Getting in late on this long thread but hubby will be retiring at 63 this year and I have been reading a lot of the suggestions that everyone has written. Our only child is graduating this year and we are waiting for all of her college acceptances to come in. We feel fortunate to live in a very low cost of living part of the country and have our house paid off. D20 will hopefully be a NMF (also has had some good scholarship offers from the few schools she has already been offered admission). We are in pretty good shape for this retirement but it still feels like a leap of faith! Will continue to follow the thread and learn from all of you!
Residential rental real estate. Weâre currently building apartments with the intention of holding them in perpetuity. Ours will yield much higher than 4%. It isnât for everyone, but itâs worked for us in the past, so weâre doing it again.
Our apartments will be held in our family limited partnership, but there are also strategies to hold rental real estate and other non-brokerage investments in retirement accounts. As an example, DW and I each have two retirement accounts, administered by a custodian that specializes in âself directedâ retirement accounts. These four accounts are members of a Limited Liability Company that is fully managed by DW and me. This LLC invests primarily in land and private mortgages, but it could also own rental real estate, but in that case we would need to hire a property manager.
Companies have dealt with the rising costs of health care by steadily shifting to employees many costs. It started with co-pays and now co-insurance and several different categories of drugs (plus, newer companies may be covering a smaller percentage of the insurance premiums â not sure about this but have seen it in Silicon Valley startups).
I would not be surprised if Medicare moves in that direction as the changes are complex and a little hard to think about. Prescription drugs are not covered by Medicare Part A or B. So, Medicare subscribers can sign up for pharma plans (Part D, I think). These sometimes allow pretty high prices for drugs or donât cover them. If Congress did not forbid Medicare from negotiating directly with drug companies, the cost of drugs could be much lower (it is much lower in all of the other countries I know about).
As a consequence, people planning for retirement should consider that they may be paying a higher fraction of their health care costs (which will also increase as they age).
Does your retirement plan include a vacation home in addition to your main resident? For some reason I had always envisioned us retiring with a house by the lake. But I can see clearly now that a lake house is definitely no longer in our plans. I have adjusted my vision to DHâs. That sounds like I gave up on my dream but itâs really not. DH wants to live around university towns (Berkeley, LA, Boston, Ann Arbor,etc.) when he âretiresâ, he probably will never stop working, just a question if he will still get paid or not get paid. He hopes to retires into a dean position at some university. If not he would still do research and collaborates, and he will continue to be the reviewer for scientific papers from a couple universities, and Dreyfus foundation. That will never stop.
Now the idea of a lake house doesnât seem appealing to me any more. What will I do all day long being (presumably) secluded from the neighbors and everything else? Itâs funny that I am in extrovert and HD is an introvert so his idea of where to retire often surprises everyone. He likes to be able to walk to shops, restaurants, coffee shops from the house/apartment. We will travel a lot more, but because DH travels 100k miles a year now, he doesnât care much for traveling but he is more than happy to vacation with me and the kids.
DH just got a huge job offer (triple his current salary, 7 figures), we hope to be financially secured earlier than planned so that HD can dedicate his life to pure research. He has always wanted to do this but life happened, a mortgage and 2 kids kinda killed your (other) â dreamâ in a way. Maybe with his new opportunity he will be able achieve this dream sooner than later. As for me i will expand my charity work, will go back to visit many places that we had been to once. Will try to set up something more permanent. And if the money is there, Iâll be able to hire help and expand.
I hope to buy a property somewhere around university town now because the real estate keeps going up and up, but impossible because we have no idea where DH will end up. Since D19 is at Cal and one of DHâs labs will be in San Jose, we thought we should buy something at Berkeley but then it still feels too early to do anything like that.
Anyways, no advice, just random retirement thoughts.
Even if the employer covers the same percentage of the premiums next year, if the premiums increase, the employee (and employer) share will increase. I.e. if the employer covers 90% of the premium, but the premium increases from $7,000 to $8,000, then the employee share increases from $700 to $800 (and the employer share increases from $6,300 to $7,200).
Good for you, @sherpa! Someone has to do the oh not so easy job of RE development. 
I have scheduled an appt with a financial planner to see how we stand in terms of retirement. The biggest question, to me, is medical. I read the post outlining the costs of Medicare and Medigap by @bluebayou in post no. 16199. What if you are on a specialty drug? How is that/are they covered? Right now, Iâm on co-pay assistance so itâs only costing me $5 per Rx.
@Nhatrang, congratulations on your husbandâs job offer. Our plan currently includes a house on a lake and a new main house on the river. We have been part of a university community because of my past affiliation, my modest appointment and lots of friends/colleagues. But, we are out in the sub/exurbs. We thought about moving back in to Cambridge, but decided we like living in nature and will have our new house on the river. Not clear we need both places. Like your H, neither ShawWife nor I expect to retire.
@BunsenBurner, we have a couple of rental units that ShawWife manages, but I would love to invest more in residential real estate that we donât have to manage.
@shawbridge can you share why you donât want to retire? My husband canât wait to be able to quit his job, not because he hates it or itâs stressful. Even though he is very good at his job, itâs just doesnât exactly align with his passion. He is still in research, but itâs the research that is aligned with his companyâs vision, not his own area of passion. So as soon as both kids are done with college, he will seriously consider stop following the money to peruse his passion. That path may or may not bring the income but hopefully we have enough safety net that it doesnât matter as much.
Your houses on the lake and the river sounds amazing. But are they far apart enough that you feel like going on vacation to either house? Why not a house in Cambridge and a house on the lake/river? Just curious.
We have paid ZERO dollars for DHâs prescription drugs this year, his first on Medicare. He has a supplemental policy (no additional cost) that covers everything. We were pleasantly shocked! This year, the supplemental coverage will also give him a monthly âallowanceâ he can use to cover OTC meds at a local pharmacy.
We kept Hâs insurance (we are on the family plan for me, H and D) as well as Medicare A & B. H rarely has copays for anything, including his Rx. We didnât have to buy any other plans.
@Nhatrang, I left full-time teaching a long time ago and started a firm that uses my research but is more in line with what I love to do. Some of the work is very interesting. Iâm always learning about new industries, situations, countries, politics, etc. My clients fly me around the world first or business class and I stay at nice hotels and go to good restaurants. I think I will do less traveling as I age but I canât imagine what would be more interesting than what I do. I still teach one week a year at my old university. I do a lot less writing, but have a writing project coming up. I stay in contact with lots of smart people, which is one of the parts of academia that I value.
The lake house is 6 hours drive. It was my wifeâs familyâs country house years ago. We knocked it down and rebuilt it this year. In an alternate universe, we wouldnât have it and would just have the house on the river.
âMy husband canât wait to be able to quit his job, not because he hates it or itâs stressful. Even though he is very good at his job, itâs just doesnât exactly align with his passion. He is still in research, but itâs the research that is aligned with his companyâs vision, not his own area of passion. So as soon as both kids are done with college, he will seriously consider stop following the money to peruse his passion.â
It is not always easy to cross back into academia after years in industry. Hope he will be able to fund a lab to pursue his dream. Fingers crossed for him. The situation sounds very familiar. Have someone here in my house who decided to follow his passion⊠it is an uphill battle, and not a low stress situation.
@youdontsay, my H is also on a specialty drug and we also have co pay assistance.
Specific classes of drugs (ours is a biologic) are very, very expensive. Co pay assistance is only for those who have private insurance and once you are on Medicare, you are no longer eligible. As of now, the specific brand that H uses is not covered under any Medicare plan. None.
Hâs doctor says that when the time comes, that there is a drug in that class that Medicare will cover and he will have to change to that drug. It does cause some concern as we will have to just hope that the other drug works as well as the one he is on now.
My best advice is for you to talk to your physician about what happens once you go on Medicare.
@shawbridge - I am late on your new house purchaseâŠI will give you a bit of my past experience (my parents) and my current experience.
My father had such a vision as you - build a beautiful house on a 5 acre in a beautiful part of NJ. He wanted his children and grandchildren to come home to visit. Unfortunately we lived all over the country (and world). We all came back to the house one week a year over xmas. The reason being our children had a lot of ECs, so during holidays they had summer camps/training. We lived very close to them and my girls spent a lot of time with them, but most of the time it was driving them back and forth to ballet. When we had time off, we (my siblings and I) all preferred to travel the world rather than staying in NJ (as nice as their house was). We often took our parents with us. But my father still had that expectation of his kids coming home more. At times there were resentment and tension. Toward later part of his life, my mother wanted to move to a condo/home in an adult community, but my father wouldnât give up his dream home. My mother ended up staying in that home for 5 years after my father passed away because she felt guilty about moving. We finally moved her last year and she is so much happier now. She said she wished my dad would have done the move with her. They had the means of having the house taken care of (gardener, snow plower, cleaner), but still it was a lot of work for my mother to keep up the house.
Now my girls are all grown and out on their own (D2 is still in law school, but already has a Big Law job lined up). D1 works in banking with very intense schedule. She travels a lot for work, but during her time off she has gone off to India, Portugal, Spain, Greece (thatâs just last year). We all live in the same city, but our time together is still very limited. We do continue to make a point of going on vacation together as a family once a year. I know when they have children they are going to have me help out with babysitting, which I would love to do, and it would most likely be at their home. When time to purchase my forever home I decided on an apartment in NYC with all the amenities I wanted. Iâve had options of working in other cities and for me the priority was to be close to my kids. My girls have made a commitment of staying in NYC and thatâs what they have agreed with their SOs too.
@shawbridge - your kids seem to have very time consuming jobs and they live across country from you. I think you should renovate the new home to the way you want it instead of with your kids/grandchildren in mind. What you want may not necessary be what your kids want. When I lived abroad for few years, I preferred to stay at a hotel when visiting my parents because I needed my own space. There was always that awkward discussion with my parents.
@oldfort, yours is sage advice. My first presumption has been that kids with busy lives in California are not going to fly for extended periods to the East Coast no matter how nice the place is (and it will be very nice). If ShawD moves back to the East Coast, it would be a great place for grandkids.
My second presumption is that, should ShawD stay on the West Coast, both kids would be there and we would start to spend part of our time there (we had been doing that for two or three years but need to find another studio for ShawWife). I donât know if we would keep the house on the river rather than a smaller place if we were there only six months a year. Hard to know.
ShawWife would never give up 35 years of deep friendships here, but we could reduce our real estate footprint at some point.
@shawbridge, we admit to bribing our kids to visit by making our house inviting (HarTru tennis court, Pickleball, heated salt water pool, hot tub, sauna, koi pond, media room, etc). Still, they are busy launching, and those with significant others need/want time with them and the families of their SOs.
So, we enjoy the amenities ourselves and with our local friends.
My brother has a nice home in CA, but both of his kids are working in NYC. HIs kids also love CA and would love to visit more often, but their schedule just wouldnât permit it. My brother and his wife are now spending half of their time in NYC.
Frankly, what is there to say your kids wouldnât be able to afford a place nicer than what you have. Sounds like your kids are doing quite well.
I could definitely see us, once the kids are more settled and start families, giving our kids some assets so they could have a nicer place and we could visit them more often, having the greater flexibility. I agree with @oldfort re: adult childrenâs busy lives and limited time off. I, too, wanted to use some of that time exploring the world and did so yet there was the expectation to visit both sides of the family as well.
Iâm on a specialty drug, and according to Medicare, weâd have to pay $10k/year for just that med. Scary stuff, as our current copay is $150/mo.
Need to find out if our costs would be any better if we keep our current medical coverage as secondary when DH retires. However, premiums for retirees on that plan are $500+/mo.
We know that weâll be in decent shape financially with a pension, 401k and Social Security, but itâs the unpredictability of medical expenses, esp pharmacy costs that scare the &$#@ out of me. There doesnât seem to be any way we could possibly save enough to cover the contingencies.