Contemplating Retirement

[Koolau]

Thought I'd say hello. I am 61, almost a year in to a slightly early retirement. So while my experience is not decades down the road, I do have some observations.

My wife had a terrible accident with an unlicensed illegal about 3 weeks after I retired. She was seriously injured, our beautiful F150 4x4 was totaled, insurance paid half what the truck was worth. I purchased a new truck half a year later $66K

Homeowners insurance doubled and doubled again. I was paying over $53,000 for health, car and home insurance. Allstate even continued to withdraw the premium for the totaled truck for 6 months despite repeated requests.

AT+T decided that my DirecTV account needed sports channels. If it does not burn fossil fuel, I don't like it. I don't watch sports of any kind. DirecTV increased my costs to something more than $4000/yr.

My wife is not wasteful with money in any way. Yet she does not actively manage monthly charges, that's up to me.

My point: I could not have predicted the direction this went. Despite my complaints, nearly a year down the road, I have not yet made a 'savings withdrawal'. Cutting out the nonsense is essential.

We too have found out that insurance companies don't take losses lying down. We're now paying for the Lahaina Maui fires and just this year, we've begun paying for the insurance industry's loss due to a condo fire in downtown Honolulu. Our insurance has also doubled and then doubled again. Not only that, the industry has warned the condos in town that they will simply pull out of the market if we don't spend (in our case $30,000 per condo unit) to install sprinklers.

The tail is definitely wagging the dog. The fires that we're paying for were caused by negligence, but the negligent won't be paying much of the bill so, guess what, the insurance has to pay - but insurance doesn't really pay for losses. They just take from everyone else and hand it out - maybe. End of rant.

 

[Cujet]

Wow. That’s a lot to happen in the first year. Hope your wife is doing well now. I am glad to hear that so far everything has worked well financially. For me the takeaway is to have surprise large purchases need to be planned out.

Thanks, she is now functionally disabled, but she's healed from surgery and can walk a little bit. Mailbox, truck to store, rides a cart. She does not complain much, and tries hard. And it's been really nice hanging out with her. My Corporate Aviation job took up all my time and had me away from home way too much.

Nice thing about the new truck, no maintenance needed. While that was not in my plans, it is nice in its own way to start out retirement with a brand new and super comfy vehicle that can do what we need. We are not driving as much, so I expect 15 years of good service.

The other part of retirement that has been amazing is that I can concentrate on my health. I have another thread about Grok3 and health. For the first time in more than 2 decades, I feel great! The stress evaporated the instant I left, and came right back when they called constantly for help. I ended up blocking phone numbers/emails. The relief of stress was eye-opening. I had no idea just how bad it was. The entire thing can be described by one word: Glorious.

Yesterday:

 

[pb4uski]

We too have found out that insurance companies don't take losses lying down. We're now paying for the Lahaina Maui fires and just this year, we've begun paying for the insurance industry's loss due to a condo fire in downtown Honolulu. Our insurance has also doubled and then doubled again. Not only that, the industry has warned the condos in town that they will simply pull out of the market if we don't spend (in our case $30,000 per condo unit) to install sprinklers.

The tail is definitely wagging the dog. The fires that we're paying for were caused by negligence, but the negligent won't be paying much of the bill so, guess what, the insurance has to pay - but insurance doesn't really pay for losses. They just take from everyone else and hand it out - maybe. End of rant.

I'm not sure what you expect them to do. Expected claims is the starting point for premium pricing. Over the long run premiums will reflect claims, claims administration, taxes overhead and profit/ return on capital utilized. Otherwise you might as well just stop issuing and renewing policies. As a holder of preferred stock of many insurers and therefore a provider of capital, I wouldn't want it any other way.

 

[Koolau]

I'm not sure what you expect them to do. Expected claims is the starting point for premium pricing. Over the long run premiums will reflect claims, claims administration, taxes overhead and profit/ return on capital utilized. Otherwise you might as well just stop issuing and renewing policies. As a holder of preferred stock of many insurers and therefore a provider of capital, I wouldn't want it any other way.

I suppose I expect them to have a bad year or two instead of making it all up on the backs of rate payers. There's a happy medium on such things and I don't see a willingness to take the occasional loss when they've been doing very well for a long time.

I agree that they can't take the whole loss sitting down but why do you buy insurance? Isn't it to have your losses covered? The one-time losses are making insurance virtually unaffordable for many people. I know a number of people who are now going naked.

Your points are well taken in theory. In practice I think the insurance industry needs to take some of the hit as well. YMMV

 

[pb4uski]

I think if you check into it you will find that they don't take it all straight away but over time. Returns on equity of US property and casualty insurers are ~10%, so pretty modest compared to the S&P 500.

Besides, everyone of these insurance rate increases that you rail against are approved by your state insurance regulators, and in my experience state insurance regulators are loathe to approve significant rate increases unless they are justifiable.

 

[Koolau]

Besides, everyone of these insurance rate increases that you rail against are approved by your state insurance regulators, and in my experience state insurance regulators are loathe to approve significant rate increases unless they are justifiable.

The insurance business in Hawaii basically told those state regulators "Give us what we want or we are outta here."

 

[Cujet]

Besides, everyone of these insurance rate increases that you rail against are approved by your state insurance regulators, and in my experience state insurance regulators are loathe to approve significant rate increases unless they are justifiable.

Hurricane Irma destroyed 25% of the homes in the Keys. Since that 2017 storm, my rates here inland Jupiter Farms have quadrupled. The state may regulate it, but we are paying for people who are "living on the edge" Period, end of story. I'm going naked and will not be feeding the insurance beast anymore.

Again, insurance companies were stunningly good at emptying my checking account via direct withdrawals. Even when I tell them to stop. Last year, to the tune of $53,000. That's not good when take home pay is double that and commuting expenses were also over $50K.

No, I was not reimbursed for commuting travel to and from the 6 airports I worked from. Jet Blue, hotels, rental cars, third cars, holiday aviation busy periods etc.

It got to the point where I could not afford to work. Maybe everyone else got raises that quadrupled their salaries over 7 or 8 years. My employer saw fit to provide no raises for 14 years.

 

[mydogwantsmetoretire]

Have been a long-time lurker at this site and have gained lot of valuable information from the forum over the years. Following is our current financial status:

Both of us age 52. DW retires as a teacher in May. Burned out form teaching middle school. I am currently contemplating retirement too but am hesitant.

Our Retirement accounts: $2.5 M (730K Roth; rest in trad/401k)

Taxable Account: 600K

Kids 529: $177K (DS graduates in May has job lined up; DD has 3 more years + Grad school)

House paid off

DW will get yearly pension of ~10K (non-Cola) after June

Healthcare plan ~1000/mth with DW state plan (if I decide to FIRE)

Other expenses ~ 80K/yr

SS for DW @62 $11K

SS for myself @70 46K

My current salary ~150K

Have been beefing up the taxable account by decreasing the contribution to the retirement account. Will plan to use Rule 72(t) for closing the income gap until 59.5.

FireCalc gives 100% success rate even with 120K yearly spending.

Feel a bit nervous about my decision. Work is no longer enjoyable and not planning to work for anyone else. Enjoy trading and managing our as well as family’s portfolio.

Any suggestion/advice greatly appreciated.

Your profile has a lot of similarities to mine with age and NW. Our two kids will be in college in the next couple of years. Even with my assumption that I will have to fully fund their college, one private and one out-of-state public, we still are basically good on retiring early like you.

My struggle has been on the front of purpose and what to fill my time with. For me, this has resulted in deprograming from the paradigm of work being the primary driver of purpose.

On the filling my time bucket, I am starting to consider volunteer opportunities or even some random projects, that are not driven by financial considerations. Both of these are generating excitement for me, especially knowing I can’t do these in the grind of my current job.

As I deprogram and think about new opportunities, it definitely helps me to feel a little less anxious about leaving my current life status. While I haven’t pulled the trigger yet, I am getting closer and closer.

Hope this helps.