Fire and ss and medicare

[misty57]

We will both be 55 this year and DH is planning to FIRE probably before the end of the year. What are people in their mid-to-late 50s doing with SS and Medicare when determining their SWR? We want to do some traveling sooner rather than later in retirement, but the extent of it is obviously tied to our SWR which changes based on whether we will receive SS and Medicare.....or not, and the difference is HUGE.

 

[ProGolferWannabe]

While I certainly cannot predict the future, I would guess at your ages, you would likely see minimal changes to your social security benefits; and I think even the Ryan proposal to address medicare would only impact folks younger than yourselves. My guess is you can reasonably assume that your benefits as you understand them today, will be there for yout tomorrow. Having said that, however, there are no guarantees---maybe only one trip to Europe a year instead of two might be something to consider.

 

[misty57]

While I certainly cannot predict the future, I would guess at your ages, you would likely see minimal changes to your social security benefits; and I think even the Ryan proposal to address medicare would only impact folks younger than yourselves. My guess is you can reasonably assume that your benefits as you understand them today, will be there for yout tomorrow. Having said that, however, there are no guarantees---maybe only one trip to Europe a year instead of two might be something to consider.

That is what I'm thinking, but if it turns out to be something different we could be screwed.

It is so frustrating having saved for early retirement for all of these years (since DH was 24) and FINALLY getting here and not knowing which way is up.

You don't think anyone 55 and older will be means tested beyond what is already in place today?

 

[ProGolferWannabe]

That is what I'm thinking, but if it turns out to be something different we could be screwed.

It is so frustrating having saved for early retirement for all of these years (since DH was 24) and FINALLY getting here and not knowing which way is up.

You don't think anyone 55 and older will be means tested beyond what is already in place today?

Well, like I said, I don't know for sure what the future holds, but what I do know is that if you are uncertain, you have some choices: (1) limit your spending as I suggested; or (2) work longer. Wish I could tell you what will happen--I would love being all knowing; would certainly simplify my life.

 

[Katsmeow]

I am 57, DH is 64. He retired when he was 62 and I semi-retired. The reality is that if we start out assuming that we won't receive SS benefits fairly close to those currently projected then he wouldn't have retired when he did and I would be working full time.

I envy those who can say that they see SS benefits/medicare solely as an extra and they could retire just fine without them. But...that isn't us. We couldn't retire just fine without them.

I feel that I am at a bit more risk than my DH, but even so I think it is highly likely that I will receive SS benefits. FWIW, in planning I've assumed that 100% of our benefits will be taxed versus current rules.

I have played with what would happen if, for example, DH received SS benefits and I received nothing. It would require some significant changes to our plans. That said, I think that is extremely unlikely.

The reality is that if we wanted to be able to be in a position where SS and medicare were totally unnecessary for us and were just extras then we wouldn't be able to retire for a very long time. And that would be choosing not to retire just because something negative might have a small chance of happening. We've elected not to make that choice.

 

[Nords]

You don't think anyone 55 and older will be means tested beyond what is already in place today?

It's hard to assess political risk (in addition to all the other portfolio risks).

One way to look at the problem would be to decide that if this one risk could screw up your ER, then you're too close to the edge and should have a little more in your portfolio.

Another way to look at it would be to consider ways to earn part-time income. Some people have no fear of working in their 60s, others would rather sell their own blood plasma...

 

[Alan]

It is exactly 2 years since we ER'ed at 55 and 54.

I've assumed Medicare will be there, and expect SS at 100% of the estimates I get using the SS calculator on the website.

Our budget includes $15k / year in health costs as my retiree HI could evaporate at any time, and I can't see changes to Medicare being any worse than that.

We are doing our traveling while we are healthy and can afford it. First year of retirement we spent 5 months away in Colorado, Canada and England.

Second year we spent 7 months away in England, Ireland and Madeira.

This year we have planned 4 months away in 6 different States plus Canada.

If I'm completely wrong I won't regret what we are doing now, and we'll make adjustments or go back to work or whatever.

 

[nun]

We want to do some traveling sooner rather than later in retirement, but the extent of it is obviously tied to our SWR which changes based on whether we will receive SS and Medicare.....or not, and the difference is HUGE.

Plan for the future, but don't let it stop you from doing what you want in ER.
SS and Medicare will be there for you, but run your numbers without them to see how you would fare.

Me, I've doubled down on the social safely net as I've paid into both the US and the UK systems. If one gets cut I still have the other, and if both get cut I can move to Germany and claim benefits there....thank you EU citizenship.

 

[misty57]

It's hard to assess political risk (in addition to all the other portfolio risks).

One way to look at the problem would be to decide that if this one risk could screw up your ER, then you're too close to the edge and should have a little more in your portfolio.

Another way to look at it would be to consider ways to earn part-time income. Some people have no fear of working in their 60s, others would rather sell their own blood plasma...

DH is already working beyond what we planned, waiting on a possible VLO package that has been rumored might be offered in the next few months. He works way too many hours and the stress is ridiculous. He already has a health concern that could limit his ability to travel as he ages.

It wouldn't screw up our ER per se, but it is a determinant of how much we can spend in the early years when we want to travel. By the time we have absolute certainty in the matter, we've either blown $$ that we might need or have not spent what we could have, denying ourselves life's experiences and leaving too much on the table in the end.

It is really frustrating when trying to determine a SWR and I wondered how people in a similar circumstance might be handling it.

 

[Alan]

It is really frustrating when trying to determine a SWR and I wondered how people in a similar circumstance might be handling it.

To add to my post above, I set an SWR of 3%.

 

[REWahoo]

It is really frustrating when trying to determine a SWR and I wondered how people in a similar circumstance might be handling it.

With the stress, frustration and medical problems, what would your DH's decision be about pulling the plug if there were never any indication of a possible VLO package? I'm guessing he'd already be drafting his retirement papers.

Few of us ever get a bulletproof guarantee of a "S" WR. If he waits for that to happen you'll be decreasing your time to enjoy retirement and increasing the odds health problems will take the decision out of your hands.

 

[misty57]

It is exactly 2 years since we ER'ed at 55 and 54.

I've assumed Medicare will be there, and expect SS at 100% of the estimates I get using the SS calculator on the website.

Our budget includes $15k / year in health costs as my retiree HI could evaporate at any time, and I can't see changes to Medicare being any worse than that.

We are doing our traveling while we are healthy and can afford it. First year of retirement we spent 5 months away in Colorado, Canada and England.

Second year we spent 7 months away in England, Ireland and Madeira.

This year we have planned 4 months away in 6 different States plus Canada.

If I'm completely wrong I won't regret what we are doing now, and we'll make adjustments or go back to work or whatever.

We have budgeted $14K/yr. for health care premiums (with retiree HI subsidized premiums), dental, and vision. Our portion of the retiree premiums have already increased 1500% over what they were just 10 years ago.

I guess we'll plan to travel every year until we hear that something has changed; but my gut tells me that since we'll both hit the "magical" 55 this year, we'll get something in the way of SS and Medicare, even if it might be a somewhat reduced benefit from what it is today.

 

[misty57]

To add to my post above, I set an SWR of 3%.

Thank you so much for taking the time to comment. I was thinking somewhere between 2.5 and 3%.

 

[Alan]

With the stress, frustration and medical problems, what would your DH's decision be about pulling the plug if there were never any indication of a possible VLO package? I'm guessing he'd already be drafting his retirement papers.

Few of us ever get a bulletproof guarantee of a "S" WR. If he waits for that to happen you'll be decreasing your time to enjoy retirement and increasing the odds health problems will take the decision out of your hands.

+1

Yesterday I helped a good friend do his taxes. He usually does them himself by hand but 2011 was much more complicated so we used TT and did them together.

For years he has been looking to retire. His wife ER'ed at 60 2 years ago on a full teacher's pension and he waited until May last year when he was 62 and collecting SS.

She died in May. They had been married 40 years. He wished he had retired 2 years ago.

 

[misty57]

With the stress, frustration and medical problems, what would your DH's decision be about pulling the plug if there were never any indication of a possible VLO package? I'm guessing he'd already be drafting his retirement papers.

Few of us ever get a bulletproof guarantee of a "S" WR. If he waits for that to happen you'll be decreasing your time to enjoy retirement and increasing the odds health problems will take the decision out of your hands.

IF there had been no rumor of a VLO his last day of work would have been 1/31.

 

[misty57]

+1

Yesterday I helped a good friend do his taxes. He usually does them himself by hand but 2011 was much more complicated so we used TT and did them together.

For years he has been looking to retire. His wife ER'ed at 60 2 years ago on a full teacher's pension and he waited until May last year when he was 62 and collecting SS.

She died in May. They had been married 40 years. He wished he had retired 2 years ago.

I COMPLETELY get your point.

 

[Alan]

Thank you so much for taking the time to comment. I was thinking somewhere between 2.5 and 3%.

If that includes a generous travel budget then I wouldn't hesitate. If income from SS goes below what you plan and/or Medicare costs more than you plan, then you cut back on your traveling at the time those things happen.

It's all a matter of balancing risk and reward.

 

[Alan]

I guess we'll plan to travel every year until we hear that something has changed; but my gut tells me that since we'll both hit the "magical" 55 this year, we'll get something in the way of SS and Medicare, even if it might be a somewhat reduced benefit from what it is today.

Nothing is going to change policy-wise this year on SS and Medicare, and if/when it is changed I can't see them not limiting the pain to over 55's.

 

[misty57]

If that includes a generous travel budget then I wouldn't hesitate. If income from SS goes below what you plan and/or Medicare costs more than you plan, then you cut back on your traveling at the time those things happen.

It's all a matter of balancing risk and reward.

Well, if it did, it would be a no-brainer. That's the problem. Like I said, I guess we'll assume that we'll get some benefits, spend more up front and less on the back end.

I really appreciate your input.

 

[REWahoo]

... I guess we'll assume that we'll get some benefits, spend more up front and less on the back end.

That's what we did almost 7 years ago and so far it has worked out well for us. Looking back from the luxury of hindsight, I'd be very disappointed had I delayed retiring to pad the portfolio. Those first few years were really nice.

 

[Alan]

Well, if it did, it would be a no-brainer. That's the problem. Like I said, I guess we'll assume that we'll get some benefits, spend more up front and less on the back end.

I think you'll be pleased to make that decision. Good luck.

 

[Nords]

It wouldn't screw up our ER per se, but it is a determinant of how much we can spend in the early years when we want to travel. By the time we have absolute certainty in the matter, we've either blown $$ that we might need or have not spent what we could have, denying ourselves life's experiences and leaving too much on the table in the end.
It is really frustrating when trying to determine a SWR and I wondered how people in a similar circumstance might be handling it.

In that case I'd ER now, spend at a 4% SWR (maybe a bit more if you plan a victory tour for the first couple years), and be ready to cut back later if necessary.

90% of the ER calculators do not account for a variable withdrawal. Humans, however, will almost always cut back their spending during a recession to help preserve their portfolio.

 

[misty57]

That's what we did almost 7 years ago and so far it has worked out well for us. Looking back from the luxury of hindsight, I'd be very disappointed had I delayed retiring to pad the portfolio. Those first few years were really nice.

Ya, I really don't want DH to wait much longer; but the VLO payout would be 28 weeks of pay. He decided that it was too much not to wait it out for a few more months.

 

[misty57]

I think you'll be pleased to make that decision. Good luck.

Thanks Alan.

 

[misty57]

In that case I'd ER now, spend at a 4% SWR (maybe a bit more if you plan a victory tour for the first couple years), and be ready to cut back later if necessary.

90% of the ER calculators do not account for a variable withdrawal. Humans, however, will almost always cut back their spending during a recession to help preserve their portfolio.

Thanks for your input.