Author: nosurprisesretirement

A Tale of Two Motorhomes

The yellow star tells us we’ll be on the Activity-Personal side of the Retirement Activity Compass for this post:

RAC - star UR

A note on this post – we will primarily discuss married couples here, but unmarrieds will also find value because the same principles will apply if you plan to engage in retirement activities with friends or relatives.

The Two Motorhomes

Last week I heard from a reader about the motorhome that she and her husband researched and bought so they could tour the country when they retire.  They read Bill Myers’  Buying a Used Motorhome and bought a lower cost motorhome.  They will be trying it out this winter with a trip to Arizona and, if they don’t like it, they can sell without losing a huge investment.  They have discussed their shared activities in retirement and are aligned.  I suspect that if we measure their retirement satisfaction in a couple of years, it will be fine.

Fast forward to yesterday where I was talking with a couple where the husband will retire next month. The husband is looking forward to buying a motorhome and touring the country.  Sound familiar so far?  The wife is looking forward to starting a pottery studio, not driving around in a motorhome. As Scooby Doo would say, “Ruh ro”.  This couple clearly has a failure to communicate.  It appears that the couple did little or no shared retirement activity planning and are not aligned.  Where do you think their retirement satisfaction measurement will be in a couple of years?

What Can We Learn from the Two Motorhomes?

Discussing, negotiating, and planning well before the retirement ‘day’ comes will help balance the interests of both parties.  There usually has to be give and take on both sides, whether it be a married couple, or retired friends planning joint activities.

Be adaptable – you may find you don’t like to motorhome (or run a B&B, or a pottery studio…).  Planning to try out any activity, especially the expensive ones, before you commit large resources will help avoid bad retirement surprises.

Be realistic – take into account your budget for retirement activities, mobility restrictions (oops, Bill’s knee can’t take standing for more than about 45 minutes!) and insurance restrictions (will I be out of network if I go to Alabama?).

On your own?  Singles aren’t hermits, so consider starting to build your retirement activity network early, but remember, it’s never too late to start.

Actions you can take include:

-Open the discussion.  Make a date to sit down over coffee and discuss what major activities you want to do in retirement (hint – surveys say ‘travel’ is on a lot of these lists.)

-If you find that you disagree on direction, search the web for ‘interpersonal conflict resolution’ and use some strategies for getting to compromise.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Pre-retirement or retired, why not RAP?

Retirement – it’s not for the old, it’s for the tough, and the RAP is a Retirement Activity Plan.  Remember, No Surprises Retirement is about helping you avoid bad retirement surprises.

Fight Cognitive Decline!

The abstract of the Mental Retirement study in the Journal of Economic Perspectives noted, ““Some studies suggest that people can maintain their cognitive abilities through “mental exercise.”… In this paper, we propose two mechanisms how retirement may lead to cognitive decline. For many people retirement leads to a less stimulating daily environment. In addition, the prospect of retirement reduces the incentive to engage in mentally stimulating activities on the job.”  A RAP can help you minimize cognitive and physical declines, maximize your retirement satisfaction and avoid bad retirement surprises.

Finding a Plan

Many of you probably have some type of retirement savings or retirement income plan (I hope!). I looked around and I was able to download a number of sample plans from different financial planners but they were all financial. I could not find any sample Retirement Activity Plans, and I think that’s a big gap in ‘real’ retirement planning, so I started researching and outlining a plan for us.

Retirement Activity Planning – the Retirement Activity Compass

Take a look at our Retirement Activity Compass:

Retirement Activity Compass - v3

The Retirement Activity Compass shows that people have key points for which to plan:
-Activity, for physical health
-Creativity, for mental stimulation
-Social, for connectedness, with community, family and friendship
-Personal, for solitude and personal time.

We’ll talk about planning in each area in future posts.  For now, don’t run out and start frantically exercising, especially without getting clearance from your medical professional first, but do start thinking about what you want out of retirement and where those wants line up on the Retirement Activity Compass.

Actions you can take include:

-Think about each point of the Retirement Activity Compass; Activity, Creativity, Personal, and Social.  Consider what you want to do (or are doing) in retirement and what you need to do to start.

-Next, look at your gaps on the Retirement Activity Compass.  Are there areas in which you do not have activities or plans?  If there are gaps, consider what you might do.  ( I did start up an activity plan, after physician clearance, which includes exercycle or walking, situps, and pushup, er… pushups. (Get down and give me two, pre-retiree!)

-Find a place to get physically active.  If you’re on Medicare, you might be eligible for a ‘free’ Silver Sneakers health club membership.  If you’re retired Military, you might find a gym on base/post.  I use my basement floor (it’s carpeted!)

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

 

The Retirement Income Pyramid. Annuities; you keep living, they keep paying.

 

Income pyramid - png - v8

Whoa folks! A Retirement Income Pyramid change!

An addition and a major change to the Retirement Income Pyramid today.  Annuities join the Retirement Income Pyramid just above Social Security and Pensions move up on the retirement surprise risk scale above annuities!

Our earlier looks at the retirement income pyramid talked about Social Security and pensions. In this post, we’ll focus on annuities and also shift pensions a little more up the pyramid. Annuities are part of the secure, stable base, but in a slightly lighter green.  The lighter green shows safety but with a little more risk than Social Security. Just like Social Security and pensions, we should know where we might find annuity surprises!

Pension risk increases

We’ll spend more time on why my risk assessment of pensions shows increased risk in a future post, but I can tell you that I have read research and anecdotal articles that have moved my sentiment.  Take a look at this Buffalo News article about the Teamsters pension plan – their pensions payments were cut 30%.

Boring full disclosure here

I am employed by a life insurer that sells annuities and formerly worked for a different life insurer that sells annuities (I consider them both outstanding firms in terms of safety and keeping the promise to insureds/annuitants).  My wife and I own annuities, as part of a balanced total retirement plan, for the guaranteed lifetime income with potential for income growth. I am not a licensed agent or registered representative and I do not make recommendations for your specific situation.  These blog posts are for general education.

What can an annuity do?

First, let’s ask the question of what can an annuity do for you?  The simple answer is that an annuity will provide you provide guaranteed lifetime income.  I joke that my annuity will keep paying even if I live to 400. The joke part is the 400, the serious part is that the annuity really would keep paying.  Please note, we’re discussing annuities and guaranteed lifetime payout riders here, not deferred annuity purchases with tax-deferred cash buildup, though those usually are a prerequisite to the payouts.  And yes, annuities have expenses, for guarantees and death benefits.

Can you have a bad retirement surprise with an annuity?  Very similar to pensions, yes and no.

Yes – surprise risks

-Insurance companies, just like pension trustees, sometimes do make mistakes and fail. The annuity payments are only guaranteed by the insurance company issuing them, not by any governmental entity (no FDIC or PBGC for example).

-Insurance companies are closely monitored by the states in which they issue annuities for financial stability and the ability to keep their promises, and the states usually act proactively on potential issues to make sure the insurance company keeps its promises to the policy owners.  Unfortunately, some insurers have failed for various reasons.

-While the annuity pays you, inflation can eat away at your purchasing power.

No – things that help avoid or mitigate surprises.

-Insurance company actuaries are accountable for certifying that the firm can meet its obligations to policy owners and can be held criminally liable if they know of fraud issues and do not report them. In my opinion, these women and men are very smart, very dedicated to making sure the firm can keep its promises, and very thorough in their analysis and actions.

-There are state guaranty associations which will step in to make some level of payments to policy holders if a company should fail.  Bottom line, a highly rated (Best, Fitch, Moody’s, etc.) insurance company is almost as secure as a pension guaranteed by the PBGC. And remember, not all pensions are covered by the PBGC. Your insurance company will be monitored by the state and will be part of the guaranty association.  Please note state guaranty associations have limits, just like the PBGC.

– Some annuities have inflation protection available, at an extra charge.

NOLHGA! The National Organization of Life and Health Guaranty Associations. (I love to try to pronounce it.  Sounds like the noise made after taking a bite of some bad medicine and knowing you can’t spit it out…)

NOLHGA states, “State guaranty associations play a vital role in keeping the promises made by the insurance industry and protecting policyholders when their company goes out of business. Since 1983, state guaranty associations have:
Provided protection to more than 2.5 million policyholders
Guaranteed more than $22 billion in coverage benefits
Contributed approximately $6.5 billion toward the fulfillment of insurer promises”

My opinion is that with proper selection (check your insurer’s ratings) and diversification (I have annuities from two highly rated firms), your annuity is pretty safe from surprises.

Actions you can take include:

-Learn about annuities with guaranteed lifetime income benefits which pay you an income for as long as you live, even after the funds you used to pay for the annuity hit zero.  (If there happen to be funds left when you die, your beneficiaries will receive them.) My opinion is that annuities that have a potential for increasing income could help offset inflation, but as always, your particular situation is a key to these being appropriate for you or not.

-Try your own annuity quote!  Abaris lets you run your own quotes at this link which requires  you to register. https://www.myabaris.com/

-Get professional advice from a trusted financial advisor.

-If you own an annuity, an insurance policy, or are just curious, read up guarantees in general and by your state, here at NOLHGA

Questions, comments, or suggestions for retirement surprise areas you want to know more about?

-Leave a comment
-Use ‘Contact’, above, to send an email.

 

Ouch – a bad surprise ate my retirement!

Remember – the goal of this blog is to help you avoid bad retirement surprises. Another way to say bad surprise is ‘unplanned significant expense’.  Here is the equation – you can do the math, I promise:

Planned retirement income (and standard of living)   chicken-beach-cartoon-illustration-hen-suntan-cream-34831754

minus bad surprise =

lower retirement income (and lower standard of living) Bus Bench

Real life example

I have a friend who had a bad retirement surprise happen with her healthcare.  She retired with an employer-provided post-retirement pre-65 healthcare plan.  Good news – the employer still provides a pre-65 plan that guarantees coverage.  Bad news – the premiums went up very substantially, which ate into the friend’s retirement income.  Her budget teeter-totter suddenly tilted left.

Budget Teeter Totter-left tilt - v2

There are a few factors at work here:

  • There was a surprise – the friend had an significant unplanned rate increase (think over 50%).
  • Thank heavens the friend is guaranteed fairly good coverage which will help avoid additional bad surprises.
  • Regardless of what you might be paying for healthcare, the overall cost of healthcare in the US continues to inflate, so we can all expect increases, especially as the baby boomer cohort ages.
  • The earlier you retire before 65, when Medicare kicks in, the longer you are exposed to the potential impact of premium surprises. Retire at 59 and increases are potentially a severe problem.  At 63, the problem is potentially less severe because you only have two years until Medicare.

What hints does my friend’s example give us on how to avoid an insurance premium surprise pre-65?  My opinion is that pre-65 retiree health insurance from any source other than a Federal Government plan (FEHB, CHAMPUS) is a risk that could cause either high premiums or lack of coverage.  If you’re not covered under FEHB or CHAMPUS, follow along below.

A budget try-it for you!

Here’s a budget planning activity for you to try, ideally before committing to retirement.

  1. Review how changes in things like insurance premiums might affect your income. Try some scenarios.
  2. Look at your budget with your insurance premiums and other healthcare expenses as planned, then use a stress test or two (or three). What if health expenses went up 25%, 50%, or even 150%? What would it do to your budget and your lifestyle?
  3. Ask yourself how you would pay for the increase. Would it come from savings? 401(k), IRA, or other qualified money? Second mortgage?
  4. Look at what paying for a bad retirement surprise now would do to your long term income plan.

Assuming you found that at some level of increased health insurance (and overall out of pocket healthcare) cost increase your retirement standard of living would be significantly impacted, what are your options? Let’s use an old project management risk planning method to find out.  Our choices are accept the risk, mitigate the risk, or avoid the risk entirely.

  • Accept it – If costs go up, pay the increased cost (perhaps out of retirement savings) and just live with the lower standard of living.
  • Mitigate it – You might search for a cheaper plan and take more risk on yourself (danger here!).  You might go to back to work, primarily for health insurance.
  • Avoid it – Plan to retire later.  Retire somewhere where medical insurance is cheap, like Ecuador.  Seriously, see the Miami Herald Cuenca article.

Actions you can take include:

  • Learn about any pre-65 health insurance your employer offers.
  • As of right now, it looks like the ACA will be going for another year, so if you don’t have a Federal, Union, or employer pre-65 retiree health plan, go on your exchange and see what your costs (remember – premiums + deductibles/co-pays and out of pocket maxes!) might be when you retire. (If you do have a Federal, Union, or employer pre-65 plan, check out those premiums.)
  • Think about what your personal strategy will be for any pre-65 retiree health care.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

Ouch – the Equifax breach. What I’m reading and doing.

tl;dr

Step 1 – Went to Equifax (also see below), checked both of us (not impacted (don’t really trust that)), signed up for monitoring, waiting to get email to finish the process (high volumes!)

Step 2  -Put temporary Fraud Alerts on our SSNs online (Experian – easy to use!).  Also see FTC article, below.

Step 3 – Have data security hygiene – I don’t give out information over the phone, email, or web, unless I call them at a number I trust (from verified website, phone number on statement, phone number on credit card) or go to their website (and from the ‘secure’ and green indicator on the browser address bar, know it’s not a spoof site).

Step 4  – Use a specific credit card for most non-routine web transactions that has a relatively low limit and I won’t have to change a bunch of auto-payments (get that 1.5% cash back!) if it’s breached.

Step 5 – Thing not to do (avoid a surprise!) – If you’re asked to pay for something on this breach, you’re probably on the wrong web page.  The Equifax check and monitoring are free and the Experian fraud alert is free.  (Remember TANSTAAFL – nothing is free.  This breach eats up your time and costs anxiety.)

I did not freeze credit reports, because I think that fraud alert will cover us.  YMMV.

Not tl;dr – read these:

Equifax:
https://www.equifaxsecurity2017.com/

Experian fraud alert:
https://www.experian.com/fraud/center.html

Credit report freeze info:
https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs#score

FTC info:
https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do

Wellsfargo comments on the breach:
https://www.wellsfargo.com/jump/enterprise/data-breach/

It’s about time…

Retired or working, you have expenses.  Some are optional (coffee at the barista’s place, new pine tree air fresheners for the car) and some are required and non-negotiable (water, electricity, gas, property tax).  Good news, some expenses are mostly required but are negotiable, so you might be able to help yourself to a positive retirement (or even pre-retirement) surprise by negotiating!

My wife is full-blooded Dutch and the Netherlanders are noted for being careful with money.  A couple of years ago, she renegotiated many of our mostly required expenses and ‘It’s about time’ for her to do it again.

It all started when I noted that our satellite TV service bill increased, a lot (it might have been DirecTV at the end of the promotion period).  The service was fine, but competitors were offering pretty similar service with much better deals.  My wife called around and saved us 50% on a new service.  It required a new installation, but a couple of hours supervising the installation was well worth the savings.

Later while we were discussing retirement planning and expenses, I noted that we had monthly trash, insurance, and phone bills, too.  The Dutch culture kicked in and soon my wife was calling firms, stating, “We’ll be retiring soon and we’ll be on a fixed income, so I need to bring these expenses down…”  Before I knew it, she had us saving significant amounts on trash, insurance, and internet.  Like over $1,000/year in savings (in all fairness, we did have a Cadillac trash plan, we just were not generating unlimited trash weekly…12 years of that – ouch!)

WIIFY?*

You too, can take advantage of these savings, but as usual, TANSTAAFL*; it will require some work:
-Find your semi required bills.
-Determine alternatives (Dish and Comcast were TV alternatives for us.)
-Call some alternatives and see what they offer.
-Call your preferred provider (perhaps it’s the one you have now) and let them know you’re retired (or nearing retirement) and will be on a fixed income and need a better deal. Let them know what the competition offered.
-Make your choice – stay with the deal your preferred option offers, or switch to the new one.
-Count your savings and use the money for other things that are important to you.

Now, here’s one you may not know about – life insurance. Talk with your trusted financial professional, because if your health has improved since your whole life or UL policy was issued (blood pressure under control, quit smoking), you might be able to get re-rated to lower premiums without having to get a whole new policy. If you have a term life, you may be able to save by re-rating or by getting a new policy. Always have the new one in hand before cancelling the old!

Let us know in the comments section if I missed some savings opportunities.

* – TANSTAAFL – “There ain’t no such thing as a free lunch.”  It shows up in No Surprises Retirement fairly often.
* – WIIFY – “What’s in it for you?’

Actions you can take include:

Bills to consider negotiating:
-TV/Cable
-Internet (Cable or DSL)
-Trash
-Homeowners insurance
-Auto insurance (is there a lizard in your future?)
-Landline phone
-Cell phone.

Look for the next update on Friday, September 8 at 12:30 PM.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

What will you do?

Apologies

First – apologies for the lack of updates the past couple of Fridays. I was on a retirement test (vacation) and did not complete the weekly updates.

Activities

Ahhh, the dream of leaving the workforce. No more mandated schedule and your time will be your own! Does that leave you exhilarated, scared, excited, or confused, or even all of the above? I am personally in the all of the above category.

In my current state of still working full time, I go to work five days a week where I get:
-playgroup (meetings!)
-snack (breakfast and lunch)
-assemblies (all company meetings)
-individual work time.
I actually get paid to go and have organized activities, although not necessarily of my choosing. Once you are retired, the organization of your day and activities is up to you, and if you do not plan, it may be day after day of daytime TV.

Avoid the void

And there’s the retirement surprise we want to avoid – the retirement activity and social void. You and I need plans for what we want to do and, in some cases, we’ll switch from being paid for your days to paying for our days. As an example, if we want to go to an assembly (perhaps a movie in a theatre) after retirement, we could end up paying for a ticket. An article on CNN Money cited research that noted, “… a 2013 paper by researchers at the University of Exeter Medical School that reviewed numerous studies on the relationship between volunteering and health concluded that volunteers had a lower risk of mortality than non-volunteers, were less likely to feel depressed and had an increased sense of well-being.” Having a plan means you’ll be doing things and doing things will make for a happier, and likely longer, life.  You might drink Coke, because ‘things’ go better with Coke… (perhaps I’ll take up stand-up comedy in retirement!)

Realism

One company I worked for had a policy of ‘realistic previews’ for people entering certain job categories. They had the job candidates complete tasks that were both challenging and related to the work they hoped to be doing. Candidates quickly found that they were suited for the job or that this was not for them. Consider trying the same for retirement. Perhaps you have always planned to make furniture when you retired. If you’ve never made furniture before, perhaps consider some ‘realistic preview’ way of finding out that it is or is not a viable alternative prior to getting a bad retirement surprise.

Maybe you dream of sleeping in until 10:00 AM daily. Not a problem if that’s your dream, but consider trying it next vacation to see if you can sleep that long and to determine how the rest of your schedule might fit with your late sleeping.

What is important to you? Travel, volunteering, kids, grandkids? Put those in the plan. Also, don’t forget to check out the senior discounts for assemblies!

Actions you can take

Actions you can take include:
-Put together a general retirement activity plan that might cover the routine activities for every month. It might include volunteering, grandchild care, movies, lunches with fellow retirees (they don’t happen if someone does not plan them!).  What does a ‘normal’ retirement month look like for you?
-Look at the activities of your retired friends – which ones would you like to use as positive role models and which ones are models for what you don’t want.
-Remember you need your health – do you need to be exercising more and eating less? Should you be more blood pressure medication compliant?
Look for the next update on Friday, September 1 at 12:30 PM.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?

-Leave a comment
-Use ‘Contact’, above, to send an email.

The Retirement Income Pyramid; pensions, the next level.

Pensions

Income pyramid - png - v5

Our first look at the retirement income pyramid talked about Social Security.  Today, we will review pensions. Pensions are still toward the stable base, but in a lighter green showing a little more risk than Social Security, but still pretty safe from surprises, right?  Yes and no:

Yes
-Pensions from businesses are protected by regulations from the US Department of Labor which push the firms toward making the pension secure and funded.

-If your firm fails, the US Government has the Pension Benefit Guaranty Corporation (PBGC) to step in and make some or all of your guaranteed payments to you.

-Some pensions may be inflation protected with potential for an annual cost of living adjustment (COLA).

No
-Some pensions from governments, school districts, and religiously affiliated employers are not covered by DOL regulations or the PBGC. Even though your employer promises to pay, you may be more at risk with one of these. A potential bad surprise.

-Most pensions are not inflation protected.

Buyouts! Lump sum cash!

You may receive an offer from your employer to buy you out of the lifetime payments they promised with a lump sum (perhaps quite large) of cash. These have the potential to be a good deal or a bad surprise, depending on many factors.

The first thing to remember is that if you take the lump sum, you won’t have the guaranteed monthly payments coming in, unless you figure out how to use the lump sum to do that.  A bad surprise is when you feel rich, use some or all of the lump sum to buy the Corvette, and later have a bad retirement surprise when your monthly income does not meet your expenses.

There is a potential, repeat – potential, upside.  You may be able to invest or place the funds such that they will provide a lifetime monthly income that is larger than your employer promised.

How you can prepare if you receive a lump sum offer.

-Learn about immediate income annuities (give an insurance firm a premium, and they pay you an income for as long as you live.  Or longer, with a ‘period certain’ income annuity.  My opinion is that these are not as good right now because of the low interest rate environment, but as always, your particular situation is a key to these being appropriate for you or not.

-Learn about annuities with guaranteed lifetime income benefits which pay you an income for as long as you live, even after your funds hit zero.  If there happen to be funds left, your beneficiaries will receive them. My opinion is that these have a better potential for increasing income that could help offset inflation, but as always, your particular situation is a key to these being appropriate for you or not.

Recommendations if you get a lump sum buyout offer:
-Get professional advice from a trusted financial advisor.
-Get a second opinion from a different trusted financial advisor.
-Spend time learning as much as you need to be able to make an informed decision that fits your needs and situation.

Look for the next update on Friday, August 11 at 12:30 PM.

Actions you can take:

-Learn about immediate annuities at CNN Money
-Learn how to check how well your employer’s pension plan is funded at pensionrights.org
-Learn about PBGC pension ‘insurance’ at PBGC

Questions, comments, or suggestions for retirement surprise areas you want to know more about?

-Leave a comment
-Use ‘Contact’, above, to send an email.

 

Medical expenses – a good defense is a viable offense (to avoid or minimize retirement financial surprises!).

WIIFY

A primer on post-retirement health insurance and medical expenses.  Transfer your health risks to an insurer for a known premium and avoid an uncertain and potentially retirement income busting drain on your nest egg.

tl;dr – Have a health insurance strategy.  Know what the pre-65 strategies are and what direction seems to fit best for you..

FYI – if you see text in blue, it’s a hyper-link to a resource!

TANSTAAFL

A quick mnemonic – There ain’t no such thing as a free lunch (TANSTAAFL).  Nowhere is this more true than medical insurance and expenses. Medicare is an example, Part A (hospitals) has no premium and Part B (essentially ‘doctors’) does, but you’ve paid Medicare tax forever, therfore TANSTAAFL

Two main kinds of ‘retirement’ medical insurance

One way or the other, you will need a retirement medical expense strategy.  There are two kinds of medical insurance for retirees, pre-65 (before Medicare) and Medicare (65 and on).  We’ll cover Medicare in a later post, so this post is for if either you or your spouse (or both) is going to be under 65 when you retire.  Basically a must read unless both of you are over 65 right now.

When you retire you’ll need medical insurance unless you:
a) have no assets and low income and will depend on Medicaid
b) you have assets and are willing to assume the risk of spending them all on medical care, then going to a), above.

Pre-65 health insurance strategies

1. Keep working – Stay at your current job and don’t retire until you have your health insurance strategy or qualify for Medicare. Or, find a part time job that offers health insurance. I just checked and if you work 20 hours/week, Starbucks has health plans.  I have no idea on the costs for the Starbucks plan.

2. COBRA – Not the snake, but the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA lets you continue employer health insurance for 18 months at 101% of the employer’s negotiated premium.

Advantages: it’s guaranteed, the premiums, deductibles, and coverages are known.  You have up to 18 months of COBRA coverage when leaving employment.

Disadvantages: the premiums can seem very high and there is no ACA subsidy. You only have 18 months of coverage.  Since you only have 18 months, if either of you are younger than 63.5, you’re going to need more than one strategy, because COBRA will stop before you are on Medicare.

3. Individual health insurance through an ACA exchange or a broker – This is really up in the air right now, but when I last checked, incomes up to the $60k range received significant premium subsidies. Depending on your age, this may be the best option, but until the ACA direction is firmer, you may want to hold off on retirement if individual health insurance is your strategy.

Up next – Look for the next update on Friday, August 4 at 12:30 PM.

Actions you can take:

-Call your HR Department and ask what the current COBRA premiums are.
-Take a retirement knowledge quiz.  It’s a tough one, but explains the answers at the end.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

 

 

 

 

You’re gonna die! But we can help with a surprise there, too.

WIIFY – A quick lesson on avoiding passing a surprise to your loved ones and a tip to potentially lower the costs. Learn a new ‘thing’ – tl;dr.  tl;dr means too long, didn’t read and is a summary for you! Note – not pretending to be an attorney here, just noting some generally available information and recommending you see an attorney.

tl;dr – Put your assets in a trust and make them easy to transfer and avoid probate at death. Use a legal plan to potentially save significant money on setting up the trust.

End of retirement planning
Sorry dear reader, but the end of retirement, as some euphemistically call death, will happen for all. When you die, married or not, someone has to handle your ‘estate’: real estate (house), tangible personal property (your gnome collection), and your intangible personal property (stocks, bonds).  Don’t surprise your loved ones, plan some in advance.

Trust
An easy way to not surprise your loved ones is to have most of the big stuff in a trust.  Work with a licensed attorney in your state on this. A trust is essentially a legal holding entity that can ‘own’ assets and give them or income from them to a ‘beneficiary’ (could be you) and lets the trustee (could be you while alive and, on death, pass to a spouse or child(ren) distribute the assets.  The distribution of the assets at death with a trust is much simpler, faster, and in my experience cheaper, than probate.  We only needed a death certificate to distribute the in-laws’ assets from their trust.

Legal plan
My daughter and son-in-law were going to get a trust and made noises about getting a trust as a birthday gift (the gift that keeps on giving!) Trusts are not inexpensive, so I looked at the legal plan available through their work.  It covered trusts and one of the attorneys in the plan is an excellent attorney that we used for out trusts. The legal plan cost was about $300, so they signed up for the legal plan and I gave them a $300 present, which saved them (or me?) about $700.

Up next – Look for the next update on Friday, July 28 at 12:30 PM.

Actions you can take:
–Read more on trusts.
-Check out your legal plan at work or, if you don’t have a legal plan at work, search the web for ‘legal plan’ and see what the cost benefit is for a trust.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.