Staying the course

[windedhare]

Hi,
I enjoyed reading this board and am encouraged to find fellow ER hopefuls engaged in discussion! I hope to learn and contribute to this board.

I am absolutely determined to get ER. I am very, very tired. For as long as I can remember I've been studying and working at a frantic pace. At 29, I feel older than my years physically and find that I am actually regressing emotionally! :-/

Fortunatley, I have an ER plan, and making decent progress. There is just a long road ahead (the rules keep changing!) and the challenge is staying the course.

Keeping the course, in 6-7 years, we will be mortgage free and according to the calcutors have an additional $1M in investable funds. This is a good mileston/vision.

Current NW:
325K with 65% of this in tax-deffered accounts, the rest in taxable accounts

Current Contributions:
Max 401K at 10%, with 4% match. Not eligible for Roth.
Company gives 6% defined contribution pension
Contribute additional 28% of after tax to investments.
I apply extra 1-2K month towards mortgage based on how much is left over.

The biggest risk to my plan is myself.... --- sabatoging it before it has a chance to fly by acting out a quarterlife crisis and quitting. Fortunately this site does give some uplifting encouragement on those 'down' days.

Thanks for the opportunity share!

 

[Skylark]

Sounds great, you are certainly ahead of me.

A question: how do you know when you have reached your goal? At 325K and +/- 6 years to FIRE, you seem to be over the hump and with a little luck you will be able to retire very early in your life. 6 years goes by very fast, do you know when to make the change to ER?

 

[windedhare]

Interesting question Skylark....

I don't think I can be certain about successfully achieving FIRE until I understand two additional key factors:
- Will there be kids in the future
- Will we have to support our aging parents, this scares me more than the kids question

Regardless, I hope that when I see the $1M mark, I will not feel guilty about ER if DH wants to keep working. ER isn't as urgent for him as it is to me.

 

[retire@40]

I don't think I can be certain about successfully achieving FIRE until I understand two additional key factors:  
- Will there be kids in the future
- Will we have to support our aging parents, this scares me more than the kids question

Maybe Long-Term Care Insurance should be considered for your parents.

 

[windedhare]

I poked around the net on LTC insurance today and we probably are very likely pursue the LTC option if we can agree on a provider we trust, and believe will stay solvent, and stay in the market.

The thought of having to account for 4-8K on LTC in our annual budget )(eee-ouch!)means 100-200K additional monies that must be funded in the nest egg is something I can probably get over. The alternative of being drained empty is much less appealing. But I heard that many providers dont stay in the market very long, I'm not sure I can get over that after x years of paying those kinds of premiums!

Insurance-- it's a love/hate thing----grateful to have the opportunity to purchase it, but so aggravated to have to make the decision whether to purchase it or not.

 

[MooreBonds]

Hi windedhare...I've also thought about looking into LTC insurance (but have just begun the search). I'm also weary of knowing how to trust which players will be there 50-60 years from now when I'll be needing the policy I've sunk so much into.

Do you have any recommendations on sites I could visit to get info/quotes on LTC insurance? Any advice on companies you know/have heard are good would be appreciated.

Peter

 

[charlie]

Peter,

IMHO, the time to buy LTC is in your late 50's .... not
when you are young.

My wife and I both have LTC with GE Capital Assurance.
I don't know anybody with a better chance of survival
than GE.

Cheers,

Charlie

 

[John Galt]

Hello Charlie! We and my folks are rolling the dice and
going without LTC insurance, but for different reasons.
My Dad would never have considered it. It was too
complicated for him to deal with. We can not afford it, but honestly I am not too sure we would buy even if
it fit into our budget. I am getting more and more into
the "unclemick mode", i.e. assuming more of the risk yourselves.

John Galt

 

[unclemick]

A. At 88, mom is dead set against a LTC and wants to die at home with us. B. If worst comes to worst - at current rates, she can afford 5 years, 10 if we kick in and stay under 4% SWR. If she goes for 100, then - the backup plan is moot. Rising health care cost just has to be watched as unknown.

 

[Cut-Throat]

Unclemick,

It seems that since you have retired, you have increased your net worth quite a bit!

Have you ever wondered that us ER's when always planning for the worst end up actually increasing our wealth thoughout our lifetimes instead of spending it?

Well have you? -

An early cocktail hour post !

 

[unclemick]

Wellllll - I aquired a nest egg to ER by being a cheap SOB and sort of kept the habit for the last 12
yrs of ER. Cheap is sort of a comfort zone.

 

[John Galt]

Hello Cut-Throat! While waiting for unclemick............

In Texas, three of us caught about 80 stripers in one morning, but
no real big ones, biggest about 2.5 lbs. Real nice time though.

Back on topic, I was very surprised that my net worth increased post-ER and post-divorce. It was
serendipitous, to say the least. In 1993, I expected
to work part time forever and to struggle with finances
at least until age 62. I went into that situation
with my eyes wide open. Worked out great for me.
I think you hit the mark about "planning for the worst".
I always think about "what's the worst that can happen?" Most of the things we worry about never happen anyway.

John Galt

 

[Bob_Smith]

A couple of comments on LTC: First, regarding when to buy LTC: Keep in mind that these companies go through your health history with a fine tooth comb and charge accordingly. And there are many conditions which can cause a person to become uninsurable at any age, so the best time to consider LTC coverage, IMO, is when you are healthy. We bought when we were relatively young (~49 & 50), and with rates going up, I'm not so sure we won't end up paying less by buying young - time will tell. We paid it off in one lump sum - so there are no annual payments or rate increases. Total cost for the two of us was ~$35,000 for $110/day, unlimited days, with a 5% compound inflation rider (both in facility and home based care). That was 2 - 3 years ago. The company replaced the policy we bought with three that aren't as good. Nevertheless, windedhare, I think your $100,000 - $200,000 estimate is too high, even if you're in a high cost area.

FWIW, I have included a list of definitions supplied by three of the major ratings providers - AM Best, Standard & Poor's, and Moody's. Most LTC company web sites will provide the most current financial stability ratings for their company. You can use this list to see what those ratings mean. I snagged these definitions directly from their respective web sites for my own use - maybe someone here will find it useful. I cut off the weakest category ratings so this post would fit - nobody would consider a company in those categories anyway.
_____________________________________

AM BEST:
AM Best's Financial Strength Rating (FSR) is an opinion of an insurer's ability to meet its obligations to policyholders. The following list outlines our rating scale and associated descriptions.

Secure:
A++, A+ (Superior)
A, A- (Excellent)
B++, B+(Very Good)
B, B- (Fair)

Vulnerable:
C++, C+ (Marginal)
C, C- (Weak)
D (Poor)....They go on to list weaker ratings.
____________________________________________

Standard & Poor's:

An insurer rated AAA through BBB is regarded as having financial security characteristics that outweigh any vulnerabilities, and is highly likely to have the ability to meet financial commitments.

AAA: EXTREMELY STRONG financial security characteristics. AAA is the highest Insurer Financial Strength Rating assigned by Standard & Poor's.

AA: VERY STRONG financial security characteristics, differing only slightly from those rated higher.

A: STRONG financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings.

BBB: GOOD financial security characteristics, but is more likely to be affected by adverse business conditions than are higher rated insurers.

An insurer rated BB or lower is regarded as having vulnerable characteristics that may outweigh its strengths. BB indicates the least degree of vulnerability within the range; CC the highest.

BB: MARGINAL financial security characteristics. Positive attributes exist, but adverse business conditions could lead to insufficient ability to meet financial commitments.

B: WEAK financial security characteristics. Adverse business conditions will likely impair its ability to meet financial commitments.

.....They go on to list weaker ratings.
__________________________________________

Moody's:

(Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. Numeric modifiers are used to refer to the ranking within a group - with 1 being the highest and 3 being the lowest. However, the financial strength of companies within a generic rating symbol (Aa, for example) is broadly the same.)

Aaa: Insurance companies rated Aaa offer exceptional financial security. While the credit profile of these companies is likely to change, such changes as can be visualized are most unlikely to impair their fundamentally strong position.

Aa: Insurance companies rated Aa offer excellent financial security. Together with the Aaa group, they constitute what are generally known as high-grade companies. They are rated lower than Aaa companies because long-term risks appear somewhat larger.

A: Insurance companies rated A offer good financial security. However, elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa: Insurance companies rated Baa offer adequate financial security. However, certain protective elements may be lacking or may be characteristically unreliable over any great length of time.

Ba: Insurance companies rated Ba offer questionable financial security. Often the ability of these companies to meet policyholder obligations may be very moderate and thereby not well safeguarded in the future.

B: Insurance companies rated B offer poor financial security. Assurance of punctual payment of policyholder obligations over any long period of time is small.

.....They go on to list weaker ratings.

 

[windedhare]

Hi Peter,
GE is the company that seems to be the leader that come up in the LTC market. I believe Suze Orman recommended them on her TV show. Metlife's website had some useful information to assist with learning more about LTC products. Its still pretty daunting to me... good luck with your search.

Bob,
Thanks for passing this info along to those of us who are starting to look into LTC and concerned about the providers.

I really glad you think and I do hope I've overestimated- I'd faint and give up if I were to learn I've significantly underestimated!

Anyhows, I extrapolated a little bit to account for two sets of parents, mine and his. They are in their mid/late 50's and some medical problems beginning to show up on one parent so I am expect higher rates. I was seeing annual estimates so I am presuming that you get a price advantage by paying up front. Unfortunatley they wont stop aging to give me time to build up funds! If we move forward, it will be annual payments.

Charlie,
Thanks for sharing your experience with GE