I read recently that LTC insurance companies greatly underestimated the costs to provide care. They are losing a tremendous amount of money on many policies, so are trying to increase rates to avoid further losses going forward.
We bought LTC policies for similar reasons as kjofkw. We did benefit from group rate via e. DHâs employers and liked the option for home care. I did pay a little higher rate on my policy (bought a few years later than DHâs) to have the right for refund later if rates increase too much. Iâll admit it may not be this is NOT the right decision for most couples, but itâs what DH and I felt comfortable with so that we can spend liberally on travel in early retirement.
Met with âWealth Managerâ 2 years ago and then again last week. Felt a lot better this time. This is somewhat driven by my H getting a different job that pays over 40% more and us putting off retirement another year. I also think Iâm learning more about our options.
So anyway, our guaranteed annunity payment ( pluss SS) which lasts until at least age 95 is something we can certainly live on. And it continues if either of us dies. The kids would continue to get it up to15 years ( which is adjustable). IOW, if we both die less than 15 years after retirement they will get the payment up to15 years,minus SS.
The remaining, and larger, part of our retirement funds can be distributed in any amount we want. What we do not use is left to our heirs.
We can convert our unused sick days from work into supplemental health care. Apparently it lasts a very long time.
So we seem to to be in a good situation. LET RETIREMENT BEGIN in two years!
@morrismm - That sounds exciting. I hope the extra income encourages you to splurge a bit (travel etc) in the next 2 years leading into retirement.
Any feedback on Schwab? One option we are considering involves use of Schwab investments / website.
Mr. B is pretty happy with Schwab. They let him trade stocks in his IRA for five bucks a trade. He says the website is very easy to navigate.
We will be moving the after-tax $$ from our 401k into a Schwab Roth. We had stocks there for awhile and buying/selling online was easy.
Dh reran his numbers for retirement budgeting and is finally happy. It turns out that he previously used our expenditures from 2017 in his estimates without subtracting all that we spent on Ddâs wedding and some other one time expenses. Last weekend he looked at only our 2018 expenditures and asked how Iâd cut down so much without him noticing (âWe havenât been eating rice and beans, so whatâs going on?â) Now heâs satisfied that he can live to 105. I told him that I hope he enjoys himself those last 15 - 20 years because I donât anticipate lasting that long.
If you are gone, he can probably use that savings to last another decade or so.
mom2collegekids - That is indeed scary.
During the work day Thursday (with vacation beginning after Friday work), H found out (at 1 pm) he was needed to get on a flight at 5 pm (with arrival at final destination in Mexico at 11 pm) only to turn around on a return flight at 6 am (he arrived in ATL by 10 am central time and has one flight leg left to get âhomeâ). Why? Carrying critical parts for mfg. He got his airline tickets at the airport counter so no idea how much his round trip ticket cost, but his company weighs out these things. IDK if he even checked into a hotel!
Long story about how there was a coordinated effort with various facilities and included renting a 747 to transport product internationally to meet the deadline with a hefty daily penalty (and of course company reputation on the line). They met the deadline, but it was within a very short time periodâŠand many were sweating it out. This is the world of contract electronics manufacturing in a global paradigm.
Good thing my schedule is flexible! However I expect grumpy H for our vacation travelâŠ
During retirement, H will be at home enjoying his projects and being home; I expect to do some travel with other family and friendsâŠ
Pension question: Luckily, my spouse will get a modest (but not insignificant) pension from his old employer. Question is how to decide on 75% vs 100% survivorship. Both my parents lived into their 90s and his dad is now over 90 (his mom died in her late 70s of a blood disorder). We are both healthy now. If I did the calculations correctly, the âbreak evenâ between the 75% and 100% is about 5 years for me to live longer. While expenses would go down for one person vs two, not sure they would go down 25% and social security income would also be less.
Anyone done this or have thoughts on how to decide?
Thanks!
@mom2and, here is my thought on the survivorship pension.
If you can manage your retirement income/budget with the 100% survivorship amount, thatâs what you should do. If you need the full amount from the 75% survivorship, then that is your answer.
Upon the death of your husband, your household will have a reduction in income from the loss of his SS, no need to compound that by a reduction in that pension, too.
Make sure you understand what happens with social security. I believe that a surviving spouse who is above full retirement age (66 for most of us) can receive the deceased spouseâs full benefit upon his death. So for two spouses who both have social security records, regardless of which one dies first, social security is only reduced by the lower benefit amount. In most cases (meaning where the husband out-earned the wife) , the wifeâs benefit steps up to the deceased husbandâs full benefit.
@mom2and, Itâs perhaps more helpful to think about categories of expenses that would change upon the death of one spouse, and those that wonât. Someâfood and beverage, clothing, out-of-home entertainmentâwill likely be reduced by half, more or less. Medical costs will be reduced, but itâs hard to predict by how much; it depends on the medical needs of each spouse, some of which are fairly predictable, others not. Transportation costs will be reduced but probably by less than half. If either spouse has expensive hobbies, those costs will be eliminated entirely. Other costs are more or less fixed, like utilities, repairs and maintenance on your home, and property taxesâunless you downsize, which some people do upon the death of a spouse.
Individual circumstances vary, but as I perform this mental exercise, I could easily see expenses dropping by around 25% upon my death or that of my spouse. And if I wasnât sure, I might take the 75% option anyway, and put the difference in payouts between that and the 100% option into savings and investments, to create an additional cushion for the surviving spouse.
We just made that decision, but our situation is different, and my thought process is different. My wife just started receiving a small pension (<$500/month) and I urged her to maximize that monthly payment by opting for no survivor benefit. If she dies before me, I donât want her money. (wonât need it) In other things we are mostly making the conservative economically correct decisions, ie I wonât start my social security until age 70 which means she will get a maximum benefit if I go first.
For Hâs pension, the max survivor benefit was 55%, and you could opt for lesser amounts down to 0. It reduced the monthly pension by 10% to give me a 55% survivor benefit.
We are comfortably living on the reduced pension and figure I will greatly benefit from having a survivor benefit if H predeceases me. Since heâs over a decade older, this is statistically likely. I have no pension and very little SS or retirement funding. Neither of us can get life insurance at reasonable rates.
We could never buy any annuity with the amount Hâs pension is reduced by that would pay me anything approaching what I will get for 55% of Hâs pension.
@HImom maybe you know the answer to my question. You seem quite knowledgeable about Civil Service retirement. I am in the same situation as you. My H is retired from Civil Service and will not receive SS. I receive a very small pension from working for the County. I am eligible for SS and I paid into SS while working for the county. I do not plan on taking SS until I am 70. At which point itâs estimated I should receive about $1500 per month. My question is, if my H passes before me and I receive spousal benefits, does that affect the amount of Social Security Iâll get? The more I read, the more confused I get! Thanks for any insight you can give me.
My understanding is that MY social security benefits based on MY earnings will not be affected at all by my Hâs CSRS pension or any survivor benefits I get from H based on HIS working.
Any benefits H could be entitled to based on MY working would be reduced by the government offset or windfall, so he would be unable to collect anything from my working as a spouse (his pension greatly exceeds my SS).
I believe I will be entitled to similar SS benefits as you, plus 55% of Hâs pension if he predeceases me.
Thanks so much. That has been my understanding also, but I guess I just started overthinking everything.