I can’t remember if I’ve asked this question before or not, so sorry if it’s a repeat.
What do people think of the LTC insurance that has a life insurance component? We are seriously considering it, but I’m not sure It’s a great idea.
We would likely pay a substantial sum “now” to be covered later. I like the “pot of money” concept, that either spouse can draw from.
To date we’ve always declined LTC insurance.
As federal employees, we have that option also, in case anyone has opinions about it specifically.
@CT1417 Thanks for that info about RMD at year end counting as if being paid evenly over the year. My wife has an inherited IRA and gets a check in December. I will look at sending that to IRS. We typically just pay a small penalty every year because I am too lazy to make estimated payments. This would help. But I guess we don’t have to take the RMD this year, so maybe next year?
@Igloo , I agree with you 100%, eliminating 1 yr of RMD only helps those who don’t need to take an RMD but it’s easy to forget the original rationale which was to save folks from being forced to sell stocks at depressed prices. After all, stocks always go up, don’t they? But it is easy to forget now that stock indices have made new highs.
For my inherited IRA money, I have the forms from my mother’s old NY credit union… need action within 90 days (and a few weeks have already elapsed). Last month I had some initial coaching from my local bank (which really is a credit union). Psychologically it would nice to have the funds as cash-out or inherited IRA at same place with mom’s other assets, at least short term. I’ll need to study the trade-offs though since interest rates are so low there.
There have been a lot of “moving parts” with mom’s paperwork (and some frustrations along the way- how can an insurance company spell names wrong on BOTH sister’s checks , different last names, when the names are listed on the policy?) But it has been sooo much easier due to her good planning.
TIP - CONSIDER MAKING YOUR ASSETS ALL NAME CO-OWNER or BENEFICIARIES (TOD or ITF)…it is still good to have a will, but in these designation allow money to flow outside the will. (For some families, it could make sense to make a Trust to list as beneficiary).
@colorado_mom What does the good planning look like?
@NJres If you rely on withdrawing RMD to live on, you are forced to sell anyway depressed or not. Hopefully, folks planned ahead and sold for the coming year’s withdrawals. Don’t they say to keep money needed soon in cash? I do benefit from the rule but the personal gain seems peanuts compared to the harm to the society widening gap between haves and have-nots rules like this creates. It seems so unnecessary.
But everyone who was withdrawing had to take RMD’s, whether they were a have or have-not. The rule applied to everyone of a specific age. And at least it’s one year where people who have forgotten to take RMD’s (because it’s pretty dang easy to forget things as you get older) aren’t massively penalized, which is highway robbery in my opinion.
No, haves don’t have to take RMD this year and save on the tax on RMD. Have-nots on the other hand have to take any way since they need the money and pay taxes on it. On the year have-nots took the blunt of hardship, how is this fair or advisable?
That’s a poor excuse. Finacial institutions remind you over and over throughout the year. Haves can’t forever play grabbing money from the society without eroding equitable social structure. They were already ahead of the game. Now, they use their smart and clout to squeeze out every penny instituting r=ules that will tilt the playing field further.
@Igloo, we don’t have to approve of the decision Congress saw fit to make regarding 2020, we just have to know that they made it. If you want to go back through the original negotiation documents and drafts and see which representative suggested that change people might be interested in the results, but it’s a done deal now whether anyone likes it or not.
@Iglooo - The “good planning” I mentioned for my organized (former-secretary) 89 year old divorcee mother included paperwork filed in strong box (her will,power of attorney, medical power of attorney, DNR which was also on fridge, insurance policies), spreadsheet of all assets (with columns for me / sis beneficiary etc to show approx evens split), LTC insurance policy with autopay set up, id/pw list, training to log onto her laptop / email (and then I set myself up to also monitor her email from my workstation).
.
@1214mom, LTC insurance was once attractive – significant benefits – but the insurance companies underestimated the increase in life expectancies, lost a lot of money, and have cut way back on what is available in current LTC insurance. My read is that one did better self-insuring because the lifetime caps were unattractively low. One of my FAs showed me an LTC program with a life insurance component, which was cleverly constructed and reasonably attractive on its surface. However, I strongly suspect that it was laden with hidden fees. I think the program he was offering required a big upfront payment. I declined, so I can’t tell you much more, but I would look into the fees.
My mom forgets if she’s done it every year, whether she gets reminded or not. She likely has some early dementia and my father likely has Alzheimer’s. You would probably consider them a “have” because of the amount of money they have saved up in their accounts, however it is because they rarely spent anything on what was considered non-essential over their lifetime. No restaurants, no hotels, no travel, no heat in their house except a couple of small water heaters. Did everything themselves, including using jackhammers for plumbing and hanging upside down to hammer every nail while reroofing.
Class warfare is a waste of time, unless you’re trying to rile up the masses. The vast majority of us just live our lives as best we can, and by saving and investing our money, we aren’t taking away from anyone.
But dementia hits many of us, have or have not.
fwiw
We transferred the inherited IRAs to our credit union, and made arrangements for them to automatically withdraw the annual RMDs and deposit that money in one of our other accounts there. That’s working out fine.
I wonder why any bank wouldn’t do this if asked?
Class warfare happens all time time in legislatures whenever a bill regarding economics, spending, taxation, regulation, etc. comes up that increases or decreases economic class advantages or disadvantages.
MODERATOR’S NOTE: This thread is drifting off-topic. Please stick to the subject.
That’s a great question, @alh, I’ll ask my mom if Vanguard can do this.
Hate for them to lose half their retirement RMD to taxes because I forgot to remind her!
Thanks @shawbridge. I will inquire about any fees. They weren’t mentioned when our FA suggested it. In fairness, we asked him about options. He’s a pretty low pressure guy.
You can minimize your post retirement/pre-Medicare health care costs by keeping your Adjusted Gross Income below 400% of the federal poverty level, thereby getting a full ACA subsidy. For a family of two, that translates to an AGI of about $64,000. But you can still qualify for the ACA subsidy even if your income is up to about $73,000, by contributing $9000 to Health Savings Accounts, which will reduce your AGI accordingly.
Yes, Vanguard will calculate the RMD required (based on the Dec 31 balance of that account), withdraw RMD’s automatically (monthly, quarterly,…) and transfer the funds into the clearing account (Federal Money Fund). Vanguard will also withhold a % for federal taxes if requested.
Feeling better about retirement now that DD2 has finally started budgeting and saving. She has saved a good amount for 2 months now. She was home and took these books back to read “The Millionaire Next Door” and Dave Ramsey’s book “More Than Enough”. DD2 had the DR HS course in 2013. A friend of hers was budgeting by spreadsheet and she picked up some hints from her. Since it is now HER idea, and she is doing it her own way - but she is finally getting a little financially smarter two years after college graduation.
DD1 who never had the HS course but is frugal and totally 100% buy in with DR. SIL had to absorb it via pod casts and the book; and they have been paying down his student loans and the small car loan they needed to take to have a family vehicle for their babies. They have the weekly and the monthly budgeting and are really doing well on the debt pay down.
Makes retiring easier when the next generation is ‘taking care of business’.
We’ve paid far more than prices quoted here for various healthcar plans. Our current plan is 2,850/month and has a pretty steep deduction (maybe 5-6K). We’ve have ones that were even higher and had deductions as high as 14K. Yep. It was crazy some years. It might not be a bad idea to call a local company and get a quote if you plan to retire early. Prices also vary based on your local marketplace. Some areas are very very high. Most families have at least person who get healthcare via their company. If not, it can be a huge ticket item.
Also, you can’t take it as a write off unless you own the company and can use it as an expense (so another reason to do some consulting or at least keep up with health care issues). Worth checking into. Every year the taxes on healthcare seem to be differenet.
We don’t take any prescriptions but have heard from older family and friends that prices can also be very high. So that can be a factor also. My SIL is paying about 1 k per month. Maybe there are ways to keep those costs down, but that could add up to a large sum quick.