Even though it actually is a pay-as-you-go “welfare” plan, rather than being accounted as a pension plan (it would be trillions of dollars underfunded if it had to do pension plan accounting). As it is, Social Security finances are mainly subject to the ratio of workers to recipients, rather than reserves paid years/decades earlier by current recipients (and the investment returns on those reserves).
@busdriver11 - Your idea to start with one spouse retiring first could work out well. My husband retired last year, and I kept working since 7 years younger. We added him to my health insurance (High Deductible) as spouse, and the cost was tolerable.
@colorado_mom , we did the same thing about insurance. Added Dragondad to mine when he retired until he was Medicare eligible.
If you have a high deductible plan, do you have an HSA? Contribute as much as is allowed if you can, because it essentially makes your medical expenses (including Medicare part B and D premiums) tax deductible for as long as the account lasts.
Thanks @dragonmom - Yes, we’ve both been stashing money into our HSA. But my husband, who started Medicare in May, did not realize he could use it for those monthly payments. We were just going to use HSA for to cover deductible and copays.
The state of Minnesota has a Senior Citizens Education Program (SCEP) that allows seniors age 62 and up to audit college classes at any public college or university in the state for free, or to earn credits toward a degree at a minimal cost of $10 per credit. I’m seriously considering pursing a Masters degree in some field that interests me—history perhaps?—after I retire. I could acquire a Masters degree for a few hundred bucks. It would keep my mind active and engaged, the discipline would be good for me, and I’d thoroughly enjoy the opportunity to study something I’ve never had the opportunity to study in a deeply engaged, comprehensive way. And if I never complete the degree due to a loss of interest or health constraints, it’s no big deal; I’ll still have had the experience and a heck of a lot of fun along the way. It’s a great opportunity. I’m surprised more seniors don’t take advantage of it.
@bclintonk H and I did that very thing in Colorado age 60 and above for 3 years. H took all kinds of business and geology classes. I took all kinds of art classes and even tap. We both took French classes (neither had taken French before). Hand full of people willing to commit the time.
If college classes are via zoom (Covid strategy varies by school), that could be appealing. No travel time or hassle/cost with parking. Not as fun as being in the classroom live… but perhaps a good change of pace when stuck at home.
At the time we took them 2016-2019 they would not allow online classes free for audit. Maybe it’s changed now. I really enjoyed the art classes (so out of my history) and those really helped to be done in person.
I just filled out papers to annuitize a small annuity I bought from a friend 21 years ago when he was between jobs and working as a broker. The original documents include a table that calculates your monthly payment at a given age. I am sure the factors in the table looked very stingy 21 years ago, but in today’s zero interest rate environment they produce an above market payment. I wanted to move this annuity to Schwab where I have most of my retirement assets, but they can’t match the payout so I am going with monthly payments from this insurance company. Also, there is one factor for every year, not for every month, so I have gained nothing by waiting 3 months since my birthday. The monthly payment should cover our cable bill.
@NJres I just don’t get annuities. I had the feeling the policies are old school like whole life insurance policies in the sense of being very expensive in order to get that benefit. Though we never seriously did any research on them.
I can see a need for someone who has no pension and not a huge amount of retirement savings. I wish my dad had something like that. He won’t spend $$ and is likely to pass on his retirement egg and it isn’t needed by his kids.
Could also be a good tool for someone who cannot control their spending and needs to keep from spending too much per year.
Just wondering, what’s the annual average percent return of investment one can use to approximate one’s net worth say, 18 years from now. 8? 6?
I’m planning to retire maybe 10 years from now. But since wife is considerably younger and can live by her salary alone and then small pension/social security and even just her working part time and rental property income, we’re not really planning to draw down from our retirement fund until later, which is about 18 years from now.
I usually use a fairly conservative 4% annual rate of return to project long-term net worth, then for comparison purposes plug 5% and 6% into the online RMD calculators that Schwab and others offer to give me a range of estimates. The 4% figure may be on the low side given that most of my investments are in growth stocks that have consistently produced a higher rate of return, even in economic downturns. Even the bond funds have been returning well in excess of 4%. But I’d be nervous going as high as 8%. If I get 8%, so much the better; it’s all gravy. But better to plan for a lower rate of return, and if you do better than that it’s a pleasant surprise, than to base your plans on an unrealistically high rate of return and be disappointed.
I’ve seen some retirement advice that says you should plan for a 3% rate of return, but to me that seems unrealistically low. I’ve got tax-free munis that are returning 4.5% and all my other investments are doing much better. Barring a total meltdown of the economy that takes down even reliable, seemingly recession-proof high flying growth stocks like Apple and Google, it’s hard to see how my overall rate of return could ever go as low as 3%
@Happytimes2001 , I was taught that annuities and whole life policies are ripoffs that enrich the insurance companies and agents who sell them at the expense of investors who absorb the hefty costs of fees and commissions for rates of return that can be easily matched or exceeded by other, lower cost investments… I’ve seen no evidence to the contrary in the years since.
Nor do these products benefit low-net-worth investors, who can least afford the exorbitant fees and commissions. The people who sell them are preying on the ignorance of the financially vulnerable.
About $100.000 in annual income, no mortgage on a house in expensive area of US, a govt health insurance that supplements Medicare, and $4 -$5 million in cash/investments.
So why do we not feel rich? This country is such a mess.
Years ago I decided that most people felt that houses costing 150% of what they owned (or hoped to own) were what they’d really like. For example - $300k houses looked awesome when you could only afford $200k, etc. Probably retirement savings is similar … each couple would feel happier if they they had half again as much as reality.
“Barring a total meltdown of the economy that takes down even reliable, seemingly recession-proof high flying growth stocks like Apple and Google, it’s hard to see how my overall rate of return could ever go as low as 3%”
