Wow. Just found this thread again (link from another thread) and read thru it all. Thank you Imoldernu for so much great information! You and your bride are certainly an inspiration to most er/esr-wannabees. My wife and I are ESR'd since 2/13 at age 49. We still have younger kids (ages 11 and 9), so it's a little tough to pack up and head to the hills (your campground), but the ESR thingy will allow our assets (mostly rental properties we self-manage) to continue to grow for a number of years while the mortgages are paid down. We certainly look forward to the days when we can travel between homes/locations whenever we want. Again, many thanks for your information and anecdotes. Best of luck to you in holding off Phase II as long as possible!
Sharing 23 years of Frugal Retirement
- Thread starter imoldernu
- Start date
robnplunder
Thinks s/he gets paid by the post
I've read thousands of posts in numerous forums. This thread is one of the best I've read. Thanks OP and others who responded/contributed. I've learned a lot. I will revisit this thread as reference.
I've been fascinated with this simple formula. When I calculate it with my numbers I get about a 6.5% withdrawal rate based on:
1. nestegg expected interest return= conservative 3.5% (I'm kind of allowing for a little inflation here)
2. nestegg / remaining life expectancy of 33 years
3. total of 1 +2 /nestegg is 6.5%
am I doing this right? I've only run a couple of subsequent years and it looks like the WDR will remain high % but the dollars obviously get smaller. Here is where I'm hearing the OP say he runs the 'yearly' double check to make adjustments... in other words, the strategy is intended to be flexible, not absolute..
My reason for being interested is that my DW and I have no desire to leave a legacy and I feel most approaches are on the conservative side. This approach is less conservative while still allowing for the unknowns. In any event, thanks imoldernu for these insightful ideas...
Katsmeow
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It seems to me that as people get older this may need revision. This basically seems to assume that either you die at 85 or that after 85 you live only on SS (there wouldn't be any portfolio left to provide any income). The thing is that I think it would be hard to live only on SS for the average person (not impossible, just hard). For someone age 60, projecting to age 85 will probably work for many people since they will die by age 85. But, as you approach 85 the likelihood that you will live past 85 increases. That is, when my mom was 50, it probably didn't seem very likely she would live to 90 (and wasn't all that likely). Now that she is 89 the chances of living to 90 are quite high.
So, it would seem this plan would need to ratchet up the 85 as you get closer to 85.
Originally Posted by Live And Learn View Post
This thread is priceless. Thank you imoldernu.
+1
Probably a best of...
I second that and very much appreciate the time it took imoldrnu to post it all. I'm still digesting the wisdom contained in his remarks.
This thread is priceless. Thank you imoldernu.
+1
Probably a best of...
I second that and very much appreciate the time it took imoldrnu to post it all. I'm still digesting the wisdom contained in his remarks.
onebigdummy
Dryer sheet wannabe
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I liked it!
fisherman
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I also think this is the best thread overall here. There are many good ones on many subjects but this one is special.
Please make it a sticky thread Mods.
imoldernu Thank you for all the time you took to keep notes and post this info. It is so useful to so many.
Please make it a sticky thread Mods.
imoldernu Thank you for all the time you took to keep notes and post this info. It is so useful to so many.
A while back, I mentioned the initial onset of Alzheimers. I am putting this post into the "sharing" thread because it represents only my own thinking. It is not meant to be a subject for discussion, but a first person experience. Hopefully, as we go along, I can add to these thoughts, not as a matter of advice, but as a baseline measure.
As I near age 80, (a few years away), the subject is dear to my heart. With genetics working against me, Alzheimers is not just a "fear", but a work in progress. I am keeping a journal, just for myself, to be able to look back as long as I am able, and to measure the progression.
I look at this from a different perspective... not as one who is worried about "getting" AZ, or having to deal with parents, friends or relatives who have it... but from learning how to accept it, and deal with the progression.
First, Alzheimers is not an on/off disease, the way you would turn on a light... but more like a dimmer swtch. The only real question is how fast the slide into the serious and debilitating inevitable helplessness.
I try not to give advice, as everyone is different, but some thoughts on my own situation:
-On testing, or doctor's diagnosis - No! To what gain? Perhaps drugs to delay or extend the onset... but at best, current phamacology offers only a slight delay.
-The second part of this "no diagnosis" is the downside that it presents. Friends and relative "hovering" and watching for every indication of problems. Bad enough that I have short term memory problems, but the most irritating thing about that is the constant "OH... everyone has memory lapses... You don't have a problem ". I am dreadfully afraid I'm going to do something drastic to the next person who says that.
-The next part is the internal struggle, to live a normal life, and to begin developing way to cope with the coming years. It's the short term memory that causes the most problems. I honestly don't think that the deep seated intellect is affected. The interest in learning, if anything, is more intense than ever. Curiosity and problem solving has become more entrenched. Perhaps with less pressure from the day to day memory requirements, I am left with more time to pursue knowledge as goal. A happy side effect.
-Freedom... this may be the biggest part of the "no diagnosis" insistance. Once a medical decision has been reached, it becomes a death knell to freedom. I have yet to meet anyone with any degree of Alzheimers who voluntarily accepts the restrictions that come with that life sentence ... This accounts for the struggle that families have in getting loved ones to be diagnosed.
Just imagine... no car... no going out alone... sideways glances always... So no thanks... I'm fine.
-A side note... about Alzheimers and Intelligence... I'm not sure there's a connection between the problems associated with AZ and intelligence... especially in the early stages. Probably so with regard to the testing... intelligence as measured by verbal and cognitive and physical tasks, but not basic intelligence. In my own case, measurement of 145 WB. I am sure that a written test today would probably be below 100, though I don't believe it measures the thinking power or the deep cerebral connections for reasoning and problem solving. This could change.
-The time line... wow... the biggest question. I'd like to think it will be measured in years... hopefully 5 to 10 years, but am prepared for whatever happens.
As we go along, am thinking to use my journal for reflection and measuring the progress. In any case, in no rush to die.
.................................................. .................................................. .......
Sharing a short story that I heard long ago, that represents my outlook on life.
I am in the hospital, where I was brought after an automobile accident. I am in bed, hooked up to tubes and wires. For some reason, I cannot move. Seems like I've been here for a while. Not so bad, I'll rest up, and wait for the Doctor to release me. I smell flowers... yeah, on the bedstand next to me. Oh, oh... here comes the nurse... Pretty little thing... she acts like I'm not here... Oh well... Actually, not so bad... I can see out the window... birds in the trees... flowers... and I don't hurt at all... Not so bad...
Wait!... here comes the doctor. And my wife and kids. Musta took the day off... didn't need to, I'll be home for dinner. They look awful, like maybe the dog died or something. The doctor's talking to them.... he's sorry... Sorry about what?... I'm fine, look at me... I feel very good... What's that? What test? What does he mean, brain dead?.... And now the family is crying, and leaving... Hey wait... wait... Here comes the doctor back again... What's he doing with that plug... Hey... don't... Hey... wait.. Hey...
Life is Good!
As I near age 80, (a few years away), the subject is dear to my heart. With genetics working against me, Alzheimers is not just a "fear", but a work in progress. I am keeping a journal, just for myself, to be able to look back as long as I am able, and to measure the progression.
I look at this from a different perspective... not as one who is worried about "getting" AZ, or having to deal with parents, friends or relatives who have it... but from learning how to accept it, and deal with the progression.
First, Alzheimers is not an on/off disease, the way you would turn on a light... but more like a dimmer swtch. The only real question is how fast the slide into the serious and debilitating inevitable helplessness.
I try not to give advice, as everyone is different, but some thoughts on my own situation:
-On testing, or doctor's diagnosis - No! To what gain? Perhaps drugs to delay or extend the onset... but at best, current phamacology offers only a slight delay.
-The second part of this "no diagnosis" is the downside that it presents. Friends and relative "hovering" and watching for every indication of problems. Bad enough that I have short term memory problems, but the most irritating thing about that is the constant "OH... everyone has memory lapses... You don't have a problem ". I am dreadfully afraid I'm going to do something drastic to the next person who says that.
-The next part is the internal struggle, to live a normal life, and to begin developing way to cope with the coming years. It's the short term memory that causes the most problems. I honestly don't think that the deep seated intellect is affected. The interest in learning, if anything, is more intense than ever. Curiosity and problem solving has become more entrenched. Perhaps with less pressure from the day to day memory requirements, I am left with more time to pursue knowledge as goal. A happy side effect.
-Freedom... this may be the biggest part of the "no diagnosis" insistance. Once a medical decision has been reached, it becomes a death knell to freedom. I have yet to meet anyone with any degree of Alzheimers who voluntarily accepts the restrictions that come with that life sentence ... This accounts for the struggle that families have in getting loved ones to be diagnosed.
Just imagine... no car... no going out alone... sideways glances always... So no thanks... I'm fine.
-A side note... about Alzheimers and Intelligence... I'm not sure there's a connection between the problems associated with AZ and intelligence... especially in the early stages. Probably so with regard to the testing... intelligence as measured by verbal and cognitive and physical tasks, but not basic intelligence. In my own case, measurement of 145 WB. I am sure that a written test today would probably be below 100, though I don't believe it measures the thinking power or the deep cerebral connections for reasoning and problem solving. This could change.
-The time line... wow... the biggest question. I'd like to think it will be measured in years... hopefully 5 to 10 years, but am prepared for whatever happens.
As we go along, am thinking to use my journal for reflection and measuring the progress. In any case, in no rush to die.
.................................................. .................................................. .......
Sharing a short story that I heard long ago, that represents my outlook on life.
I am in the hospital, where I was brought after an automobile accident. I am in bed, hooked up to tubes and wires. For some reason, I cannot move. Seems like I've been here for a while. Not so bad, I'll rest up, and wait for the Doctor to release me. I smell flowers... yeah, on the bedstand next to me. Oh, oh... here comes the nurse... Pretty little thing... she acts like I'm not here... Oh well... Actually, not so bad... I can see out the window... birds in the trees... flowers... and I don't hurt at all... Not so bad...
Wait!... here comes the doctor. And my wife and kids. Musta took the day off... didn't need to, I'll be home for dinner. They look awful, like maybe the dog died or something. The doctor's talking to them.... he's sorry... Sorry about what?... I'm fine, look at me... I feel very good... What's that? What test? What does he mean, brain dead?.... And now the family is crying, and leaving... Hey wait... wait... Here comes the doctor back again... What's he doing with that plug... Hey... don't... Hey... wait.. Hey...
Life is Good!
Last edited:
JoeWras
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Thank you for sharing, imoldernu. You are a model for all of us.
In retrospect, my Dad had a good 5 years with ALZ where he functioned very well with just "irritations" regarding memory loss. He drove very successfully without major incident in this time and retained his freedom, humor and grace. I'm hoping for more for you. The disease is different for everyone. I wish you the best.
Dad is now about 6 years in since he noticed (about 4 years for us family) and now it is difficult as he is pretty much in stage 6 of the disease, as defined on the alz.org site. This is when it gets hard. But even now he has good days which we all cherish.
In retrospect, my Dad had a good 5 years with ALZ where he functioned very well with just "irritations" regarding memory loss. He drove very successfully without major incident in this time and retained his freedom, humor and grace. I'm hoping for more for you. The disease is different for everyone. I wish you the best.
Dad is now about 6 years in since he noticed (about 4 years for us family) and now it is difficult as he is pretty much in stage 6 of the disease, as defined on the alz.org site. This is when it gets hard. But even now he has good days which we all cherish.
robnplunder
Thinks s/he gets paid by the post
I now have 4 plans on budget plan:
1. Splurge - work 2 -3 more years at current job before RE, travel the world
2. Maintain - live in same place, keep current life style, can RE now if I don't have OMY syndrome.
3. Conservative - hedge against 2 going bad, move to less expensive area, downsize
4. Austerity - hedge against 3 going bad with lots of unexpected events that significantly reduces my asset.
imoldernu, this really is a great thread. Thank you for it.
I went back through the 7 previous pages and didn't see anything about this, so sorry if I missed it. Looking back, what would you do differently other than divide retirement into two phases? I'm asking in the broadest way possible -- not just in terms of money. What didn't you do that you now wish you had? What about that you did but now wish you hadn't?
I went back through the 7 previous pages and didn't see anything about this, so sorry if I missed it. Looking back, what would you do differently other than divide retirement into two phases? I'm asking in the broadest way possible -- not just in terms of money. What didn't you do that you now wish you had? What about that you did but now wish you hadn't?
Teacher Terry
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I just read this entire thread & it is awesome! I know the rules on medicaid/nursing homes are always changing but I know that at one point if you had a home & one spouse went into nursing home that the other spouse could live there until they died. Then the home would be sold & $ given to pay back Medicaid. If the remaining spouse had to go to a nursing home the home was taken at that time. So in effect the home was a temporary shelter of assets but not permanent.
We just went through this issue with FIL going into a nursing home. In his case it was irrelevant as his wife passed in 1999, but when all other assets are exhausted Medicaid then files a lien on the house for the amount of what they paid. So the house isn't "taken" exactly, but the lien of course has to be paid when the house is sold.
This is why it is so important to see an elder law attorney before the crisis develops. State laws and circumstances vary so there is no "one size fits all" solution but it is very specialized with lots of legal "gotchas" if you don't know all the subtle nuances of the game.
aja8888
Moderator Emeritus
Now that the Medicaid look back period is 5 years, it makes sense to distribute assets ahead of time or set up trusts long in advance of a situation where Medicaid may get involved.
Teacher Terry
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Thanks for the clarification Walt.
I have been reading many posts about SWR (Safe Withdrawal Rate) and while I think I understand the reasoning and the mechanics that produce retirement planners, it seems to me that the subject is more complicated in practice.
The generally accepted definition that most seem to adhere to, comes from Bogleheads:
This is not to disagree, but to point out the difference between a 30 year period and a 5 year period... and the "depletion to zero" factor, and the 95% probability.
The SWR if I understand it correctly, applies to an investment portfolio, and not to (1.) net worth or (2.) Social Security.
(correct me if I'm wrong SS and if so, how to calculate SS for 30 years).
On net worth... Here, the question (for me, anyway) is: Why should I not calculate this? Since we are talking about "withdrawal"... let us take this as a case in point:
Portfolio of $1 million. Age 65, plan to age 90 (20 years)... SWR 4% = $50K/yr., in FireCalc, an 80% success rate.
Now, it is clear that this only deals with the portfolio. It leaves other variables to be decided by you.
.........
So, still dealing with what if's... what happens to your actual spending rate if you were to add $30K/yr in SS? (two people). Well, easy enough to figure.
$50K + $30K = $80K
But then, what about your the balance of your net worth? Since we're basically calculating if you can afford to live to that age 90... and not whether you'll be giving $300K to the SPCA...
This is where I see a difference. What about your home, or other properties, or other assets that could covert to cash? This is where my philosophy and experience differs from othere here on ER. I calculate the value of my home as part of my retirement plan. Sure it's nice to think you'll always live in your dream home, but 2500 s.f. is a lot of cleaning-walking - replacing - repairing-and cluttering. For us, 1000 s.f. apartment living in a retirement community is very desirable even now. So, let's say the house would bring another $250K. Over the 25 years, that's another $10K/yr for a total of $90K spending.
Now, you can say... "But you have to live somewhere!" In our plan, the total living costs in our CCRC, in an apartment, ... including healthcare, food and entertainment, is less than $40K. (See phase II planning)
..................................................................................................
And so... to simplify, here's a plan... based on net worth. Make believe numbers...
10 years to go.
Net Worth $500K divided by 10 years = $50,000/ yr
Social Security $25K yr.
That calculates to $75K/yr spending.
Doesn't include interest, dividends or inflation, and our chances of living to that age is around 35%.
We're in better shape than that, but a simple example that includes SS and
non portfolio assets.
Give it a try... simple.
Total net worth divided by number of planned retirement years plus annual Social Security or Pension $$$'s = Annual Spending.
Aw... don't take this too seriously... it's just an old man, trying to simplify the numbers.
The generally accepted definition that most seem to adhere to, comes from Bogleheads:
This is not to disagree, but to point out the difference between a 30 year period and a 5 year period... and the "depletion to zero" factor, and the 95% probability.
The SWR if I understand it correctly, applies to an investment portfolio, and not to (1.) net worth or (2.) Social Security.
(correct me if I'm wrong SS and if so, how to calculate SS for 30 years).
On net worth... Here, the question (for me, anyway) is: Why should I not calculate this? Since we are talking about "withdrawal"... let us take this as a case in point:
Portfolio of $1 million. Age 65, plan to age 90 (20 years)... SWR 4% = $50K/yr., in FireCalc, an 80% success rate.
Now, it is clear that this only deals with the portfolio. It leaves other variables to be decided by you.
.........
So, still dealing with what if's... what happens to your actual spending rate if you were to add $30K/yr in SS? (two people). Well, easy enough to figure.
$50K + $30K = $80K
But then, what about your the balance of your net worth? Since we're basically calculating if you can afford to live to that age 90... and not whether you'll be giving $300K to the SPCA...
This is where I see a difference. What about your home, or other properties, or other assets that could covert to cash? This is where my philosophy and experience differs from othere here on ER. I calculate the value of my home as part of my retirement plan. Sure it's nice to think you'll always live in your dream home, but 2500 s.f. is a lot of cleaning-walking - replacing - repairing-and cluttering. For us, 1000 s.f. apartment living in a retirement community is very desirable even now. So, let's say the house would bring another $250K. Over the 25 years, that's another $10K/yr for a total of $90K spending.
Now, you can say... "But you have to live somewhere!" In our plan, the total living costs in our CCRC, in an apartment, ... including healthcare, food and entertainment, is less than $40K. (See phase II planning)
..................................................................................................
And so... to simplify, here's a plan... based on net worth. Make believe numbers...
10 years to go.
Net Worth $500K divided by 10 years = $50,000/ yr
Social Security $25K yr.
That calculates to $75K/yr spending.
Doesn't include interest, dividends or inflation, and our chances of living to that age is around 35%.
We're in better shape than that, but a simple example that includes SS and
non portfolio assets.
Give it a try... simple.
Total net worth divided by number of planned retirement years plus annual Social Security or Pension $$$'s = Annual Spending.
Aw... don't take this too seriously... it's just an old man, trying to simplify the numbers.
Last edited:
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The reason that a home is commonly not used is because in a lot of cases the plan is to age in place and the home would not be converted to cash that could be used to fund living expenses. IF the plan is to sell the home and downsize then the cash the transaction provides could be included in retirement assets.
In my case I don't include my home because I have no intent to sell, selling and renting would be a "Plan C" if everything else went to hell.
At older ages, I think you could just take the portfolio divided by the remaining expected life (similar to RMD calculations). I would not use 10 years, because what if you end up living 15 years? But what you could do is each year plan on spending the portfolio value divided by your estimated remaining years (or the applicable IRS RMD factor). For example, the closer you get to the 10th year, the higher the probability that you may live beyond the 10th year.
And you are correct that WR relates to what is coming from your portfolio and SS would be on top of withdrawals in determining what you could spend.
In my case I don't include my home because I have no intent to sell, selling and renting would be a "Plan C" if everything else went to hell.
At older ages, I think you could just take the portfolio divided by the remaining expected life (similar to RMD calculations). I would not use 10 years, because what if you end up living 15 years? But what you could do is each year plan on spending the portfolio value divided by your estimated remaining years (or the applicable IRS RMD factor). For example, the closer you get to the 10th year, the higher the probability that you may live beyond the 10th year.
And you are correct that WR relates to what is coming from your portfolio and SS would be on top of withdrawals in determining what you could spend.
daylatedollarshort
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We would definitely not keep our current house to age 90. It is a lot of work to keep up even now. We do plan on selling at some point.
Hey, imoldrnu - You sent me a message during the week. Just letting you know I tried to reply but could not because your mail box is full.
Hey, imoldrnu - You sent me a message during the week. Just letting you know I tried to reply but could not because your mail box is full.
Medicaid spousal asset protection
The subject has been discussed at length in this thread as well as others. In reviewing some of the comments, I found this "nolo" article that gives a good overview of the protections that are available when one spouse goes into a nursing home... not just the home exclusion, but also other assets... income, other assets, and community property.
Since the rules vary by state, the specifics are not delineated, but the range of protection (not including the home) goes from $23,000 to $117,000. It might be well to research the exclusion amount for your state.
The rules for this are included in the Affordable Care Act beginning in 2014. The
"minimum monthly maintenance needs allowance" (MMMNA), which defines the Medicaid eligibility limit is also discussed.
While many retirees have substantial assets and will not likely require medicaid assistance, paying for five or six years of nursing home expenses @ $100K+, could seriously affect longer term security.
Rather than posting an excerpt, I think reading the entire article may be more important.
Medicaid: Protections for Spousal Income During Long-Term Care | Nolo.com
In addition that, this article details more information... dealing with mistakes that can be made in dealing with money prior to applying for medicaid. This includes the exempt monies, exempt resources, and details about having insufficient power of attorney.
Elder Law Resources: 7 Costly Medicaid Planning Mistakes
The discussion of homestead (owning a home than could be exempt for medicaid purposes) versus renting... should at least be considered, as the limits by law, is $500K, with some states gong up to $750K.
Theoretically, after the surviving spouse dies, the state medicaid would have a lien on an exempted home for the amount expended. To determine if this is being done in your state, you'll have to do specific legal research or consult an elderlaw lawyer. My own experience was that the state did not do this, and the home became part of the deceased's estate. This was many rears ago. Others have indicated that the state medicaid DID collect on their expenses.
In all of this, it's well to do early planning, to comply with the 5 year lookback rule.
This is not a legal opinion, and other specifics are welcome.
It's easier to talk about this when one gets older, and closer to the probabilities of needing care. Living in our CCRC, we often see cases where the surviving spouse who is living in the rented apartments with all normal expenses included in the rent, must give this up, because of inability to pay... most often because when both spouses were alive, they turned to rental... and the home exclusion was not available when one went into the nursing home. It's a matter of planning for the wellbeing of a spouse who may live an additional 10, 15, or 20 years. It was knowing this that caused us to buy our home in this CCRC.
The subject has been discussed at length in this thread as well as others. In reviewing some of the comments, I found this "nolo" article that gives a good overview of the protections that are available when one spouse goes into a nursing home... not just the home exclusion, but also other assets... income, other assets, and community property.
Since the rules vary by state, the specifics are not delineated, but the range of protection (not including the home) goes from $23,000 to $117,000. It might be well to research the exclusion amount for your state.
The rules for this are included in the Affordable Care Act beginning in 2014. The
"minimum monthly maintenance needs allowance" (MMMNA), which defines the Medicaid eligibility limit is also discussed.
While many retirees have substantial assets and will not likely require medicaid assistance, paying for five or six years of nursing home expenses @ $100K+, could seriously affect longer term security.
Rather than posting an excerpt, I think reading the entire article may be more important.
Medicaid: Protections for Spousal Income During Long-Term Care | Nolo.com
In addition that, this article details more information... dealing with mistakes that can be made in dealing with money prior to applying for medicaid. This includes the exempt monies, exempt resources, and details about having insufficient power of attorney.
Elder Law Resources: 7 Costly Medicaid Planning Mistakes
The discussion of homestead (owning a home than could be exempt for medicaid purposes) versus renting... should at least be considered, as the limits by law, is $500K, with some states gong up to $750K.
Theoretically, after the surviving spouse dies, the state medicaid would have a lien on an exempted home for the amount expended. To determine if this is being done in your state, you'll have to do specific legal research or consult an elderlaw lawyer. My own experience was that the state did not do this, and the home became part of the deceased's estate. This was many rears ago. Others have indicated that the state medicaid DID collect on their expenses.
In all of this, it's well to do early planning, to comply with the 5 year lookback rule.
This is not a legal opinion, and other specifics are welcome.
It's easier to talk about this when one gets older, and closer to the probabilities of needing care. Living in our CCRC, we often see cases where the surviving spouse who is living in the rented apartments with all normal expenses included in the rent, must give this up, because of inability to pay... most often because when both spouses were alive, they turned to rental... and the home exclusion was not available when one went into the nursing home. It's a matter of planning for the wellbeing of a spouse who may live an additional 10, 15, or 20 years. It was knowing this that caused us to buy our home in this CCRC.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I have no idea what you are talking about, but you seem happy with what you have figured out, so party on! You sure do like abstractions.
Ha
Ha
Lesson learned from experience with FIL and others on this board. Pay for the elder law attorney, outrageous as their fees may seem at the outset. In the long run, they will save you and your family assets and are well worth their fees. There are so many minefields and "gotchas" in that topic that it is a full time job to keep track of them. That is what elder law attorneys do.
Lancelot
Full time employment: Posting here.
The guy said that they maintain contact; however, he doesn't speak with his boys four times daily by telephone. He realizes that his 'kids' are now adult men and he respects that.
+1 Loving your children also means allowing them to be independent and
not interfering in their lives.
One last hit at this dead horse...
First, by the time it comes to getting an elderlaw attorney, the damage could be done because of the 5 year lookback.
John and Mary are 60, own their home value at $250K but haven't saved quite enough for a full retirement. Total assets of $500K excluding the home. John's health is not so good, and they feel that he would be better off retiring early to avoid the stress. By selling their home, they would have another $250K to invest, while renting or severely downsizing to much less expensive housing.
Shortly after selling the home and retiring, John's condition worsens and he enters a nursing home, where he continues to live for 5 years @ $100,000/yr.
Because there are assets above the minimum required to have his care provided by medicaid, all of their savings will be spent in payments to the nursing home... except for some exemptions for an auto and other cash or property exemptions provided by the ACA.
They can spend down to qualify for medicaid but these dollars are subject to approval by the state, within a 5 year period. Part of the spend down would logically be the purchase of a home... but this would not count because of the 5 year lookback. IF, John and Mary had kept their home, instead of renting, even if the state would still take their savings (less exemptions) Mary would still be able to keep a minimum living amount as well as the home.
In broad numbers, this would save $250K, the value of the home.
......................................................................
As a similar case in point, an older local couple who had owned a home and small farm, sold the farm, and moved into our CCRC apartments where the rent including meals transportation and all utilities comes to about $30K/yr. When the wife broke her hip, she went into the nursing home and stayed there for 5 years before passing away. Our lower cost nursing home still costs about $80K, so that drained most of the Mr.'s nest egg. Had they stayed living in their home, it would have been protected (in the form of the home).. As it happened, very sadly, he did not have enough to continue paying the $30K rent, and was forced to move in with his son.
It is hard to argue with his logic... move in to a care facility at a known cost to be paid from the proceeds from the sale of the farm. What was not considered was the need to go into the nursing home, with the cost coming from his nest egg, instead of medicaid.
I only come back to this, because for almost everyone, the rent/own decision is not something that can "wait until the time comes", because of the 5 year lookback. Yes... of course, this will not apply to everyone here, but for those (like us) who will retire in a less than optimum financial situation, the decision should be part of the initial planning and risk assessment.
First, by the time it comes to getting an elderlaw attorney, the damage could be done because of the 5 year lookback.
John and Mary are 60, own their home value at $250K but haven't saved quite enough for a full retirement. Total assets of $500K excluding the home. John's health is not so good, and they feel that he would be better off retiring early to avoid the stress. By selling their home, they would have another $250K to invest, while renting or severely downsizing to much less expensive housing.
Shortly after selling the home and retiring, John's condition worsens and he enters a nursing home, where he continues to live for 5 years @ $100,000/yr.
Because there are assets above the minimum required to have his care provided by medicaid, all of their savings will be spent in payments to the nursing home... except for some exemptions for an auto and other cash or property exemptions provided by the ACA.
They can spend down to qualify for medicaid but these dollars are subject to approval by the state, within a 5 year period. Part of the spend down would logically be the purchase of a home... but this would not count because of the 5 year lookback. IF, John and Mary had kept their home, instead of renting, even if the state would still take their savings (less exemptions) Mary would still be able to keep a minimum living amount as well as the home.
In broad numbers, this would save $250K, the value of the home.
......................................................................
As a similar case in point, an older local couple who had owned a home and small farm, sold the farm, and moved into our CCRC apartments where the rent including meals transportation and all utilities comes to about $30K/yr. When the wife broke her hip, she went into the nursing home and stayed there for 5 years before passing away. Our lower cost nursing home still costs about $80K, so that drained most of the Mr.'s nest egg. Had they stayed living in their home, it would have been protected (in the form of the home).. As it happened, very sadly, he did not have enough to continue paying the $30K rent, and was forced to move in with his son.
It is hard to argue with his logic... move in to a care facility at a known cost to be paid from the proceeds from the sale of the farm. What was not considered was the need to go into the nursing home, with the cost coming from his nest egg, instead of medicaid.
I only come back to this, because for almost everyone, the rent/own decision is not something that can "wait until the time comes", because of the 5 year lookback. Yes... of course, this will not apply to everyone here, but for those (like us) who will retire in a less than optimum financial situation, the decision should be part of the initial planning and risk assessment.
