The “I want to retire soon” thread (1 Viewer)

[stbugs]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

While I agree with the enjoy now sentiment, 53% not loving it is honestly a bit low to me. Considering that the median retirement savings for people in the 55-64 range is $185k and most people take SS at 62, 53% seems a little low. Half of all retirees don’t have fun money/large income streams so they aren’t doing much and it’s not because they didn’t plan. It’s because there’s not much to plan around. There’s also pensions but I don’t think I’d be off in saying that most people, who worked jobs for long enough to have a nice pension, are probably in the bigger than median retirement savings group.

I think for a lot of people, you're doing the same things you're doing during retirement that you're doing pre-retirement. The big difference is that you're just not working anymore and maybe for some people, that's all that really matters.

Oh, I agree. I’m just saying I’m not surprised by the number because if you read retirement planning threads like this, chances are you are already well ahead of the bulk of retirees. The people unhappy with retirement probably aren’t ecstatic with pre-retirement.

 

[Sand]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

While I agree with the enjoy now sentiment, 53% not loving it is honestly a bit low to me. Considering that the median retirement savings for people in the 55-64 range is $185k and most people take SS at 62, 53% seems a little low. Half of all retirees don’t have fun money/large income streams so they aren’t doing much and it’s not because they didn’t plan. It’s because there’s not much to plan around. There’s also pensions but I don’t think I’d be off in saying that most people, who worked jobs for long enough to have a nice pension, are probably in the bigger than median retirement savings group.

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

 

[SFBayDuck]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding? That's surprising to me, if true, especially the latter half of that stretch. Most people are starting to experience some pretty significant declines in their 70s (the slow-go to no-go transition in full effect). Hell, the average male life expectancy in the US falls right in that window (and right at the end of it for females), and death would sure seem to reduce life satisfaction!

Any studies on this that you are aware of? As I hope you know by now I'm not trying to call you out, just trying to educate myself!

 

[Terminalxylem]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

Don’t get me wrong, my job is OK, and current existence includes activities I really love. But given the choice, I’d rather do more fun stuff.

The question is, why do 53% not “really love” retirement?

Are they bored, or lack purpose? Personally, I’m easily amused, and have fully embraced how inconsequential my efforts are.

 

[Terminalxylem]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

You, me and duck and maybe a few other folks need a separate thread for that way of thinking.

I’ve not chimed in much in the thread because I’m a financial moron who has managed to make a decent amount of money for a while. I’ve always balanced saving with spending on trips and enjoying life now. Tomorrow isn’t guaranteed and retirement definitely isn’t.

Thankfully, we've traveled so much in our 30+ years together that there's not much left that we want to see. Now, its just exploring the PNW from here in Boise.

Kind of a tangent to this thread but I’ve always wanted to travel the world in retirement - now started rethinking lately that as VR technology advances that seeing the world could be a lot easier and cheaper.

Although I find the concept a little disturbing, I can imagine the VR experience may also be more pleasurable, particularly as technology improves.

 

[Terminalxylem]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

While I agree with the enjoy now sentiment, 53% not loving it is honestly a bit low to me. Considering that the median retirement savings for people in the 55-64 range is $185k and most people take SS at 62, 53% seems a little low. Half of all retirees don’t have fun money/large income streams so they aren’t doing much and it’s not because they didn’t plan. It’s because there’s not much to plan around. There’s also pensions but I don’t think I’d be off in saying that most people, who worked jobs for long enough to have a nice pension, are probably in the bigger than median retirement savings group.

I suspect health is the fun-limiting factor, not money.

 

[Sand]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

 

[IvanKaramazov]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Not gonna lie. I find that result very surprising too.

 

[Terminalxylem]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Thanks. I had heard happiness increases as you age, but didn’t realize it keeps going up, even in 70s/80s.

Even more reason to do everything you can can to maximize lifespan.

 

[Terminalxylem]

Lots of interesting data on Happiness and Life Satisfaction

 

[matttyl]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Not gonna lie. I find that result very surprising too.

Not called a midlife crisis for nothing.

 

[Terminalxylem]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Not gonna lie. I find that result very surprising too.

Not called a midlife crisis for nothing.

I particularly like this part

While there are differing theories as to why this is, most agree that it is an acceptance of aging that promotes contentedness.

 

[jamny]

As someone who is only a couple weeks away from turning 60, age has been on my mind quite a bit the past few months. Obviously, anything can happen but I feel like the 60's are the last happy decade. The last decade before you are old. The last decade before people say "so young" if you die. A big part of it is that my dad died one week after his 60th, so that has hit me a bit too. I knew it was young at the time, back in 2001, but now I can feel how young it really is. It's encouraging to read about the happiness of those that are older and I'm sure not long after my birthday, I'll look past age again. But for now, it's a reality, not just a number.

 

[AAABatteries]

As someone who is only a couple weeks away from turning 60, age has been on my mind quite a bit the past few months. Obviously, anything can happen but I feel like the 60's are the last happy decade. The last decade before you are old. The last decade before people say "so young" if you die. A big part of it is that my dad died one week after his 60th, so that has hit me a bit too. I knew it was young at the time, back in 2001, but now I can feel how young it really is. It's encouraging to read about the happiness of those that are older and I'm sure not long after my birthday, I'll look past age again. But for now, it's a reality, not just a number.

Happy early birthday, GB.

 

[jamny]

As someone who is only a couple weeks away from turning 60, age has been on my mind quite a bit the past few months. Obviously, anything can happen but I feel like the 60's are the last happy decade. The last decade before you are old. The last decade before people say "so young" if you die. A big part of it is that my dad died one week after his 60th, so that has hit me a bit too. I knew it was young at the time, back in 2001, but now I can feel how young it really is. It's encouraging to read about the happiness of those that are older and I'm sure not long after my birthday, I'll look past age again. But for now, it's a reality, not just a number.

Happy early birthday, GB.

Thanks man...I was in Vegas for my 50th. I guess it's fitting to be in Napa for my 60th, like an old person...lol

 

[Sand]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Not gonna lie. I find that result very surprising too.

I also happen to notice I'm at the nadir on the curve. Not surprising - squeezed between generations with care needed both ways, a career that still requires long hours and lots of dedication, and an acute awareness that time is moving quickly.

 

[Godsbrother]

Retiring on Wednesday.

 

[IvanKaramazov]

Retiring on Wednesday.

Relocating or staying put?

 

[fruity pebbles]

It's not all about money. In general life satisfaction is at a maximum about 65-80, so there is some effect simply due to season of life.

Wait, people are most satisfied with their lives from ages 65-80, or am I misunderstanding?

That's correct. Many studies out there. Here is one graph.

Redirect Notice

Not gonna lie. I find that result very surprising too.

I also happen to notice I'm at the nadir on the curve. Not surprising - squeezed between generations with care needed both ways, a career that still requires long hours and lots of dedication, and an acute awareness that time is moving quickly.

Agree. I’m in my early 50s and it’s probably been the hardest point in my life for no particular reason. Just pulled a lot of different ways with a lot of people depending on me. Sometimes I just sit there and think……can one more person hang off of me. The road to retirement and a little less stress seems to have slowed down to a snails crawl, like when you can see the finish line but you don’t have much left.

 

[Sand]

Agree. I’m in my early 50s and it’s probably been the hardest point in my life for no particular reason. Just pulled a lot of different ways with a lot of people depending on me. Sometimes I just sit there and think……can one more person hang off of me. The road to retirement and a little less stress seems to have slowed down to a snails crawl, like when you can see the finish line but you don’t have much left.

I hear you. My wife's family has enough disaster in it to make for a lot of frustration. There are a couple folks there who have and will expect sustenance from me. And, I tell you, when I get to the point where I hit my time and number and all that's left is sustaining those folks (and effectively I'll be going go to work everyday to support these wastrels) I'm going to be a pretty grumpy old man. <--- not even close to the emotions I feel when thinking about this.

I still expect to help my kids down the road, but that expenditure is filled with joy, not frustration.

 

[Godsbrother]

Retiring on Wednesday.

Relocating or staying put?

Staying put. All 3 of our kids are in the Pittsburgh area and there is no way the wife is moving away from the grandkids.

We do plan on being snowbirds and travel someplace warm for a month or two in the dead of winter though winters here have been mild for the past 4 or 5 years

 

[Desert_Power]

What are the thoughts here towards using the Roth 401k option?

My plans have mostly been to load into the traditional 401k during working years to reduce tax burden and then take advantage of Roth conversions in retirement (inspired by the strategies of folks like GoCurryCracker). Our household has been above the cut-off for the Roth IRA for several years now and, as a result, our current allocation of financial assets are approximately: 66% in 401k/Trad IRAs, 26% in taxable brokerage/savings, 6% in Roth IRA, and the rest in HSA.

My first retirement only lasted 2 months and my new employer will not start with a match until next July. Not sure if it makes sense to contribute towards the regular 401k to reduce tax burden (solidly in the 24% marginal bucket for now) or to actually use this Roth 401k bucket to build out that allocation. Another option would just be to grow the brokerage, but that is where the overflow will end up anyways.

My wife is contributing only at the match level right now (she reduced when I quit). Thinking about whether she should do more and/or switch to a Roth as well.

 

[stbugs]

What are the thoughts here towards using the Roth 401k option?

My plans have mostly been to load into the traditional 401k during working years to reduce tax burden and then take advantage of Roth conversions in retirement (inspired by the strategies of folks like GoCurryCracker). Our household has been above the cut-off for the Roth IRA for several years now and, as a result, our current allocation of financial assets are approximately: 66% in 401k/Trad IRAs, 26% in taxable brokerage/savings, 6% in Roth IRA, and the rest in HSA.

My first retirement only lasted 2 months and my new employer will not start with a match until next July. Not sure if it makes sense to contribute towards the regular 401k to reduce tax burden (solidly in the 24% marginal bucket for now) or to actually use this Roth 401k bucket to build out that allocation. Another option would just be to grow the brokerage, but that is where the overflow will end up anyways.

My wife is contributing only at the match level right now (she reduced when I quit). Thinking about whether she should do more and/or switch to a Roth as well.

I’ve always been traditional mainly because I don’t recall ever having a Roth option before my wife started working again. Once she did my priority was reducing the tax bill. Every penny in traditional would have been taxed at our highest or maybe even next highest tax bracket.

I do plan to do some back door movement, if possible when we aren’t working anymore and before taking Social Security. With the $29k standard deduction for married jointly, we could takeout $123k as income and the tax rate would be about 12%. Even if I took out up to $230k and have an effective rate of 17-18%. That’s way lower than the effective rates we saved by the pre-tax contributions.

I know Roths are great for some situations and my 22 year old is doing a Roth 401k for his first job, but I’m glad we did traditional as I think we will definitely have a lower rate during retirement, especially trying to do the back door transfer.

 

[Sand]

What are the thoughts here towards using the Roth 401k option?

My plans have mostly been to load into the traditional 401k during working years to reduce tax burden and then take advantage of Roth conversions in retirement (inspired by the strategies of folks like GoCurryCracker). Our household has been above the cut-off for the Roth IRA for several years now and, as a result, our current allocation of financial assets are approximately: 66% in 401k/Trad IRAs, 26% in taxable brokerage/savings, 6% in Roth IRA, and the rest in HSA.

My first retirement only lasted 2 months and my new employer will not start with a match until next July. Not sure if it makes sense to contribute towards the regular 401k to reduce tax burden (solidly in the 24% marginal bucket for now) or to actually use this Roth 401k bucket to build out that allocation. Another option would just be to grow the brokerage, but that is where the overflow will end up anyways.

My wife is contributing only at the match level right now (she reduced when I quit). Thinking about whether she should do more and/or switch to a Roth as well.

Depends on how early you want to retire. The taxable account allows you to show the income you want to show and carry you to 59.5. The earlier you retire the more you need taxable, so that's a consideration. Without considering that I'd have a good look at the fee structure in the 401k. If fees are off the hook I'd lean toward taxable. If the 401k has really good, low fee options I'd probably lean that way. Either way it looks like you have some pretty good dispersion between account types.

It would be nice to have more Roth monies, but it doesn't always work out that way. I have like 2% in tax free instruments - just never worked out. Like you I have a good spread between tax deferred and taxable accounts - I think that, like you, I'll have plenty of knobs to turn to my advantage.

 

[-OZ-]

One of my new favorite podcasts:

5 Common Mistakes To Avoid When Retiring Early

Podcast Episode · Retire Sooner with Wes Moss · 06/27/2024 · 35m

podcasts.apple.com

53% of retirees “don’t really love retirement”

What percentage of people “really love” their working years?

Fair question. But the point I take away, is to make a life you enjoy now and plan for the next step instead of running away from your current life.

Don’t get me wrong, my job is OK, and current existence includes activities I really love. But given the choice, I’d rather do more fun stuff.

The question is, why do 53% not “really love” retirement?

Are they bored, or lack purpose? Personally, I’m easily amused, and have fully embraced how inconsequential my efforts are.

Seems to be a combination of lacking purpose and human connection for the most part.

Agree. I’m in my early 50s and it’s probably been the hardest point in my life for no particular reason. Just pulled a lot of different ways with a lot of people depending on me. Sometimes I just sit there and think……can one more person hang off of me. The road to retirement and a little less stress seems to have slowed down to a snails crawl, like when you can see the finish line but you don’t have much left.

I definitely hear that. We visited my family this week, thankfully my sister is awesome and taking the lead with my parents as they go through a lot of aging issues. I spent some time with them this week at their facility and took them to get their state ID cards. Honestly I wouldn’t be able to handle them along with working, kids, and trying to maintain my health. Her kids are older and largely self sufficient but it gets challenging for her too.
God bless those with young kids and aging parents nearby.

What are the thoughts here towards using the Roth 401k option?

Depends on your circumstances. I’m almost an even split in the TSP but my pensions plus the taxable part of SS will get us in or very close to the current 22% tax bracket after the standard deduction.

 

[Desert_Power]

What are the thoughts here towards using the Roth 401k option?

My plans have mostly been to load into the traditional 401k during working years to reduce tax burden and then take advantage of Roth conversions in retirement (inspired by the strategies of folks like GoCurryCracker). Our household has been above the cut-off for the Roth IRA for several years now and, as a result, our current allocation of financial assets are approximately: 66% in 401k/Trad IRAs, 26% in taxable brokerage/savings, 6% in Roth IRA, and the rest in HSA.

My first retirement only lasted 2 months and my new employer will not start with a match until next July. Not sure if it makes sense to contribute towards the regular 401k to reduce tax burden (solidly in the 24% marginal bucket for now) or to actually use this Roth 401k bucket to build out that allocation. Another option would just be to grow the brokerage, but that is where the overflow will end up anyways.

My wife is contributing only at the match level right now (she reduced when I quit). Thinking about whether she should do more and/or switch to a Roth as well.

Depends on how early you want to retire. The taxable account allows you to show the income you want to show and carry you to 59.5. The earlier you retire the more you need taxable, so that's a considerations. Without considering that I'd have a good look at the fee structure in the 401k. If fees are off the hook I'd lean toward taxable. If the 401k has really good, low fee options I'd probably lean that way. Either way it looks like you have some pretty good dispersion between account types.

It would be nice to have more Roth monies, but it doesn't always work out that way. I have like 2% in tax free instruments - just never worked out. Like you I have a good spread between tax deferred and taxable accounts - I think that, like you, I'll have plenty of knobs to turn to my advantage.

That's good advice to look more into the fees in each plan.

I'm 36 and have already quit once/didn't expect to rejoin working so quickly. Ideally, we would both tap out in about 3 more years. At least for a while.

 

[Sand]

That's good advice to look more into the fees in each plan.

This is kind of off track, but there have been studies on the returns of mutual funds and the overriding correlation there is the fees charged. 0.5% a year over many years is huge.

 

[Peggy]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

 

[matttyl]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

This is all my wheelhouse. Let me know if you have any immediate questions. A+B alone covered about 80% of all of your non-drug medical spend, but has no cap on your 20% - that’s where a supplement (aka a medigap plan) comes into play to fill those gaps. Buy a D-drug plan that best suits your needs year to year.

HSA can be spend down after 65 for part B and part D premiums, but not for a Medicare supplement. So at least it’s a way to fund Medicare with pretax dollars.

 

[SFBayDuck]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

I had that webinar on my calendar as well, but got too busy with work to make it.

Did they talk about ACA subsidies at all? I was playing around with the calculator here the other week, and it sure seems like if your MAGI in retirement isn't too high you can get coverage pretty cheaply.

With Medicare people talk about IRMAA surcharges all the time on retirement podcasts, and that could be an issue if you retire right into Medicare as it looks back two years. But I think you can file an appeal if you retire and your income drops significantly. But if you retire early and aren't pulling $200K out of your IRA/401Ks each year (for a couple), that doesn't seem like it'd be an issue.

 

[IvanKaramazov]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

I had that webinar on my calendar as well, but got too busy with work to make it.

Same. Kind of funny that we're all watching the same stuff.

 

[SFBayDuck]

Same. Kind of funny that we're all watching the same stuff.

I did catch one yesterday from YCharts feature Michael Kitces on Tax Efficient Withdrawal Strategies in Retirement (link to the follow up material). His audience is largely RIAs and other financial advisors, but I find a lot of his stuff really educational.

I also watched a Retirement Plan Live the other evening, from Roger Whitney. Interesting to see him walk through presenting to a couple where they stand (before turning into a commercial for his club). And this is after 3-4 podcasts featuring that couple where they gathered all of the relevant info if you want the background (Retirement Answer Man podcast).

 

[Peggy]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

This is all my wheelhouse. Let me know if you have any immediate questions. A+B alone covered about 80% of all of your non-drug medical spend, but has no cap on your 20% - that’s where a supplement (aka a medigap plan) comes into play to fill those gaps. Buy a D-drug plan that best suits your needs year to year.

HSA can be spend down after 65 for part B and part D premiums, but not for a Medicare supplement. So at least it’s a way to fund Medicare with pretax dollars.

I can use my HSA to buy tampons but not a medicare supplement. That makes a ton of sense.

 

[Peggy]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

I had that webinar on my calendar as well, but got too busy with work to make it.

Did they talk about ACA subsidies at all? I was playing around with the calculator here the other week, and it sure seems like if your MAGI in retirement isn't too high you can get coverage pretty cheaply.

With Medicare people talk about IRMAA surcharges all the time on retirement podcasts, and that could be an issue if you retire right into Medicare as it looks back two years. But I think you can file an appeal if you retire and your income drops significantly. But if you retire early and aren't pulling $200K out of your IRA/401Ks each year (for a couple), that doesn't seem like it'd be an issue.

ACA didn't get much more than a mention. I need to run the numbers against paying for COBRA pretty soon. Although I'll probably have to do COBRA for the first year anyway as I'll have a big capitol gains number.

 

[NutterButter]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

I had that webinar on my calendar as well, but got too busy with work to make it.

Did they talk about ACA subsidies at all? I was playing around with the calculator here the other week, and it sure seems like if your MAGI in retirement isn't too high you can get coverage pretty cheaply.

With Medicare people talk about IRMAA surcharges all the time on retirement podcasts, and that could be an issue if you retire right into Medicare as it looks back two years. But I think you can file an appeal if you retire and your income drops significantly. But if you retire early and aren't pulling $200K out of your IRA/401Ks each year (for a couple), that doesn't seem like it'd be an issue.

ACA always seemed like an easy decision. Just make sure you have enough in taxed accounts to cover those pre-medicare years.

 

[matttyl]

Please, please, please keep in mind that many if not most “ACA” plans (individual market plans, on exchange, with a subsidy) have very limited networks - most likely are HMOs. And most have very large out of pockets (maybe low deductibles, but still coinsurance and copays after that to a very large OOP number). I’m an agent in Va. if you go on exchange in most of my state, you’re looking at a state based only HMO policy with an OOP max that’s $8k+ (before subsidies - which could knock that down as well, but your income needs to be really low for that).

When I say “state based” HMO, I mean I side VA only. So if you’re outside VA and you want to go see someone at Duke (or anywhere else in NC), that’s out of network. If you’re in northern VA and want to go to someone in DC or Johns Hopkins in Baltimore (that’s out of network). I’ve told the story here of my then 3 year old son needing to go to Children’s National in DC for nearly a month due to “idiopathic inter-cranial hypertension,” and had he been covered by that HMO type policy I’d be bankrupt today.

Your state/area may be different, just be sure to be painfully aware exactly what it is you have available to you.

 

[matttyl]

Listened to a Fidelity webinar on healthcare in retirement the other day. Why does everything government have to be so complicated?

Medicare A for hospital, B for your doctor, Supplemental to close the gap on how much your responsible for in A+B. D for drugs! Oh and don't forget C for vision and dental. Watch out for IRMA on part B and D! OMG! FML!

Choices to bridge the gap to age 65, only 10 years!:
1 - COBRA
2 - Spouse's Plan
3 - Public Market Place
4 - Private Insurance

I did learn that HSA can be used for anything after age 65 taxed as income. I digitized all my receipts recently though, should have plenty to be tax free when the time comes.

This is all my wheelhouse. Let me know if you have any immediate questions. A+B alone covered about 80% of all of your non-drug medical spend, but has no cap on your 20% - that’s where a supplement (aka a medigap plan) comes into play to fill those gaps. Buy a D-drug plan that best suits your needs year to year.

HSA can be spend down after 65 for part B and part D premiums, but not for a Medicare supplement. So at least it’s a way to fund Medicare with pretax dollars.

I can use my HSA to buy tampons but not a medicare supplement. That makes a ton of sense.

I’ve honestly never understood that bit. You can withdrawal HSA funds tax and penalty free to pay for/reimburse yourself Medicare part A premiums as well as for a part D plan (or even for a Medicare advantage plan should you go that route, which I generally don’t recommend) - but not for a Medicare supplement plan.

That said, if you’re talking a married couple, both on Medicare, each with their own part D plan and even with minimal out of pocket medical expenses, you’re still talking $5k+ a year in todays dollars that you can pull from your HSA tax free - and considering you can no longer fund your HSA once on Medicare, you’re need quite a bit in it to not run out after 15-25 years. (Math - $177/m each for Medicare part B, $20/m each for a part D, $20/m out of pocket copays/m each).

 

[Peggy]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

 

[-OZ-]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

no, gawd no.

 

[SFBayDuck]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

That sounds un-optimal, but.....

There are two* different 5-year rules

• Earnings on your contributions. You are correct, as long as he's had any Roth IRA (I don't believe a Roth 401K counts, and once you roll one over that would start the 5 year clock) open for over 5 years he's set there.
• Conversions - if this is what he's doing (you used the word "contribution"), then each one does have a 5-year clock. That's why people talk about doing conversion ladders, to convert some amount each year that you can then access 5 years from then. So it might make record-keeping easier having separate accounts?

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

 

[Peggy]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

no, gawd no.

Yeah I didn't think so but after a few drinks he had me starting to wonder.

Doesn't really matter for me because everything is going to be plus 5 years by the time I'm 59 1/2, but, let's say you have a Roth that you've been backdooring for years and then recently opened a Roth at a different bank - for different purposes - to roll over 401K in retirement. Theoretically you don't have to wait 5 years on the second account correct?

ETA: Answered my own question with help form BayDuck.
Regular "contributions" I have if any should go into account #1 and any 5-year rule has expired.
401K "conversions" should go into account #2 and you have to keep track each year because each conversion has to stay put 5-years.

 

[Peggy]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

That sounds un-optimal, but.....

There are two* different 5-year rules

• Earnings on your contributions. You are correct, as long as he's had any Roth IRA (I don't believe a Roth 401K counts, and once you roll one over that would start the 5 year clock) open for over 5 years he's set there.
• Conversions - if this is what he's doing (you used the word "contribution"), then each one does have a 5-year clock. That's why people talk about doing conversion ladders, to convert some amount each year that you can then access 5 years from then. So it might make record-keeping easier having separate accounts?

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

Thanks, that's it. That's the disconnect. You're right.

ETA: He's got RMDs so he's been taking the excess from what he needs and putting it into Roth accounts. That's a separate 401K conversion each year.

 

[fruity pebbles]

Wealth of information in this thread.

 

[-OZ-]

He's got RMDs so he's been taking the excess from what he needs and putting it into Roth accounts. That's a separate 401K conversion each year.

That’s interesting. Without looking into it I’m not sure you can contribute RMDs into your Roth IRA. Does he have earned income?

 

[-OZ-]

Alright, had this discussion with my neighbor last night. He's 70+ years old and has been setting up a new Roth account every year, with each new contribution, so he can keep track to make sure that contribution stays invested for at least 5 years.

He doesn't need to do that does he? He's had a roth for decades. The 5 year rule no longer applies. Or have I miss-understood the rule this whole time?

That sounds un-optimal, but.....

There are two* different 5-year rules

• Earnings on your contributions. You are correct, as long as he's had any Roth IRA (I don't believe a Roth 401K counts, and once you roll one over that would start the 5 year clock) open for over 5 years he's set there.
• Conversions - if this is what he's doing (you used the word "contribution"), then each one does have a 5-year clock. That's why people talk about doing conversion ladders, to convert some amount each year that you can then access 5 years from then. So it might make record-keeping easier having separate accounts?

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

Makes sense. I’m not looking to convert anything (most likely, maybe after retirement and before SS but probably not) so hadn’t considered that rule.

 

[Gally]

Wealth of information in this thread.

Unfortunately a lot of it is in a different language. hahaha

 

[Peggy]

He's got RMDs so he's been taking the excess from what he needs and putting it into Roth accounts. That's a separate 401K conversion each year.

That’s interesting. Without looking into it I’m not sure you can contribute RMDs into your Roth IRA. Does he have earned income?

No. He was converting which comes with the 5 year waiting period. I phrased it wrong. It's makes sense now, I just wasn't connecting the dots.

He told me he converted every year age 55 - 70.5 before RMDs to get the RMDs down into the lowest tax bracket possible. That's what I plan to do.

I'm not going to get a brand new Roth account each year though. lol This guy is super organized so I'm surprised he didn't figure out a better way to do it. I'll probably just have two sets of equivalent funds with a spreadsheet. Invest in asset allocation A when rolled over, after that amount hit's 5 years sell and invest into asset allocation B. B is free to withdraw from.

 

[-OZ-]

get the RMDs down into the lowest tax bracket possible. That's what I plan to do.

Makes sense. Not an option for us
Although we’ll probably stay in the 22% (if rates don’t revert)

 

[Instinctive]

Speaking of Roth IRAs, had a productive couple days:

1. Filed delinquent 8606s for me and my wife for 2018 and 2019
2. Funded Traditional IRAs for each of us for $7k for this year, after tax
3. Converted to Roth IRA funds
4. Made a reminder for every week starting 3rd week of Jan to include an 8606 for each of us with tax return for this year

 

[Peggy]

401k conversion to Roth between ages 55 and 59.5

As long as it's a direct conversion without taxes being held no penalty right? And this has to be allowed by your employer's plan?