How much to retire in late 50's?
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Anonymous
+1. Paying $30-40k for health insurance is a joke, and few dare to say the obvious...ACA was a joke. |
Anonymous
This |
Anonymous
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OP, I have nearly an identical situation to yours (down to the ages and the finances and the kids out of college), so I'm avidly reading this thread. Like you, I suffer from financial anxiety regardless of my assets, but I acknowledge that I'm unduly concerned because of my anxiety issues.
I recommend you treat your concerns therapeutically before you make any long-term financial issues. If you don't get therapy to get your anxiety under control, you'll live in a tense, depressed, worried state with a clutched-chest feeling during every week and month of retirement as you watch the money decrease bit by bit. You know intellectually that you're fine to retire, but it's okay to wait until you are emotionally there. |
Anonymous
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OP here:
To the PP in my situation, what's your plan? How to fund, what income do you require for spending? The Fidelity calculator says we run out of money in our 90's, if we live that long. So not it's not just me being anxious. My assumptions do account for a couple of new cars in our future and health care, LTC. I can mess with the market performance expectations and make it work, or lower the life expectancies, or ignore that the ACA exchanges price health care in the 25,000 - 40,000+ range (for PPO). |
Anonymous
Have you ever tried getting private health insurance pre ACA as a 50 something year old? My DH tried to and was denied due to a pre-existing condition. As you get older, you are more prone to getting pre-existing conditions. Health insurance wouldn't be as expensive as it is now if it weren't for Trump stopping the cost share payments. Yes, it was going up, but not as much as it is now due to the cost sharing payment being killed. ACA is the only thing that will allow my DH and I to retire early. If it goes away, we won't be able to retire early, and I'm thinking neither will OP. |
Anonymous
Health insurance is going to be just as expensive regardless of whether "cost sharing" payments are changed. It is just a question of whether the policy holders pay for or the taxpayers. The only way to change the cost of health insurance is to change its attributes: what it covers, what the co-payments are, and to what extent the insurers get a break and health service pricing and the extent to which they pass these through to policy holders through billing practices. Paying for pre-existing conditions is fundamentally not insurance. It is a direct subsidy from other policyholders or taxpayers to people with pre-existing conditions. Unless politicians start talking honestly about insurance issues, we are never going to get out of this mess. Remember, if it truely costs $30K per year for healthcare, that is roughly half of the median household income in the country. That is simply unsustainable. |
Anonymous
PP here.. I agree with you, but doing away with ACA won't solve the issue faced by OP and others who want to retire early. That was the point. And I know that private insurance pre-ACA was also expensive because I've had it for about 20 years off and on. But I disagree with the bolded. This is part of insurance. It's spreading the risk. However, even if it's not "fundamentally insurance", a country that has a system that tells those with pre-existing conditions that you are SOL in terms of the private insurance market is one that doesn't care about sick people, which is millions. There's something deeply wrong with this. Like I said, the older you get, the more prone you are to pre-existing conditions. Rs want to go back to a system where the insurance companies can exclude covering your pre-existing conditions. What's the point of insurance then when you know that more than likely it's the pre-existing condition that you will need treatment for? Might as well not get insurance and use the money you'd spend on premiums to pay for your pre-existing condition illness. Oh, but then you get sick with something else and then what? Then that becomes a pre-existing condition, and next year, the insurance company can decide to stop covering that. This is a crazy system. OP, we are in the same boat as you, but we pay for private insurance now and know how expensive it is and will be in the future. Either ACA will make it even more stupidly expensive, or the R plan will not cover those illnesses you are prone to get as you age. Either way, older Americans who don't qualify yet for medicare are screwed. I would seriously consider taking an easy job in my late 50's just for the insurance but so many places don't want to hire older people. Again, either way, we're screwed. |
Anonymous
This is PP, apologies for the rudeness, but I still don't get how this isn't more than enough money. The question gave me a head-to-desk moment. A simple retirement calculator is online here: https://www.nerdwallet.com/investing/retirement-calculator I entered it assuming OP was 58 now and wants to retire at 60, and have $100K in annual income. The tool assumes a 5% rate of investment return in retirement, which is quite conservative, but absolutely critical to keep some of your money invested, and you have quite a lot of it! This calculator says you will need $2.81M to retire and you already have more than that. You likely have more in retirement savings than maybe 98% of people when they retire. Just don't assume you are going to take it all in a lump of cash and spend X amount per year; the key is ensuring you continue to make retirement income while you are retired. It sounds like you have modest spending plans and it's likely that you could have your estate continue to earn more in investment value every year than your income needs are, so your retirement account will still be growing every year while you're in retirement. |
Anonymous
Applause Applause Applause Applause |
Anonymous
NP: I think this is where you are experiencing a disjunct. OP says annual spending is 100k NOW, but that they would have to add significant health insurance costs to that. It's also unclear whether OP has figured in taxes to the annual spending or unexpected expenses outside of current annual spending. So that annual amount should be more like 120-150k depending on that. |
Anonymous
| My parents are in a nursing home and the money is going down fast. Not sure if I want them in a medicaid accepted place but that maybe where we are headed. |
Anonymous
This is the PP in your situation. Honestly, after reviewing this thread and talking late into the night, DH and I reevaluated our situation and decided to work at least 5 more years. He'll be 60 then, which will mean only 2 years to Social Security (because he'll be taking it at 62) and only 5 years to Medicare. Social Security benefits will be $2,068/month for him at 62, which would cover his out-of-pocket medical insurance until he's 65. I have a history of cancer--only 3 years out from diagnosis--and the long-term prognosis for me isn't great, so I want to balance the reality of needing enough money for retirement with the acknowledgment that I'm not going to last to 90. If/when the cancer returns, I can take disability payments immediately, and then a year later, I qualify for Medicare based on my health condition regardless of my age. Thus, a lowered life expectancy for me helps make our retirement plan appear healthier (ha!). Obviously, that's not a plan you can (or would want) to follow! As for income we require for spending, I've come to realize how much we rely on not having to worry about money. When we met with a financial planner, he wanted to know where all our money went. I feel we live pretty simply--mortgage is paid off on a 60-year-old house in Prince George's County, our van has over 200,000 miles on it, kids went to state schools and had academic scholarships, etc.--but we like to eat out a lot, and we enjoy vacations a few times a year. I thought we'd be in good shape when we paid off our mortgage, but now we help pay for my MIL's housing expenses, and youngest DD is still in college at $40K/year, and so on and so forth. Add to that a host of home improvements (e.g., roof replacement), including an upcoming renovation to prepare for aging in place, and our income is clearly slipping through our fingers. I thought we had a healthy savings, but the planner said we should have quite a bit more based on what we make. I think the only reason I became excited to retire early is because my sister & her DH are retiring (they're in their early sixties), and I got the retirement bug! DH and I are going to begin keeping an eye on our spending, which we've never really done in the past 15 years or so, and we'll be more aggressive with our cash savings (e.g., invest in CDs or higher-interest accounts). In short, we're going to put the brakes on & enjoy the fact that we have money coming in--because the thought of not having that cushion has become more of a concern than retiring early. |
Anonymous
Thanks for sharing your story PP. OP here. First of all, I wish you good health in the future. Health issues definitely put things in perspective. Of course you are reminded that every day is precious, but also, you realize how important health insurance is. My dad, who lives out of state, incurred over $800,000 in health care charges so far this year. Fortunately, he is on Medicare and supplemental insurance, so he pays something like $5000 of this. But looking at those kinds of costs, we cannot take the risk of being insurance less. Apart from the cancer and your potential qualification for Medicare/disability, we could be financial "twins." We have also been blessed enough to forego budgeting for the most part, but not well off enough to be financial independent quite yet. In fact, apart from the grueling, soul crushing nature of DH's job, I'm not a big proponent of early retirement. If you enjoy your jobs, you are young enough to be productive earners for quite a few more years. I'm not averse to going back to work either. I imagine how you feel about your work is an important consideration, especially with health concerns. We do have some health risks looming, but we're trying to monitor and manage those. For me, that means lots of medical tests; DH needs to slow down and smell the roses to improve his chances of enjoying life and retirement. Truth be told, he has too much to contribute to really retire, but he's been so depressed, we do need to have some sort of "reset." We also eat out way too much, bad for our health and bank accounts, but a habit we're trying to scale back a little. Likewise, we do travel a bit, not big trips always, but maybe two weeks in Europe every other year and a couple of domestic trips in the alternate years. Plus the travel to visit elderly family members has ramped up in the past few years. You are smart to do the home reno now while you have jobs to help pay for it. We'd like to do some updates, but I'm too skittish to pay out oodles of money on home improvements now, which would make the chances of retiring early (or partially) more remote. Ha! Financial planners love to inquire as to what you do with all your money, so they can guilt you into investing more of it with them. That can be a little self serving. Just got an email from Fidelity today basically laying out that the financial advice they provide should be viewed through the lens of the commissions their advisers get. Our best savings plan was "auto" saving for cars, college, weddings, vacations, and retirement. We never optimized our returns, but we've been debt-free for about 15 years, which is a good feeling. Now we are in the home stretch and we'll have to address an appropriate asset allocation to get enough juice out of the market with not getting caught in an ill-timed recession. I am not entirely comfortable with doing that on my own, but at least I'm not motivated by commissions. |