Fixed it for you. 
@thumper1 ā Ah, no, my mother is not living with me. That would not work well!
You wrote: " I thought medical expenses were over a certain %age of incomeā¦
AFAIK, yes, the amount that exceeds 7.5% of AGI can be listed as an itemized expense. Here is what I wrote in my last post:
āI thought that I could sum up her property taxes capped at $10K + medical costs in excess of 7.5% of her AGI + charitable contributions, and if those three exceed the $12K standard exemption, she will be better off itemizing.ā
I do need to find a list of eligible medical expenses. I am hoping that the 20% share of the cost of her in-home aides (the amount not reimbursed by the LTC plan) will be considered an eligible expense. The LTC premium has been, so I need to confirm the deductibility of the actual expense, now that she is using the plan.
@bluebayou Iāll let you know.
@MomofJandL Actually, $1000/month for COBRA for two people is really cheap. If I COBRA, it will be over $2000/month.
btw, you would get an additional 36 months if he ages into Medicare while on COBRA.
@bluebayou ā I believe that the total continuation period can be 36 months, so if the H retired and both spouses were on COBRA and then the H became eligible for Medicare, the wifeās continuation would extend to total 36 months, but I donāt think the 36 months are added on to the original continuation period.
You have to already be on Medicare BEFORE you retire to get the 36 months of Cobraā¦ otherwise it is 18 months.
Per my former companyās benefits broker, there are two rules for Medicare/COBRA, and being on Medicare before term is the first. The second, is a qualifying event, which includes aging into Medicare.
I guess Iāll find out since I just filed for my wifeās extended coverage.
https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_fact_sheet.html
Ah! I understand
H signed his paperwork this morning to take his companyās buyout offer, which is resulting in retirement a few months earlier than planned. It has been a roller coaster ride, because we had just begun the āare you sure we can do it this springā conversations. Last night, our planner presented us with the bottom line of what it all means and how it all works. H is 60; I will be 59 next month. I will continue to work another 3 years or so (yuck), and he is open to doing something different with his life. After more than 42 years with the same company, he will take some time off to decompress (and do a few things around the house), then who knows. But we can do it without him going back to work, so anything he does for pay is icing on the cake.
We have the house paid off, low taxes, good savings, and we have always lived a relatively frugal lifestyle. I know we are in a good place. But man, is it scary to do this!!
H turned down buyout offers because his employer begged him to come back for 6 months after retirement and taking the buyout wouldāve meant paying it all back!
We were scared about retiring too but with the ed expenses and mortgage done, we were netting more in retirement than when we were working and significantly more than in the early days of our marriage when we hardly had any money after paying the mortgage. Good luck to all who are navigating this!
Having a good financial plan in place helps the transitioning.
Our financial planner concurred that we can go with an Option our LTC insurance presented, lowering our annual premium but also reducing our coverage (removing 5% inflation on the daily payment rate) - so we will self fund if there is a shortfall in the LTC payout if and when we need it down the road 15/20/25/30 yearsā¦if we donāt need the LTC coverage, we have thrown less money at the insurance. But the insurance helps us when we need it.
Thankful for SS and MC when our time comes in a few years. Some of our investments should carry over to our children as inheritance.
Key for the children is good cash flow and good at saving/investing.
@kelsmom - Congrats to your husband! I know itās scary. My H was forced into early retirement a month ago. Heās almost 63 and had planned to work until 65, but the university at which he worked (for 31 years!) decided to close his research core. So much for planning.
So yeah, I know how you feel - Iām 59 and had planned to retire early-ish, but now Iāll work until at least 63 (for the health insurance.) Weāre the same as you and your H: house paid off, lots of retirement savings, frugal lifestyles. H is loving retirement so far and is getting lots of things done around the house. Heās not bored and we havenāt run out of money yet - but Itās only been 6 weeks!
Congrats, @kelsmom. Change is hard and I know from experience it takes awhile to get comfortable with the change of not having as much income coming in and therefore salting away savings. Sounds like you are well prepared financially so donāt sweat it too much. I know for us it took a few years to feel comfortable with it.
I hope you all had a wonderful Thanksgiving.
New topic here (I think). Is anybody considering a donor-advised fund? Here is a link for an example through Schwabb. https://www.schwabcharitable.org/public/charitable/home
Our financial advisor mentioned it. This seems to be a way to shelter investment profit from tax by putting it into a fund for future charitable giving. The funds are irrevocable, even if you die they must be designated for charity (immediately or as a donor fund for beneficiary). It sounds complicated to me, but since weād like to continue our charitable giving in retirement we are researching it. Under new tax laws, we will be doing standard deduction without the prior Schedule A advantage for deducting our donations.
@colorado_mom - A donor-advised fund was suggested to us as well. For the same reasons as you. With no mortgage and moving to a state with no state income tax, we, too, will be using the standard deduction going forward. We considered it, but decided to pass. The irrrevocable aspect was a turn-off. Also, I think we just must not be that wealthy. We are making some year-end charitable gifts of appreciated stock this year (what we would have funded the donor-advised fund with). I would like to think we can keep up our level of giving notwithstanding the lack of tax benefit to us. Weāll see. FWIW, I donāt think it is super difficult/complicated to set up.
A related articleā¦ https://www.fa-mag.com/news/how-the-2018-tax-law-increases-charitable-giving-deductions-37426.html
I set one up at Fidelity years ago. My income has some volatility. In particularly good years, the idea was to put more money into the find than I would give out that year for use later. I have done that.
With the change in tax laws, we will make our donations from the fund and every few years donate a significant sun to the fund to get the itemized deduction. This may be useful to more people as a result of the change in tax laws.
This link has Donor Advised savings examples - https://www.forbes.com/sites/adamstrauss/2018/08/31/how-to-minimize-taxes-under-the-trump-tax-law-using-donor-advised-funds/#2d9e107a40a6
DAF probably makes the most sense for families that have large, regular donations (like church, college alumni annual pledge etc) and want to avoid tax on greatly appreciated assets.
@colorado_mom, I think it works for both. We give every year to a bunch of charities. Now we will give a big donation every N years to the DAF and itemize in that year. We will then give 1/N of that donation each year from the DAF to those charities. That way we will get the benefit of the tax deduction. When we give with appreciated securities, we will do it the same way for even bigger tax benefits, though I have to say that I rarely remember to do the latter.
Iām now working on using a Roth to invest in startups. In particular, I am co-founding a company that will combine my professional area of expertise with state of the art AI/NLP/ML. I wonāt be an employee but will own a meaningful slug of equity. Some will be awarded to me for my contribution in IP etc. The rest I will invest, hopefully through the Roth.
I talked with church treasurer today, and he said DAF is easy on their end if we just use it for regular giving to general account. (He says it was tricky in some cases with people trying to put it to a particular fund, since not all have the same 501c designation). Iām still leery due to the āirrevocableā aspect of DAF, so we continue to research and discuss it at home.