How much do you really need?

raggiemomSeptember 28, 2009

Whenever I look at retirement calculators, they tell you to figure on living to be 90 or 95 and that you should want to have 80% - 90% of your pre-retirement income coming in monthly. I am seriously looking at early retirement. My husband is 62 but because of diabetes, he is now on Short Term Disability and will be going on Long Term Disability next month. His eye sight is failing. In his job, he drove several hundred miles a week. His vision is past the point of being legally able to drive - though not legally blind.

I am 60 and my health is not great. I feel fine and am able to do most anything, but a year ago I had a "heart event" and had to had open heart surgery. At that time they found I also had diabetes. So, now I take diabetes meds, heart meds, cholesterol meds, etc. Not fun, but at least it keeps me going and feeling well.

My questions for you are:

1. Will I be able to find health insurance on my own until I reach MediCare age? If so, at what cost? I know you can't say for sure, but estimated amount. I work for a very small (12 employees) company and we do not have an option of continuing our insurance once we leave.

2. Do you really need 85% of your income when you retire? Seems the first few years you might do a lot and spend a lot, but than then it would slow down.

We currently make about $85,000 per year. After the disasterous market the last couple of years, his 401 has about $175K and mine has about $50K (I stayed hone with the kids until they were grown, so I got a late start). We also have about $300,000 in roth IRA's, mutual funds and other CD's. We have no debt - house and cars are paid for. We don't live extravagantly, but we do enjoy life. We had always planned to travel both here and in Europe when we retired. We have a son in London and have already been to Europe three times and absolutely love visiting the different countries. Again, we do our trips on the cheaper side. Neither of us have to stay at 5 star resorts or eat in fancy restaurants.

I am really wanting to retire early because of DH's eye sight. I am scared if I wait until I am 65, it will be so much worse he is not going to want to go places or enjoy our trips. He has had 6 or 7 laser surgeries and they are doing more, but no real change - they are just staying the same so far.

Any thoughts or opinions would be welcome.


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Actually, you can continue your present coverage under your employers plan. It's called COBRA. The premium is the same monthly rate your employer pays the insurance company. The only difference is that your employer doesn't pay his portion. You have to foot the bill for the full amount and your employer can charge a fee for administering the paperwork for you. (actually that may have changed since I last had anything to do with COBRA. I seem to remember someone telling me that they sent their payments directly to a Cobra rep so the employer may not be in the picture anymore.) It's possible to find a company that will take you with all the preexisting for a lower premium and I would encourage you to check it out. But, in all likelyhood your only recourse may be to continue your present coverage through your employer. Either way it won't be cheap but, you can't afford to be without coverage. Good luck. I sure hope you can find something cheaper.

    Bookmark   September 28, 2009 at 8:46PM
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What a difficult situation. It would be so nice for you to have time with your husband now.

Unfortunately COBRA can run only for 18 months. Also ask what your employer's share is because that would be added on to what you pay now. Could be four or five times what you pay now. (The average employer sponsored family health plan costs $13,0000).

At your age and depending on the state you live in, your cost for private health insurance on your own may be even higher. That is, IF you can even get coverage with your preexisting cardiac and diabetic conditions. Your situation is at the heart of the health care reform debate. (We won't go there.)

Insurance is one part of this, but your income needs are another concern. Look at your annual Social Security statement and review your estimated income from SS. Now look at your retirement savings. A conservative plan would withdraw only 3% especially in early years. So that would be about 16,000. Is that 16k plus your husband's disability plus your SS enough to maintain your lifestyle and pay for health insurance?

I hate to go all Suzie Orman on you but early retirement may not work out well for you. Be very careful.

Is there any way you could take some extended time off then return to your job? Possibly under the Family Medical Leave Act?

Here is a link that might be useful: health insurance cost article

    Bookmark   September 29, 2009 at 1:50AM
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Here is a Blue Cross/Blue Shield link for getting a health insurance estimate.

Good luck.

Here is a link that might be useful: Blue Cross Blue Shield

    Bookmark   September 29, 2009 at 2:04AM
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Thanks for the responses. I have really been trying to look at all possibilities. I wish I could do the Family Medical Leave. Unfortunately, a small company (7 employees) is not subject to many of the employment laws - this being one of them. Co-workers are not happy that I was off last summer for four weeks when I had heart bypass surgery. Then I had to take my husband to the doctor many times since he can no longer drive, plus he was hospitalized for a week and I had to take off with him. Then my dad had to have his leg amputated and move to a nursing home. He lives out of sate, so I was off for a week to help him. After that, we finally went on vacation to Europe where our son was getting married. We had gone a week before the wedding to have a little vacation time. While we were there, my dad died. So we were in Europe for 11 days, then off for four more days to attend to Daddy's funeral. As you can see, this has not been our best year and co-workers don't seem to have a lot of sympathy since they have to take over for me when I am out. I am not in the greatest work environment. But at 60, what do you do in today's job market?

I think my nerves are getting the best of me and I am grasping at any straw to make our lives better. Maybe we could move to Canada or London and have government health insurance. :-) What a difference a year makes. Before my surgery in June 2008, we thought our plans were going along great - that we would both work until DH was 65, then both retire and pay for my insurance for 2 years. Now it's just all gone somewhere in a handbasket!

Sorry for the long self-pitying post.

    Bookmark   September 29, 2009 at 12:26PM
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It isn't self pity. You are in a really tough situation. Health care, health issues and finances make for a very stressful combination.

Take care.

    Bookmark   September 29, 2009 at 2:53PM
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raggiemom - it is a tough situation - it's good you are carefully considering what your options are. I'm sure there are many different insurance options but I know some friends of mine who retired pre-Medicare are paying about $13K per year for health insurance.

Your situation is one I think about when I consider retirement plans. You think you may work until a ripe old age but there is certainly no guarantee your health will allow for it.

    Bookmark   October 11, 2009 at 10:31AM
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I sincerely doubt you are insurable at this point. Most plans would require you pay a high percentage over even the Standard rate, or make you wait at least a year before writing coverage on you.

celticmoon is correct on the healthcare costs. A comprehensive health insurance costs slightly over $1K/mo. average for a couple. The advantage is that they can't drop you since it is a continuation of coverage. Also, wasn't there something in the President's stimulus plan about helping to pick up some of the cost of COBRA insurance for the unemployed - although I'm not sure that would cover self-termination/retirement, it may be restricted to those who are laid off.

Maximum you would want to take is a 4% distribution annually.

I have no idea what the immigration policy is in England, but your dollars would not go far as currently the US dollar is weak vs the pound, about $1.64/one pound.

Canada's immigration policy varies per province. British Columbia is now almost completely closed to immigration unless you have $300K cash and intend to open a business. I think some of the other provinces are more open to immigration, but you will be contending with more severe weather. It's no joke how cold it gets in Calgary (my MIL's relatives live there so she visits summer!).

If you are really strapped for cash and want to retire, I'm afraid going South of the border is your best alternative. There are many cities with US ex-pats and very good healthcare. We have friends who have had to move out of the US because they couldn't afford to retire here.

You should note that Medicare does NOT cover anything if you live outside the US. Medical care in South and Central America can be very good, however, and is inexpensive by US standards. Panama, Costa Rica, Ecuador, and Mexico all have large ex-pat communities.

    Bookmark   October 18, 2009 at 2:09AM
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