anxious mom:
run a SS calculator such as OpenSocialSecurity for a recommendation on when to file for SS. In particular, the survivor benefit can be worth quite a bit, but if one of you has health issues…
Yes, DH will retire with 100% retirement benefits to me if he predeceases me… and health insurance would also continue. Thanks for the link to the SS calculator… I’ll run it before making a decision about SS!
We opted to have a 10% lower monthly payout for H’s pension so I’d get the max possible survival benefit of 55% of his benefit amount. Survival benefits can be a very important part of financial planning, especially when there is a significant age difference between the couple and a big difference in retirement savings and benefit.
H worked for 45 years. I worked full time for 5 years, raised the kids, and then have been working part time for decades now. I have been able to accept positions with no benefits and no retirement because we figured I’d get 55% survival benefit. I also qualify for minimal social security—perhaps enough to pay Medicare B or a bit more.
"If anyone has any suggestions about how to get to a reasonable balance, suggestions are appreciated! "
@busdriver11
i just relistened to Barry Ritholtz’s interview with Bogle [ which was recorded a couple of years ago but was rebroadcast this last Fri]
https://www.bloomberg.com/news/audio/2019-01-18/jack-bogle-remembered-on-masters-in-business-podcast
what HE said, a few years ago, was the % allocated to bonds need ed to be different than what HIS firm was actively suggesting . This podcast is long but WELL worth listening to.
I’ve also heard from other FA’s that those in the early years of retirement should have lower allocations of equity investments, but as they grow older, and can afford to take more risk [ since they wont have decades more to live], they should increase the % of their retirement assets into equities, and decrease the % in bond funds.
Our financial advisor has a risk index tool, and based on how we answer questions shows our risk tolerance.
H and I don’t have pensions, and we have purchased Annuities to lower our risk; we do have quite a bit still in equities - 401k and Roth IRAs.
We still are working a little under 3 more years until we both are 65 and have Medicare. Do not have inexpensive health insurance option before then w/o one of us working FT. We both are ‘hanging in’. House will be paid for in next 2 years.
Looking to health improving in retirement as being able to focus time and energy on regular exercise, lower stress, and eating healthier/eating less (losing some weight).
Sister lowered her stress level with retirement, and her increase in regular exercise was noticed with better health at recent MD annual visit. Her H is 16 years older than her, so she has been cooking from scratch and healthy for many years (and watching portion sizes). Her H has always walked regularly, and now they do frequent walks, while she plays Pickle ball several times a week as well…
Thanks for that link, @menloparkmom. I have a lot of time off this week, so I will listen to it, I’m sure it’s fascinating. And interesting that he is advocating a difference in bond allocation than what his own firm tells you to do…
I have never heard anyone to say to increase the percentage to equities as you get older, but certainly if you don’t need the income, it does make sense.
Personally, not a fan of annuities particularly if still working; they are really insurance products and, as such, can be expensive. OTOH, when one is getting much older and starting to lose a lot more brain cells, a SPIA can simplify an older retiree’s life.
Exactly. Go a little more conservative in early 60’s, if you can wait to 70 for higher earner to file SS speaking of an annuity like wait), and then go more aggressive with more equities.
There are some, for example Wade Pfau and Michael Kitces https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/. However, as is usually the case, it depends.
Another data point, as is the case with us: if you’re committed to a Liability Matching Portfolio (LMP), all new money after your Fixed Income is “good” goes to equities, you’re still working (ie, more cash comes in), and the markets are favorable, you inevitably increase your equity allocation.
We went to the guy who manages some of our assets today, and he said given our expenses and assets, we look great for retiring in the next couple years and living into our 90s. YIPPEE!
BUT, I’m sure we didn’t estimate all of our expenses correctly on the first try, and he is not aware of all of our assets. This is the year I’m tracking expenses carefully, so by next year at this time I should have a better idea if I can really stop working “stress free.”
We also have to figure out how federal employee health benefits interact with Medicare, to get et those costs estimated better.
He told me something I hadn’t thought about in retirement planning - Medicare covers different things in different states. I had no idea.
Is that true? I thought only the Medicare Advantage and Medigap policies were state, and even county, specific.
We have FEHB. I pay the same amount as I did when I was working, as I retired with the benefit fulfilling all the criteria of age and years. It also has medications. D was on it until recently when she aged out. H is on medicare A&B and FEHB is his secondary. It is my primary as I do not have medicare yet. The costs that are involved here are continuing the FEHB and paying a certain amount for part B depending on your income.
Yes, we are the same. H uses the FEHB instead of buying a Medicare supplement of medical policy. It does cover his Rx. We pay for his Medicare B. I’m covered and our dependent D is as well. I won’t qualify for Medicare until I’m 65.
Some of H’s friends and former coworkers have opted to just have FEHB and NO Medicare B, but we are risk adverse and so far prefer to have all the protection we can.
@HImom, do you mind sharing roughly how much Medicare part b is for someone with FEHB? Thanks
Medicare part B is the same for all people. It is based on the person’s income. It’s $135/month as a base but adjusted upwards if your modified gross income was higher.
“Yes, DH will retire with 100% retirement benefits to me if he predeceases me… and health insurance would also continue” - Wow, that is fantastic! It’s getting more and more unusual for couples to have annuity pensions these days. It’s a real blessing because it gives you a component to retirement planning where you don’t need to guess how long you will live.
Well it’s all good - unless inflation rises drastically (pension is not inflation indexed) or city goes bankrupt… Pension fund is not fully funded, but they predict it will be in 20 years or so. Fingers crossed that all goes well with that! Still, we should be able to live on pensions just fine, and when SS kicks in, that’ll be our inflation hedge, and ROTH etc, won’t need to be touched until inflation really takes a hit on the pensions.
Even things that are supposed to have COLA don’t necessarily seem to be that closely tracking inflation, depending on what categories of expenses are important. As one ages, Rx, medical expenses and being able to hire all sorts of help are likely to be increasingly important. I don’t believe these are well-reflected in many inflation indexes.
I am kind of confused. Our financial adviser suggested that we do a mega back door Roth as often as we can, as we don’t have much time left to do tax advantaged investments. I understand how to do that, you invest after tax money in your 401K, and then you convert it to a Roth IRA, hopefully before you have any earnings (but pay taxes on earnings if you do have them).
But apparently many years ago (I don’t even remember doing this), I invested 10K in my after tax 401K, which now has 50K in earnings. I think that in order to not have unpleasant tax consequences with the back door Roth, I need to roll that money over…the after tax 10K can go into a Roth IRA directly, but the 50K needs to go into a traditional IRA (that I will have to pay taxes on when we withdraw). According to something I read on Bogleheads, since 2015? you can now do that, and that takes care of the tax issue. Our FA is out of the office for awhile, and I’m trying to understand what I should do before I even get more confused by talking to her…maybe I should just roll the entire thing to a Roth, pay the taxes on the 50K and get it over with. But that would be at a high tax rate, so I dunno.
Any of you investment gurus know if I got it right?
Any traditional IRAs you have you would have to prorate the Roth IRA. I made sure not to have any funds in traditional IRAs when I did my Roth IRA conversion—rolled my traditional Ira to the 401k.
See HImom, that’s what confuses me. I think I’m being told to roll my money out of the 401K after tax into a traditional IRA, which I fear would cause a tax issue. I think I’m going to try to start a Bogleheads thread. Hopefully the FA will answer me, but I want to understand before I get completely confused.
Edit to add, I think I have my answer from the Bogleheads forum. Apparently I’m not the only person who is confused. Things changed in 2014.