations and celebrate successes, share tips, receive encouragement...

[Teacher Terry]

The year we lived on 30K with a paid off house after I paid health insurance was a lean year. WE rarely ate out or went to events that cost $. Every single expense was analyzed to see if we needed it. WE ended up dropping the insurance on the motor home and taking off the tags etc to save $. Gas was too expensive at the time to use it anyways. Maybe the in-between option is to continue to work p.t. for as long as possible to help either increase savings or the $ you have to spend. WE lived in a 1100 sq ft condo with 3 very small dogs at one point and that was fine. I also like to own because I like to decorate, paint, etc and have things the way I want. Now we also have my son's big dog. WE are planning on never having more then 1-2 dogs again for a number of reasons. First is the expense, vet bills are high here and then if we die one of my son's would probably take one but not 4. All of ours are between 11-18. Also 3 of them are on medication because they are old and that is not cheap.

[Geila]

Dh and I would probably like work part time till 62/65... I've always thought working at ACE Hardware would be fun - it's a mile from my house, has so many things to learn about, and they have such a nice relaxed vibe. However, there always seem to be more employees than customers in there, most employees are "mature" and not likely to job-hop that often; thus the job openings are probably rare. But I'm going to keep my eye out... :)

[Geila]

The year we lived on 30K with a paid off house after I paid health insurance was a lean year. WE rarely ate out or went to events that cost $. Every single expense was analyzed to see if we needed it. WE ended up dropping the insurance on the motor home and taking off the tags etc to save $. Gas was too expensive at the time to use it anyways. Maybe the in-between option is to continue to work p.t. for as long as possible to help either increase savings or the $ you have to spend. WE lived in a 1100 sq ft condo with 3 very small dogs at one point and that was fine. I also like to own because I like to decorate, paint, etc and have things the way I want. Now we also have my son's big dog. WE are planning on never having more then 1-2 dogs again for a number of reasons. First is the expense, vet bills are high here and then if we die one of my son's would probably take one but not 4. All of ours are between 11-18. Also 3 of them are on medication because they are old and that is not cheap.

One of the benefits of living in a mild climate is the huge savings in utilities. When we looked at buying a house in NJ some years back we were shocked to hear the owner talk about his utility costs, year round. That would have definitely been a major impact on annual living expenses. Of course, we live in a large city and have the offsetting issues that go with that too. Certainly everything comes with a trade-off.

[freshstart]

In fact, I remember someone telling me that if a woman (I don't know if it extends to a man) is married longer than 8 years I believe, she can choose to petition SS benefits based on the earnings of an ex-husband. Again, provided they were married than 8 years, or whatever the current timeline is. This could have significant impact on divorcees, especially those who were SAHM during their marriage or prime earning years.

Just for the record, I believe you had to have been married 10 yrs in a situation of divorce. My ex tried to make the judge sign the papers 4 days short of 10 yrs. Which was just petty and mean because the person is not affected at all by former spouses choosing to collect. The judge said, "well, aren't you a special kind of mean, sir, I will sign this in 10 days just to be safe." Hopefully, I'll never need a stinking penny from his SS, but if I do benefit from it, I will use it.

[frugal-one]

Why not take SS at 62 since the break even point is around age 80? You are able to invest 3-4 years of ss checks. Unless, your family is long lived I guess I don't see the draw to wait???

[Teacher Terry]

Well at age 62 if you are still working p.t. I think they take a dollar in reduction of benefits for every 2 you make. This occurs until you are at your full retirement age. Also SS increases every year by 8% between your full retirement age and age 70. So each year you wait you get more $ permanently. There are many factors to consider.

[rosarugosa]

TT: You can earn a certain amount before reduction in benefits kicks in:
Help TopicsRetirement
What happens if I work and get Social Security retirement benefits?
You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefit. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.

We use the following earnings limits to reduce your benefits: If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.
For 2016 that limit is $15,720.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit, but we only count earnings before the month you reach your full retirement age.
If you will reach full retirement age in 2016, the limit on your earnings for the months before full retirement age is $41,880.

Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.

[freshstart]

I was told 2 yrs ago by work's financial planner and one from Vanguard that I was totally able to retire easily at 55. My goal had been 62. I was so shocked but didn't really think about it and just kept funding my 403B. Then, as you've heard ad infinitum, I got sick at 45 and am hoping to receive SSDI (I have a lawyer with a good record and a team of docs who insist I will never work again). I see a judge next Dec and get an answer in 2/17. I'm willing to talk dollars because I learn from others or maybe someone has advice for me. I have decided to call this early retirement because I cannot deal with the fact I am not working because of being disabled. I refused my doc's advice to apply for SSDI for 9 mos, believing "I will be fine in a month," thus pigheadedly setting myself 9 mos back in the 2 yr SSDI process.

I receive a shaky longterm disability payment of $2900 before tax a month. But when I get the back pay settlement from SSDI, I have to give back LTD $1900 for every month I had it, basically they take my settlement. So I actually only get to keep free and clear $1100 a month. If that doesn't make sense, basically, they are loaning me the $1900 a month to make it until I get SSDI. This policy is supposed to continue til 65, supplementing my SSDI with $1100 a month so I make the same $2900 a month I make now. My lawyer said this policy is crap and she is shocked they haven't dropped me yet. So I am squirreling away money hand over fist in fear this will end and I will have no income until SSDI. I have saved $20k of it so far.

When I became disabled, I immediately called my 403B planner and Vanguard. I have 42k in a defined benefit pension. And have now moved everything over to Vanguard except the pension and have about $550,000. They assured me if I live frugally, I can take a small amt starting now if I need to and never touch the principle. No penalties because I am on disability. Well, I had planned for 10 more yrs of contributions before considering their retire at 55 proposal. So since I cannot contribute and I am 45, this money has to work harder and last me 40 yrs instead of 30. So my goal is to live so frugally I don't touch this money for a very long time. It is aggressively invested in Index Funds, pretty much the same for 2 decades. Once I lose LTD or get SSDI, I will have another session with a Vanguard CFP for guidance.

as for insurance, COBRA was way, way cheaper than the NYS Marketplace plans. I have that for this calendar yr, then I have to switch to a Marketplace plan. I am trying not to worry about how expensive and bad these plans are right now but am scared because even with decent COBRA coverage, my medical expenses were almost 8k this year. After two years on SSDI, I can buy into Medicare and will need a secondary insurance, unless I do a MCR Advantage plan. My job was supposed to offer insurance at a group, reasonable rate if you worked there 20 yrs. They stopped this plan after I had been there 21 yrs.

I'm also blessed with a not so nice ex-husband, who loves to go to court, we've had the same judge for 14 yrs, she's got his number but some things are just the law and she can't help me. In March, DD 16 was having a very hard time handling my mother's terminal illness and how sick I was (I was way worse than now and really could not take care of her to the standard I have set as a parent), she was stressed and scared and trying so hard to handle a difficult Junior yr. She wanted to live primarily at the ex's, I told her that was understandable and fine, I told him have his lawyer call mine, I will not contest as long as I have fair visitation. Instead, he sued me for custody, dragged it out for 10 mos when I contested nothing, and it cost 7k. Now he is suing for child support. he will get $450 a month from SS retractive to the date I applied. So he will be getting $450 x24 in a settlement. But he wants to double dip and get that plus $450 a month now. Which no judge would enforce. So we offered $150 because my earnings of $1100 a month put me near the poverty level and he should only get $25-50 a month, the caveat being he has to pay me back the $150 a month when he gets the settlement. He is unlikely to accept this, we will end up in court and there goes another 7k. College is looming and I cannot afford to pay half of a State school tuition as agreed to in my divorce. So my finances now and in the future are not at all on steady ground.

Lastly, my parents and I sold our houses to get this handicapped accessible home with the plan of saving money by joining forces and I would be my mom's hospice nurse. This turned out to be divine intervention because once I got so sick, I needed help several times a day from an adult. I could never have lived alone in a 3 story townhouse. I've posted how this has affected the house finances and we are meeting at the end of the month to discuss this.

if anyone has any advice or can point out where I am going down the wrong path, I am very open to help. In my heart of hearts, I am having a very hard time believing my retirement accts can really be used to help me in any meaningful way and not ever touch the principle.

[Teacher Terry]

FS: your ex is a terrible person. I guess you need to know how much $ your stash generates without taking any of the principle to see how much it helps you. I have much experience with SS and usually by the time you get to see a judge I usually saw that the clients won. At one point so many people went on SSDI that they made it too hard to get on. It went from one extreme to the next. I have seen a lot of good people severely disabled that it took them 2 years to get it. Hugs:))

[iris lilies]

That is a shame about the SS benefit change.

Now, wouldn't your spouse continue to receive your pension in the event of your death? I have been assuming that spouses get survivor benefits (dh has a modest pension, I have none; well, I have a modest IRA from a small mandatory pension payout when I left an employer) but maybe that varies by employer?

No, my spouse does not get my pension beyond the year 2025 if I die. He would get it, if I die tomorrow, up until the year 2025.

This is a choice we made at time of taking the pension. For him to receive it for his lifetime, the annual amount I received while alive would have been reduced by more than I wanted to agree to.

edited to make better sense

[iris lilies]

Neither of us has a pension and I find myself feeling very nervous about retirement.
I gave up my full time job a few weeks ago for health reasons and work part-time and am currently planning to gross 24k this year working part-time, so with husband we will gross something like 65k. I'll be 60 in a couple of months and am concerned about money.

I wish we had pensions; we have 401k/IRA but not enough to maintain a comfortable retirement.

Next year after turning 62 years old we could gross a similar amount in pension and social security incme, $ 67,000. It depends when we turn it all on.

we seem to spend $65,000 - $70,000 annually, this number based on the lasr 9 months.

We do have savings that will generate income and from which we can draw, so that is a backup plan. Which, granted, relieves most stress.

[Gardenarian]

I need to preface this by saying I'm not a financial person - every year I throw all my papers in a box and give them to our trusty tax guy to work out. My idea of budgeting is shopping at Goodwill and turning the heat down.

Downsizing played a big part in our (semi) retirement; moving from a larger 3 story house in San Francisco to a small ranch house in a walkable town in Oregon gave a big boost to our savings and will continue to save us money over time.

Like many others, I'm reluctant to spend my capital, so I am working part-time. (I'm also having a hard time letting go of the sense of belonging that a job provides.)

For background, I'm 57, but fully vested in several pension plans (through the state of California) and currently collecting pension as well as salary. We pay for our own insurance, roughly 10k per year for three. Huge deductible, but we're covered if something really bad comes up. Our total expenses have run about $50-60k per year but I'm seeing those decrease monthly.

I'm more than a little concerned to see how our taxes come out this year; we sold a second home as well as our primary residence.

Fresh start, I'm dismayed to hear about your troubles. My dd is also 16 and, though she doesn't say so, I know my health problems weigh her down. I wish I had the financial advice you need; I can easily picture myself in your situation. At least your housing sounds like a plus. Your ex sounds unsympathetic, to say the least. I'm so sorry.

[freshstart]

FS: your ex is a terrible person. I guess you need to know how much $ your stash generates without taking any of the principle to see how much it helps you. I have much experience with SS and usually by the time you get to see a judge I usually saw that the clients won. At one point so many people went on SSDI that they made it too hard to get on. It went from one extreme to the next. I have seen a lot of good people severely disabled that it took them 2 years to get it. Hugs:))

He is a jackass. I used to think he was a good, hands on dad and he is very involved in the kids' lives. But he has tried so hard to drive a wedge between the kids and me. For instance, when he would not settle the custody battle for 10 mos, he told DD it was because I was fighting to make her come home. Even though her court appointed lawyer diplomatically told her this was completely untrue. She bought it hook, line and sinker and our relationship, once very strong, is now strained to say the least. The things he has said to them about me are horrible and didn't cease even with lawyer intervention. Alienation of affection cases are very hard to prove and win, they drag the kids through a dramatic court experience, as well as very expensive. My lawyer said not worth it, the damage had already been done over the years. So he's not a "good" dad, because a good divorced dad wants his kids to have a healthy relationship with their mother. In 14 yrs, I can count on one hand the number of times I've said a bad word about him, I want my kids to have a great relationship with their dad. But as my grandmother always said, "Evil will out someday." They are at the ages where if they want to know what really happened I would tell. If they don't ask, I won't tell.

Yeah, I have a whole 2 yrs planned from start to finish. My lawyer has never lost a case in over 25 yrs with my doctor because she is the rare doc willing to really take the time to document thoroughly. And the other 3 have been contributing well. I had patients on hospice who lost their first attempt, and died before ever seeing a judge. the family got the money retroactively but what a horrible stressor for them not to get it on the first try, even when they told the examining doc they were on hospice. the only patient I ever had get it on the first try had advanced ALS. It's absurd.

[freshstart]

Fresh start, I'm dismayed to hear about your troubles. My dd is also 16 and, though she doesn't say so, I know my health problems weigh her down. I wish I had the financial advice you need; I can easily picture myself in your situation. At least your housing sounds like a plus. Your ex sounds unsympathetic, to say the least. I'm so sorry.

I'm sorry your DD is struggling, too. I may call Vanguard again and ask them to run the numbers, head in the sand is not very good. I don't want to waste my free CFP session until I get SSDI, know about child support, have an idea if LTD will continue, etc because each of those make the scenario potentially turn out different.

[rodeosweetheart]

I'm sorry your DD is struggling, too. I may call Vanguard again and ask them to run the numbers, head in the sand is not very good. I don't want to waste my free CFP session until I get SSDI, know about child support, have an idea if LTD will continue, etc because each of those make the scenario potentially turn out different.
I would call a fee based planner if I were you, with your unique situation.
I think they might be able to give you advice about health costs, disability, and long-term management of the money you do have, which is considerable. I think it might be a good idea to talk to someone who was not Vanguard, too.
Do you have a mortgage, or is your house paid for? As you say, that turned out to be a wonderful move you made with respect to housing and family needs.

As to the kids, if the youngest is 16, the good news is that child support won't last forever. I felt a tremendous sense of relief when mine turned 18. I don't think that the amount you contribute to college can be the same that you envisioned when you were able bodied and in the workplace. I know that my son started at a SUNY school his first year and got Pell grants, as he was living with me and I had virtually no income at that time and was coming out of my own disability situation.

I guess if I were you, I would be thinking about what I could do in my situation, vs. what I could not do, and try to keep a positive mind set. You have much to work with in the situation you have described, as well as time on your side with growing your assets. I think talking to a fee based planner or someone with some expertise in money planning with a disability situation would be invaluable.

And call Vanguard, too--they should talk to you for free, too, with so much assets in your account.

It is tough, when your health and situation change so drastically. A positive attitude helps enormously, and you have much to work with here!

[ApatheticNoMore]

Teacher Terry, our combined ss is pretty low, not anything like other people's pensions from what I see here.

i hear you on this. People actually get all that stuff from their employer like pensions, including being able to be covered on their employers healthcare after they leave? What kind of business would want you on their healthcare after your not even working for them? See I'm gen X. So you aren't' alone, maybe among boomers but trust me most of my entire generation and the Millennials is in your position. I may have some time on my side but I distrust heavy stock investment (you don't take the money you need to live on to the casino in my view and it's not likely to change). But 2% a year doesn't get you much of anywhere. I am glad someone mentioned annuities, they will give me a safe 2% :). Haha, I mean they allow tax deferred growth like a 401k but aren't so awful like the investment choices in the 401k (I mean the 401k choices have high fees and poor performance in my experience - that may very well just be the options in MY employer provided 401k, but it's a problem I have to deal with - I don't think I'm even getting 2% and it is partly in stocks). Also annuities aren't easily maxed out like a Roth.

[pinkytoe]

For pensions to go to a survivor you usually have to take a reduced pension in exchange for the spouse getting some of it when the other person dies
I was given six payout options including lump sum but we decided to go with 1/2 of my pension amount going to DH for his lifetime should I die first. It reduced my monthly amount by $125 but since he only has SS it seemed the best thing to do. Once we get to a cheaper locale, we too plan to live on about $35K a year as we don't have the bazillions saved that are recommended by financial planners. There was an interesting thread on the Citydata retirement forum about living on $25K a year. I did not work for several years so my SS payment will be just under $1000.

[iris lilies]

I was given six payout options including lump sum but we decided to go with 1/2 of my pension amount going to DH for his lifetime should I die first. It reduced my monthly amount by $125 but since he only has SS it seemed the best thing to do. Once we get to a cheaper locale, we too plan to live on about $35K a year as we don't have the bazillions saved that are recommended by financial planners. There was an interesting thread on the Citydata retirement forum about living on $25K a year. I did not work for several years so my SS payment will be just under $1000.
Are you drawing SS on your non UT job(s)? I Ask because I thought you said some time ago that you dont get SS.

your pension is healthy if it is 2/3 of your salary. Mine is less than 1/3 f my end salary.

[Gardenarian]

I took a $100 dollar per month reduction in my pension so that my DD will get $500 per month, for life, after my death.

[iris lilies]

I took a $100 dollar per month reduction in my pension so that my DD will get $500 per month, for life, after my death.
That is a fabulous benefit. thats gotta be a private annuity type thing. i think you talked about this.

[iris lilies]

Freshstart, you mention buying into Medicare. What is that, how does that work? I assume it is a program for those on SSDI.

[SteveinMN]

People actually get all that stuff from their employer like pensions, including being able to be covered on their employers healthcare after they leave? What kind of business would want you on their healthcare after your not even working for them?
The place from which I'm collecting my pension early stopped the pension plan for new employers in 1992. No one new after that got the choice of receiving a pension; existing employees got the choice to stay with it or stop it and get a sweetened contribution to our 401(k)s. At that time of multi-billion-dollar mergers (when it seemed pretty much any company could be bought (and its pension plan messed with) and given that I had another 25+ years to go for a full pension there, I chose to go with the 401(k).

But I still just met the five-year requirement for vesting. The company opted to buy us out with an(other) annuity equal in value to the current value of our pension. Their rules: no COLA, no increase in benefit if we waited, no survivor's benefit option, and no guarantee they would offer it again (so far they have not). Again, not to humblebrag, but this pension was unexpected -- a lagniappe, if you will -- and it's money we could use now to keep from drawing on other sources (like SS) until later. My other pension will pay about $300 a month once I start it. By then that amount should be enough to take the Mrs. and me to Caribou once a month for a fancy coffee and a treat. :~)

The bit about continuing medical coverage after retirement was a carrot dangled in front of employees to keep them at the company in lieu of higher salaries, better medical plans, and faster career advancement they'd find at other companies. Every organization has its selling points to employees; at this place "steady" ruled the day. It is a big company and it didn't move all that fast by design. Given that it's been around more than 100 years and enjoys a generally-good reputation to this day, apparently it was the right choice for them.

Unfortunately the cost of health care escalated so quickly that the company announced an end to the benefit for retirees after <date>. Then they announced that retirees after <next date> would get a different plan than employees. Then they told those retirees that they would be getting the dollar equivalent of the cost of that plan and they were on their own to get coverage. Almost needless to say, the first cutoff incited lots of retirement-eligible employees to leave. Maybe that was a side-benefit for the company; I dunno. It's not the same company at all anymore and I fear what made them special is almost completely gone.

[pinkytoe]

I have been a state employee who has been paying into SS all along so will receive benefits. I believe that public school teachers here do not receive SS though. I fell under the old rule of 80 - age plus years of service - to qualify. It is now rule of 90 so one would have to work here basically their whole life starting from a young age to receive a pension.

[Geila]

A quick note about the whole "Humblebrag" thing: We are naturally going to have a variety of means here, and that's going to come out to some degree if we're going to have a meaningful discussion. I'm certainly not offended if it becomes clear in discussion that someone has more than me, hell those are the people that are the most likely to teach me something useful. I think as long as it's discussed in a straightforward manner and not in a bragging way, and people are considerate of the fact that others may not have the same means (e.g. don't assume everyone is rich and able to use tools/strategies that are only available to the wealthy), then I don't see any problem with talking about this stuff.

+1! :+1:

I think this is the basis for mentorships. We can receive the benefit of learning from those who have come before us.

[Geila]

freshstart - I'm sorry you were married to such an ass. But kudos to you for getting out. Big kudos. I don't have any financial advise but I would like to reassure you that your daughter will be fine if you can't help her pay for state tuition. That's what financial aid is there for. This is exactly the type of situation that merits financial aid, and as a tax payer, I'm happy to support that. I'm amazed at your fortitude and determination to do the right thing and to be a strong, proactive woman. Your daughter is lucky to have you as a role model. And I think in time she will see that.

[Geila]

Just for the record, I believe you had to have been married 10 yrs in a situation of divorce. My ex tried to make the judge sign the papers 4 days short of 10 yrs. Which was just petty and mean because the person is not affected at all by former spouses choosing to collect. The judge said, "well, aren't you a special kind of mean, sir, I will sign this in 10 days just to be safe." Hopefully, I'll never need a stinking penny from his SS, but if I do benefit from it, I will use it.

Thanks for the correction. And you're right, the distribution does not affect the earner at all, so there is no reason for the animosity - other than being an ass and a jerk. Sorry you have to deal with this guy on a regular basis. >:(

[Rachel]

Iris,

How does "file and suspend" work? I've heard this phrase and I've tried to read the soc. sec. website. I was born in 1953, so it sounds like I could qualify but I have no idea how to do this or what the benefit is. Can you explain or point me to a resource that explains it?

Many many thanks, I really appreciate it.

[jp1]

Iris,

How does "file and suspend" work? I've heard this phrase and I've tried to read the soc. sec. website. I was born in 1953, so it sounds like I could qualify but I have no idea how to do this or what the benefit is. Can you explain or point me to a resource that explains it?

Many many thanks, I really appreciate it.

File and suspend is going away fairly soon: http://www.investopedia.com/articles/financial-advisors/111015/social-security-file-and-suspend-claiming-strategy-ending-now-what.asp

Essentially the way it works(ed) is that a person reaches full retirement age and "files" for social security but immediately "suspends" collection. Their spouse can then collect spousal benefits. The person that filed and suspended then waits to start collecting and eventually (as late as age 70) starts collecting and gets the higher rate that comes from filing at an older age. But in the meantime the couple has been collecting the spousal benefit already for several years. And once the spouse, who has been collecting spousal benefits, reaches an older age they can file and start collecting their own benefit (assuming that it is larger than the spousal benefit they'd been collecting.)

[Tradd]

I just turned 47. I won't be able to get full SS until I'm 68 (I think, or is it 69?). I have an IRA that was a rollover 401K from a previous job. It just sits there. I've done nothing with it. It's in a Vanguard Target fund, 2035, I think. I have a 401K at work I'm throwing $200 a paycheck (so $400/month) at it. I think that's about 8%. I will have my credit card paid off this fall, then I tackle my car. I should be totally debt free by the end of 2017. Then I start saving like crazy for both retirement and a 6 month emergency fund. I'm single, so I've got to take care of myself. I'll keep working as long as I can. I suspect I would get bored at home.

[ApatheticNoMore]

Oh there is no way I will work till 67 or 68 even if that's full retirement. 65 if there's no other way to pay for healthcare? I don't know, could be. I suspect the employment world will discard me as a useless older person long before then anyway though, so I tend to think of years till 62 mostly and whether I can last that long before being discarded (doubt it) and then it's just whatever I have and accept it, even if it's poverty, oh well, I tried to do what I could.

How horrendously boring work is I'm not sure anything in the universe is more boring, certainly not sitting at home, not staring at the wall doing nothing, not death itself :). The Shawshank redemption is the great symbolic story about work, years and years in prison, just scrape, scrape, scrape - one day escape. Even Morgan Freeman gets out eventually, went in a young man, came out an old man, but that's work , uh I mean prison. Oh really, why bother pretending they are all that much different. Although they do give us a few parole hours with work. Another miserable work day, another day wondering why life is so much pain. Because it is.

But the 401k is at 10%, I try to put some (or full) into a Roth, I have an emergency fund for a period of fairly long term unemployment since I consider it entirely possible.

[jp1]

I've seen too many professional acquaintances/coworkers sent into retirement before they were planning on it so I'm aiming for 60, which is 11 1/2 years from now. If I can end up working a year or two longer that would be fine, but hopefully not necessary. I'm putting the max into my 401k ($18,000 per year with an employer matching contribution of roughly $7,000, and will up my contribution to include an extra $5,000 next year once I'm old enough to be able to do the "catch up" contributions) plus I'm maxing out my Roth IRA every year and putting roughly another $5,000/year in non-retirement savings. My savings level is not varsity MMM level, but I've also not ever had a goal of "retire as early as absolutely possible". I don't want to do it forever, and yes, it's still a job, but I actually kind of enjoy it.

[iris lilies]

Iris,

How does "file and suspend" work? I've heard this phrase and I've tried to read the soc. sec. website. I was born in 1953, so it sounds like I could qualify but I have no idea how to do this or what the benefit is. Can you explain or point me to a resource that explains it?

Many many thanks, I really appreciate it.

i thought it worked a little differently than how jp1 describes, that for instance :



I start drawing Soc,Sec

DH files and suspends, and then takes a spousal benefit whch is approx half of my SS

Years later, after his own benefit has increased (because the longer he waits, the more it builds up) and switches over to his own benefit.


Thats my understanding of how it works.

After reading the web links provided by jp1, and if it still loks attractive, contact your local SS office. Deadlines are coming up, but
I dont understand them. i just know that due to my birthdate, I am shut out of this benefit.

[rosarugosa]

JP1: Kudos to you for your disciplined savings habits!

[Teacher Terry]

The studies show that most people end up retired before they planned either by being laid-off or by health issues. Also many want to work p.t. but I think the stats were really low like 20% actually are able to find p.t. work.

[jp1]

JP1: Kudos to you for your disciplined savings habits!

My current pay structure makes it painless. I have 7% put into my 401k all year so that I get the maximum employee match and every March I get a bonus that is roughly 25% of my total compensation. For that one check I ramp up the 401k contribution to 40-45% and use the remainder to fund the Roth and other investments.

[iris lilies]

Iris,

How does "file and suspend" work? I've heard this phrase and I've tried to read the soc. sec. website. I was born in 1953, so it sounds like I could qualify but I have no idea how to do this or what the benefit is. Can you explain or point me to a resource that explains it?

Many many thanks, I really appreciate it.

To be clear, the advantage is that your own SS benefits build up, all the while you take yue apousal benefit. This seems like free money to me.