Help me convince my wife...

[urn2bfree]

I retired. My wife still wanted to work. But lately the BS bucket is filling up for her, but she is paralyzed by fears.

Fear our portfolio will crash (60/40 with 2 1/2 +years in cash) - and a proposed WR of 3.3% on current value (not including the cash in the equation) easily supporting a generous monthly income.
But
Fear that health insurance will be unattainable or unaffordable or both. She Claims a friend (or is it a friend of a friend?) is currently paying $10,000 a month. Yes that is not a typo...$120,000 a year just to insure herself and her 3 children that this friend is somehow responsible for insuring... How is that possible or sustainable?

I figure $20,000 a year is a more reasonable amount to budget conservatively for health insurance for both of us. (Mid 50’s no serious health problems nor Rx's at present)

So what do the most brilliant retirees and wanna retirees on the Internet say?

 

[Sunset]

If your WR of 3.3% includes the 20K estimate for health insurance. I say retire now.

Any chance either of you can get employer health insurance due to retirement ?

 

[capjak]

ACA in Illinois for a couple with medium visits to doctor and mid 50s bronze is 14,000 per year to gold 25,000 per year total out of pocket

 

[evilanne]

see https://www.valuepenguin.com/average-cost-of-health-insurance
Note:

Older consumers will see higher rates with 30 year olds paying 1.135 times more, 40 year olds paying 1.3 times more, 50 year olds paying 1.786x and 64 year olds paying 3 times the cost listed.

 

[samclem]

urn2bfree: You can learn a lot about this by setting up an account at "healthcare.gov" and go through the steps of looking at the ACA marketplace plans in your area. Put in your estimated income and it will show if/what subsidies you'd get. With each plan offered you can see what what the premiums are, the deductibles, co-pays, out-of-pocket (OOP) max, etc. If you really want to go the extra mile, you can see if your docs accept various policies.

Of course, if the law changes, this will all be out the window.

 

[Aerides]

You need to ask her: What will make you feel comfortable? (and then just listen, don't jump to solve each issue).

And don't focus so much on number (but have them ready to produce. not "I figure" but "here, this is what it will be").

Guarantee you HI is not her only concern.

 

[Another Reader]

Insurance prices go up dramatically as you get into your late 50's and early 60's. You can easily drop $25-$30,000 in today's prices for two people on a decent plan with good coverage in your early 60's in my area of California plus substantial OOP. I would plan on at least mid $30,000's for insurance for both of you as you get into your 60's and experience more issues while the ACA is in place. Post ACA is anyone's guess.

ETA: I have pre-Medicare retiree insurance from my last employer. It's subsidized to a modest extent and the coverage is broad with minimal co-pays. With the sudden health issues I have experienced in the last year, I would have been in deep do do with one of the Covered California bronze plans. Skimping on health insurance is a great idea until it's not.

 

[samclem]

You need to ask her: What will make you feel comfortable? (and then just listen, don't jump to solve each issue).

It's Not About the Nail

 

[tmitchell]

How are ACA premiums calculated for early retirees? Do dividends & sold index fund shares count as "income"?

 

[pb4uski]

How are ACA premiums calculated for early retirees? ....

The same as everyone else. See healthsherpa.com

... Do dividends & sold index fund shares count as "income"?

Yes... same as everyone else... starts with tax return AGI which would include dividends and captial gains.

 

[tmitchell]

Yes... same as everyone else... starts with tax return AGI which would include dividends and captial gains.[/QUOTE]

Does that include if you sell shares outright as well?

 

[broadway]

Yes... same as everyone else... starts with tax return AGI which would include dividends and captial gains.

Does that include if you sell shares outright as well?

I am not sure what you mean by "outright".
Haven't you ever sold shares of stocks or shares of a mutual fund before?
Didn't you report them on Schedule D?

Any sale of assets from a non-tax deferred account counts as income.

 

[2017ish]

Yes... same as everyone else... starts with tax return AGI which would include dividends and captial gains.

Does that include if you sell shares outright as well?

I am not sure what you mean by "outright".
Haven't you ever sold shares of stocks or shares of a mutual fund before?
Didn't you report them on Schedule D?

Any sale of assets from a non-tax deferred account counts as income.

To the extent the sales proceeds exceed the cost of those shares. If you sell only stocks that have stayed the same or gone down in value, you have no income (good luck on that after the run up of the past few years though!)

 

[tmitchell]

Got it. In fact I've never sold any stocks at a profit, which is why I'm asking. I'm hoping to leave my job in about a year and starting to make the calculations! Thanks all.

 

[brucethebroker]

Assume the worst case and discuss it. If all Hell broke loose, and your income dropped, what could you do to make money (at that time). Consult? Drive an Uber? Bag groceries? Starbucks (free coffee?). (As a former school teacher (30 yrs ago), I would be able to substitute teach for about $100 a day if needed.) There are plenty of PT opportunities to make enough money to survive if needed. Would you want to? Most likley, no. But could you, for a year or two, until things improved?

That seemed to help DW pull the trigger on her career. Good luck.

 

[jjonas]

ACA in Illinois for a couple with medium visits to doctor and mid 50s bronze is 14,000 per year to gold 25,000 per year total out of pocket

Insurance prices go up dramatically as you get into your late 50's and early 60's. You can easily drop $25-$30,000 in today's prices for two people on a decent plan with good coverage in your early 60's in my area of California plus substantial OOP. I would plan on at least mid $30,000's for insurance for both of you as you get into your 60's and experience more issues while the ACA is in place. Post ACA is anyone's guess.

Is this assuming that you're hitting the deductible every single year and not getting a tax credit? I've been reading a lot about people claiming you'll pay 20-30k per hear in health care premiums and/or out of pocket costs but this largely depends on the state where you live and your income. I would suggest the OP go to healthcare.gov or your states health care exchange website and run some estimates. In New Hampshire, for two people in their mid 50's with 54k per year in income, medium doctor visits, max out of pocket for a silver plan is 10k, monthly premiums $448 per month, estimated total yearly costs $11098.

For a silver plan in Illinois for the same scenario as above, it certainly is a higher monthly premium but the estimated yearly cost is about 13k per year, $762 monthly premiums. In California, $655 per month for monthly premiums, max out of pocket $13500.

I'm fairly new to investigating health care costs and premiums as I'm in the beginning stages of planning my retirement (currently covered by an employer plan). Perhaps I'm misunderstanding something.

All this is might be irrelevant in 2018 but just wanted to find out where people are getting these estimates.

 

[urn2bfree]

I believe the problem is found in the various answers about health care that suggest checking healthcare.gov. And then finish up noting that in 2018 all of this could change or may be irrelevant.
I realize all retirement planning has uncertainty - it is the incredibly unstable health care cost forecast which seems to paralyze DW more than anything.
I remember starting saving for our kids' college tuition 24 years ago. I knew we would never qualify for any financial aid ( a sort of good problem, like owing more taxes). We were told it will cost $100,000 a year to send a kid to college by the time our kids reach that age. These forecasts were not just wildly off. They had to be. Increasing costs generally cannot grow unchecked.
It reminds me of the things one hears at the beginning of baseball season - "if he continues at this pace he will hit 100 home runs this year". Things never continue in straight lines....but.
But.
BUT Health care insurance costs are different. In the US, anyway.

 

[marko]

Fear that health insurance will be unattainable or unaffordable or both. She Claims a friend (or is it a friend of a friend?) is currently paying $10,000 a month. Yes that is not a typo...$120,000 a year just to insure herself and her 3 children that this friend is somehow responsible for insuring... How is that possible or sustainable?

I figure $20,000 a year is a more reasonable amount to budget conservatively for health insurance for both of us. (Mid 50’s no serious health problems nor Rx's at present)

First thing I would do is spend about 20 minutes online and find out what HI will cost YOU. Regardless, $120K for HI sounds way, way out of line. Someone's fibbing or misinformed.

 

[retire2020]

I just enrolled through Healthcare.gov and picked my plan for NJ starting June 1st. I was quoted $857/month for a family of five after ACA subsidy of $650 for estimated O-MAGI of $107,000. When I got the bill I was happily surprised that my premium for month is $682 about $175 less than the quoted price.

Plan is from Horizon BCBS Omnia Silver HSA

 

[Another Reader]

Is this assuming that you're hitting the deductible every single year and not getting a tax credit? I've been reading a lot about people claiming you'll pay 20-30k per hear in health care premiums and/or out of pocket costs but this largely depends on the state where you live and your income. I would suggest the OP go to healthcare.gov or your states health care exchange website and run some estimates. In New Hampshire, for two people in their mid 50's with 54k per year in income, medium doctor visits, max out of pocket for a silver plan is 10k, monthly premiums $448 per month, estimated total yearly costs $11098.

For a silver plan in Illinois for the same scenario as above, it certainly is a higher monthly premium but the estimated yearly cost is about 13k per year, $762 monthly premiums. In California, $655 per month for monthly premiums, max out of pocket $13500.

I'm fairly new to investigating health care costs and premiums as I'm in the beginning stages of planning my retirement (currently covered by an employer plan). Perhaps I'm misunderstanding something.

All this is might be irrelevant in 2018 but just wanted to find out where people are getting these estimates.

Covered California, age 63, a plan that doctors here will actually accept, plus OOP. OP's income level appears above the level for subsidies.

 

[Another Reader]

Is this assuming that you're hitting the deductible every single year and not getting a tax credit? I've been reading a lot about people claiming you'll pay 20-30k per hear in health care premiums and/or out of pocket costs but this largely depends on the state where you live and your income. I would suggest the OP go to healthcare.gov or your states health care exchange website and run some estimates. In New Hampshire, for two people in their mid 50's with 54k per year in income, medium doctor visits, max out of pocket for a silver plan is 10k, monthly premiums $448 per month, estimated total yearly costs $11098.

For a silver plan in Illinois for the same scenario as above, it certainly is a higher monthly premium but the estimated yearly cost is about 13k per year, $762 monthly premiums. In California, $655 per month for monthly premiums, max out of pocket $13500.

I'm fairly new to investigating health care costs and premiums as I'm in the beginning stages of planning my retirement (currently covered by an employer plan). Perhaps I'm misunderstanding something.

All this is might be irrelevant in 2018 but just wanted to find out where people are getting these estimates.

For young ER folks that can live on lower incomes and live in low or moderate COL states, the ACA has been a big help. Look at FUEGO (Root of Good). He's worked the ACA to his advantage. People with higher incomes in their 50's are paying through the nose. And Medicaid might work for FUEGO's kids in North Carolina, but the California version (Medi-Cal) is worthless.

 

[Red Badger]

It's Not About the Nail

Been a few years since I saw this. LMAO! Thanks!

 

[ERD50]

Been a few years since I saw this. LMAO! Thanks!

+1. And my wife did NOT think it was funny at all! What does that tell you!

And the post by Aerides did make me think of this video though " (and then just listen, don't jump to solve each issue).". And I'm sure she's right.

-ERD50

 

[Mulligan]

First thing I would do is spend about 20 minutes online and find out what HI will cost YOU. Regardless, $120K for HI sounds way, way out of line. Someone's fibbing or misinformed.

Has to be...At that price every member in the family can go to surgery center in Oklahoma, pay cash, and everyone receive total knee replacements every year for both legs. Or if that sounds boring the family could have 11 bypass graft surgeries. There would be no incentive to have insurance at that price. Shove the kids inside a bubble and tell them they arent leaving it until they turn 18. $120,000 in premiums for 4 people (3 kids), that is nonsense talk.

 

[ugeauxgirl]

You need to ask her: What will make you feel comfortable? (and then just listen, don't jump to solve each issue).

And don't focus so much on number (but have them ready to produce. not "I figure" but "here, this is what it will be").

Guarantee you HI is not her only concern.

Yes- My DH grew up poor and is having trouble with this because his parents replied to every question with "we can't afford to" DH did this in the first years we were married- we had to sit down and have a talk. We are both very conservative with our considerable income but we COULD afford a vacation. It took my husband YEARS to accept the fact that yes, we could retire and I was simply going to, whether he liked it or not. He's coming around though, and after years of denial re the numbers and countless charts and graphs, he's gotten it. We have enough. He doesn't have to retire if it makes him feel better to work, but he gets that we are good. Its a psychological thing, not a numbers thing.