I’ve been surprised that 401k balance excluded from EFC calculations. There is wisdom in encouraging people to retire, but not everybody has an easy opportunity to open 401k with employer.
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retirement balances are excluded, but the $xx contribution made to a IRA or 401k is added back to that year’s income by many private colleges.
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This calculator is from 2013 and therefore wildly out of date. The unsubsidized cost in my state for a silver plan for 2 people aged 60 is going to be at least $2000/month, and that’s with $2000/4000 deductibles.
My state’s web site for ACA plans requires only birthdates to preview plans.
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I am really comfortable with the 401k that has good investment choices, and our financial advisor and other investments. But these Robo advisor services fill a niche.
All contributions made to retirement accounts in a given year are reported on FAFSA, too, and added back into income.
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Just wondering - those calculators look great, very helpful. Do they exclude your assets? E.g., your 401k and investments and home equity - it would only look at your adjusted gross income?
The numbers I ran weren’t as awful as I thought, lol. Not great, but less than the $3000 a month others have been telling me our fam would pay for 3 people…!
I don’t think what one pays for health insurance is impacted in any way by one’s level of assets. I think it is solely based on income. I am sure someone will correct me if I am wrong. I believe people who have the capacity to shift income to different years or who own businesses have a lot more, “play,” in determining their income than others.
In terms of monthly costs, I think there are an awful lot of variables depending on your state and the type of coverage one chooses. My dh’s health insurance premiums are less than mine (though we both have a type of PPO), but the network I have is significantly broader than his is. That was important to me. We also both have prescription plans as we each take a fairly expensive medication. The cost of having that aspect on our plan is definitely less than if we paid the full amount for the medications, but it does increase the cost of our monthly premiums.
I honestly think the best way to get a sense of cost is to talk to a health insurance broker.
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All contributions to tax deferred retirement accounts are added back as income. The others are already included as income.
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As has been mentioned a few times in this thread, if you use your state market for insurance (in that in between time after retirement but before Medicare), the premiums will vary based strictly upon your income (not assets) I assume each state will also be different. We are paying far less right now for market health insurance then we will for Medicare in a few years, because we are living completely off our non retirement savings (not in IRA or 401K). This will all change once we hit Medicare age and begin to drawn down on retirement savings and collect Social Security and pensions.
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Unfortunately (not really, but sort of) for us, my ds was part of a non qualified deferred compensation plan. His, “retirement” happened sooner than we expected. We could live off our non retirement savings, but the payments out of that plan are income (pretty significant) to us over multiple years. Deferring income at the time seemed like a good idea. In hindsight, maybe not so much.
Yep, this is not a strategy that can work for everybody. All depends upon how your savings are structured.
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Well… and age.
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My big take-away from this: “go see a health insurance broker.” Did not know that was a thing! Thinking of working for several more years, but want to play out our options for a variety of paths and medical coverage (pre-Medicare) is key. Thanks!
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For most of us in this gang, the big college surprise years ago was that minimal need-based aid (or none) at our income/assets, even though college costs were staggering and seemed unaffordable.
Then for some of us the big retirement-planning surprises were 1) pre-65 costs are very high, ballpark $1000/month per person even with high deductible…. but of course with MANY variables. 2) even after 65 on Medicare it’s not free, and for the better plans it can add up to hundreds per month per person.
Heads up foor those considering Roth conversions: it might disqualify for you for health insurance subsidies (ACA/obamacare) you’d get at your level of retirement income.
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Having worked for two Universities before having children, I was well aware of the rising college costs - so was very glad to find out about a program in our state that allowed paying into a state run pre-paid college tuition program - read about it when DD1 was a newborn, and only had enrollment one month a year - so we enrolled her the next year (paid upfront the money, but they also had a payment program) and enrolled DD2 the next year. The state discontinued entry into the program, the state had to pay in to help keep it afloat, and we did slightly lose some off the total promised (they locked the tuition rate at a particular year). The strong college scholarships at our in-state Universities have for high stat kids (GPA plus SAT/ACT) paid another portion. The last portion was each child’s stock fund that received a boost from grandmother’s two small life insurance policies that paid out to the grandchildren. Thus graduated from college debt free. We didn’t have to cash flow during college years except for incidental expenses and we paid for car insurance and cell phone. We survived my Stage III aggressive cancer and 4 year max copays and deductibles. DH stayed employed throughout his career. I was able to return to work ‘sunset career’ for 5 years to retirement age age 65. My management of DH’s 401k, along with finding a great financial guy where we consolidated various retirement funds into funds managed by him (all converted to Roth IRAs) and also spun off funds from 401ks to buy various annuities at the right time.
Last Jan, prior to my retirement, I was nervous about the stock market. Now that I am retired, I am not nervous at all. I think going through all the Covid stuff and other uncertainties, we have solid financials with retirement funds/investments.
Really key on out of pocket money was keeping employer supported health insurance until we both turned 65. Our birthdays and year of birth is only months apart. Our last 10 months of insurance via COBRA would have been $10,000 more total than we paid for the same level of insurance coverage – DH retired 10 months earlier than planned, but I worked enough hours to have my employer supported health insurance which was very similar to DH’s employer insurance coverage and employee costs.
Yes Medicare B monthly fee went up; decent Medigap or Advantage program costs money; depending on meds used - drug plan costs too. Knowing all of this - I am still glad to leave work and pay the price tag for the health care coverage.
DH and I have a slew of medical visits in Jan and beyond. We will have to pay the Medicare deductibles, but nothing until they process the claims.
Key in retirement is staying active, staying as healthy as possible, having enough of a nest egg to not run out of money. DH’s parents (both age 92) died already - and mine died younger. As much as possible, I am investing myself in our 3 grandchildren who right now do not live far from us. 2022 looks good so far!
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I am curious what percentage of your highest working years annual income you live on now. Is it enough to live the life you envisioned for yourself in retirement?
Edited to add: working through one of those planning tools and I’m not sure what to put for the income I want to have in retirement (as a percentage of our current income(s)).
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I am not retired, but I watched what my parent did. Dad ended up retiring at 55 from construction. He got disability due to health issues so he went on SS and his pension. Mom retired at 66.
They paid their house off in 1997 at 51 for Dad. They never carried much debt. They had supplemental health ins to medicare from their work. Money came out of the pensions for it.
They ended up bringing in way more money in retirement than they needed each month to live on. They just didn’t spend much money. They weren’t supporting any kids. They didn’t really travel. When they needed a car they paid cash.
Dad passed away a few years ago. Mom doesn’t get any of his pension. She is still totally fine.
Basically I learned you just don’t need as much money in retirement than you do when you are working and supporting a family.
Just keep your expenses low.
I suggest you add up all your current monthly expenses and compare that against what you will receive monthly from your social security and any other income sources.
Include also the need to replace expensive items (for example, car or even cell phone) every X years.
Even if you paid off your mortgage, property taxes and maintenance expenses can be substantial and you may not be able to do as much of the maintenance yourself as you grow older (ie, yard work and snow removal).
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I suggest you figure out how much ALL of your expenses are, and monitor them for a couple of years, and then make adjustments (no more college tuition, no more mortgage, no more retirement contributions, more travel, etc.) to determine how much you “need” in retirement. Make sure you account for new cars, gifts to kids and others, new appliances, etc.
I did this, and was sort of surprised at how much I spent over the course of a year.
I also suggest you search for or create a comprehensive spreadsheet and fill in how much you think you spend for each category.
I have been retired for close to a year, and I can tell you I didn’t spend as much as I thought I would last year. BUT, if COVID wasn’t around, I would have traveled a lot more, and expenses would have been significantly higher.
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Thank you for responding :). I do budget pretty carefully, so I know what we spend each year. Presently, we happen to live pretty far below our means (because so much of our current income is funneled into saving for retirement and saving/paying for our kids’ education), so I feel like the percentage we could live on comfortably is quite a bit lower than the advice I’ve read (plan for 80-100% of current income). But then I assume it can’t be that simple and I must be missing something.
I don’t want to put you on the spot, but if you wouldn’t mind answering…what percentage of your pre-retirement income did you think you would need?