How Much Do You think You Need to Retire/What Age Will You/Spouse Retire: General Retirement Issues (Part 2)

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We are spending differently.

We are extremely lucky that there is retiree healthcare benefits so the cost of that is quite low. My husband has significant medical expenses so early retirement is only possible because of that.

We had debt (college for kids) before retirement that was paid off aggressively. That is done. Cars are paid off. Mortgage not quite yet. So there is that.

It’s weird because covid stopped a bunch of working expenses. No commute, no work travel, no clothing or eating out expenses. We didn’t travel at all before retiring because of paying off that college expenses.

Now we are traveling more. Visiting the kids more. But spending isn’t all that more or less. Allocated differently.

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We are not selling because we need the equity. The house is fully paid and we are debt free. We have enough non retirement savings to live off until we officially retire. We are choosing to move and have decided that we prefer to live in an apartment after so many years of paying real estate taxes and home maintenance costs.

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For some people, like me, “how much do you think you need to retire, and at what age…” we think about having our kids/grandkids have the right start and continuation in life, which may include some of our time/energy/money later on during retirement years… We have not needed to delay retirement. We have more time now w/o career jobs to continue to ‘fine tune’ finances and other relevant things to continue to make our lives enjoyable - and that includes things being ‘alright’ with kids/grandkids. In times past, ‘family’ logically is a ‘safety net’ - for guidance and help during times of trouble, whatever that may be. But not enabling family members totally ‘off the rails’.

We have never financially supported DDs after college (they had a stock account, and with proper handling of funds during college, had enough with right away career start), other than interest free loan to DD2 when she set up her apartment which she had solo (her college apartment was furnished) - DD1 had gradually built up her apartment furnishings during her last year in college and then beyond with roommates (was in dorm 3 years; DD2’s school only had room for freshmen on campus), and in part was helped when her roommate’s aunt ‘redecorated’ and they got living room furnishings. We wanted DD2’s investments to stay intact, and wanted her to get the furnishings she wanted (not extravagant, but very good bed and other furnishings that she is happy with). DD2 now has the means to budget and pay us off on the remaining loan amount (under $1500) - she certainly could have paid it off earlier, but baby steps…

If we gift to one, equal amount (or cash) to other - couch and loveseat (DD1/SIL picked out – the couch had roll out upgraded full sleeper, as I didn’t want DD’s in laws to be sleeping on an inflated mattress for their visits), TV for first year newlyweds. Living 100 miles away, we could see what their needs were.

We are slowly educating DDs about the hurdles DH and I went through to learn about building up our assets, having enough and the right kind of insurance, etc. The internet and better communication of insurance products (and all other things) allowed us to purchase additional term insurance when we felt we needed it (one income family at that point).

The policies with cash value that we purchased in our late 30’s - we still have, not paying any more premiums for many years as the dividends pay the annual policy rates - however, we would have gone with term insurance and invested the difference in cost, the time value of money and gains in investments. DH always had disability insurance and life insurance through work (life insurance was company paid, 3X annual salary, and if accidental death during work I believe double of that – he did travel a lot nationally and internationally, so that was a small possibility). So we set up DDs with enough term insurance, and actually even pay for an extra term policy on SIL (DD1 is beneficiary). DD1/SIL are in the years with young children and two incomes.

We bought really great LTC insurance policies (before they became ridiculously expensive - and even the new ‘blended’ policies may not be a good decision to purchase), that had 10 year guaranteed rates, but after rate increases proposed to keep top of the line coverage, we were able to modify our policies’ coverage limits with a set yearly payment that we were paying (and continue to pay). I consider that LTC insurance almost like catastrophic home owner’s insurance (major loss) - you hope never to need to use it, but it is there (with use constraints). I had an experience with disability insurance, and even the best of insurance will try to wiggle out of paying. The insurance company had a retired FBI ‘field agent’ come visit me (I had a friend, retired civil service, be with me during that visit to verify my illness claims), and wrote favorable for my illness level. The insurance company MD (who just reviews paperwork) still didn’t want to take my medical oncologist statements of 8/10 fatigue, 8/10 pain, 8/10 nausea for disability, so I had to say “I guess I will have to get a lawyer” - the next day they ‘approved’ my claim.

DDs have automatic insurance with their work as well. Neither DDs are property owners yet (they are 27 and 29), but if DD1/SIL/Gkids stay where they just moved to - they can purchase a home when SIL gets out of Army assignment, as DD1 is settled in her job/career. They are renting a home similar to what they would be purchasing, and have gained familiarity with that city (plus continuing familiarity over the next two years). DD2 seems to be staying where she lives, but the last piece of the puzzle is her BF’s sports management job opening in that area. He will be another season or two with the sports team in our area (thus he is living with us). SIL and DD2’s BF both had a bit of time until they have gotten career breaks (Covid affected the start of the work in sports management). DH and I were homeowners at 22, and owned homes in 4 cities – it turns out we made money or broke even on every home sale. We built our current home which we have been in for 31 years now. Some young adults (single or as couples) do become homeowners - have seen it with the lower home interest rates, but many don’t want to start with a ‘starter home’. The sacrifices young people are willing to make to live below their income to become home owners.

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I retired at 61, DW will retire this year at 62. Hard to say how spending had changed, I think covid had a bigger impact.

We are buying health insurance on the exchange, and thanks to them Inflation Reduction Act we get a subsidy. So it’s more than we were paying before, but they govt is picking up half. The subsidy might be higher next year, I haven’t run the numbers yet.

We are traveling more since I’m not restricted to three weeks of vacation any more.

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Insurance companies tend to be suspicious of insurance fraud, but that often results in insurance company behavior that makes legitimate claimants feel like they are being treated like fraudsters.

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I always figured that launching the kids would be a bigger reduction in spending than straight up retirement. I know I will spend less when retired, but getting these kids off the payroll is way bigger.

D19 graduated and found a program for a Masters in Ed to get certified to teach. It pays for the schooling, apartment and gives her money to live on. She just has to teach in that county for 3 years. D23 got a full-ride. That was our big game changer. We were planning on cashflowing about $10K a year for her schooling. I found a new job that came with an increase.

We are giving D23 some spending money each month at college not a lot. D19 did not get that. We have shuffled some cars around and had to get a couple of new ones. Payments on two of them drop off pretty quick. We were going to make D19 take over the payment on her car but thanks to her sister we aren’t making her, but we are making her pay for her cell phone and she gets nothing else from us. We did spend a chunk of change over the Summer getting one kid set up in a new city(she did use money from selling her college furniture) and dorm/laptop stuff for the other.

It is nice I can already see our grocery bill going down. If we eat out it is cheaper. And of course there are no longer any sports/activity costs, which at one point were a little costly.

But I would anticipate when we fully retire to reduce spending a bit more unless we travel.

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The ‘reasoning’ the insurance company gave was so ridiculous. AFTER the field agent. After my very legitimate medical oncologist.

No it is not fraud concern - they just didn’t want to pay. They count on some people with legitimate claims to not have the energy, knowledge, or ‘fight’ in them to challenge it.

Should not be treated like a fraudster when I was so totally disabled. I was wise enough to protect myself in the way I described on the home visit. I was so weak, I could barely sit up in the chair to answer questions. I overpaid for the disability insurance, because, as income replacement, they only would cover when I was 100% disabled. They depend on absence from work on grading 20, 40, 60 or 100% disabled. So SAHM’s or SAHD’s who continue to pay on private disability policy, get over scrutinized, and also do not get partial disability - it is either 100% or 0%.

And yes, disability insurance companies typically won’t take a group disability policy from a MD office or a law firm office due to past fraud.

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BIL is 63 and has an older wife. He is taking COBRA for himself, and when that runs out, he will buy on the exchange for the remaining months - however there is a possibility he can get added on his wife’s teacher retirement insurance - he will do whatever makes sense. Just before he retired, he had a fatty growth on the back of his neck, but it was benign (what a relief). I believe their house is paid for, and they are making payments on a sizable RV that is permanent docked (it has king size bed, very large shower, steps built and permanent parking spot with maintenance for spring turn on and fall turn off of water/sewer). Bowing out of work was not a great financial move, but he seems to be willing to live frugally – which he pretty much had done prior to marrying later in life. He didn’t want to miss out of all the summer life at the RV with his wife, and also with the grandkids (he is step grandpa). They spend a lot of time with her kids/grandkids, and they enjoy that.

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We retired at 59/60 with no debt and purchased ACA health insurance until Medicare kicked in (we’re 65/66 now). Our only child was attending a service academy at the time, so we had no college costs. Except for taxes on the gain, the 529 funds came back to us penalty-free thanks to the Military Family Tax Relief Act, so we lived on cash savings and those funds before taking SS and investment withdrawals last year.

There have been no spending surprises in retirement as I’ve been tracking our monthly cash flow to the penny for decades expecting to live the same in retirement as previously. The transition was a non-event.

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So I assume the added expense if health care before 65 was offset by a decrease in other expenses you had pre-retirement (like kid-related costs)?

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Agree about getting kids off the payroll is big! Yes the college years (and prior) with kids can (and are) a big cash drain. Get the kids out on their own, paying their own bills and making good decisions.

DH’s former boss has 7 kids, and the first ones have done really well and are a good role model for the ones that follow (the youngest two sons are now in HS) - two DDs have been Air Force Academy (former boss had been a pilot with Canadian Air Force), and son and other daughters also doing great with college and beyond. His kids have all been great runners, so their athletics and high academic stats have gotten them doing well with colleges - along with their personal characteristics (and good examples of their parents).

Good friends/couple have been terrible about the cash flow out to their 3 young adults, age 24 - 31. None of these kids have finished college degrees - and not because they are not smart enough. Provided cars, paying for cell phones, paying for living expenses, and even taking in student acquired dogs when their kids were unable to continue with the animal due to a variety of reasons – either for short periods of time or forever. The 24 YO has had athletic scholarships for tuition (and more) right out of HS (including stopped out/restart, Covid affected eligibility for longer time than standard) but they pay for everything else. His first scholarship was for tuition/housing/everything needed except a few personal expenses (cell phone, misc. spending). - but he only wanted to do his sport and didn’t have the maturity to study for school - even with tutors provided…so that school dropped off, and based on his sport ability, went onto the next (a series of them!). Oldest had full academic and COA scholarship (true full ride) and lost it, along with getting married to a true dead beat who is now ex-H. Middle didn’t focus on ACT/SAT testing, so got minimal state scholarship, and then after a few years dropped out (even leased a new Mercedes when she qualified with her earnings…). The parents are going through a ridiculous amount of money, and continue to do so.

We fortunately had purchased a state pre-paid tuition plan - purchased when newborn/1 year old (enrollment was only during one month of the year), they had good scholarships for state schools (something not available in a lot of states), and each had a stock account which helped them graduate debt free. One had full tuition plus stacking scholarships; the other had almost full tuition scholarship. Those things in place had us not stressing on finances during college years. Our savings/investments built up in our lives prior to DDs, and managing income/expenses to our best. Utilizing our abilities to guide DDs while also the changes affecting our lives prior to retirement.

DDs were in daycare and Montessori up to ages 4 and 6 when I became SAHM due to DH’s greatly exponential business travel and no family here. We paid for private schooling from K through HS (for all but 3 years of younger daughter in public middle school for 3 years for their band program and good equivalent education) - the high school years got them with a better overall student body (although our school zone has top stat kids, there are lots of influences and issues that can derail a very good student in our public HS), but also had a modified block schedule better for their education and extra curriculars than the public HS. If we could not afford the private HS, could have guided DDs through the public HS, but that IMHO would have been more of a challenge and with worry issues, due to the number of negative influences more available. We also didn’t get ‘derailed’ with my aggressive cancer diagnosis and years of treatment when DDs were in 8th and 10th grades. DDs were able to get ACT/SAT scores into very good college scholarship levels. Faith, values - how much of it is absorbed - they at least had the best we could provide at home and with their private schooling. DDs drove together to HS, and younger DD had her driver’s license and had older car to drive to school her final two years of HS when DD1 was away at college.

DDs graduated from college on time and never dropped a class. Both had degrees where they could support themselves (engineering, and nursing).

DD1 needed a car during her sophomore year at college - for clinicals (nursing starting her junior year), but also did Air Force ROTC during her college sophomore year, and it was at another area school and she needed a car for that. Due to military cuts, she did not get into summer field training and then paid for ROTC, but she got into working for the VA Hospital as a new graduate nurse due to a program she was in at her college for VA nursing (and her career has blossomed with getting into nursing management at two VA Hospitals - one with recent family re-location). DD1 got our 3rd/older car (for a short time we had 4 vehicles - two older ones that had originally been purchased new) for a while and then got my better car when the older car was less reliable. When DD1 graduated in 2016, her grandparents could not continue to drive and they sold her their used car at an affordable price (it had been previously bought used, and with being in WI, had under body rusting from winter road salt) - but it was running, with decent tires, and good until her DH rear ended someone in traffic a few years later and the insurance company totaled the vehicle. The insurance and their savings allowed them to purchase a decent used car replacement. My DH got a nicer car a bit later, and so I allowed DD2 to use my better car at college, and I took the older 3rd car (the 4th car was donated months earlier). We paid for DDs’ car insurance and cell phones during college. I worked a sunset career (4 1/2 years until I turned 65 in 2021), and got a very good better used car, paid cash from my earnings. Cash for DD1’s wedding (2017), and DD2 got equivalent in good used car (and she is still driving it, Highlander with now just over 200,000 miles - and recent new tires and the servicing for 200,000 miles). DD1/SIL now have good used Highlander and Odyssey which they purchased 100% themselves.

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I want to second the notion of not planning on inheritance as life has a way of intervening. No big inheritance on my side of the family, but ShawWife’s father was a serial entrepreneur and her mother inherited a fair bit of money. She would have inherited much, much more as her uncle (an artsy architect) decided to take over the family business (worth a lot) because “that was what Mom would have wanted” (not) and ran it bankrupt in two years. ShawWife’s father left a business I was on the board of and I arranged a sale with a strategic buyer. Bad behavior by the management killed that deal and every year afterwards, the business declined in value. She ultimately received 1/7 of the value I had worked out with the strategic buyer. ShawWife’s mother is in her 90s and doing well, so her kids won’t receive any money until they are likely in their 70s or at the very least mid to late 60s. By then it won’t make much of a difference.

We did persuade ShawWife’s mother to lend to ShawD much of what she needed for a downpayment on a 2-family house against ShawD’s inheritance. She came to see it and was really moved by how she was able to make such a difference in ShawD’s life and how responsible ShawD was. She is now asking her other grandkids if they want a loan against their inheritance to buy a house.

But, generally, her decision-making led us to assume we would not receive anything from her. We likely will, but by the time it arrives, we won’t need it, we will decline it and have it go to our children.

Edit: My plan from the beginning was to plan as if there would be no inheritance. One of ShawWife’s sisters dropped a a financially decent career for more new-agey life (as did her Ivy-educated husband) and for years relied on her parents for subsidies. At some point, Mom told her there wouldn’t be anymore and she then worked on building a serious business. But, she is still counting on her inheritance for her retirement and has asked a couple of times for the advance gift of a house that would advantage her relative to her sibs (if the house was worth X, her inheritance 20 years later would be her share of assets less X, which would ignore the appreciation of the house over those years or whatever X would have done in the market over that period). Her mother is sympathetic but has not transferred the house. At this point, it probably a) won’t happen for other reasons; and b) would make less of a difference because of a shorter expected lifespan.

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I realized that phenomenon years ago. That when the time came to pass along anything there will be a good chance I will be retired and won’t need it. Depending on the situation we will probably let it pass to the kids if there is anything. It will make more of a difference for them.

Although like I said upthread Mom has started to pass along small amounts now. That is helpful.

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Wow on people with educations and good careers making decisions negative to the good path they were on, and then counting on gaining inheritance money to ‘help them out’. They ask and are turned down - fine, or asked an no action - fine.

I recently came across a paper DD2 written out summer 2006 (DD2 was between 4th and 5th grade). #11 on the list “Can you stop buying stuff for yourself because you are wasting our money…”

She is certainly not like this as an adult, but obviously there are people that have designs on money they think they are entitled to inherit. I know people that have made announcements to kids/grandkids “don’t count on inheriting anything from me - we are spending our money in retirement.” Both my younger siblings had future spouses that pursued them in part for ‘family money’ (both marriages ended in divorce) - and this is small town, small business.

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Our kid-related costs ended in 2015. Our retirement planning accounted for a lot of variable costs. The temporary cost of ACA did not affect our budget.

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They did get subsidized for a number of years. In addition, they would also arrange family vacations to places like the Galapagos or Israel, invite her mother, who would then pay for the trip. As the mother (my MIL) got older and started to worry about whether she had enough (she has more than enough and is still carrying three houses) and has been generous in a variety of ways, she told my SIL that there wouldn’t be any more subsidies.

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Despite coming from a rag (MF), this article has some interesting information.

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Fascinating, I had no idea you could do a mulligan!

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This is what I alluded to upthread, the thing I learned at that retirement planning class I attended last week.

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Did they say how you pay back the SS money taken prior to changing mind? Just curious if lump sum or some kind of adjustment to future benefits.