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It looks like retirement will work for us
Old 07-20-2007, 09:17 AM   #1
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ScottFromUtah's Avatar
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It looks like retirement will work for us

My DW and I have decided to retire effected summer 2008, she at age 63 and I at age 63½. We are both professors at the same university. She will have 16 years and I will have 30 years of experience at our university when we retire. We had seven children--four daughters and three sons. Six of the seven have graduated from college. Our oldest daughter hasn't graduated yet; she is married with three kids, dropped out of school while her husband was in medical school but has returned to school and will graduate in two years. Besides teaching and doing research, DW and I have coauthored 40 books together, most of which have been good-selling or best-selling textbooks.

We have loved our professional life, but it's now time to retire and move on to other things in life: doing genealogical research, serving our church, traveling (mostly to visit our big family), and pursuing other hobbies (music, reading, writing, and fitness). We are essentially debt free, own two homes with no mortgages, have saved fairly aggressively over the past 20 years, have a nice pension from our university, continue to receive royalties from our books, and of course have social security. When I run FIRECalc (the advanced version), everything works out well.

We do have some concerns, however. First and foremost is our health. We are both overweight, having each gained about 30 pounds over the past 3 years as our exercise levels have been hampered due to health issues. DW has plantar fasciitis, so she's been unable to walk much. I have a history of high blood pressure and heart disease, in spite of the fact that I have run many marathons (including Boston 2004) and have done several cycling centuries and triathlons. When we retire, I hope to spend more time with my fitness hobbies.

Our second concern is that we will become overbooked as retirees, and end up busier than we are now working full time. We have several friends that have fallen into that trap--becoming over-committed to family, church, and other volunteer pursuits. They have full, active, fulfilling lives, but they are are not truly retired; they're just not getting paid for their "full-time jobs."

Our third concern is that our money will be insufficient to sustain us if we should need assisted care or full nursing care in our advanced years.

Any comment, criticism, or advise on these concerns would be welcome.

I have one specific question: What do you know about long-term care insurance? It is work looking into?

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Old 07-20-2007, 09:28 AM   #2
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Welcome, and congratulations.

TIAA-CREF, I presume, in addition to your pension. It's a highly regarded company, but others may be less expenseive if/when you decide to roll-over your funds to an IRA.

Health wise, my only suggestion is to tend to what you can while still working. Be frank with your doctor about wanting to tie up loose ends before D-day. While it may not be possible to do that completely, at least the borderline tests can be moved up a few months (things like colonoscopy, stress testing for your heart issues if indicated, etc.). That way, if things are detected that require further care you can do them on medical leave while still an employee.

Do a search for more discussion about long term care. It's a tough one to call; I have personally deferred purchasing this due to excessive uncertainties about the health care system down the road, very high premiums, carrier-insolvency risk, and the offsetting increase in my nest egg from re-investing what would have gone to premiums. Could this backfire? Of course, but we feel we know the risks and will reassess periodically.

Being overbooked after retirement is a personal choice. Nothing more, nothing less. No more excuses about committees, departmental parties, retreats. Been there, am in academics, and have also heard folks complain about it. Frankly my reaction is that if they weren't getting more positive reinforcement than negative, they would simply have said no more often.

Anyhow, enjoy the board, read as many of the relevant threads as you can, and keep us posted.

San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 07-20-2007, 09:31 AM   #3
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> What do you know about long-term care insurance? It is work looking into?

It's worth looking into. It's also worth shopping aggressively for. Unfortunately, this is one product that, annualized, is much cheaper to buy young (40's) so you might not like the look of the premiums.

I have mixed feelings about Suze Orman, but I would heartily recommend 'You've Earned It, Don't Lose It: Mistakes You Can't Afford to Make When You Retire'. It's a $10 paperback and will cover many of the questions you'll likely start to think through... including some great information on long-term care.

Congrats on this next stage! It sounds like you both have had very fulfilling and rewarding lives (7 kids, wow) and I'm sure that trend will happily continue.
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Old 07-20-2007, 09:45 AM   #4
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We have also decided to self-insure for LTC. Good family history, large life insurance, uncertainty like RIT says, good portfolio performance.

Regarding overcommitment, we travel four months a year and are here in the PNW for the summer. Most places need you to be here during the "school" year when their activities are busiest.

And the advice about health-testing is valid. Get as much testing as you can so you know you are clear (or not) before pulling the pin. A temporary weight gain can be reversed with little long term impact. We started with a soup diet, then low carb, now just intelligent choices. Have dropped 30 pounds permanently. Not working helps because we enjoy cooking and so avoid lunches and dinners out. More fruit, less cereals and grains. More stir fries and less meat and potatos or pizzas.

Good luck. It sounds like you are set for a successful retirement.
For the fun of it...Keith
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Old 07-20-2007, 05:24 PM   #5
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You and your wife seem pretty much ready to go. I can't help with the insurance because we are still in the final planning phase (still young at 45, nest egg is pretty close to ready, but daughter is still in HS with a couple years to go...wouldn't be a problem except we are posted overseas in a high cost location where I would not want to stay...and pay...for school without the subsidy from the company...the school is really good, so we want her to finish here).

BTW, your post rings a bell: 7 kids, church service, genealogy, profile says mountain west...could it be.... R U LDS2? If so, I have seen some advertisements in a mountain west magazine related to a healthcare coop type of they have LTC type of insurance as well? Might be worth checking. I don't have the magazine anymore so I can't remember the name of the coop...sorry...but if you are there maybe you've heard of it.

Anyway, good luck with the long term care. If you do find the coop, I'd be interested to know its name and whether or not they offer LTC insurance. We currently have homes in california but may sell and also move to the mountain west...

thx for your post!

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Old 07-21-2007, 04:22 PM   #6
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That's a great idea about getting your tests done before you officially retire.

Regarding, long term care insurance, I think it's a no-brainer, especially for someone who is very close to retirement.

RIT makes some interesting points.

I'm not sure what RIT means by "excessive uncertainties about the healthcare system." I assume that he means that the way in which care is provided might change in the future, which could result in a current policy becoming obsolete, if a type of care is developed in the future that is not covered under current policies.

I find the likelihood of this happening to be remote. I think it is very unlikely that in our lifetime "robot care" or some other high-tech method of care will supplant the need for loving caregivers. 50 years from now people will receive care the way they have for centuries: from loving, caring individuals, either at home or in a qualified facility.

Regarding "high premiums", RIT is correct. The premiums are high because the probability of making a claim is darn high and the costs of care are high. Last year alone the top 8 long term care insurers incurred over $3.3 Billion in claims on their long term care policies.

But, that's not what's really amazing. There are a lot of factors that go into calculating the cost of a long term care policy including: choice of benefits, age of applicant, marital status, state of residence, health history, internal rate of return, as well as overhead expenses.

Every long term care policy has a different way of calculating that premium. When evaluating the top 10 long term care insurers, premiums for nearly identical benefits will vary by as much as 50%, sometimes even as much as 100% or more. Literally that means that if one A++ rated insurer were to charge $3,000 per year in premium, another A++ rated insurer might only change $1,500 per year in premium FOR NEARLY IDENTICAL BENEFITS.

To compound, what is already a very complicated issue, many insurance agents who sell long term care insurance are not experienced with the product and don't know how to design the policies in ways that maximize the benefits, but minimize the premiums. I will give you a recent example:

I have some clients who live in the
Tampa area. They are a healthy, married couple in their early 60's. They recently purchased a policy from me with an A++ rated insurer. Their combined annual premium is about $3,000 per year for a policy that starts off with over a half million dollars in benefit. The benefits automatically increase by 5% compounded growth each year. The increases in the benefits each year do not make the premium go up. Within 15 years, their policy will have over $1.1 million in total benefit. Within 30 years, the policy will have over $2.2 million in total benefit.

Here's what's really shocking: this couple got quotes from two other insurance agents for a policy from this exact same A++ rated insurer. One of the agents quoted a policy that had 30% less benefits but the premium was more than $7,000 per year. This agent was choosing benefits that were very expensive, but not very important and deleting benefits that were very important, resulting in a "poor value". The other agent's quote was for over $5,000 per year, it too had significantly less benefits than the policy that they chose with me.

Regarding "carrier insolvency", the majority of the leading long term care insurers have been in business for over 100 years. Companies like John Hancock, Met Life, Prudential, New York Life, and others have been through World Wars and a Great Depression. They'll be around long after we're gone.

Lastly, regarding the time value of money and investing more money, rather than purchasing a LTCi policy, the math just doesn’t work. If you’re using realistic investment assumptions, investing an amount equal to the premium could never pay for more than about 6 months of care.

But that’s not the real issue. The real issue is that you don’t know when you’re going to need long term care. If we knew you were going to need long term care for 3.7 years starting at age 88, then it would be easy to calculate how much money you needed to set aside to pay for your expenses.

Unfortunately, I’ve seen too many people and heard too many sad tales of people who have had a major change in their health in their fifties or even forties. The wife of a USF employee got Alzheimer’s in her forties. An Army officer’s wife in Sun CityCenter got Alzheimer’s in her mid-forties. A client of mine in Sun CityCenter, her husband got Parkinsons in his early sixties. Others have strokes or disabling accidents in their fifties or sixties. For those people, the concept of ‘self-insuring’ is a fast way to depleting their retirement savings. The person who needs care doesn’t have to deal with the financial consequences; but the healthy spouse has to deal with both the emotional burden of seeing his/her spouse disabled, as well as the financial burden.

Having to liquidate assets at an inopportune time in the market, in order to pay for care expenses is costly; not to mention the cost of capital gains taxes on appreciate assets as well as ordinary income tax on withdrawals from IRA's and 401k's, etc...

This post is way too long... but, based upon some very personal family experiences, I feel strongly about this issue.

By the way, RIT, having lived in Tampa for nearly 15 years, I’m a big Bucs fan. Unfortunately, they don’t play too many of the Bucs games out here in Southern California. So, I usually have to listen to the games on NFL radio.

Scott A. Olson, CLTC

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Old 07-22-2007, 09:41 AM   #7
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Welcome! I am not experienced enough to have advice on most of what you asked, but if your wife is still having problems with plantar fascitis, you might want to look for an active release therapy practitioner (Active Release Techniques®). A friend of DH's got his pf mostly resolved with a few weeks of treatment, although I don't know how severe or long-term his problem was.

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