nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
I retired a year ago at age 53, so I'm now 54. I have ample after tax investments and rental income to cover my expenses and so could keep my annual AGI to around $10k made up of rent after deduction of expenses and dividends.
At age 55 I will be able to take a $20k/year pension and get a cadillac retiree health plan for $100/month. I don't have to start the pension at age 55 and if I defer it will increase by $1330 a year up to a maximum of $33.7k at age 66. Given my low AGI I qualify for Medicaid and my state has very good Medicaid provisions and I would be covered through a private insurer, pay no premiums and keep my current PCP. The retiree health plan has better out of state coverage and will pay for overseas emergencies and I do travel to the UK a lot.
So I have the following choices:
1) Take the pension (it has a 3% COLA) and increase my AGI so I won't qualify for Medicaid and pay the $100/month for the retiree health insurance. I estimate my AGI will be around $30k and after exemptions and deductions the taxable income will be around $18k allowing me to do around $19k of ROTH conversions up to to the 15% tax bracket limit. This will allow me to preserve my after tax investments that are all invested in low cost equity index funds and reduce future RMDs.
2) Defer the pension, keep living off my after tax investments and rental income and use Medicaid. I'll have to keep my AGI below 138% of poverty
level, but this obviously saves $1200/year on health insurance and will give me more guaranteed income later in life, but less after tax money and less chance to convert IRA money to ROTH to reduce RMDs. This option also means I have to deal with the hassle of annual enrollment.
At age 55 I will be able to take a $20k/year pension and get a cadillac retiree health plan for $100/month. I don't have to start the pension at age 55 and if I defer it will increase by $1330 a year up to a maximum of $33.7k at age 66. Given my low AGI I qualify for Medicaid and my state has very good Medicaid provisions and I would be covered through a private insurer, pay no premiums and keep my current PCP. The retiree health plan has better out of state coverage and will pay for overseas emergencies and I do travel to the UK a lot.
So I have the following choices:
1) Take the pension (it has a 3% COLA) and increase my AGI so I won't qualify for Medicaid and pay the $100/month for the retiree health insurance. I estimate my AGI will be around $30k and after exemptions and deductions the taxable income will be around $18k allowing me to do around $19k of ROTH conversions up to to the 15% tax bracket limit. This will allow me to preserve my after tax investments that are all invested in low cost equity index funds and reduce future RMDs.
2) Defer the pension, keep living off my after tax investments and rental income and use Medicaid. I'll have to keep my AGI below 138% of poverty
level, but this obviously saves $1200/year on health insurance and will give me more guaranteed income later in life, but less after tax money and less chance to convert IRA money to ROTH to reduce RMDs. This option also means I have to deal with the hassle of annual enrollment.
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