Retirement Targets

[BDAL23]

my company offers it but I've avoided opting in because being in a timeframe of life where pregnancy and childbirth can happen means it's not a great option.

My wife and I kept it and didn’t pay out of it. My wife had a C-section and gave birth to twin girls. Our out of pocket was around $2500. Still less than paying a year’s worth of higher premiums.
i had knee surgery to repair a meniscus tear and an MCL tear. It cost me $2200 out of pocket. I save way more than that in the difference between premiums.
My company also contributes $1000 every year to the HSA. Your HSA can be invested in mutual funds offered by the provider under your fund. You are missing out on that gain. You can reimburse yourself at anytime tax free for bills you paid out of pocket(next day, 6 months 2 years, 20 years, no limit). You could allow your savings to grow for 20 years, then withdraw $20,000 in reimbursement tax free.
At age 65 your benefit can be used like a 401k if you desire.
I view it as another way to invest approximately $7500 a year tax free.

 

[SayMyName]

I feel like these high deductible and OOP plans with HSAs wouldn't work well for people with major medical issues. Am I wrong?

It depends entirely on the specific details of your plan. In my instance, due to premium differences and OOP copays / max limits, the HSA plan makes financial sense whether using it very little or using it a whole lot. It was only in a middle-of-the-road case that it could be financially better to be in a traditional PPO plan. Since I cannot accurately predict that "Goldilocks scenario", I choose the average case and go with the HDHP with HSA and have always come out $$ ahead.

 

[yowza]

I just have concerns about oversaving and not spending when I am young. If the pension is set to pay over 50% of wages and stays in effect then I would have way to much if I saved assuming nothing.

If so you could make it rain $ for someone else.

 

[yowza]

I'm not sure I'm a retire early type of person.

I have an uncle who is 80 and still works (owns a retail place) and says will retire when he is 85. Doesn't need to be working. He just does not know what he would do if he stopped. It still excites him and evidently they never wanted to do any travel or other hobbies.

 

[cowgirl836]

My wife and I kept it and didn’t pay out of it. My wife had a C-section and gave birth to twin girls. Our out of pocket was around $2500. Still less than paying a year’s worth of higher premiums.
i had knee surgery to repair a meniscus tear and an MCL tear. It cost me $2200 out of pocket. I save way more than that in the difference between premiums.
My company also contributes $1000 every year to the HSA. Your HSA can be invested in mutual funds offered by the provider under your fund. You are missing out on that gain. You can reimburse yourself at anytime tax free for bills you paid out of pocket(next day, 6 months 2 years, 20 years, no limit). You could allow your savings to grow for 20 years, then withdraw $20,000 in reimbursement tax free.
At age 65 your benefit can be used like a 401k if you desire.
I view it as another way to invest approximately $7500 a year tax free.

Mine gives $500 (would be $1k now with a child). The PPO plan was a $2k/$4k OOP which we easily hit with son's delivery, the HDHP goes to $4k/$8k and we would have hit that easily as well. Difference in premiums (counting myself and child) is about $800. I'd have to look more into the mutual fund bit - if it's the same options we have for the 401k, those are pretty terrible.

My husband has switched over and I may in the future as well.

 

[MisterO]

the wealth tax would apply to household with $50,000,000 in assets. If you're worried about that I hope to see your name on the new press box addition.

I am nowhere near that level...however, the income tax, when it first started out in our modern taxation system, was designed to be paid by only the wealthiest (less than 10% of all taxpayers) families. Obviously that has changed to include a lot more than just the wealthy.

A wealth tax is the same- it starts out with a small, wealthy group, and over time, it will reach average folks too. Do not be fooled. The ‘soak the rich’ mantra is a lie.

 

[BCClone]

Mine gives $500 (would be $1k now with a child). The PPO plan was a $2k/$4k OOP which we easily hit with son's delivery, the HDHP goes to $4k/$8k and we would have hit that easily as well. Difference in premiums (counting myself and child) is about $800. I'd have to look more into the mutual fund bit - if it's the same options we have for the 401k, those are pretty terrible.

My husband has switched over and I may in the future as well.

I have had my health plan for awhile, it is a grandfathered in plan. My plan is a 3500/3500 plan. Those co-deductibles can really catch you. I found this out with my wife having a surgery (she is on her own plan and the kids are on mine). Walking in with a 1500 deductible and finding out that you have to pay 3k on the spot does catch you off guard a bit. The 4/8 would be an even bigger surprise. It is surprising how quickly the meds and office visits will eat up your deductible if you are paying them out right instead of a co-pay of like $20.

 

[AuH2O]

My wife and I kept it and didn’t pay out of it. My wife had a C-section and gave birth to twin girls. Our out of pocket was around $2500. Still less than paying a year’s worth of higher premiums.
i had knee surgery to repair a meniscus tear and an MCL tear. It cost me $2200 out of pocket. I save way more than that in the difference between premiums.
My company also contributes $1000 every year to the HSA. Your HSA can be invested in mutual funds offered by the provider under your fund. You are missing out on that gain. You can reimburse yourself at anytime tax free for bills you paid out of pocket(next day, 6 months 2 years, 20 years, no limit). You could allow your savings to grow for 20 years, then withdraw $20,000 in reimbursement tax free.
At age 65 your benefit can be used like a 401k if you desire.
I view it as another way to invest approximately $7500 a year tax free.

We used to have a high deductible plan and HSA through my old employer. Once we had it funded, we had years with very little expense, years with big-time expenses (child birth and all that goes with it), and years in between. Every year for us it was less out of pocket than the other regular plans would have been. I think there were some people where it didn't make sense either because they had prescriptions or PT on a regular basis (I don't remember exactly).

Obviously it depends on what the other options are, but I knew people that stuck with the old regular plans and ended up paying more than the max out of pocket they could do with an HSA and high deductible plan.

 

[AuH2O]

let's say you turned 40 in 2021 and starting working in 2004. The average college grad salary that year was $42,108. So we'll take that x2 (assume you get married) then x3 as they suggest. To get that amount you'd need to save/invest $715.25 each month, assuming 6% growth. And that's also assuming you don't get any raises or lose money to inflation.

I am not arguing with what experts suggest, only saying that's it's much harder to do in reality than we think it is on paper.



We have 529s for both my kids - ages 6 and 3. If we stopped contributing now, assuming 6% growth, we'd have $90k for the youngest and $131k for the eldest. I better boost the youngest's contributions.

A big issue I have with the financial advisors is basing all of these targets on income rather than expenses. For nearly everybody, it's really tough to save much of your income early in your career. Then for most people they get raises that outpace increases in spending. As a result, people are almost always way behind those targets for much of their working lives. For many years their has always been a panic about how nobody has close to enough saved for retirement, yet people still retire at a reasonable age. They seem to want to scare people into dying with tons of money.

 

[NebraskaCY]

My wife and I kept it and didn’t pay out of it. My wife had a C-section and gave birth to twin girls. Our out of pocket was around $2500. Still less than paying a year’s worth of higher premiums.
i had knee surgery to repair a meniscus tear and an MCL tear. It cost me $2200 out of pocket. I save way more than that in the difference between premiums.
My company also contributes $1000 every year to the HSA. Your HSA can be invested in mutual funds offered by the provider under your fund. You are missing out on that gain. You can reimburse yourself at anytime tax free for bills you paid out of pocket(next day, 6 months 2 years, 20 years, no limit). You could allow your savings to grow for 20 years, then withdraw $20,000 in reimbursement tax free.
At age 65 your benefit can be used like a 401k if you desire.
I view it as another way to invest approximately $7500 a year tax free.

I agree. When I decided to go to a high-deductible plan several years ago, I crunched the numbers based on our expenses from previous years to see the difference on out of pocket. If you truly save the difference in premiums between the regular plan and the high deductible to use on medical expenses thru the year, you'll be ahead in the long run. I am fortunate that my family really is healthy, so our medical expenses are low on a yearly basis. In the 4 years on the high deduct., we have banked over $8K into an HSA that would have been solely used to pay premiums on the other plans.

 

[cowgirl836]

I have had my health plan for awhile, it is a grandfathered in plan. My plan is a 3500/3500 plan. Those co-deductibles can really catch you. I found this out with my wife having a surgery (she is on her own plan and the kids are on mine). Walking in with a 1500 deductible and finding out that you have to pay 3k on the spot does catch you off guard a bit. The 4/8 would be an even bigger surprise. It is surprising how quickly the meds and office visits will eat up your deductible if you are paying them out right instead of a co-pay of like $20.

yeah in my husband's case I believe the premium difference was bigger plus they did $1k per individual in the HSA to start so it was an easier choice for him to move over.

 

[Beernuts]

I am nowhere near that level...however, the income tax, when it first started out in our modern taxation system, was designed to be paid by only the wealthiest (less than 10% of all taxpayers) families. Obviously that has changed to include a lot more than just the wealthy.

A wealth tax is the same- it starts out with a small, wealthy group, and over time, it will reach average folks too. Do not be fooled. The ‘soak the rich’ mantra is a lie.

It's a campaign slogan...that simple math doesn't support. Everyone's taxes will be going up...they have to if we ever realistically want to balance the budget and make a dent into the national debt.

 

[yowza]

It's a campaign slogan...that simple math doesn't support. Everyone's taxes will be going up...they have to if we ever realistically want to balance the budget and make a dent into the national debt.

We are never again balancing a national budget. Those days are over.

 

[yowza]

A big issue I have with the financial advisors is basing all of these targets on income rather than expenses. For nearly everybody, it's really tough to save much of your income early in your career. Then for most people they get raises that outpace increases in spending. As a result, people are almost always way behind those targets for much of their working lives. For many years their has always been a panic about how nobody has close to enough saved for retirement, yet people still retire at a reasonable age. They seem to want to scare people into dying with tons of money.

My fear is being forced to live in a crappy crowded underfunded understaffed nursing home with that stench they have and also not being a burden on anyone else ever. I want to travel and do stuff for sure but I also want my last days not to be spent in such a place.

 

[IceCyIce]

Retirement for me - the closer is gets the further it seems

 

[gj524]

It depends entirely on the specific details of your plan. In my instance, due to premium differences and OOP copays / max limits, the HSA plan makes financial sense whether using it very little or using it a whole lot. It was only in a middle-of-the-road case that it could be financially better to be in a traditional PPO plan. Since I cannot accurately predict that "Goldilocks scenario", I choose the average case and go with the HDHP with HSA and have always come out $$ ahead.

This is what I found with the PPO vs. HDHP plans offered by my company based on my own calculations. There is a window of a "sweet spot" where the PPO has an advantage due to low copays for doctor/specialist visits if you have the right amount. But the HDHP starts the year about 2200 ahead based on lower premiums and 1000 HSA match for employee w/spouse coverage (I'm married, but no kids yet) and gives the opportunity to invest HSA dollars. My HDHP also has a lower max out of pocket vs. the PPO and covers pregnancy office visits 100% if we do have a kid on the way.

I figure even if there is a year where it would have been a little cheaper to have the PPO, the investment opportunity and protection of the lower max out of pocket make the HDHP worth it anyway for me. Other employer plan calculations may come out differently though.

It's worth mentioning too that if you have a qualified life event where your situation changes (i.e. having a baby), most employers will let you change your coverage outside of the open enrollment period too.

 

[brianhos]

What about opening up a Roth IRA under my child's name, instead of a 529. I'm pretty sure you can pull earnings from a Roth early if its for college expenses. Then if they end up not going to college, it will grow until they retire.

Sorry if this was already discussed

They have to have income to have a roth. My son got his first job this year, my plan is to match his earnings in a roth at the end of 2021 to get him started.

 

[yowza]

Markets have been doing great the last year to year and a half so trust most remain on their targets? I have to admit the returns over the last 18 months are much better than I expected.

 

[yowza]

Interesting there has been 0 real discussion among both sides about reducing Medicare age to 60. Would be a boon to those around that age and for the younger folks who would take the jobs and move on up. Of course we find it hard to have enough employees as it is now I guess.

Who would squawk if say Medicare age was reduced to 60 but everyone, including employers had to pay 1% more in to help cover the cost? I don't know what the real % would need to be, maybe its astronomical.

 

[dmclone]

Interesting there has been 0 real discussion among both sides about reducing Medicare age to 60. Would be a boon to those around that age and for the younger folks who would take the jobs and move on up. Of course we find it hard to have enough employees as it is now I guess.

Who would squawk if say Medicare age was reduced to 60 but everyone, including employers had to pay 1% more in to help cover the cost? I don't know what the real % would need to be, maybe its astronomical.

My guess is that there isn't a lot of compassion for those that have enough money saved to retire at 60. I'm all on board for my own benefit but probably a hard sell. Especially when no program seems to be solvent in it's current state.