Utterly lost. Can somebody please point me in the right direction?

[Christian]

I am not an educated man, so please take it easy on me.

I am 56 years old.

I am of full retirement age for my government employer's retirement plan. I am fully vested in the retirement plan, although I have only been "on the job" for about 13 years, so if I retire at this point, my pension calculation would result in a more modest pension amount. I also get free medical insurance for life, and a 2.5% COLA.

I was injured in the line of duty about a year ago, and have basically been off work ever since. I had reconstructive surgery, and I'm about half way through the six months of rehabilitative physical therapy that they think I'm gonna need. I'm currently drawing a full paycheck, but that will come to an end at some point.

In the meantime, my wife was recently diagnosed with cancer, at the age of 41. When we found out, she asked me for two things- she asked me for a dog (to replace one that passed from cancer last year), and she asked me to retire to spend more time with her. She needed two surgeries, and they were both supposed to have been done by this Summer.

So we started looking at 08/01/19 as a potential retirement date for me.

Her first surgery caused an infection. That resulted in an emergency surgery (surgery #2) to clean it all out, with one more surgery (surgery #3) that will be needed just to get her back to where she was supposed to be today. Plus, they need her to heal for 3-4 months before they can perform surgery #3. And then she will still need her final surgery a month or so after that. So our timeline has been pushed back by approximately 6 months.

My wife and I are currently covered under my employer's Kaiser group medical coverage. But that would end if I retire to spend more time with her.

At this point I should explain that our situation is complicated by some debt that we are carrying. We have good credit, and almost all of our debt is at low interest rates. I can make all of my monthly payments just off my base pay. But my base pay was only about half of the money that I was making prior to my injury- in my job, there is as much overtime available as I want, and for years I have made a habit of working a lot of overtime, nearly doubling my pay. We were paying down our debt at the rate of several thousand dollars a month above and beyond our monthly payments, with the goal of paying it all off...until I got injured. We paid about $150K in debt down to $71K by the time I got injured. Now, with no overtime, the best I can do is to pay down our debt at the rate of about $2,000 a month, which means that we're still gonna be carrying about $63K of low-interest debt if/when I retire in August.

I can't service that debt on a modest pension, so we're looking at pulling a portion of my contributions out of my retirement (my employer's contributions stay in). This would allow us to pay off all of our debt, so that we would be able to afford life on my modest pension. But it would also reduce that pension further, which would mean that we would need to relocate to a less expensive part of the country and/or a less expensive lifestyle (full-time RV life until my SS kicks in at 62). We're okay with that.

But we don't know how to have insurance that will pay for her last cancer surgery, after I've already retired.

 

[Teacher Terry]

Do you own a house and if so how much equity is in it and what are your payments including taxes? It seems like your pension will be small to start with only 13 years and I certainly wouldn't take any money out of your pension fund to pay CC debt. That is unsecured debt and if need be you could go bankrupt from it probably. How much is your pension and what are your expenses? You will need to look at the ACA for insurance and see what that will cost. There is a thread on here that has you answer a bunch of questions to see if you are ready for retirement.

 

[Christian]

I can piggy-back her onto my free retirement medical insurance, as long as I pay the difference.

My retirement plan offers my choice of Kaiser or Blue Cross Blue Shield insurance. Kaiser is more expensive, and the retirement plan pays that higher amount, regardless of whether I chose Kaiser or Blue Cross Blue Shield. In actual practice, that means that I'd pay about $800 a month for her if we choose Kaiser, and very little if we choose Blue Cross Blue Shield.

But Kaiser is not portable. We have to enroll in the Kaiser region we reside in. And all indications point towards us relocating someplace less expensive.

Blue Cross Blue Shield is more portable, but I have had horrific experiences with Blue Cross Blue Shield coverage and billing in years past. It seemed like any time I actually went in for something, it triggered a never-ending fusillade of indecipherable bills. And trying to talk to their billing people was orders of magnitude beyond Abbott and Costello's "Who's on first" bit.

And the private plans that I've looked at online, look utterly ridiculous in terms of costs and coverage.

 

[Jerry1]

I’m very sorry for your situation. There’s been cancer in our house too and it’s a rough go, to say the least. Others will chime in, but my first thought is that, unfortunately, you’ll need to continue working because of the insurance. The way you describe your debt leads me to believe that you’re not financially ready to pull the plug on your employment. Sincerely sorry.

On the other hand, anything is possible and if you’re determined to answer your wife’s wish, people have probably retired on less. In terms of being with your wife, don’t forget family medical leave. It should be available to you to provide time for you to be with your wife during her fight. Best wishes.

 

[Golden sunsets]

I’m sorry that you are dealing with so many major issues at once. One question regarding insurance. You mention in your opening remarks that you will have health insurance for life. Doesn’t it cover your wife?

 

[Christian]

Do you own a house and if so how much equity is in it and what are your payments including taxes?

We do not own our home, so no equity.

It seems like your pension will be small to start with only 13 years...

Depending on the payout option(s) that I choose, about, a little over $3,000 a month.

...and I certainly wouldn't take any money out of your pension fund to pay CC debt. That is unsecured debt and if need be you could go bankrupt from it probably.

I didn't say CC debt- I just said debt. It includes our cars and everything. My car is financed at 1.9% interest, which is less than the inflation rate during the period that I've owned it.

How much is your pension...

What do you mean?

...and what are your expenses?

Our monthly budget is about $6,000 a month.

You will need to look at the ACA for insurance and see what that will cost.

I did. It's ridiculous. Even if I could pay those premiums, I couldn't eat 30% of her last cancer surgery on my modest pension.

There is a thread on here that has you answer a bunch of questions to see if you are ready for retirement.

I read it. My wife has cancer and says I'm ready for retirement. My body may agree with her.

Thanks for your input.

 

[Christian]

I’m sorry that you are dealing with so many major issues at once. One question regarding insurance. You mention in your opening remarks that you will have health insurance for life. Doesn’t it cover your wife?

Thank you for your kindness.

No, my retirement insurance won't cover her. I wish it did.

 

[Christian]

I’m very sorry for your situation.

Thank you for your kindness.

There’s been cancer in our house too and it’s a rough go, to say the least.

I'm praying for you and your family right now.

Others will chime in, but my first thought is that, unfortunately, you’ll need to continue working because of the insurance. The way you describe your debt leads me to believe that you’re not financially ready to pull the plug on your employment. Sincerely sorry.

Our original plan was for me to work another two years, and retire debt free. Cancer has changed that.

On the other hand, anything is possible and if you’re determined to answer your wife’s wish, people have probably retired on less.

We're pretty determined.

In terms of being with your wife, don’t forget family medical leave. It should be available to you to provide time for you to be with your wife during her fight.

FMLA doesn't come with a paycheck. Besides, I'm already off work and drawing a full paycheck due to my injury in the line of duty.

Best wishes.

Thanks again.

 

[38Chevy454]

Here is what I think is accurate summary of your situation:
1. Can get pension of approx $3000/month, with 2.5% COLA, starting when you retire in Aug 2019, or a little more if later.
2. Your medical is covered and you can get coverage for your wife at around $800/month for Kaiser HMO; or less if you go with Blue Cross.

3. You have about $63,000 in debt total anticipated by Aug 2019.
4. You do not own your home or have any equity in it. Or any problems with moving to a lower cost of living area.
5. No mention of how much retirement (403b or 457?) savings amount, but you did mention tapping that to pay off debt. How would tapping this make your pension be less, I am confused by that.
6. No mention of any retirement savings for your wife?
7. You state estimated budget needs of approx $6000/month to live at current location.
8. It's personal information, but do the doctors feel your wife's odds for beating the cancer are high or not. Sorry that kind of sounds like a harsh question, but it may figure into your decisions based on time.
9. Do you get SS once eligible, or are you one of the gov't employees that do not get SS? Does not help you now, but that money may be a critical addition for later years. Same with your wife, does she get SS?

Your wife is facing rough times with the surgeries and cancer, she does need your support and tile that you are able to give. The difficulty you face is how to retire and live off your relatively small net income after insurance and debt payments. I am not sure what the right decision is for you. If you were not dealing with your wife's cancer and surgeries, i would say that you must work longer.


Can you retire from current job, be with wife through recovery, and then maybe go back to work at a later date to work on supplementing your pension and having some money coming in without withdrawing from your retirement savings? That may be your best path. Basically taking a break now, but knowing that once things get back to normal you will go back to work.

 

[Teacher Terry]

We went through a cancer scare with my husband and it’s not fun. I am sorry. He is fine now. I just assumed it was CC debt because if you don’t own a home I cannot imagine how you can originally have 150k of debt. I guess the question is can you live on your pension while paying for HI for 6 years until SS.

 

[Buckeye]

What is your priority?

Is it treating your wife's cancer with the best medical care because she has a reasonable chance of recovery? Good care is not cheap. If this is your priority, I would not retire and lose your current health insurance. I had a friend who was diagnosed at 40 with breast cancer and she is now 60 and doing just fine. Her diagnosis was definitely not a death sentence but she did have excellent insurance and she got excellent care.

Or is spending more time with her your priority because she has a low probability of recovering from her cancer and you want to spend her last days together? If this is the case, I guess it doesn't matter if you have good health insurance so you might as well retire. OTOH, if you cut back to a regular schedule with no overtime, you would be spending a lot more time with your wife, wouldn't you?

 

[Animorph]

Seems like adding your wife to your health insurance may be your best bet. If you can qualify for an ACA subsidy that might be less expensive. Since you are currently on Kaiser I'd be tempted to stay with it, even at $800/month just to avoid making a major change at this time when there's enough stress as it is. Also, your deductible already paid for this year might apply for the rest of the year with Kaiser, but probably starts again if you switch plans. If you can switch plans in the future when the crises are over during an open enrollment period or something, even better.

I think I'd keep the low-interest debt. Sounds like that improves the pension if you don't have to withdraw. If you have the option to make small withdrawals as needed, you might be able to supplement your income as needed/if necessary. If not, I would take out enough for maybe a year of debt payments and use that to make your monthly payments. That could carry you through the initial transition and serve as an emergency fund, just in case, without the full impact of going debt free.

Sorry you're getting all this dumped on you at once. My best wishes to you and your wife.

 

[Christian]

Here is what I think is accurate summary of your situation:
1. Can get pension of approx $3000/month, with 2.5% COLA, starting when you retire in Aug 2019, or a little more if later.
2. Your medical is covered and you can get coverage for your wife at around $800/month for Kaiser HMO; or less if you go with Blue Cross.
3. You have about $63,000 in debt total anticipated by Aug 2019.
4. You do not own your home or have any equity in it. Or any problems with moving to a lower cost of living area.

Bingo.

5. No mention of how much retirement (403b or 457?) savings amount, but you did mention tapping that to pay off debt. How would tapping this make your pension be less, I am confused by that.

I contribute 12%, my employer contributes 19%. My 12% to date is about $161,000, so my employer's 19% to date is about $255,000, for a total of about $416,000.

Of my $161,000, I can choose at retirement to pull out lump-sum payments of 0%, 50%, 75%, or 100%, each of which would progressively reduce my monthly pension amount.

The 75% option that we're looking at, would be about $121,000. After 20% mandatory withholding, that comes to about $97K.

$63K to pay off our debt, $5K to move, leaves us with about $29K.

We're not gonna need two cars in our retirement, so I can sell my car (KBB book value about $45K).

The $29K plus the $45K, would be enough for us to pay for the RV that we intend to tour the continental U.S. in for the next 5-1/2 years, until my Social Security kicks in at 62.

...or something like that.

6. No mention of any retirement savings for your wife?
7. You state estimated budget needs of approx $6000/month to live at current location.

Yup.

8. It's personal information, but do the doctors feel your wife's odds for beating the cancer are high or not. Sorry that kind of sounds like a harsh question, but it may figure into your decisions based on time.

No worries- her outlook is good. She's not even gonna need chemo or radiation.

9. Do you get SS once eligible, or are you one of the gov't employees that do not get SS? Does not help you now, but that money may be a critical addition for later years. Same with your wife, does she get SS?

I don't get SS from my job, but I worked in the private sector for many years before taking this job, so I will have some SS.

We decided to have her stay home to raise our daughter, but she has worked since then.

Your wife is facing rough times with the surgeries and cancer, she does need your support and tile that you are able to give. The difficulty you face is how to retire and live off your relatively small net income after insurance and debt payments. I am not sure what the right decision is for you. If you were not dealing with your wife's cancer and surgeries, i would say that you must work longer.

I appreciate your thoughts.

She wants me to retire- she has already been without me for so much of our marriage, mostly due to all the hours that I've worked. It has not been unusual for me to work three 17-hour double shifts back-to-back, punctuated only by a few hours of sleep in between. And when I'm at home sleeping during the day, she's at work, so we can go the better part of a week without even seeing each other.

Having me off work due to this line of duty injury for the last year, has been a real blessing. She was off work for two months and we were both recovering from our respective surgeries at the same time. She really appreciated the time that we got to spend together. With me being closer to 60 than 50, and with her cancer, she really wants to have me full time.

We've only taken two major vacations during our entire marriage (month-long trips touring Europe), and they were both epic team-building marital exercises.

Can you retire from current job, be with wife through recovery, and then maybe go back to work at a later date to work on supplementing your pension and having some money coming in without withdrawing from your retirement savings? That may be your best path. Basically taking a break now, but knowing that once things get back to normal you will go back to work.

I can't service our current $63K debt on a $3,000 a month pension- that's why it looks like I'm gonna need to pull some cash out to pay it off.

And going back to work would be the opposite of retiring to spend time with my wife- especially going back to work with no exit plan (aka the "work until you die" plan).

 

[Christian]

We went through a cancer scare with my husband and it’s not fun. I am sorry. He is fine now.

No kidding. I wish you well.

I just assumed it was CC debt because if you don’t own a home I cannot imagine how you can originally have 150k of debt.

I couldn't image having $150K in CC debt at all...

But to answer your question, we bought two cars- that's the majority of it right there.

The amount of debt we were carrying was not desirable, but it didn't seem disproportionate to our income.

I guess the question is can you live on your pension while paying for HI for 6 years until SS.

We're trying to figure out HOW to do it.

 

[Christian]

What is your priority?

Is it treating your wife's cancer with the best medical care because she has a reasonable chance of recovery? Good care is not cheap. If this is your priority, I would not retire and lose your current health insurance.

There is no guarantee that I'm going to recover from my injury enough to return to duty.

And again, she wants me to retire. As I said above, she feels that she's been without me enough, due to all the hours that I've worked.

OTOH, if you cut back to a regular schedule with no overtime, you would be spending a lot more time with your wife, wouldn't you?

It's not up to me. It's a sworn position- they can (and will) order me to work as much overtime as they need.

 

[Teacher Terry]

We have a RV and you will need repair money. Things are made of plastic and break frequently. You also need a warm climate. If you buy a motor home you will need to pull a car and not all cars can be towed. If a 5 th wheel then a towing vehicle. We found after a month of traveling we were done being in such a small space. If you withdraw money then your pension will no longer be 3k? If you didn’t pay into SS with your government job you will be affected by WEP. I just applied for SS and despite being 65 lost 463/month because of it and take home a whopping 363/month.

 

[Christian]

Seems like adding your wife to your health insurance may be your best bet. If you can qualify for an ACA subsidy that might be less expensive.

Please tell me about ACA subsidies.

Since you are currently on Kaiser I'd be tempted to stay with it, even at $800/month just to avoid making a major change at this time when there's enough stress as it is.

But it looks like we're going to have to move somewhere cheaper, and Kaiser is not portable.

Also, your deductible already paid for this year might apply for the rest of the year with Kaiser, but probably starts again if you switch plans. If you can switch plans in the future when the crises are over during an open enrollment period or something, even better.

We have no deductible- just $15 co-pays.

I think I'd keep the low-interest debt. Sounds like that improves the pension if you don't have to withdraw.

But I can't make service $63K of debt on a $3,000 a month pension.

If you have the option to make small withdrawals as needed, you might be able to supplement your income as needed/if necessary.

That's not an option. It's a one-time deal, at retirement.

If not, I would take out enough for maybe a year of debt payments and use that to make your monthly payments. That could carry you through the initial transition and serve as an emergency fund, just in case, without the full impact of going debt free.

Carry us through what? In a year, when that money runs out, I'll still have the rest of the debt. I've either gotta pay it off now, or pay it off later, but either way, I gotta pay it off.

With a pension as modest as mine, we'd really need to be debt-free to be able to get by.

Sorry you're getting all this dumped on you at once. My best wishes to you and your wife.

Thank you for your kindness.

 

[mystang52]

OP: One of your replies indicated a likely good outcome from your wife's treatment - no chemo or radiation. That being the case, and in light of your overall financial situation, I think the better course is to continue working to make it easier getting out of debt. FMLA can protect your job while you take a SHORT time off to stay with wife during treatment.
After she has recovered, go back to employment, pay off the debt with a higher income (while simultaneously building up a bigger lifetime pension), let the dust settle a bit, and then with cooler heads revisit timing of your retirement.

 

[Teacher Terry]

I just lost my 22k part time job. So now we gross 3900/month. No car payments and 650 house payment including taxes and insurance. We had to cut our budget and cut out travel. You will spend money to park your RV. Renting by the month is cheaper. You could park where you don’t need to pay but will be out in the middle of nowhere and you still have to dump regularly. Gas is not cheap. Some parks will not take a RV older than 15 years old and have breed restrictions for dogs. It’s due to insurance. So no pit bulls or mixes everywhere and some places no shepherds.

 

[Christian]

We have a RV and you will need repair money. Things are made of plastic and break frequently.

Not that kind of RV. We're looking at ordering a new 2020 Mercedes-Benz Sprinter cargo van for about $40K, and converting it ourselves. The vehicle itself will have a full bumper-to-bumper factory warranty and get 20 mpg. I can fix anything that I build inside of it, as well as handle all of the routine maintenance.

You also need a warm climate.

We figure that the wheels on the bottom of the RV will allow us to move to whatever kind of climate we happen to want.

If you buy a motor home you will need to pull a car and not all cars can be towed.

All cars can be towed- that's why God invented trailers. What you're talking about is called flat-towing. I am not a fan of flat-towing- you can't back up like you can with a trailer, and you're subjecting the flat-towed vehicle to absolutely everything you drag it over.

We will either store her car when we're not using it, tow it (on or in a proper trailer) behind the Sprinter, have her drive it as a chase vehicle, or some combination of the above.

If a 5 th wheel then a towing vehicle.

Don't want to do that either. Poor fuel mileage, difficult to find a place to park it, and it pretty much restricts you to pay campgrounds.

If you withdraw money then your pension will no longer be 3k?

Correct. My monthly pension amount would go down if I pull money out. There are numerous options as far as how I want to structure the payout.

If you didn’t pay into SS with your government job you will be affected by WEP. I just applied for SS and despite being 65 lost 463/month because of it and take home a whopping 363/month.

I paid into Social Security for 27 years prior to taking this job. Being WEP-free requires 30 years. I do not expect WEP to materially affect my SS.

 

[Patricia Lyn]

Hello, sorry to hear about your difficulties and the surgical infection! Geez! Hard enough to recover from surgery without that happening.
Ok ACA subsidies in a nutshell...you can qualify for a tax credit based on an ACA plan’s cost (there are different levels of coverage...bronze, silver, etc). But you have to be in an income window...can’t make less than (don’t quote me) 24,000 as a couple or they throw you onto medicaid and can’t make more than 64,000 as a couple or you don’t qualify for the subsidy. There are a couple of levels in between so say you make just over the 24,000/year mark, you would qualify for the maximum subsidy which would basically pay the premium for you. There are all sorts of subtleties and rules but it sounds like you could qualify for a nice subsidy for your wife. You personally would not get a subsidy since you have coverage through your work even after you retire.
Anyway, check it out. There are several good blogs online that explains it pretty well.
Good luck with everything. You sound like you have your direction mapped out...just need to make it happen and you are asking the right questions.

 

[Markola]

You seem like candidates for a highly-rated fee-only financial planner to me. DW and I have one and he knows all kinds of things I do not. There is no need to try to figure all this out on your own.

 

[Christian]

I just lost my 22k part time job.

I'm sorry to hear that, Terry.

So now we gross 3900/month. No car payments and 650 house payment including taxes and insurance.

Good for you. I wish I had done that well.

You will spend money to park your RV. You could park where you don’t need to pay but will be out in the middle of nowhere...

No we won't.

This is a plain-Jane Sprinter van, not a 40-foot corrugated aluminum and fiberglass box with brightly-colored graphics on the side. We will be able to park anywhere.

...and you still have to dump regularly.

No, we won't.

Planet Fitness has 1,742 locations all across the U.S., with unlimited hot showers and toilets, and it's $10 a month for both of us. That's just "Plan-A".

Ultimately we'll keep a porta-potty for emergencies, but neither one of us is a big fan of pooping in our own vehicle and then driving our poop around until we find an approved place to dispose of it. Nor do we want to be messing with "the stinky slinky", plumbing headaches, odors, leaks, maintenance, repairs, and finding a dump station to start with.

Gas is not cheap.

That's why we're planning something that gets 20 mpg, instead of something that gets 7 mpg.

Some parks will not take a RV older than 15 years old

We're not planning on staying in any parks, and our vehicle is so new that it hasn't even been built yet.

...and have breed restrictions for dogs. It’s due to insurance. So no pit bulls or mixes everywhere and some places no shepherds.

We're not planning on staying in any parks, nor are we planning any pit bulls or mixes or shepherds.

 

[Christian]

Hello, sorry to hear about your difficulties and the surgical infection! Geez! Hard enough to recover from surgery without that happening.
Ok ACA subsidies in a nutshell...you can qualify for a tax credit based on an ACA plan’s cost (there are different levels of coverage...bronze, silver, etc). But you have to be in an income window...can’t make less than (don’t quote me) 24,000 as a couple or they throw you onto medicaid and can’t make more than 64,000 as a couple or you don’t qualify for the subsidy. There are a couple of levels in between so say you make just over the 24,000/year mark, you would qualify for the maximum subsidy which would basically pay the premium for you. There are all sorts of subtleties and rules but it sounds like you could qualify for a nice subsidy for your wife. You personally would not get a subsidy since you have coverage through your work even after you retire.
Anyway, check it out. There are several good blogs online that explains it pretty well.
Good luck with everything. You sound like you have your direction mapped out...just need to make it happen and you are asking the right questions.

Wow, thanks.

Can you link me to some of the information that you're referring to? I could structure our income to be just under that $24K threshold if I needed to.

 

[Christian]

You seem like candidates for a highly-rated fee-only financial planner to me. DW and I have one and he knows all kinds of things I do not. There is no need to try to figure all this out on your own.

That's a tough one...

A financial planner will tell my wife that even though she's been without me so much already, that she needs to be without me even more, as I go back to work.

And that's assuming that I heal well enough to go back to work.

But thanks for your input.