60-retiring soon - feedback welcome

[mijoy]

Hi All,

Looking for feedback; I believe I am in fair to good shape but welcome any feedback I can get.

I'm 60,wife 56 we want to get out of our present jobs imminently. The big question mark is health insurance. We will be on our own. We are all in a waiting pattern now that there is a new administration. My plan, if the election went the other way, was to apply for Obamacare where we was likely to qualify for a substantial subsidy where we were to live off retirement savings (mostly tax free) till Medicare kicks in. (Obamacare subsidies are based on taxable income). We could easily have manipulated our resources to be in a sweet spot for a subsidy.

Given this I feel I must plan on a worst-case-scenario situation. Which means I pay 100%. Looking at health care plans in Massachusetts that appears to be in the 1800-2000 range for a good health insurance.

For us this means I need to be able to maintain about a $$6500-7000 monthly income from my various sources. $5000 for living expenses and $2000 for health insurance. Again, hopefully the new administration will produce something more affordable but I should not plan on it.

I've used Firecalc which seems to indicate we are ok with our 6500-7000 reuirement (high 90% using some scenarios, 100% using others.

Current situation (roughly)

No bills - own home valued at about $340K. Own all 3 cars and 2 small boats. No other foreseen expenses other than the usual.

$900K (about 1/2 401K, 1/2 other stocks/bonds/cash) about 35-40% already after tax.

Pension (no COLA) $1000/mo now or up $1570/mo at 67 (with full survivor benefit)
Max SS for me (approx $2700 at 66, wife about 900 at 62).

Plan is to live off approx 1/2 retirement savings till 65-66 (450K)
Followed by SS/Pension/rest-of-savings (whatever gains I can get over 5-6 years on the remaining 450K)

We both welcome working in retirement part-time as long as it is something we enjoy. Income from this part time work is not very important. It would be nice if wecould pull in another 2-3K this way.

Feedback welcomed

[MBAustin]

Welcome mijoy! If you haven't seen them yet, there are two excellent resources here that might help you with your decisions:

http://www.early-retirement.org/foru...ire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

If you've run Firecalc and are happy with the results, that's a great signal. it's very important to have a good handle on your "spike" spending. Cars will need to be replaced, roofs will need to be reshingled, etc. Also have you looked at your total asset allocation and are your comfortable with that?

Welcome and we'll do our best to answer specific questions as they come along.

[Bigdawg]

It's all about expenses. How much wiggle room do you have? 3 cars for 2 people? 2 boats? That is roughly 5-6 hundred/yr in registrations and insurance (guess). I hear it on here often about tracking your spending for at least a few years before pulling the plug. Regardless of health care future I would get all check ups done now while you are still working. Good luck. Welcome to the forum. Lot's of knowledgable folks on here.

[brucethebroker]

When looking at health ins., don't forget that at age 65 the whole game changes. We currently only pay about $150 a month each for part B plus D of Medicare.

Maybe it would help to lump the next 5 years or so into one expense, (similar to a cash payment for a replacement car), then budget $400 a month or so (Medicare) from then on.

[frugal-one]

If you are planning on working PT in retirement ... think about places that may kick in for health insurance. Hospitals in my area will prorate based on hours worked. Another idea to consider and look into?

[mijoy]

Thanks all, great advice,much appreciated. Frugal-one, I never even considered looking into a hospital for part-time work, thanks for the advice,there are a few near where I live.

Thanks again all. I will visit the sites recommended as well.

[rodi]

I retired just as the ACA came online, and was unsure how it would work... so I budgeted for paying full freight for insurance. I still budget for that... and tax refunds (the subsidy is actually a tax credit so you can claim it up front or at tax time) is a bonus.

If your budget works with full freight healthcare - go for it!!!

The point about medicare being a game changer is a good point... My husband started on medicare this month and it is SO much less expensive. He went from a high deductible, HSA qualified HMO plan that was $650/month (for just him) - and he had a $4500 deductible so a lot of out of pocket costs, to the much cheaper 'Cadillac' f-plus plan with medicare. All in for Part B, Part D, and Part F+ it's only $211/month... And he can see any doctor that takes medicare (which is 99% here in San Diego) with very low OOP that is capped at the low deductible. It makes me want to get older quicker for the cheaper insurance. LOL.

[NgineER]

Quote:

Originally Posted by mijoy Max SS for me (approx $2700 at 66, wife about 900 at 62).

Your wife should be eligible for her own or half of yours, whichever is highest as far as I know.

[Livefree]

I see that you live in Mass. It's quite possible, even with the changes taking place now, that Mass may retain coverage going forward even if federal dollars dry up.

I'm investigating this myself and have an appointment with an enrollment assister this week to see what type of coverage and costs associated.

[mijoy]

Quote:

Originally Posted by Livefree I see that you live in Mass. It's quite possible, even with the changes taking place now, that Mass may retain coverage going forward even if federal dollars dry up. I'm investigating this myself and have an appointment with an enrollment assister this week to see what type of coverage and costs associated.

Livefree, I'd be very interested to find out how you make out with your findings. Please feel free to private message me.

I assume you are referring to what was formally known as RomneyCare.
I don't know what the qualifications for RomneyCare was but I was under the impression that unlike ObamaCare, RomneyCare took your assests into consideration (as opposed to just taxable income). But I am really not sure of anything at this point because I have always been covered by workplace plans and never before had to give it much thought. This is a learning experience for me.

[pb4uski]

I think you should be ok, especially if you end up getting some part-time work between now and 66-67 when your pensions and SS begin.

I would wait as long as you can on SS. I'm in a similar situation in that my SS is much higher than DW's SS (we are the same age) and we are living on savings from ER until SS. To me, if I can wait the enhanced benefits is cheap longevity insurance since it is likely that one of us will live to our early 90s given our current health, family history and joint mortality. However, it is comforting to know that if investment results lag that after we are 62 we can start SS but if our investments continue to do well the we'll let our SS grow... especially since if I die first she gets my benefit (and hers goes away).

There is a neat SS strategy planning tool at SSAnalyze - Bedrock Capital Management

Same principle with your pension unless the growth is non-linear. My pension benefit grew at a good rate from 50 to 60 and then at a much more modest rate from 60 to 65 so I decided to take it at 61.

As others have mentioned, your health insurance and health care costs should be a lot less than $2,000/month under Medicare... my Mom's Part A, Part D and Medigap costs are about $350/month (for one person). You can get a notion of current Obamacare health insurance costs at healthsherpa.com

I think once you factor in your wife's spousal SS benefit (1/2 of your's instead of just hers assuming that you both wait until your FRA), lower health care costs that your Firecalc success ratio will increase quite a bit.

[Livefree]

As far as I know, assets are not counted. I will let you know more when I find out.

[Katsmeow]

One factor in the uncertainty over health insurance. You are assuming health insurance will be available until you and your wife turn 65 for Medicare. Current law as I am sure you know does not let insurers turn down coverage based upon pre-existing conditions. That may continue for some period of time but it might end at some point. Depending on your health and that of your wife you might want to plan on what you would do if pre-existing conditions mattered again. I think I read somewhere that Massachusetts would go back to its system if the ACA went away. But, I'm not certain about that. It is a factor you might want to look into.

As for Medicare, some have posted about the current costs. Bear in mind that there have been some proposals to chance Medicare to a voucher type situation which would likely increase costs. I don't think at this point those amounts can be quantified and there may be no significant changes. But, you should consider that possibility as well.

[street]

Welcome. Looking at what you have you should be fine buying HI at 2K per month. It might be that some adjustments are made in spending but it is doable with your investments.