Dh retired at 55. We had just planned for the expense of healthcare - which is about $2,200 per month for both of our plans combined. We also have no mortgage or other debt, so healthcare premiums are definitely our largest expense by far. We don’t have the capacity to manipulate our income at all because of the deferred comp plan he had from his corporate job.
Dh did wind up going back to work for a small start up company. He wasn’t looking but was found by a headhunter. But, his job does not include any health benefits (too small to require), and it’s at a significantly lower salary than he had. Nevertheless, it’s incoming cash, and he loves his role there. Much more fulfilling than many of his corporate years were.
Even without a mortgage, property tax is a significant expense for me. It is solvable by moving, and that is probably part of my whole retirement plan, early or otherwise.
Our property taxes in Florida are definitely higher than in our previous state - even though we were in a 3,400 sq ft house before and are now in a 1,600 sq ft condo. However, we no longer pay a state income tax. Nevertheless, our property taxes are still less than 40% of our health insurance costs.
All of these things went into our decision-making process.
Paying what we do for health insurance certainly isn’t a fun way to spend money.
Spending money doesn’t have to be fun. I would view health coverage as “set and forget” like income tax withholdings as long as I was left with enough money for things I want.
We didn’t have a choice about the timing. H was “retired” a few years ago.
We stayed on the same BCBS plan but paid 100%, which was over $26K this past year. H chose a BCBS wrap around plan (his description of it) to supplement Medicare. Once that starts, our annual cost will be about $19K until I go on Medicare as well.
We could get cheaper BCBS plans with Medicare, but H prefers to keep essentially the same level of coverage. We both will be having more surgery in the next couple of years, some of which was postponed due to Covid.
Haha no worries but thank you for the post 65 new info. I haven’t paid attention to that stuff as much as I should, but I’m only 52 so I have a ways to go, but my husband is 62 so I should be on top of it because of how it may impact his HSA. I would hope we never have to take it out as non health care expenses to make it taxable but I do understand that some people have no other choices. Also, great to know about the premiums. I’ve never even thought about paying those at some point out of the HSA.
So many people are probably not even itemizing their medical expenses anymore these days with the amount of the standard deduction, etc., but again I guess you never know. When I had huge medical expenses before an HSA plan, it still was never worth much.
My husband is retiring in a few months at the age of 50. His early retirement package includes health insurance for us. We no longer putting money in college saving acct since we reached our goal in 529 a few years back hopefully it will grow more when our son needs it in 4 years time. We still owe roughly 100k on our home still debating if we should pay it off which could save us about 20k. We are still working on the monthly budget luckily my husband tracking every single pennies date back to 1998!
Once my husband is retired. I am going to get a job or volunteering.
We have an HSA, and contribute the annual maximum to it as our main supplemental savings strategy (max 403b contributions are mandatory for us). When my husband retires next March, at 61, insurance premiums will be a major expense for us too.
For those of you discussing HSAs, it is important to note that insurance premiums are not a qualified HSA expense UNLESS the premiums are for COBRA coverage. Withdrawals from HSAs to pay for employer, or ACA insurance are taxable.
Sometimes when both spouses are employed it makes sense to stagger the retirements to leverage one of the employer health plans longer. Often it is the younger spouse that keeps working (especially if that gets the older spouse to medicare age), but sometimes it is the spouse that has the more enjoyable job.
@kjofkw, we just upped our investment on the home front. The house we moved into is more significantly more expensive than our previous house and we are doing some expensive renovations. I’d guess that we get to 20+% of our net worth. We live in an expensive part of the country and we are going to put a significant additional amount into renovation. The house we bought has probably jumped considerably in value due to the Pandemic. This might increase the percentage of our net worth associated with our primary home to 25%.
We have reorganized the house somewhat so that we will have very comfortable one-floor living. The only rooms that we use regularly that are not ground floor are my office (the former MBR) and another bedroom in use as a gym. But, we have two rooms downstairs that could be converted for those purposes if needed. By configuring it this way, we hope to live here until they wheel us out. Indeed, we have always retained a condominium we bought in an artist’s live work building. ShawWife said that, if I died, she would move back there. She says now that she will stay here. The in-law suite that we converted into the MBR has a small kitchen (as well as a second BR and bathroom). So, she says she could live in the in-law suite, rent out the main house, and work in her studio (a beautiful building kitty-corner to the house. So we are going to sell the studio.
With respect to paying for health insurance in a tax-advantaged way, I believe that if you have (or can create) some contract or self-employment income, you can incorporate as a C-corp and then you medical insurance premiums (whether to a private insurer or Medicare) and your co-pays and many other payments can be business deductions. I am not up on this, but when I did look at it, you could deduct some but not all of those expenses in an LLC or as a sole proprietor. The trick is to be able to deduct expenses and not have them be subject to the AGI limit. I think you may need to create a medical expenses reimbursement plan for the business.
This is a huge advantage because the premiums and expenses are paid out of pre-tax $$ and yet the employee receiving medical benefits does not have to include medical expenses to their taxable income.
I don’t know if it’s like this everywhere, but when we go on Medicare we will likely reduce our BCBS plan to the bare bones one, and also get “cash back” from BCBS for having Medicare. I think they rebate us 800 a year. We aren’t eligible for years though, so that may change.
We are retiring in Sept, and health insurance is a major expense. Our company will allow us to keep our health insurance, but they only contribute a small amount towards it. Oddly, Cobra is significantly cheaper, so we plan on taking Cobra for 18 months, then switching to a high deductible plan, then going back and forth to the expensive plan based upon years where we think we’ll need more coverage. Hard to predict those years that something bad will happen, though!
Has anyone ever managed to work out a partial retirement deal where you can cut hours and pay but hold onto full health coverage? I have a feeling that many companies would be reluctant to do this, though it seems very sensible to me.
One problem for companies is their older employees cost more for healthcare than younger ones. My sister works in healthcare though and when she was part time, she was able to still have their healthcare but she paid more and the company paid less. It was beneficial to them as her insurance was better than her husband’s but they paid quite a bit for it.
I do think that some companies offer benefits for part time workers. But I imagine the vast majority don’t.
We have these healthcare discussions pretty regularly on this thread. It shows to me how important healthcare is, how incredibly complex it is and how many people would love to retire before 65 if they had access to affordable healthcare.
It will be interesting to see what the future holds.