Retirement Targets

[SCNCY]

Saw this the other day. Interesting and says something about the Social Security conversation. If they raise the age I'll be broken down before I could enjoy any of that benefit.

Americans who are healthy at age 50 can expect to have roughly 23 more years free of disability, plus about eight years living with disability. That would suggest people’s maximum working life expectancy, on average, is age 73.

What Is the Ideal Retirement Age for Your Health?

Average life expectancy has risen by 16 years since the national retirement age was set at 65. We asked health experts when they think people should stop working now.

www.nytimes.com

I've always felt that if you do something like this, it needs to apply to those yet to be born. The rest of us have been planning and expecting a certain date.

 

[Jayshellberg]

How much did you have to account for medical insurance for early retirement until you are eligible for Medicare? I would imagine this would take up a pretty significant amount when it's no longer through an employer.

A couple of you have questioned the ability to retire before 65 without employer health coverage or an HSA to cover health insurance premiums. I did not have an HSA, but my employer allowed me to bring my health insurance into retirement. However, even if your employer doesn’t provide health coverage into retirement, you can get coverage at a reasonable cost through the Affordable Care Act (ACA). This is because the ACA provides subsidies based on your income, not assets. The income thresholds vary by state, but a family of two with income under, say $80K, will likely get subsidized, allowing them to purchase health coverage at the reasonable cost. Since you won’t be working, your income will be lower, enabling you to get a subsidized ACA policy.

I have had several retire before 65 without health insurance, and they have been very pleased with the ACA policy cost and coverage.

 

[CascadeClone]

I had people who were 50 years old at my last place of work and they would not put anything into 401k.

Topper- I have a single guy just turned 61 who makes 100k+ and puts in<2%.

I am the POC for our 401k plan at our small biz. Out of about 15 employees I would say 4 are are doing what they should. The rest are 3%, 5% - or less.

I have a half dozen employees who earn more than enough to max out their contribution if they had any kind of financial plan or forethought. They just don't.

People are just dumb about their personal finances. They think it is too hard and means making sad choices, so they ignore it. And then wonder why they aren't getting anywhere...

 

[EnkAMania]

And Social Security could be a distant memory for a lot of us. Disappear or have the age pushed out so far it won't come into play.

Invest until it hurts. Roth 401k ain't a bad option

I always believed Social Security wouldn't be around when I retired, so I used your strategy.

 

[cyphoon]

I agree with 1, 2 and (mostly) 4, but I'll push back on 3 a little bit. Roth accounts definitely have their place but ...

I was just starting to type my counter argument to 3, but you saved me the time. It is more nuanced than simply always going with a Roth.

One thing to remember, you can make traditional contributions throughout the year, and then make a Roth conversion in mid December if it makes sense for your tax situation. This is a good strategy for people in their mid 40s and up, and those with taxable incomes that straddle the 12% and 22% tax brackets, and those with enough traditional IRA money to fund the conversions. Only real downer is that there is a 5 year rule on conversion money.

Some fintech savvy people try to "punch" their way out of the 22% tax bracket with traditional contributions, then make the rest of their contributions Roth, which is paid with money taxed in the 12% bracket. Conversions are an easy way to implement this strategy.

H

 

[KnappShack]

I've always felt that if you do something like this, it needs to apply to those yet to be born. The rest of us have been planning and expecting a certain date.

Planning and paying into.

It's totally pulling the rug out if they screw with the retirement benefit too much.

Stats show Americans are not living longer, but they'll trot that out as a reason to increase the age.

 

[bozclone]

Does she pay out of pocket? That’s a lot more than I expected.

I recently moved my Dad into a LTC facility in central Iowa. It is $352 per day for a private room. I toured another facility that was $315 per day, but they did not have any openings right now. Both facilities are really nice. They are not like nursing homes I visited as a kid. The costs will add up in a hurry at those rates. My Dad has long term care insurance which will pay for about half. I think I may consider LTC insurance at some point after looking at the cost of care.

 

[BCClone]

Planning and paying into.

It's totally pulling the rug out if they screw with the retirement benefit too much.

Stats show Americans are not living longer, but they'll trot that out as a reason to increase the age.

When it was originally implemented, IIRC, it was near the life expectancy age. For many years, they never touched the age as the life expectancy increases. If it was indexed similar to how the increases are, it would be around 75 or so.

 

[KnappShack]

When it was originally implemented, IIRC, it was near the life expectancy age. For many years, they never touched the age as the life expectancy increases. If it was indexed similar to how the increases are, it would be around 75 or so.

I, for one, am excited when I see grandpa pushing a broom at McDonald's.

 

[BCClone]

I, for one, am excited when I see grandpa pushing a broom at McDonald's.

Not saying it is right or wrong, just pointing out how it originated.

 

[KnappShack]

Not saying it is right or wrong, just pointing out how it originated.

Yep. Don't mean incorrectly to paint you as pro-elderly labor.

 

[I@ST1]

Anyone have pros/cons of an annuity for life monthly payment?

I don’t have kids/don’t think I’ll have kids and won’t need to set anything up for an inheritance situation. My concern is that if I die @ 66.. that company wins. If I understand correctly.

 

[Bader]

Anyone have pros/cons of an annuity for life monthly payment?

I don’t have kids/don’t think I’ll have kids and won’t need to set anything up for an inheritance situation. My concern is that if I die @ 66.. that company wins. If I understand correctly.

Put that money into a Roth IRA, or if your Roth is maxed already into a T-Bill fund at your broker (if you're that kinda guy you can set up a TBill ladder yourself, but that's too much work)

 

[CascadeClone]

When it was originally implemented, IIRC, it was near the life expectancy age. For many years, they never touched the age as the life expectancy increases. If it was indexed similar to how the increases are, it would be around 75 or so.

This is correct. The idea of setting it at 65 was that literally half of the payers-in wouldn't collect; that's basically how it was funded. And iirc it was only meant to help the elderly poor, not be a retirement/pension program.

I think anything we can do to encourage people to save for their own retirement is a major net positive for society as a whole.

 

[CascadeClone]

Anyone have pros/cons of an annuity for life monthly payment?

I don’t have kids/don’t think I’ll have kids and won’t need to set anything up for an inheritance situation. My concern is that if I die @ 66.. that company wins. If I understand correctly.

It's basically gambling with the annuity company.

Hedge your bet and buy a big term policy? You can't lose! Besides the being dead part, of course.

 

[NickTheGreat]

Who knows how raises/increase will turn out, but if two people had a combined income of 140K right now with a 2.5% increase each year, they would be making about 260K in 25 years. 260,000 x 11 is 2,860,000.

I did take it to mean 11x of today's salary. That changes it a bit.

 

[Cyclones_R_GR8]

I will be 51 next week; my SSI retirement age is 67 for partial benefits and 72 for full. My life expectancy is 78.5. So on average I will collect 6 years of full SSI. Although I will gets means tested out of some of that too, since I saved for my own retirement.

I don't understand this statement. Currently the FRA for anyone born after 1959 is 67

 

[CascadeClone]

I don't understand this statement. Currently the FRA for anyone born after 1959 is 67

You are absolutely right. I had it jacked up in my head (62>67 vs 67>72). Will edit prior post.

 

[pulse]

I find it interesting that on a site like Fidelity they run the model using returns much below average.

How about just average? They wouldn't give a worst case and try to upsell?

Nah. They wouldn't do anything like that.

You can run models with Average, Below Average, or Significantly Below Average. It's a simple drop-down selection. I think they default to Average. Not sure what there is to bemoan about it, the choice is yours.

 

[KnappShack]

You can run models with Average, Below Average, or Significantly Below Average. It's a simple drop-down selection. I think they default to Average. Not sure what there is to bemoan about it, the choice is yours.

It defaults to significantly below.

That's bull **** and designed to drive sales.

People are not financially savvy. There is ample room to prey on people and their fears. They see a model saying they are well below where they need to be?

Well let me show you a product that can help. For just a small fee.