Retirement Targets

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fcclone

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Hope it is a decent company. Deny. Deny. Deny. From many people I know. One example is an individual who paid premiums for decades and is now 100 and needs care now. They denied the claim. The fight continues. And the legal costs are not cheap. Insurance companies suck.
Almost two years ago when we were admitting my father into a long term care facility the administrator asked if he had long term care insurance. Once he responded no, the administrator said “good, those plans never pay and are a waste of money”.
Later I got an opportunity to visit with the administrator and informed her that I had been paying for long term care insurance for myself for the last few years. She looked at me and said ‘cut your losses and drop it’. I dropped it the next open enrollment.
 

Stormin

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Apr 11, 2006
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Almost two years ago when we were admitting my father into a long term care facility the administrator asked if he had long term care insurance. Once he responded no, the administrator said “good, those plans never pay and are a waste of money”.
Later I got an opportunity to visit with the administrator and informed her that I had been paying for long term care insurance for myself for the last few years. She looked at me and said ‘cut your losses and drop it’. I dropped it the next open enrollment.

Judging by the returns some are getting on their retirement investments it might be wise to take the premium money and self insure. Insurance companies suck.
 

Prone2Clone

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Oct 20, 2006
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zqzrxzM.jpg
Your total balances look like poop.
 
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Stormin

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But I fully get the wait and take it later mentality too. That is where I was until I dug into it more. I will be in a position that financially I could wait and take it at FRA or later but with a lower life expectancy I am convinced that FOR ME, earlier will be better. And if by some chance I do live to 90, the difference is minimal due to investment gains. I will show the full screen tomorrow (file is on laptop at work) that shows each option by year so you can see differences at any age. By minimal, I mean that over the 28 years of smaller early payments and investment gains vs larger later payments and opportunity cost the difference in total income is less than $50k. So, for less than $2k per year you are gambling that you are going to live that long. I just don't feel it for myself.

Now if you want to keep working or will be earning a substantial amount from other sources during age 62-67 obviously you will delay SS until a later age.

So you have accounted fully for reduction in benefits for exceeding the allowed earned income when taking SS early? And also considered the taxation of SS benefits on income tax? Those considerations definitely lower the SS money that you actually get to retain and therefore invest. I know in my case, I will take SS as soon as I reach full retirement age. No way will I wait till age 70. And I understand the desire to take it early as well. But I have never seen any sort of analysis other than yours that suggests you would have to live to be about 100 years or more before you hit the break even. You sound like a savvy investor. Many people are not as savvy as you. And many people are probably not as disciplined when it comes to getting money, and then investing it. Appreciate your inputs and that people need to consider their own individual situation.
 

qwerty

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The other thing that those charts never show is the COLA built into SS. It is somewhat self cancelling as whether you take it at 62 or 67 the COLA will be the same from later date on. If you set the COLA at zero and ignore investment (set to zero) the breakeven is back to the age 78 that is usually shown. And to Stormin's comment on taxes, no, taxes confuse the hell out of me so I assume they will equal out whether it is SS income or investment income. Taxes are my kryptonite, I seek outside help on those.

upload_2020-7-11_9-47-45.png
 
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Stormin

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The other thing that those charts never show is the COLA built into SS. It is somewhat self cancelling as whether you take it at 62 or 67 the COLA will be the same from later date on. If you set the COLA at zero and ignore investment (set to zero) the breakeven is back to the age 78 that is usually shown. And to Stormin's comment on taxes, no, taxes confuse the hell out of me so I assume they will equal out whether it is SS income or investment income. Taxes are my kryptonite, I seek outside help on those.

View attachment 73470

Impressed with your knowledge. I have no delusions about being as savvy or knowledgeable as you concerning your assessments. Also I find it refreshing and impressive that you defer to tax professionals when it comes to insight on taxation. A truly smart person, like yourself, knows when to seek the advice of others they consider more knowledgeable. Like in the area of taxation. Kudos to you. I have no doubts that your financial future will be successful.
 

qwerty

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OK, this chart shows 2.75% inflation, 4% investment return
At age 92, start SS at 62 you have $1,920,065 in SS payments and investment return on equal amount of your money not spent due to receiving SS
start SS at 67 you have $1,960,877 in SS payments and investment return
A whopping $40,812 difference over 30 years. And that assumes you live to age 92. Now every year you live over the breakeven the spread widens but on the reverse, if your investment return is greater than computed, the BE age gets older.

Again, this makes sense to me and has tipped me to begin early where I had planned on waiting until about 65-66. Each individual needs to consider their own situation.

upload_2020-7-11_9-53-1.png
 
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acody

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Almost two years ago when we were admitting my father into a long term care facility the administrator asked if he had long term care insurance. Once he responded no, the administrator said “good, those plans never pay and are a waste of money”.
Later I got an opportunity to visit with the administrator and informed her that I had been paying for long term care insurance for myself for the last few years. She looked at me and said ‘cut your losses and drop it’. I dropped it the next open enrollment.

Can someone provide more information in regard to what qualifies someone to utilize their long term care coverage. Remarks like "insurance companies suck and they just deny and are a waste of money, never pay, etc.", tell me nothing. Doesn't there need to be certain lack of ADLs(activities of daily living) to qualify or trigger coverage?
 

Stormin

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Can someone provide more information in regard to what qualifies someone to utilize their long term care coverage. Remarks like "insurance companies suck and they just deny and are a waste of money, never pay, etc.", tell me nothing. Doesn't there need to be certain lack of ADLs(activities of daily living) to qualify or trigger coverage?


Under most long-term care policies, you’re eligible for benefits when you can’t do at least two out of six “activities of daily living,” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

The activities of daily living are:

  • Bathing.
  • Caring for incontinence.
  • Dressing.
  • Eating.
  • Toileting (getting on or off the toilet).
  • Transferring (getting in or out of a bed or a chair).
When you need care and want to make a claim, the insurance company will review medical documents from your doctor and may send a nurse to do an evaluation. Before approving a claim, the insurer must approve your “plan of care.”
 

BCClone

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Not exactly sure.
Can someone provide more information in regard to what qualifies someone to utilize their long term care coverage. Remarks like "insurance companies suck and they just deny and are a waste of money, never pay, etc.", tell me nothing. Doesn't there need to be certain lack of ADLs(activities of daily living) to qualify or trigger coverage?

Need to have a doctor state that the patient needs assistance in performing two daily tasks. Easy ones are, hire (it can’t be family members) a person or agency to do solid cleaning and to sort out pills for the patient. 1-2 hours a week eliminates the whole week for the elimination period where you are responsible. Assistant living will typically qualify you for the elimination period also.

If someone is admitted to the hospital overnight and then released to a care center, the care center can code well to get Medicare to pay full rate for up to 100 days. 2 bouts with dehydration or a UTI can pay for nearly half the year at a care center. This is what is eating Medicare to pieces.
 

yowza

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One of Biden's proposals is to allow people to get on Medicare at age 60. That would definitely get quite a number of people to take the jump into retirement.
 

yowza

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Under most long-term care policies, you’re eligible for benefits when you can’t do at least two out of six “activities of daily living,” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

The activities of daily living are:

  • Bathing.
  • Caring for incontinence.
  • Dressing.
  • Eating.
  • Toileting (getting on or off the toilet).
  • Transferring (getting in or out of a bed or a chair).
When you need care and want to make a claim, the insurance company will review medical documents from your doctor and may send a nurse to do an evaluation. Before approving a claim, the insurer must approve your “plan of care.”

Just curious, is the insurer able to force the claimant to also go to a doctor of their choice for examination or do they accept the documentation and recommendation of your own physician?
 

yowza

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Yikes how much a year do you have to save to hit $3M by 50? I have maxed out my 401k every year since I started working and I am no where near that.

What kinds of funds does your 401k plan allow investment in? My current employer is through ADP and they have some pretty good options, but they also allow you to take half your balance and put into a separate investment account where you can invest in individual stocks if you want to or any of the thousands of mutual funds out there.

When you say maxed out your 401k, are you meaning you hit the ~$19.5k annual limit? How much is the employer match on it?

If you are maxing out and not putting in a money market/ bond fund then you should be fine unless your stock fund investment options available just suck.
 

SEIOWA CLONE

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Figuring I pay about one third of my wages in taxes, I figure that if I start drawing SS at 62 it will pay my tax bill, and leave me with around $400 remaining for myself from SS.
Which would be a higher take home than what I bring home now after taxes.
 

dmclone

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To get 3 million by 50 you would have to do the following.

Starting at 20 year old contribute the maximum, let's say an even 20k
Your employer would need to contribute at least $5k/year
Do this for 30 years
Choose an investment that averages an 8% return over those 30 years

Doable but I don't know a lot of 20 year olds maxing out their 401k.
 

Stormin

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Just curious, is the insurer able to force the claimant to also go to a doctor of their choice for examination or do they accept the documentation and recommendation of your own physician?

Not sure. But it might be their doctor. One who gets paid to make denials. I know for home damage it is their Adjustor. Some are okay. Some totally suck.
 

yowza

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Jun 2, 2016
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To get 3 million by 50 you would have to do the following.

Starting at 20 year old contribute the maximum, let's say an even 20k
Your employer would need to contribute at least $5k/year
Do this for 30 years
Choose an investment that averages an 8% return over those 30 years

Doable but I don't know a lot of 20 year olds maxing out their 401k.


Most would not and most employers are not kicking in $5k. You would need two wage earners in the mix and then it becomes a lot "easier", as long as you both sort of share the same view point in terms of savings/investment/retirement and the whole thing doesn't end in divorce.
 

Bobber

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Apr 12, 2006
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Just curious:

What age plan to retire?

What amount plan to have saved by that age?

Just curious as to when people plan to punch out for the last time and what the savings targets are. I know it varies by what you want to be able to do in retirement and health condition at that point, but just curious in general as to the two questions above.

Am an officer in my company and company rules say I have to retire at 67 and that is my plan. I'm one of those rare birds who actually enjoy working and work for a great company. Stress level isn't really too bad at all in my current role. My wife is also 5 years younger than me so have the questions of health insurance for her to contend with. I can easily see myself doing something else to keep me busy after 67 until she hits Medicare age. This could all change of course if either one of us have major health issues however we are both in great shape now, exercise frequently and are smart about our diet.

I'm going to continue to save as much as I can. I could probably retire now as I have saved a lot, but have no desire to. We know how to live below our means and have done that our whole life. It's hard to predict the future and our future tax structure, health care benefits could be a lot different than we are experiencing now.
 
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