Wow that’s a grand pension. If you have SS too, even better. Many of us who fret over long term care expenses have small or non-existent pension.
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Impossible to answer that question w/o knowing your predicated annual spending. Do you spend more than $100K/year now, including income taxes? How will future health insurance costs be covered? If you have to buy health insurance on the Exchange, that pension will result in a higher monthly premium than someone w/o that income level.
If you have a comprehensive retiree medical plan along with that very generous pension, then you may well be fine.
LTC is tricky. My parents had very generous plans. My father ended up ‘in benefit’ for six days and my mother used the benefit for perhaps five months at home. If she had lived longer, she could have received significant benefit from the plan. Lifetime cap of $750K that has compounded 5%/ year since she died several years ago. Both paid far more in premiums than they received in benefits. That very generous plan (daily benefit of $420 several years ago) had an annual premium of maybe $2500 or less. That level of coverage would cost significantly more if written today.
Do you have a spouse? Is your home paid off? If unmarried, you can use a paid-off home as your LTC fund once you are ready to move into Assisted Living, and use your pension to pay for home aides until you need to move. This is not an option when there are two spouses, as the other spouse needs somewhere to live.
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Not only is LTC insurance getting ridiculously expensive, we learned that many policies limited their coverage more than we had hoped. We proceeded to apply a few years ago anyway — only to have me (the healthy one!) rejected for something that showed up years ago in a medical chart that my own medical team dismissed as common and unconcerning. We were told it is also common not to pass the medical screening, at least on the first go round.
At that point, we elected not to appeal and are self-insuring, too. I think of our home equity as a “last resort” fund for unexpectedly high care needs.
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I know – I am very grateful. I am a government worker and the retirement benefits (including covered health care) I think makes up for a zillion years of a salary that was less than market rate.
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Thanks for the info. I do have a comprehensive retiree medical plan for myself and DH, so I don’t think I have to worry about buying a policy on the Exchange. (But that’s really important info re: a pension impacting premiums if I did have to purchase there). We can probably pay off our mortgage before retiring, and I’m sure we can bring our monthly expenses less than 100k per year. Not really worried about funding a “regular” retirement – just the LTC component if we are unlucky enough to need it.
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One thing you might want to explore carefully before retirement is whether you pension comes with any options for spouse coverage.
My husband and I decided to “split our bets” and define 50% of our pensions (both small) to continue for spouse after death. Since he is male and 7 years older (ie statistically low chance to outlive me), it made a small difference in my amount - less than 10%.
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Yes, H is significantly older than me and we opted to have me get 55% of his pension if he dies before I do. Considering he’s over a decade older than me and both my parents recently did at 90+, I think it’s pretty likely I may outlive him.
Choosing a survival benefit did cause H’s current pension payout to be about 10% less than it would have otherwise been but for longevity insurance it’s an amazing deal. It’s definitely worth thinking about this for folks who have this as an option.
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H’s account would be for Tools and Toys.
Mine would be Travel and Dining. Haha!
Neither of us have any use for hookers nor beer.
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The LTC stuff has been weighing on my mind- but when planner decisively dismissed it, that (somehow?) made me feel better. It’s not the end of the road (analysis) though- I know Suze Orman is a big proponant of LTC inurance. Have to research more.
@MMRose - congrats on the great pension & healthcare. As others have said, projecting expenses in retirement seems really key (as important as the inflow, almost!). I’m in the midst of that now (tracking our current expenses, projecting a few years out, etc.).
As a side note, to further get a handle on our current/future expenses, looking at Quicken. Has anyone used this for tracking?
We’ve used Quicken for decades! It’s wonderful for detailed tracking but it’s time consuming to enter all the data/line items.
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Thanks, momfofboiler1!
My friend just told me that her Quicken automatically tracks their bank account transactions, credit card stuff, investments, etc. Apparently it gives them alerts when reoccurring bills are coming due (and flags if they don’t have enough in their account and need to transfer from another). It even writes checks (?) to pay bills. It sounds amazing - not sure if there are different versions? Clearly I’m a neophyte on all this tho, lol.
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You get out of it as much as you put in. My h loves it. Personally I think it’s redundant with our other tracking systems and autopay.
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I only track at a high level, easy to do since all our outflow is from same bank. (Annually I look at Visa report, which does handy categorizations.). You could also use this method to go back to get historical spending by looking back at previous monthly statements.
After I balance the checkbook, for past 10+ years I’ve summed up
- VISA (the biggie, captures many things you might otherwise miss)
- AUTOPAYS/withdrawals (including mortgage & utilities & insurance and lots more; omitting college payments)
- CHECKS (except car purchase**)
- CASH withdrawals.
The subtotals are not precise with calculator… I do it approx, in-my-head math. I note these 4 sub-totals in a simple spreadsheet (originally it was just on paper), with a comments column to describe any unusual spending.
** Since we pay cars with cash, took that into account separately for retirement planning…. otherwise it would skew the average for that year.
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You all are great trackers! I seem to need to do it at the micro-level (enter every purchase into my Dave Ramsey EveryDollar app) to keep myself on track.
I have printouts of a year of bank statements (I only use debit card) and hub has almost all his purchases on a single credit card. So we have the numbers. It just requires a lot of manual entry into Excel for this historical picture we are creating – to develop an average monthly ‘spent’ figure and to inform ‘future projected spending’.
Clearly we haven’t diligently tracked as a family over the years! 
Just excited we are going there now! lol
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An advantage of the detailed method is that you’ll get a sense of “where does all that money go” ?
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Exactly. I’ve used the You Need a Budget (YNAB) app the past 3-4 years and it’s been life-changing for me. I have a much better sense of what I spend money on and what is or is not negotiable
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One method I’ve considered but never implemented is two credit cards (or one credit, one debit) - essentials/needs on one, “wants” (restaurants, travel etc) on the other.
We’ve opted to just stack all charges on United Visa to get mile - hubby used to do work trips to Japan a lot, also putting miles in same account.
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I use Excel. All outflows are through one checking account and I just sort by type of expense. The vast majority of spending is on CC, so I also pull down full year spending at year end and again, sort by category.
I don’t get hung up breaking Costco spending out as food vs household or try to figure out what all those Amazon purchases were. Some years I tally medical as that has been a significant expense the past few years.
I do pull out what I consider house-related expenses and sum them: utilities, property taxes, lawn care, heating oil, and home owner’s insurance. I toss car insurance and cell phone in there also because they are recurring.
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Your financial institution might have budget tools that allow categorization of your cash flow as well, with online color coded bar charts or pie charts.
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Instead of manually entering info from bank statements, can you just pull down last year’s transactions for your checking account and CCs? I think mine all pull down as CSV and then I just open in Excel. I can only go back 18 months so if your bank has the same limit, you will not be able to pull the full '22 calendar year. You could pull July 1-June 30 for now, and then pull '23 full year at year end.
Or I suppose you could attempt to manually enter Jan & Feb '22 transactions, but that would be painful.
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