For those in retirement age and who splurged or was over conservative in your youth....

[MrsPete]

^Mrs. Pete the elephant in the room is medical benefits. I only work pt with no benefits of my own, my DH carries them for our family. When he retires the county will cover him (I'm not sure on the kids? still learning) but not me . We can buy my benefits through his plan but not sure on the costs at this point.

Obviously, I have no idea what options you have, but I have spent more than a few hours pouring over options available to us. My choices:

- Once I complete 30 years, I have basic paid medical for myself only. That's not a bad deal at all.
- For a very large cost, I can have my husband added to my medical -- that's what we do now. It is BY FAR the most expensive cost in our lives, literally costing more than our housing costs and food costs combined. Once I retire, he can stay on my plan for the same huge cost; it'll be deducted from my pension each month.
- If either of us ever "go off the plan" after retirement, we can never be added again. If we leave, we are gone.
- Once we hit 65, we qualify for Medicare. That's a long way off for us, and it costs money. I can't be the only person who's incensed about this? I mean, every month Medicare money is deducted from my paycheck, and once I qualify for the program, I STILL HAVE TO PAY?
- ACA. I don't know anyone who actually uses ACA, and I'm somewhat distrustful of it. What if it disappears? Like I said above, I'm paying through the nose for my current health care, but if I leave it -- after after retirement /before I'm 65 -- I can't go back to it. It kinda feels safer to stick with the expensive-but-safe option.

 

[DLgal]

I'm surprised at just how many people are opting for the share-with-spouse pension option -- it all depends upon your circumstances, but my personal impression is that most of coworkers are taking max-amount-for-the-worker. The cost of sharing the pension is pretty high, and the surviving spouse receives a lesser amount. I know I will be taking the max pension. My husband is older than I am, and he deals with an ongoing medical condition. In all likelihood, I will outlive him. Will that be the right choice? It's impossible to answer that question today.

Regardless of what choice you make, it's important that everyone has more than one source of retirement income -- a pension alone isn't going to be enough. People used to talk about retirement savings as a "three legged stool" -- that descriptor seems to have disappeared from popular culture, but the concept is still good: The idea was that you aim to have 1) a pension, 2) personal savings, and 3) Social Security. A person who has these three things is still "safe" if one should fail or be reduced. Personally, I'd add something else to the three: a paid-for house. If you own your home, your monthly expenses are reduced drastically.

Obviously all pension insurance plans are different, but for military retirees, it's anywhere between 1 and 6% of the pension amount for the insurance to provide survivor benefits. You can elect a percentage (up to 55%) of the pension that you want to continue to be paid to a surviving spouse, and the cost is basesd on that. Maxing it out costs 6%. Considering that military pension payments get annual COL increases, 6% is a very small price to pay.

 

[tvguy]

Obviously, I have no idea what options you have, but I have spent more than a few hours pouring over options available to us. My choices:

- Once I complete 30 years, I have basic paid medical for myself only. That's not a bad deal at all.
- For a very large cost, I can have my husband added to my medical -- that's what we do now. It is BY FAR the most expensive cost in our lives, literally costing more than our housing costs and food costs combined. Once I retire, he can stay on my plan for the same huge cost; it'll be deducted from my pension each month.
- If either of us ever "go off the plan" after retirement, we can never be added again. If we leave, we are gone.
- Once we hit 65, we qualify for Medicare. That's a long way off for us, and it costs money. I can't be the only person who's incensed about this? I mean, every month Medicare money is deducted from my paycheck, and once I qualify for the program, I STILL HAVE TO PAY?
- ACA. I don't know anyone who actually uses ACA, and I'm somewhat distrustful of it. What if it disappears? Like I said above, I'm paying through the nose for my current health care, but if I leave it -- after after retirement /before I'm 65 -- I can't go back to it. It kinda feels safer to stick with the expensive-but-safe option.

Well, there is a cost involved if you retire early, before full retirement age. It's 66.5 for me, and I'm 61. I suspect you may be young enough that normal full retirement age is 67. Sounds like you want to retire very early. Funny, however, that Medicare has remained 65.
I hope to retire early in 2 years at age 63 and Healthcare is the biggest concern. Prior to ACA going into effect in 2014, our lowest cost option before Medicare was private insurance at about $9,000 a year, COBRA was $13,000. Now private insurance is about $22,000 a year, and COBRA at $15,000 is a cheaper option. It looks like I will have paid about $20,000 over 40+ years in Medicare tax. Current Medicare premiums are $1,700 $3,300 a year depending on your income.....so I have NO complaint about Medicare. Even throwing in $1,100 a year a private Medicare supplement will cost to cover what Medicare doesn't.

I think the thing with ACA that surprised me is with my wife's best friend, who got a plan from the ACA exchange this year, discovered there are no primary healthcare Doctors in her town of 200,000 that accept ACA insurance. What good is insurance that nobody accepts?

 

[jen7233]

I have heard of military retirees dying within months of separating from active duty and they didn't chose the pension insurance for their spouse. I don't want to be one of those stories.

That's unfortunate to say the least. Their spouses agreed and signed the paperwork to waive Survivor Benefits Plan? I'm unaware that was possible on the active component side without the spouse acknowledging the waiver, but anything is I suppose when it comes to paperwork. Maybe they assumed to self insure with their own life insurance product, I've heard that option tossed around.

 

[DLgal]

That's unfortunate to say the least. Their spouses agreed and signed the paperwork to waive Survivor Benefits Plan? I'm unaware that was possible on the active component side without the spouse acknowledging the waiver, but anything is I suppose when it comes to paperwork. Maybe they assumed to self insure with their own life insurance product, I've heard that option tossed around.

These were spouses who willingly waived the SBP because their husbands convinced them "it was too expensive." Then, after retiring, found out the active duty person was uninsurable due to health issues sustained during active duty and his subsequent VA disability rating. One guy did have a small amount of life insurance, and he died in a motorcycle crash. The $200,000 whole life policy he had didn't go very far, and the wife and kids had to move in with her parents. Both spouses had been stay at home parents.

These are only the two I personally know of. A LOT of people knowingly waive SBP, though, and then realize they didn't really understand what it would have provided after the fact. It's very sad.

 

[Ciao Mickey]

Obviously, I have no idea what options you have, but I have spent more than a few hours pouring over options available to us. My choices:

- Once I complete 30 years, I have basic paid medical for myself only. That's not a bad deal at all.
- For a very large cost, I can have my husband added to my medical -- that's what we do now. It is BY FAR the most expensive cost in our lives, literally costing more than our housing costs and food costs combined. Once I retire, he can stay on my plan for the same huge cost; it'll be deducted from my pension each month.
- If either of us ever "go off the plan" after retirement, we can never be added again. If we leave, we are gone.
- Once we hit 65, we qualify for Medicare. That's a long way off for us, and it costs money. I can't be the only person who's incensed about this? I mean, every month Medicare money is deducted from my paycheck, and once I qualify for the program, I STILL HAVE TO PAY?
- ACA. I don't know anyone who actually uses ACA, and I'm somewhat distrustful of it. What if it disappears? Like I said above, I'm paying through the nose for my current health care, but if I leave it -- after after retirement /before I'm 65 -- I can't go back to it. It kinda feels safer to stick with the expensive-but-safe option.

Have you actually added up how much you’ve paid over the years for Medicare? Because all it takes is one major illness when you are older to recoup every single cent you’ve paid into the system.

My mother had congestive heart failure (stage 4) and was too old to be considered for a heart transplant. Over the years she had 3 defibrillators put in. The bills for her first hospitalization and surgery were over $300,000. Each time the defibrillator had to be replaced was over $100,000. She had other health issues too, but her heart was the big one.

My dad had a stroke and cancer, so he had high hospital and doctor bills too.

Thank God for Medicare and my dad’s supplemental insurance (he was a government employee) because they picked up most of the costs of treatment. I remember taking my dad for a monthly shot that costs $1500 that was part of his cancer treatment.

The only thing that was expensive for my mom was all of her meds. She had to take over 10 pills per day and that was running her over $300 per month out of pocket.

In addition to still paying for part B (part A is free), you’re going to have to pay for a supplemental policy because Medicare only pays 80%.

I am lucky because when I retired I was able to keep my health insurance (BCBS Federal Employee) and my husband is covered under it too. If I die he can still keep the plan. But in order for that to happen I had to opt for a reduced annuity so he gets a big 50% of my piddly pension if I die before him.

 

[Ciao Mickey]

I'm surprised at just how many people are opting for the share-with-spouse pension option -- it all depends upon your circumstances, but my personal impression is that most of coworkers are taking max-amount-for-the-worker. The cost of sharing the pension is pretty high, and the surviving spouse receives a lesser amount. I know I will be taking the max pension. My husband is older than I am, and he deals with an ongoing medical condition. In all likelihood, I will outlive him. Will that be the right choice? It's impossible to answer that question today.

Regardless of what choice you make, it's important that everyone has more than one source of retirement income -- a pension alone isn't going to be enough. People used to talk about retirement savings as a "three legged stool" -- that descriptor seems to have disappeared from popular culture, but the concept is still good: The idea was that you aim to have 1) a pension, 2) personal savings, and 3) Social Security. A person who has these three things is still "safe" if one should fail or be reduced. Personally, I'd add something else to the three: a paid-for house. If you own your home, your monthly expenses are reduced drastically.

I was a stay at home mom for too many years. Because of that my husband made sure that if something happens to him I will be able to survive. I will get 100% of his two pensions, 401k’s, social security, life insurance, and no mortgage on our homes, so I will be ok financially.

I was surprised that so many women that I worked with knew so little when it comes to their retirement benefits and how much they will receive from social security, spousal benefits, etc.

I understand not being interested in this when you are young, but by the time you are closing in on 60 maybe you should do a little research.

 

[barkley]

I think the thing with ACA that surprised me is with my wife's best friend, who got a plan from the ACA exchange this year, discovered there are no primary healthcare Doctors in her town of 200,000 that accept ACA insurance. What good is insurance that nobody accepts?

this is the identical discussion point i had with my (non medicare/non aca) insurer (through my pension plan), a ppo that i pay through the nose for b/c the county i retired from offers only one plan to anyone who DARES retire and move out of so many mile range away from that county let alone out of the state of california. i called to inquire about who i could use for a particular test my doctor wanted b/c neither his office nor i could find any preferred providers on the insurance companies website anywhere in my state. that's when i was informed that 'just because we're a preferred provider plan in your region doesn't mean we are required to have any preferred providers IN your region'

I'm somewhat distrustful of it. What if it disappears? Like I said above, I'm paying through the nose for my current health care, but if I leave it -- after after retirement /before I'm 65 -- I can't go back to it. It kinda feels safer to stick with the expensive-but-safe option.

this is the ONLY reason i stick with my awful overpriced PPO-if i leave it there's no coming back for myself or dh.

 

[MrsPete]

Obviously all pension insurance plans are different, but for military retirees, it's anywhere between 1 and 6% of the pension amount for the insurance to provide survivor benefits. You can elect a percentage (up to 55%) of the pension that you want to continue to be paid to a surviving spouse, and the cost is basesd on that. Maxing it out costs 6%. Considering that military pension payments get annual COL increases, 6% is a very small price to pay.

Off the top of my head, I don't remember the cost to "share" my pension with my spouse, but I do know that he and I have reviewed it more than once and have determined that -- for our circumstances -- it is too much.

Sounds like you want to retire very early.

Yes, that's been our plan for a long time -- note that I say PLAN, not dream or wish. My husband is already retired. I need to put in another two years, and I'll have "maxed out" my pension; at my age, if I don't put in my full 30 years, the deduction on the pension is just too much, and I have to put in the full 30 to keep my health insurance in retirement. We have never been high earners, but we have lived frugally and have substantial personal savings as well as 401K and investments, a small income from a passive stream, and a paid-for house -- and we are building a smaller, more efficient house that'll be elder-friendly. We have worked, planned, and saved.

I think the thing with ACA that surprised me is with my wife's best friend, who got a plan from the ACA exchange this year, discovered there are no primary healthcare Doctors in her town of 200,000 that accept ACA insurance. What good is insurance that nobody accepts?

I did not know this was an issue. I don't pretend to fully understand the ACA, but my overall impression is negative. We need to either stick with our old system, or we need to go all the way to socialized medicine -- not this half-way attempt.

Regardless, it seems that EVERYONE'S #1 fear concerning retirement is medical care. When essentially everyone is afraid of the same thing, it's the system, not the individuals.

Maybe they assumed to self insure with their own life insurance product, I've heard that option tossed around.

Life insurance can be a good answer to this share-the-pension question. I know that my mom is using this method; she and my stepfather each have a pension and a Social Security check, and they're doing quite well -- but he's in poor health, while she's quite hearty for a woman in her 70s. At some point her income will literally be chopped in half -- but I know she has a large life insurance policy on him, which she's had since they were married in the 80s. She will not be hurt financially when he dies.

These were spouses who willingly waived the SBP because their husbands convinced them "it was too expensive." Then, after retiring, found out the active duty person was uninsurable due to health issues sustained during active duty and his subsequent VA disability rating. One guy did have a small amount of life insurance, and he died in a motorcycle crash. The $200,000 whole life policy he had didn't go very far, and the wife and kids had to move in with her parents. Both spouses had been stay at home parents.

These are only the two I personally know of. A LOT of people knowingly waive SBP, though, and then realize they didn't really understand what it would have provided after the fact. It's very sad.

It's not a pleasant topic, but everyone -- especially parents -- needs to calculate realistically what he or she would need in case of a tragedy. In this case, it sounds like they didn't bother to "do their homework", or they would've known he wasn't insurable. A mother left with children (don't know their age) would almost certainly need more than $200,000. At least the kids should qualify for the Social Security he will never use.

To take it a step further, the guy you knew was killed -- the story would've been even worse if he'd been disabled. If that had happened, he would have needed expensive care AND there still would've been no money. Well, no, he could've received care through the VA Hospital system. My stepfather, father-in-law and brother are all extremely happy with the care they receive through the VA. I'm getting off-topic: Everyone should consider disability insurance as part of the equation; a disability can be worse for the family than a death.

Have you actually added up how much you’ve paid over the years for Medicare? Because all it takes is one major illness when you are older to recoup every single cent you’ve paid into the system.

My mother had congestive heart failure (stage 4) and was too old to be considered for a heart transplant. Over the years she had 3 defibrillators put in. The bills for her first hospitalization and surgery were over $300,000. Each time the defibrillator had to be replaced was over $100,000. She had other health issues too, but her heart was the big one.

Huge medical bills. That is a fair point. But, to tell an opposite story -- my grandmother lived not-quite 100 years, and she really had no medical issues at the end. Oh, she slowed down and had mobility issues, but she had no disease: her heart was in good condition, her kidneys still worked, she never contracted any type of cancer. Sure did visit the doctor more often than she had in her younger years, but she essentially just wore out -- that seems to be what the women in my family do. Finally she contracted pneumonia and died in her sleep. She never had those big-big medical bills.

I was a stay at home mom for too many years. Because of that my husband made sure that if something happens to him I will be able to survive. I will get 100% of his two pensions, 401k’s, social security, life insurance, and no mortgage on our homes, so I will be ok financially.

That's good planning!

I was surprised that so many women that I worked with knew so little when it comes to their retirement benefits and how much they will receive from social security, spousal benefits, etc.

Yes, as a teacher I work mostly with women, and I see the same lack of attention to this very important topic. Amongst teachers, the attitude seems to be, Put in your years for your pension and pay off your house, and you'll be fine. Is it just women, or is it everyone? I can't say.

I understand not being interested in this when you are young, but by the time you are closing in on 60 maybe you should do a little research.

Disagree: If you wait 'til you're near 60, you've used up your best saving years. If you save while you're young, the magic of compound interest is on your side!

this is the ONLY reason i stick with my awful overpriced PPO-if i leave it there's no coming back for myself or dh.

I'll say it again: Something's wrong with the system when everyone's #1 concern with retirement is medical expenses.

 

[Nebraska_Disney]

With most people not working at jobs with pensions anymore, it is probably still smart to have 3 legs on your retirement stool yet: 1)Pension/401 K 2) personal savings (Roth/Regular IRA's, CD's, etc) and 3) Social Security. IMO, #'s 1 and 2 are the most important in that if you don't have one of them, things are going to be difficult. My motto: Pay yourself FIRST and you will see the rewards of doing so.

 

[DVCcurious]

Just read that Suze Orman says you need $10 million to retire early.

I think that’s why people just ignore planning. Numbers like that are literally impossible to achieve. So why even try.

 

[DLgal]

Just read that Suze Orman says you need $10 million to retire early.

I think that’s why people just ignore planning. Numbers like that are literally impossible to achieve. So why even try.

Suze Orman lives in an alternate reality. She is so extreme about everything.

 

[tvguy]

Just read that Suze Orman says you need $10 million to retire early.

I think that’s why people just ignore planning. Numbers like that are literally impossible to achieve. So why even try.

I could have retired at 18 if I had $10 million. That's more than I will have earned in 45 years of working.

 

[bobbiwoz]

As to the pensions going to a surviving spouse

Dh retired from our state at a young age and took on career #2.

He opted for the surviving spouse option since I worked part-time while our kids were young and would need the income. And at the time dh retired, our kids were still in high school and younger.

It really wasn't that expensive, maybe $100 or $200 a month to take the surviving spouse option.

We had just watched his mom whose husband had retired at age 58 and then died at age 66 lose her spouse's retirement income at his death.
So his employer came out way ahead. We were a bit baffled as to why he would not have chosen survivor benefits .

When dh was preparing to retire, his organization had a retirement seminar we both attended that really explained our options and showed us all scenarios.

Folks just need to be informed and weigh things out for themselves.

We are in our early 70’s. I am extremely happy that DH has opted to take the surviving spouse option.

For now, we hope to enjoy the time we have together. We’ve been together for 50 years of marriage, and we have downsized our home, and we are traveling a lot while we can do it together. He earned a lot more during his working years then I did. We moved to Ohio due to his work, and I was never able to get a job that remotely gave me what I would have gotten had we stayed put in N.J. I had begun a job at 40, planning to stay until 60 when I would have received a pension. We moved within few years of my taking my dream job!

Our sons graduated college with no debt, and we helped when they bought their houses. Neither one wants or expects money from us in the future. What will be, will be.

 

[tvguy]

I could have retired at 18 if I had $10 million. That's more than I will have earned in 45 years of working.

I just did the math, if I work another 5 years to full retirement age of 66.5.....subtract what I will have earned working for 48 years from $10,000,000, divide that by my monthly social security benefit, I will have to draw social security for 325.2 years to have earned $10 million. I will be 391 years old.

 

[morgan98]

Just read that Suze Orman says you need $10 million to retire early.

I think that’s why people just ignore planning. Numbers like that are literally impossible to achieve. So why even try.

I basically ignore all of the TV/Radio financial folks as they are too extreme one way or another and say all sorts of crazy stuff for ratings and a shock factor.

What is she even basing that on? What defines retiring early? What type of lifestyle is she expecting someone to maintain.

 

[DLgal]

I basically ignore all of the TV/Radio financial folks as they are too extreme one way or another and say all sorts of crazy stuff for ratings and a shock factor.

What is she even basing that on? What defines retiring early? What type of lifestyle is she expecting someone to maintain.

I think she is assuming that people are having to pay for private health insurance and need an exorbitant amount of money for potential long-term care arrangements. I have heard her mother lives in an assisted living facility that costs $100k per year and is on a private island. So, yeah, when you want to live like THAT in retirement, I can see needing $10M at the age of 65...

 

[tvguy]

What defines retiring early? .

That is a loaded question. I was on Jury duty and one of the attorneys was questioning a potential juror. She was retired. She was 48. He said "wow, you retired early". Her response "No, I started with the city at age 18, your are eligible for full retirement benefits after 30 years service". So for her, retiring at 48 was full retirement age. I guess 38 would be early retirement. Unless something catastrophic happens, she will be drawing a retirement check longer than she worked.

 

[morgan98]

I think she is assuming that people are having to pay for private health insurance and need an exorbitant amount of money for potential long-term care arrangements. I have heard her mother lives in an assisted living facility that costs $100k per year and is on a private island. So, yeah, when you want to live like THAT in retirement, I can see needing $10M at the age of 65...

Yeah, but if you had $10M invested and withdrew at 3%, that would be $300k a year without ever touching a penny of the original investment. Plus, hopefully you are not going to need the $100k nursing home every year for an extended period. And with $10M you could afford to dip into the original investment if you needed.

I am not being argumentative with you at all, it just seems she pulled this number out of thin air. This is the kind of stuff that just discourages people from saving at all. My mother is retired (and my single as my parents divorced and she never remarried). She has no where near $10M and is doing just fine. You would have to earn $100k a year for a 100 years to even accumulated $10M and that would not even include taxes. So yeah, that number is not realistic for the vast majority of folks.

 

[MrsPete]

With most people not working at jobs with pensions anymore, it is probably still smart to have 3 legs on your retirement stool yet: 1)Pension/401 K 2) personal savings (Roth/Regular IRA's, CD's, etc) and 3) Social Security. IMO, #'s 1 and 2 are the most important in that if you don't have one of them, things are going to be difficult. My motto: Pay yourself FIRST and you will see the rewards of doing so.

Absolutely! I actually have more than three legs on my retirement stool. You can provide for yourself in retirement in LOTS of ways, and I think the overall message is, You need more than one source of retirement income. Income streams can fail, and if you're counting on JUST one, you could find yourself in trouble.

Just read that Suze Orman says you need $10 million to retire early.

I think that’s why people just ignore planning. Numbers like that are literally impossible to achieve. So why even try.

I read that. Suze really stepped in it. Personally, I think she wasn't prepared for that question and threw out a number from thin air ... then attempted to defend what isn't defend-able. If you needed that much money to retire, only about 100 people in America would be retired! (For the record, I pulled that 100 people number out of thin air.)

I also agree that numbers like this make people say, "I'll never manage that, so I guess I'll just work 'til I die. If I'm going to work 'til I die anyway, why shouldn't I spend every penny I have today and enjoy it?" Obviously, this thought process is not reasonable, but I do think articles like the You-need-10-mil push people in that direction.

What's realistic is the 4% rule. Say you save 1 million -- that number is realistic for a middle-class couple who chooses to live frugally. Save /invest the principle and plan to live off the interest in retirement. If you have $1,000,000 and spend only the interest, you'll have $40,000/year. If you have a paid-for house, no debt, and a Social Security check, and you're no longer supporting the kids or saving for the future ... that's quite a comfortable retirement.

Unless something catastrophic happens, she will be drawing a retirement check longer than she worked.

I expect to be in that position. My father-in-law went into the military at age 18, and he has already drawn a retirement check longer than he worked. It's not a common thing, but it's also not unheard of.