I retired about a year and a half ago at 54. I haven’t read the whole thread above but - here’s my experience.
Beginning in my mid 20s, I started saving/investing aggressively with the idea of retiring in my mid-50s. Every time I got a raise or bonus, most of it went into an investment account - through the magic of compounding, it grew into a substantial sum. Since pretty early in that process, I used the 4% rule as a rough monitor of what I would need to have invested to no longer need a paycheck. As i got closer, it is more nuanced than that but, for rough numbers its a solid estimate
If you aren’t familiar, the 4% rule says you can spend 4% of your invested assets - and give yourself a cost of living adjustment every year for 30 years and never run out of money. There are a lot of assumptions under that and you can do your own research on the rule’s viability. In round numbers, if you want to start your retirement income stream at $100k you need $2.5M in invested assets.
Again, there’s a lot more to retirement planning than that but, I have found it a useful bogey.
This is similar to my plan - I’m aiming for 52-55. What are you doing for healthcare? How did you factor in healthcare into your planning? I think at this point I’m just planning to have a side hustle to cover healthcare.
As you know, Healthcare is wildly expensive and going up. The thing is, not many people realize how much it will cost. Most think it’s sumilar to when you work for a company. It’s not. And not many part time jobs offer medical benefits.
Many people are shocked at the medical numbers. For a family you could eaily pay close to 3k a month plus deductible can be 5k -14k total. That’s after tax $. We’ve paid quite a bit in medical over the years.
Healthcare.gov makes it pretty easy to estimate your premium.
I understand it varies state by state but, we are buying it through the Covered CA exchange. Because its based on taxable income, we get a small subsidy, our net premium for the 3 we cover is a little over $1k/mo for a Kaiser policy comparable to the one I had while working.
The retail rate would be about 1.6k/mo
I initially planned to spend about 1.6k/mo when I did my expense planning.
Thats a good deal. Guess it depends a lot on where you live. We live in MA and costs are high ( plus folks will go to the name hospitals if there’s anything serious).
We’re not retired in our 50s And kids still at home.
My advice would be to price it out. 1k vs 3k (plus) is 12k vs.36k so a huge range. It would sink someone thinking to retire on 75k or something. Even if you are planning on having a solid six figures, medical costs can take a huge bite.
We are all healthy but prescriptions could also add a lot esp if someone had a long term condition.
Be sure to account for the following in determining the expected spending level in retirement and asset amount needed for that:
Income taxes for money in places other than Roth accounts.
Medical insurance and medical care costs, especially if most of that was employer-subsidized while you are working. Remember to account for increases based on both getting older and general medical care cost increases higher than general inflation. Reaching the age of getting a government subsidy like Medicare can shift costs down at that time.
Other things that you use that were employer-subsidized but would have to pay for when retired.
Elimination of costs of working (e.g. commuting).
Costs of any additional activities that you may do while retired.
Totally agree with your @ucbalumnus
Much of that is what I meant by ‘there’s a lot more to retirement planning than that’.
You certainly need those, things worked out, but, I’d add a solid income/cash-flow plan based on your expected expenses plus some. There are unexpected expenses (in my case a roof) to be prepared for. Not getting a regular direct deposit took some getting used to.
There are lots of retirement check lists which help you ensure you are considering all of the details.
One biggie most of them neglect - what will you do with your time and who are you going to hang out with? For most of us, much of our social network came from the office - your relevance to them diminishes pretty quickly.
There are zero ACA plans that come close to providing the same coverage for the same cost as the corporate plan we are on now. They are all HMOs with high OOP maximums and deductibles, and high copays that make it likely you will hit your OOP maximum is you consume any health care at all. And most aren’t HSA compatible either.
If an ACA plan is the only option, our costs could be close to double what we pay now if we hit the OOP maximum, and be in excess of $35,000.
DH and I hope to live a long life - so my working to keep very good health care insurance at about $1K/month cheaper than COBRA cost (for the two of us) is worth it plus my paycheck. DH bailed out of ‘the plan’ to keep working until Oct 2021 when we both turn 65 - but it turns out that also worked out, as his father (age 92) got Covid in his skilled care facility out of state, and DH was able to be there when his dad wasn’t recovering and his family came in to say their goodbyes and sit with him 24/7 (much of it when he was unconscious and then comatose). for his last 7 days after he stopped being able to speak. Now his mother (will be 92 in March) who has family history of heart issues just got out of the hospital due to fluid around her heart (a week after she spent 5 days in hospital after testing positive for Covid and felt weak - they gave her IVs and Residivir). The mother’s caretaker at age 70+ had a stroke and a grand daughter dying unexpectedly - so arranging care. In the mean time, DH is cooking and looking out for her until other family arrive at the end of the month. He will overlap with them and also work on some home repairs/contract some stuff out that is more major.
So we have ‘enough’ for retirement as it goes.
Looking forward to the end of Covid sometime this year and we can all have a sigh of relief.
DH and I both survived Covid and hopefully no long term health consequences; I survived aggressive cancer (stage III) and have been cancer free 10+ years. DH is SWAN after the job stresses were taking a toll on him.
We have time on our side to being smart about selling our primary residence at the right time. We will downsize but not in same place we now live. I was planning on cash flowing some projects this year, but will wait until I am retired and DH and I will both have flexible time.
As many on this thread, we live to work. Some people have such enjoyable and thriving careers that they stay working after the financial need to be working.
One certainly doesn’t know how health care costs on the open market may be. Some may end up taking a lower cost option but then are dealing with insurance hassles. Two such companies as examples w/o naming. With Medicare, most people have a supplemental insurance to help contain costs; after hospitalization, if a person needs rehab…well one insurance (as supplement) first rejected rehab for person, so family had to bring her home for the care while they jumped the hoops and got rehab approved one day later. These less expensive health insurance plans count on people giving up and the insurance company saves on their payout. Another company always audits - like they are going to find unnecessary costs (but they may do as part of their ‘cost containment’). Well some health care facilities may also end up taking less of patients when they know they are going to have added audit costs which add administrative costs due to the health insurance plan the patient has. I value my time so I will pay a little more to not have insurance hassles.
We plan to stay on COBRA for 18 months, at close to $1K/month each. After that we’ll be full pay on the company plan, at about $1.5K/month each. No subsidy obviously, but good network. DH has a chronic condition, and we want to be able to pick doctors.
Certainly medical insurance factored into our retirement planning. My husband is 7 years older, so we waited until he was 65 last year and on medicare. I do have a fund for retirement medical insurance created years ago by my employer when it discontinued retirement medical coverage - the fund will last a few years if covering self only. For the first 18 months, I’ll use COBRA since it has a much lower monthly cost.
No recent updates? Are ya all eager-beavers, working on taxes already? Yea, we are not either… too early to even have all the forms.
For those planning (or tracking) retirement expense categories, late January is a good time to start watching for a Year End summary from your credit card(s).
Admittedly, I am working on my taxes. Just finished one return earlier this week. Now gathering my main stuff. Also, just starting to look at our returns in our portfolio and literally floored at the growth since March.
Tell me about it! I can’t wait until my husband turns 65 to get Medicare. Only 3 more years to go. I was so happy though to hear our health insurance premiums went down $1k this year. That was an unexpected savings and makes up for some lost resources elsewhere. Now if we can just keep down our medical expenses this year, then that will also make a huge difference as well.
Anyone started thinking about shifting investments With an eye to retirement based on two factors:
1.Softening economy due to so many unemployed and businesses closing due to Covid.
2. Other structural changes?
I can’t help but think next few months will be indicative. No one we know is spending a lot. A lot of small businesses in our town ( in biz for decades) have closed. Starting to rethink investments on that basis.
I think the next few years are going to be flat.
Anyone else? If not, are you planning to do anything for retirement to offset inflation.
I have been way over-invested in the stock market, which paid off handsomely in the past year. But I know intellectually that we shouldn’t be so heavily invested in stocks. Dh is looking to retire in May, but we live a low-cost life and will have enough, eventually, between two SS checks and two pension checks that our financial adviser says we don’t ever have to touch my 401k, which is where all the stocks are. Because of that, it feels like play money, you know? So I took one of those investor questionnaires that measures your risk tolerance, etc. I couldn’t bring myself to hit their target percentages.
So, yeah, I did lower my percentages in stocks but not to the level they advised. I have kept a lot of money in cash because I know that we will need a new roof and AC soon enough.