Being worth more at the end than the start

[W2R]

Quote:

Originally Posted by NW-Bound Yes, but I think it is about getting an immediate reduction of Medicare premium when you have one of the listed life events. For the case of capital gain income, maybe it has to be counted for the entire year before a readjustment downward. I could be wrong, but was led to that thinking by the following statement. Note the word "monthly". "you have new information and may need a new decision about your income-related monthly adjustment amount". and "If you filed a federal income tax return for the year in question, you need to show us your signed copy of the return..."

Well, if they lower my Medicare premium when I report lower income, I would be extremely happy! That would be a VERY welcome outcome. Besides that, I think it would be very fair because my income truly will go down.

[Hermit]

Quote:

Originally Posted by W2R I don't think that assumption is valid. The change in income has to match one of the reasons listed in the letter they send you. These are: marriage divorce became a widow spouse stopped working or lost income from income producing property due to a disaster spouse's pension plan was reorganized, terminated, etc spouse received a settlement due to employer's bankruptcy etc Since I have been single for 19 years, none of these apply to my situation. Also, they specifically state, "We cannot make a new decision if your income has changed for a reason other than those listed above, such as receiving one time income from capital gains". So, I think I'm SOL. Nope. I think this is what my late father used to call a "character building experience". Oh well. I have survived worse I suppose. Besides, most people are spending a lot more than me on health insurance.

I'm sorry I brought up what must be a somewhat painful reminder for you. Thanks for sharing though. I hope your experience will keep me (and others) from going down that path.

[W2R]

Quote:

Originally Posted by Hermit I'm sorry I brought up what must be a somewhat painful reminder for you. Thanks for sharing though. I hope your experience will keep me (and others) from going down that path.

Well, just don't cut it too close because one of your taxable funds might unexpectedly dump several thousand more in capital gains on you in December, than it usually provides in December. That was how I got pushed over the edge by just $2K. I cut it too close and then didn't keep tabs on things towards the end of the year.

[Hermit]

Quote:

Originally Posted by W2R Well, just don't cut it too close because one of your taxable funds might unexpectedly dump several thousand more in capital gains on you in December, than it usually provides in December. That was how I got pushed over the edge by just $2K. I cut it too close and then didn't keep tabs on things towards the end of the year.

The good news is I don't have any taxable funds except cash which is rapidly dwindling. The bad news is all my funds are locked up in tax deferred accounts making it hard to get at without major dollar penalties/taxes added fees. On the other hand, I have pension and SS to live on. RMDs will be interesting in the future. I am a few $k below the break point ($85K) so, hopefully, I will be OK this year.

[NW-Bound]

Anyway, I was curious about the step-up in Medicare premium. So I searched and found the following:

Income for Singles	Premium
$85,000 or less	$121.80
$85,001 up to $107,000	$170.50
$107,001 up to $160,000	$243.60
$160,001 up to $214,000	$316.70
Over $214,000	$389.80

So, if you bounce from the 1st to the last bracket, you are talking about an increase of (389.80-121.80) x 12 = $3,216/year max.

That is a nice sum of money, but compared to my ACA cliff, it's just a staircase step.

For me, if my next year MAGI goes from $64,000 to $64,100, my premium would go up $1,628 x 12 = $19,536/year. Now, that's a CLIFF!

And that MAGI is for joint income!!! And I have been spending WAY above that level.

[kgtest]

Quote:

Originally Posted by NW-Bound = $19,536/year. Now, that's a CLIFF! And that MAGI is for joint income!!!

Wowsa. I'm going to go out on a limb and assume the quality of care you are receiving is not 4x as good as Medicare.

[Senator]

Quote:

Originally Posted by NW-Bound My children graduated with no student loans, and are now making a good living. Barring some catastrophe, they will do well without my help, the same way I did without parental help. I can spend a lot more now, but I am so used to having a decent stash, just to look at for that feeling of security. Call me Scrooge, but a lifetime habit is hard to change.

I 100% agree. I plan on ramping up spending in future years, but it is hard to do. So far, no investment account WD, and I am still adding to it.

At some point, I suspect that a stripper who has not even been born yet may wind up with a large portion of it, although as I age, it is more and more likely she has already been born...

[NW-Bound]

Quote:

Originally Posted by kgtest Wowsa. I'm going to go out on a limb and assume the quality of care you are receiving is not 4x as good as Medicare.

Hell no!

There's only one insurer in my large metropolitan area of 4 million people. Its network does not have my existing doctor and specialist. And yet, both still take Medicare. I don't know if the doctors reject the insurer or more likely it's the other way around.

I am getting scr**** big time!

[Hermit]

This Medicare cost subject probably deserves its own thread, but if I understand this publication, the IRMAA will change with your annual income. It just takes a couple of years.

https://www.ssa.gov/pubs/EN-05-10507.pdf

[NW-Bound]

It's off-topic, but I'll just have to vent here.

Look at the Medicare premium increase of $3,216/year for a SINGLE income increase of $129K (from $84K to $214K). That's not even a step, but a shallow ramp.

ACA subsidy on the other hand drops off to 0, when your JOINT income goes a mere $1 above $64,080! A mere $1 and you pay $19,536 more.

And that's the law of the land!

PS. Note that this step-up in premium varies from place to place. The above applies at my location. Some other places may be worse.

[Danmar]

Quote:

Originally Posted by Bamaman We've finally reached normal retirement age. We worked very hard, saved hard and want to enjoy our remaining years without everyone spending our retirement money. We'd like a little less drama and looking forward to be a little bored. The kids will have real estate to liquidate, and they'll be okay.

I certainly agree with your sentiment, especially given the background you provided about your kids. How will you "spend your nestegg down" or is that something you have decided on in theory rather than developing an actual plan?

Although, I am more inclined to help my daughter (who luckily has turned out remarkably well),I still need to develop a spend down strategy. Next year, for the first time, I intend to liquidate a portion of my portfolio and increase spending. Up to this point we have generally only spent dividends. Liquidations will start small, maybe only .5-1% of the portfolio and maybe only in "market up" years. 66 retired 10 years.

[DrRoy]

In one sense, it is just straight math. You spend less than your return over time and your investments are worth more. You also have to decide if you mean before or after inflation.

[traineeinvestor]

If you expect/hope your retirement will last for a long period of time, you almost have to plan on a basis that will result in your net worth ending up higher at the end than at the beginning. Anything else is a recipe for potential poverty and lot of worry.

In my case, DW was 40 when I retired, is healthy and, based on family history, has a good chance of living to 90 or beyond. Fifty+ years is a very long time for inflation and other events to have an effect - if I don't put myself in the position where income>expenses by enough to offset inflation then it is very likely that I will end up broke. If I do put myself in a position where income>expenses by enough to offset inflation then there is a very good chance that net worth will grow over time, possibly by a lot.

Just over three years in, our net worth has grown by 13.3% (slightly flattered by having two part time incomes).

[6miths]

One of the retirement tipping points for me was when FIRECalc went from 100% success to all of the end-values being equal or greater than the amount I was going to have when I pulled the plug. I'll be gone so it's not really critical to me but I'm hoping that this will be a good buffer.

[Toocold]

Quote:

For me, if my next year MAGI goes from $64,000 to $64,100, my premium would go up $1,628 x 12 = $19,536/year. Now, that's a CLIFF!

Wow. No wonder there are so many threads here on how to reduce MAGI.

[NW-Bound]

Y'all think it is absurd? You have not seen anything yet. As I said, the number varies from place to place. If a cliff of $19,536 is bad, look at what I found in Anchorage. The following is for a couple of the age of 60.

Joint MAGI = $80,079, annual premium for Silver plan = $6,558 + $6,000 deductible
Joint MAGI = $80,080, annual premium for the same = $44,808 + $6,000 deductible

One dollar more in income, and you pay an additional $38,250 for insurance!

That's the law on the book, my friends. Go to healthcare.gov, and try Zip code 99501 to see for yourself. You do not see this in the media, because ignorant reporters have employer insurance and do not know about all this stuff.

To tie back to this thread topic, yes, a lot of people will die rich, because they do not dare spend it. Spend $1 more, and it sets you back close to $40K a year, or 1/2 of your gross income.

[braumeister]

Quote:

Originally Posted by Hermit This Medicare cost subject probably deserves its own thread, but if I understand this publication, the IRMAA will change with your annual income. It just takes a couple of years. https://www.ssa.gov/pubs/EN-05-10507.pdf

I'm expecting my letter any day now telling me exactly that. Have been on the IRMAA program for the last couple of years, but it should revert to normal for 2017. Fingers crossed!

[6miths]

Listening to discussions about MAGI? and cliffs makes me thankful of living in the Great White North! Cradle to grave irrevocable coverage... Priceless! Or at least pretty much so.

[Danmar]

Quote:

Originally Posted by 6miths Listening to discussions about MAGI? and cliffs makes me thankful of living in the Great White North! Cradle to grave irrevocable coverage... Priceless! Or at least pretty much so.

I'll second that. Don't even know what MAGI is? Many of these type of threads seem to hinge on health care costs. It must be a constant source of worry for many in the US? Now, our taxes are pretty high but at least you can plan for that.

[Car-Guy]

Back to the OP (sort of). It has never been my intention to be a LBYM type while in retirement or to die with more money than I started with. After almost 5 years of retirement, I've stayed within 10% (~inflation adjusted) of my initial retirement net worth. Sometimes a little more, sometimes a little less, but pretty close. I've spent a lot more so far each year in retirement than I ever did before I retired. However, I expect to start decreasing my spend rate on a go forward basis just because I'm getting to the point in life that I won't be able to continue to burn the candle at both ends for that much longer.

I have set dollar limits where I would cut back on my spending (discussed in other recent threads on this board) but I now seriously doubt that I'll get there. Life is to short!

So, I may very well die with more than I started with but it won't be because I was planning on that.