56 and hopefully out in 2 - - - but with health insurance issues!

[Spokane2303]

I just turned 56 this week and have started my 24 month + countdown.

Just found and joined this group.

Here are our stats:

We own our home (value $400K), have $0 debt, $830K in 401K, IRA's, Savings. 75% mutual funds (87% stock/13% bonds) - 25% CD's & checking

I have a fixed pension of $7000/yr. that I can draw at 65. This is 100% inheritable by my spouse.

SS estimate for self is : $19,000/yr @ 62 and for spouse (who is 50 currently): $9500 @ 62. Spouse is disabled and can't work but doesn't qualify for SS disability as her career was raising our children and being my best friend. So she'll draw based upon my earnings.

Our two kids are over educated (both through college and grad school without debt.), employed and out of the home! While we'd love to leave them an inheritance; however, their debt. free degrees were our gift to their financial security. We've always planned on $0 inheritance from our parents and have conditioned our children to expect the same.

I plan on working for 2 more years. Will contribute $40K to 401K and Roth IRA's per year. This includes $4k of employer match to 401K.

Our main concern is HEALTH INSURANCE due to wife's disability. I'm fortunate and have good health up to this point and do everything I can to maintain it.

We live in Washington State by choice, selected this state because of its guaranteed right to convert from a group health insurance policy into a private policy at group rates without having to answer medical questionaire. However, all private group policies limit pharmacy coverage to approx. $2,400/yr., this would leave us out-of-pocket a min. of $6,000/yr. for balance of spouse's meds. Add this to the cost of a private group policy and we're looking at: $18 - $22,000/year for medical.

Obamacare will resolve our health insurance problem if it survives the Supreme Court challenge. Its 2014 timing is perfect for our 2014 plan.

Otherwise, health care crushes all of our early retirement calculations.

We're willing to consider relocation to North Eastern US (where we've lived 2X before), to one of the states with guaranteed access to health insurance group policy if it becomes our only option after the Supreme Court rules this July.

Looking for opinions on individual state insurance options (Mass. is interesting), current costs and retirement portfolio investment advice.

Really counting on leaving the day-to-day rat race in 2014!

Hate the idea of just working for health insurance until I'm 65....

Love this site! Really like the Firecalc software!!!!

Thanks in advance for all incoming comments and advice.

Note: I calculate that we're financially secure at 58, even if we have to pay $15,000/yr. for health insurance, with a retirement income of $55,000/yr. Any feedback?

[MooreBonds]

Welcome to the forum, and it looks like you're in a pretty good spot.

Just one question: looking at your numbers, about how much in annual withdrawals were you anticipating between age 58 and 62 when you collect SS? I'm not coming up to $55k in annual income, unless you're planning on oversized withdrawals from age 58 to age 68 (when your wife collects SS @ 62), then scaling back.

Given the numbers you initially listed, I might be leaning towards either buying a less expensive home if you move (and adding $100k to the portfolio), or possibly working till 59 or 60.

If you are able to delay SS just a year or two, the decreased early SS penalty will be compounded over time as inflation kicks in and gradually reduces that SS/pension benefit, and your portfolio was spent down more heavily in the earlier years.

Don't forget the effects of inflation - those SS numbers at age 62 are still 6 and 12 years away, respectively, for you and DW - just 2% inflation will reduce that buying power a bit, let alone whatever it actually turns out to be.

[MichaelB]

Hi spokane. Sorry to hear about your wife. As you know, health care for early retirees is a significant challenge. You seem to have a good understanding of your options and be in a situation where you can choose. Good luck and welcome to the forum.

[Amethyst]

Welcome, and good luck in meeting your goals!

Amethyst