The other thing is they deduct SSDI payments from the LTD payments (including the SSDI payment our son gets until he turns 18). So you can’t get both. It gets doubly complicated trying to figure put what is taxable income snd what isn’t. While the LTD payment DH gets doesn’t fully replace his salary, as SSDI isn’t taxable, and a good chunk of the premium was paid out of pocket (not taxable), most of his payment is not taxed. So for us it definitely nets out better than not having LTD insurance, but they payments aren’t what we would have thought they would be when we signed up. It is about half. That’s insurance for you.
The pension issue adds a whole other layer of confusion. DH didn’t have a pension, so we were saved that frustration. He no longer can contribute to a 401k, though, so no match, putting a whole other wrinkle into retirement planning. I am the only source of retirement savings. Our retirement will cost more - my health insurance, ltc and ltd all go away, and we have the same medical expenses.
Plus, we had health insurance through his job. He is now covered by Medicare, which is nowhere near as good and required supplemental coverage anyway. Did the math and it made more sense for me to start doing a health insurance plan for my small biz and put him on that, too, since his medical care is so significant. Helps my employees, too. Everything is so intertwined. It’s taken years to sort out. A huge time sink and incredibly stressful. Keeping track of insurance is a part time job in and of itself.
It is impossible to imagine the many profound and mundane ways a disability changes things. I am just putting our experience out there, because we are actually fortunate. We have a social and financial safety net that are holding for now, and as an attorney I can maneuver through the red tape. But even with all of our privileges, this is hard. Without the insurance- life would be unfathomably difficult.
What a mess. I am sorry you needed it, and I am glad it helped you. I’m sure it would help many others too. It would have helped us if something happened prior to the 15 years of service. There are just so many variables and many of them nobody will tell you unless you specifically ask or you find yourself needing it.
Also people not only need to ‘understand’ how all the intricacies affect you/your family - be it local/state laws and changes, what options you may need to consider - if/then - scenarios.
Once DH became only income, we increased his term life insurance. He already has had ST and LT disability through work.
Sometimes to also get through ‘thick headed’ DDs/Sons/SIL/DIL about certain things. For example, extra LT life insurance on SIL with policy owned by DD but we pay the premiums - it is a 30 year policy. They are having their 3rd child soon, with all 3 age 3 and under.
Things can happen all the time outside of your control. DH’s company changed hands and wiped out all but 1 week of sick leave, and cannot carry over more than 1 week of sick time in future years. Prior company at retirement would have paid for unused leave – which for long employed DH could have been at least half a year’s pay. It all is how it accounted for on balance sheet - they wanted to eliminate ‘liability’. They have even gone to a wackier way to do things prior to DH’s retirement.
DH and I were in our first home a few months after we married and a year after we graduated from college. I do think we will need to assist DDs to get into their first homes – interest free loan will probably be the way. What we do for one DD we do for the other. It will be with time and planning. No money tree in the back yard. Many areas now have had a real jump in home prices and people are paying way above list price (which use to be only a common occurrence in certain locations). Some homes are with flips - major improvements on a good location and run down home. Hope to help one get into a good location and do fix up improvements over time. DH is handy and we can work with hired help/contractors.
My older son and his wife worked for two years in North Dakota – not their first choice. The first year they were in Fargo and the second year they were in a hellhole called Jamestown.
Sorry if I’m offending anyone from there.
There was literally nothing to do there – a movie theatre that changed its one movie every two weeks or so, and that’s about it. Two restaurants.
The good news? They saved almost every penny of their income during those two years – and they were being paid a premium to live and work in that hellhole. A year later, they were able to buy a brand-new house with no help from us.
Agree about your strategy with life insurance. When my ex husband and I got divorced I will never forget when his lawyer tried demanding that I get a life insurance policy. My ex husband is a Dr so he was required to maintain a life insurance policy with me as trustee for the benefit of our kids up to a certain amount x his salary until my youngest was 18. Obviously that amount was to cover child support for all those years and his share of college. I didn’t owe my ex husband child support or maintenance or anything of the sort, nor was I the bread winner in our marriage so for me to get a life insurance was a joke. We were in a 4-way meeting with him, me and our lawyers and I remember balking at that and asking why the hell would I get life insurance and the guy was like because if you die he will need to get a nanny and some other bs. I nearly lost it laughing and said right, but then he won’t have to pay me child support (or maintenance which he was paying at that time) so the cost of hiring a nanny would be a lot less than the monthly child support he was paying especially since there was a lot of doubling of things. Needless to say that was a deal breaker for me and my ex husband wasn’t the one asking for it anyway so it was quickly dropped but it just amazes me how nonsensical things are because that would’ve been a complete waste of money. My kids would have also received all my assets so there would’ve been plenty of $ for their case and my share of college if that had been a valid concern. I was the one who owned the house and had substantial pre-marital assets.
When I got remarried and because my current husband is 10 years older we went to talk to someone about some life insurance for him. I think I was just paranoid because my ex had been kind of a pain once my current husband came on the scene and wanted to redo things in our agreement and I was worried financially if something happened to this husband and knew my child support was going to be winding down soon as my kids now were much older. So, in our meeting I excused myself to go to the bathroom and when I came out my husband tells me that this guy (who had been a business associate of his) suggested we get a policy on me. I about died. Felt so taken advantage of because he clearly pounced on my husband the minute I went to the bathroom. For similar reasons as with my first husband (except the child support issue), there was no reason for me to get life insurance. My husband wouldn’t be getting my house if I died, my kids would but he also would be getting a condo we bought so he would have a place to live and my 401k, and he’s the one who makes the money, not me! Just annoys me that this guy tried to do that and then tried to upsell us on different insurance for my husband which we probably should’t have bothered with anyway since all we went with was a small whole life plan. I’m just happy that we have only 2 payments left on it. But people need to be careful about insurance and educate themselves because many insurance guys are only in it for the money and it rarely pays off, especially term.
I think my disability policy replaces a certain amount of income. Not 100%. But I assumed if I were disabled, I probably wouldn’t be doing a lot of traveling or going out to eat. But the amount is relatively high. The tradeoff is that it doesn’t kick in for 6 months.
@srparent15, I would get rid of the agent who tried to sell your husband on a policy for you after you left the room (and probably knew that you didn’t want insurance for yourself).
A co worker was widowed in her 40s with two kids under the age of 10. Her H worked in the arts, and refused to get life insurance, and I have no clue how she is making it now. Term life is relatively cheap, and when you need it, you need it badly. I keep telling my kids to get it.
My disability via work, a rather typical policy, pays 66% of income. Our union, RNs, had to fight for long term to be added to our benefit package, as it is a potentially disabling job. We had short term, but not long term, though the office workers in the hospital had long term. Another example as to why we need unions in health care.
We did and my husband is no longer friends with the guy. Unfortunately by the time we got rid of him he had probably already gotten the bulk of the commission (if not all of it) from our policy but I was pretty pissed and when we continued to get solications, I called the national office and let them know I want his name off of everything and don’t want him to be able to access anything about our accounts.
I try to think of term insurance like I think of auto insurance. Yep, I am paying money, nope, I don’t ever want to collect on it. I think they say term has something like a 4% chance of paying off, something low like that, yah, let all that money go to the widow of the guy who died.
I knew a person once who died young, $1MM in life insurance, sounds great, but then found out he had something like 10 kids, sadly, I am sure that $1MM went more quickly than they expected.
Prereqs for retiring:
– All 3 kids off to college
– Completed and paid for remodel/addition to retirement home (which we own and it is mortgaged.)
– Ability to sell current home with enough profit to payoff mortgage on both homes.
–Between stock, cash, and retirement accounts have $4M in assets not including home equity.
I will be ~50 and my spouse ~60.
Maybe seems like a lot of money? Retiring at 50/60 means many years of out of pocket medical coverage before Medicare turns on. Also years before we actually want to take distributions from 401ks and take SS. So we live off investment returns for a while. I feel very strongly about owning my home outright before retiring!
My brother and his wife are visiting. He retired last December and she is thinking of retiring in January. For health insurance she is planning on expanding her 2nd job as a part time university professor. If she teaches 2 or 3 classes it allows her to not touch any retirement savings and they will get health insurance. She isn’t eligible for Medicare for several years.
@Techno13 key is going to be the health care insurance coverage costs prior to Medicare. I would keep an eye on those things, and also think ‘outside of the box’ - finding a low stress/enjoyable job with health insurance benefits. That is a lot of years for you before MC. Some look to getting close to having COBRA coverage, and for 2 people that can be over $1K/month over having a health insurance plan through work - which is what ours would have been had I not been able to get health insurance through my job when DH decided to retire 10 months ahead of our plan.
I agree about having home paid for or being close (or easily being able to pay if off from investments especially if interest rate on home is exceptionally low).
I have my Social Security phone contact on Thursday - turning on SS Oct as I turn 65. Already have activity in Sept for all in place Oct 1 with both DH and my MC (Medicare). It seems MC won’t accept changing DH from MC A to MC A and B until the month prior to wanting MC B (he is still in his ‘window’ for adding MC B, but also we have credible coverage) - the clerk called us after our on line application – she wouldn’t put a supervisor on the phone and the call was ‘courtesy’. Essentially told me we needed to either reapply on line or get a phone appointment. Ugh, working with Gov’t.
We are going to wait on DH’s SS - as long as we see feasible - because we pay a penalty prior to 66 and 4 months, and I like to see that penalty be lower than it is now.
Yes this is my biggest concern. I could get retirement health insurance through my job (including dental and vision) but it’s still over $1000/month and not guaranteed to be continued forever. AND it requires me to collect my pension at 50 instead of 60 which is a $1400/month difference in payout. I think we will pass and pay for market insurance which is about $1700/month for the plan I want, plus an $8k/yr deductible. I do not want to work any more. Been working since I was 15. I am so done.
I am finding DH and I don’t have right away spending wants. I believe I need to see the kids getting into houses, and also get our own home decluttered with some needed projects with sprucing up. Am enjoying a bit of a slower pace and putting in the last of my time at work until my last work day Sept 16th. DH when asked how he is, always answers ‘fantastic’.
I want to put off US trips; want to look into buying some kind of a used camper/pull along but not doing that without immediate need/use to make it worthwhile. I suspect the house decisions with DDs will come into play over the next few years, and I suspect buying in good location with doing fix up – and we can busy ourselves with helping them. I have one 4 day Mexico trip with ladies – have never been to Cancun so that is something to look forward to.
sounds great. Sometime early in retirement we want to live the UK for 6 months and really explore it. Big expense to save for. We thought about a camper but discarded the idea. We’d kill each other if that cramped together for any time. haha.
I am exactly the opposite. The interest rate on our mortgage is 2.625%. With the tax deduction (we do have enough deductions that it make sense for us to itemize), the effective rate on that is somewhere in the ballpark of 1.8%. I do not want to pull money out of savings to pay off a 1.8% loan. No matter how we run the numbers, and what assumptions we make about returns on our investments, the very detailed retirement calculator we use shows us that we end up FAR better off and needing much less money saved to start our retirement if we do not pay off our mortgage. We could do that before my dh retires in a few months, but that math just doesn’t make sense for us. I understand every person finds peace-of-mind comfort about finances in different ways and the most important thing is that you can sleep at night. I get peace of mind from cash in the bank.
FWIW for anyone thinking of refinancing…those mid-2% refinance rates are still available. I think you can get close to 2% on 15 year rates. It’s far easier to do that before you retire.
Makes perfect sense. We itemize but reach the limit before we get to our mortgage interest (state income tax, property tax, both very high). We have refinanced several times to get lower and lower rates but didn’t do it this time b/c our time horizon is short and our current rates are low (3 something %). Just wasn’t worth the hassle. We would probably be slightly better off keeping a mortgage but, yes, peace of mind. We have been debt free since we married except for our mortgage and I just want the clean slate.
Makes sense. Nonetheless I’m not sorry that before husband’s retirement we paid off our mortgage (higher rate … with only a few years left, mostly principle). It’s OK to sometimes do what feels right, especially when the big picture is favorable.
Of course. I think once you get down to only a few years left, and are paying mostly principal, the impact of paying off a mortgage early on your long term financial plan is somewhat diminished. If I was a person who worried a lot about mortgage debt, I would pay ours off too. I am a retired math instructor, so I am comforted by the numbers, and as I said, having cash in the bank we can rely on in the event of some type of personal emergency. Everyone is different. There isn’t one right way.
We did not have a large balance, so it probably was a tossoff, but we paid off the mortgage by selling a small portion of one of our stocks we held like forever. Freed up cash flow, luckily guessed and sold a few $$ under the 52 wk high, and even possibly avoided paying the new state capital gains tax (which, of course, is being contested as unconstitutional).