Husband wants to retire but we are worried about healthcare

[WineLover01]

Hello - am brand new to this forum and am very impressed with the information and knowledge here. I am semi-retired - (age 52) as a part-time marketing consultant, and my husband (age 50) works full time in the defense electronics industry. He has been at his current company almost 10 years and wants to retire as soon as possible (so he can concentrate on riding his Harley and bothering me all day!!) but since he will get a small pension ($7,500 per year) if he holds off until Jan 2011 that is a no-brainer.

We have about $2.85 million in financial assets but $1.6 million of that is in IRAs and his 401k, so the earliest we can tap any of that is when I turn 59 1/2 - unless I do 72(t) withdrawals - (my own retirement assets are approx. $740,000.) We also own our home outright and separate from the figures above is the money we have saved in a 529 for our only daughter's college education -- for all four years (she is a freshman - still getting used to that!)

Expenses are about $84K per year but that includes $12K in contributions to personal savings; income is $220K, total tax rate is 35% per year (fed and CA state.)

Husband will also probably inherit approx. $1 million within the next 10 years from his 89 year old mother.

So, we are primarily concerned with the whole healthcare issue - he has a good plan with his company which we are happy with - if we have to go on the individual market, I can buy it, make him an employee of mine and deduct the cost for us both and pay separately for our daughter, but our main worry is the uncertainty of healthcare reform and what it might mean for us. We are worried about going into a gov. system and it is all so uncertain right now. We are both pretty healthy, but I have high blood pressure and he has high cholesterol - sigh.

Any suggestions or insight would be greatly appreciated! Are we being too cautious or should be go for it next year? Or maybe not yet? If I need to provide additional information let me know.

 

[dex]

Seriously?
No, Seriously?
S-e-r-i-o-u-s-l-y?
S
E
R
I
O
U
S
L
Y
?

 

[Brat]

If your husband can hold on for 2 years much of the confusion around health insurance should be resolved. Often we can suck-it-up when there is a plan in place and the goal not far away. Set a target, agree on a plan and work to achieve it.

 

[Coach]

Hi WineLover and welcome to the forum!

You're very well off, with financial assets enough to support a couple of retirements besides your own. In your shoes I would not let worry about health care reform stop me from doing what I wanted to do.

Welcome!

Coach

 

[Htown Harry]

Welcome, Winelover01.

What Dex means to say is your numbers will likely work just fine. You are indeed being cautious. At least I think that's the message. .

If I am reading your numbers correctly, your need for funds from investments after retiring in 2011 will be $84k -$12k current savings - $7k pension = $65,000, plus incremental costs for individual health insurance. Using the 4% "safe withdrawal rate" rule of thumb, a nest egg of $1.6 - $2 million will do the trick. You have more, by a very wide margin.

One thing that would help to clarify - are you including investment income in the $220k figure?

Be sure you check out the firecalc calculator linked at the bottom of the page and the FAQ's on the "Forums" tab near the top. The search function will also be very helpful in finding specific ideas on health care shopping.

 

[WineLover01]

Wow - well that was "helpful ". . . Husband is just as concerned as I am (if not more so) about the health insurance issue.

 

[73ss454]

With that type of money you're waisting your time worrying about health ins.?

Buy some Health Ins and go enjoy your life.

 

[WineLover01]

Thank you Htown Harry, Coach, Brat and 73ss for the useful replies.

 

[Marc1962]

Wow, some surprisingly harsh responses here. I say "surprisingly" because I posted something similar in August, and I found the ensuing comments and conversation to be encouraging, helpful, and informative. I have also read dozens of other introductory postings, many of which pose questions like yours and mine, and the tone in several of the postings above seems atypical to me. Anyway, I would like to welcome you to the forum and encourage you to stick around.

Regarding your specific question, I have learned a lot in the past two months from these forums, from bogleheads.org, and from a half dozen recommended books. Based on all of that freshly gained knowledge , I agree with the general sentiment that your resources are ample and that you should not worry about health insurance.

Congratulations on achieving financial independence!

 

[Bestwifeever]

Welcome to the boards!

Run your numbers through firecalc (link at bottom of page) and you should find you have more than enough $$$ to generate to cover the expenses as stated, even without the pension your DH will receive in January. Healthcare is on all our minds, but your nest egg seems quite ample to cover the cost of insurance (and you probably are a good candidate for a very high deductible policy as you can afford the deductibles imho).

Several motorcycle riders on the boards, so your husband's hobby will definitely be supported here!

 

[haha]

Any suggestions or insight would be greatly appreciated! Are we being too cautious or should be go for it next year? Or maybe not yet? If I need to provide additional information let me know.

I would worry more about the motorcycle than about health insurance. You have plenty of money, no matter what happens .You could always go to Thailand and buy great care out of pocket.

Ha

 

[Richard8655]

You shouldn't be worried about healthcare reform. The law doesn't limit your freedom to buy whatever health insurance you want. It's not a government-run system like European or the Canadian systems, but rather reform of private insurance and expansion of availability to people who can't afford it. It stops insurance companies from throwing people off when they get sick. It's actually long overdue and should be welcomed. It takes affect in full in 2014.

 

[stoutboy]

Obamacare is basically a gift to the insurance companies. Business as usual and record profits await them. It's a smidgen better than what we had, but without a public option, we are headed nowhere. It's interesting to me that even when the countries with national health care make their occasional shifts to the right, national health care remains a given. Not one has abandoned it, nor will they. The United States has much to learn from the civilized world.

As far as the OP, she and her husband are in fantastic shape financially, and I congratulate them.

You shouldn't be worried about healthcare reform. The law doesn't limit your freedom to buy whatever health insurance you want. It's not a government-run system like European or the Canadian systems, but rather reform of private insurance and expansion of availability to people who can't afford it. It stops insurance companies from throwing people off when they get sick. It's actually long overdue and should be welcomed. It takes affect in full in 2014.

 

[travelover]

Wow, some surprisingly harsh responses here. .............

Yea, I think it is grumpiness run over from the currently hot pension envy threads.

Congratulations to the OP.

 

[Martha]

You have plenty of money for the amount of expenses you have. You can buy health insurance. If your husband can go on your plan great, if not, look at the FAQ on buying private health insurance. As others have said, reform did not bring a government system, it remains a private system. You will still be buying from insurance companies, not from the government.

 

[chinaco]

I hate to be the one to break the news to you... but it looks like you're going to need to work another 20 years!

 

[ronocnikral]

welcome. and it should be relatively inexpensive to provide health insurance to your daughter through the school. not sure if that is going away b/c of the new "reform."

My questions are: where is the missing $60k going (220-35%-84 = 59)? and have you received quotes to understand what the cost of health insurance is today?

sometimes overthinking a situation can make it seem impossible. there's only one way to find out if it will work. meanwhile, life ticks by...

 

[Rich_by_the_Bay]

Sounds like you are financially there.

For me there were two health insurance issues: cost (which was very high) and eligibility (which I was able to qualify for with some HR games (I had to "retire" rather than "resign" and then got on a retiree group policy). We just decided to bite the bullet and pay the $1100 per month, now a bit lower due to an HSA opportunity.

My advice: if you are certain about eligibility, pay the premiums and enjoy.

 

[walkinwood]

Go to ehealthinsurance.com and find out what it would cost. The quotes are good if you have not pre-existing conditions.

Also go to Health Insurance and Coverage Help for Consumers Everywhere to find out details about health insurance in CA.

Welcome to the board. Do some research and you may find that you have nothing to worry about re: health insurance.

 

[Moemg]

Welcome Wine lover ,I would go online and apply for a policy then you will get a real quote and until you sign those final papers you are under no obligation. You may be surprised that it is not as bad as you are thinking .

 

[grasshopper]

Retired 5 years ago,on a lot less than your assets and still buy private health care (BCBS).

 

[Emeritus]

You shouldn't be worried about healthcare reform. The law doesn't limit your freedom to buy whatever health insurance you want. It's not a government-run system like European or the Canadian systems, but rather reform of private insurance and expansion of availability to people who can't afford it. It stops insurance companies from throwing people off when they get sick. It's actually long overdue and should be welcomed. It takes affect in full in 2014.

All my German colleagues have government regulated private insurance. You have to distinguish between government regulated and government run

 

[Emeritus]

So, we are primarily concerned with the whole healthcare issue - he has a good plan with his company which we are happy with - .

Many if not most company health insurance plans include a valuable conversion right. I suggest checking it out iwth the appropriate people .

FWIW you are almost a poster child for high deductable coverage. You need catastrophic coverage, not first dollar.

 

[MichaelB]

Hi winelover. Welcome to the forum. I think your questions and concerns are valid.

Financially you seem to be in good shape, even without the inheritance. As Rich pointed out, healthcare insurance is really two issues – eligibility and cost.

Determining eligibility is hard, because it depends on an assessment of your current health along with your medical history. An insurance agent could probably do it but you would need to provide application level detail. When I was in your situation I got online quotes and even a BCBS quote – but once we applied we were both denied coverage, and once we were denied coverage we became permanently ineligible for individual coverage (in Fla).

If you have a real ongoing business with a payroll of 2 or more you are guaranteed coverage in CA. The policy is more expensive that what you are paying now – probably 50% higher than the unsubsidized rate for a large group policy. You can put your husband on your payroll as a phantom employee but to pass inspection by the insurance company you would need to pay payroll taxes on his phantom income. This option is costly – but it works.

Another option is his cobra. That would give 18 months at 102% of the unsubsidized rate he currently enjoys. Higher than you are paying now, but still much lower than a small group rate, and guaranteed access. After 18 months you can convert to a conversion plan. The rates here may be high but access is usually assured. This is probably your best option if individual coverage is unobtainable because it guarantees your current coverage.

You may be eligible for individual policies. If so, the rates will probably be less expensive than small group, simply because they have screened out most candidates. Keep in mind that with individual policies the rules are “anything goes”, so there are few guarantees.

For financial planning purposes, a conservative projection would be to cost 30 - 50% more than the unsubsidized large group rate your currently enjoy. It's possible they cost less, but not likely.

 

[FinanceDude]

You shouldn't be worried about healthcare reform. The law doesn't limit your freedom to buy whatever health insurance you want. It's not a government-run system like European or the Canadian systems, but rather reform of private insurance and expansion of availability to people who can't afford it. It stops insurance companies from throwing people off when they get sick. It's actually long overdue and should be welcomed. It takes affect in full in 2014.

Uh.ok...........