Early Retirement?

[mnrose]

nt

 

[JeremyGNJ]

The sacrificing of living with enjoyment "now" for maybe living long enough to have an enjoyable "later" is always poor advice!

 

[eliza61]

The sacrificing of living with enjoyment "now" for maybe living long enough to have an enjoyable "later" is always poor advice!

LOL.

I've stayed in Europe a few times over my life and they have a saying that always pops into my head once in a while.

Europeans work to live.
Americans live to work.

Now of course they are pretty much set as far as health care goes (in general, yes I know they have issues also. ) so that may make their decisions a bit easier.

 

[DawnM]

I do not recommend a high deductible plan. Sure it sounds fine when you are young and healthy, but when you are older, like my parents, you have a lot of health issues.

They would have hit their deductible several years now. Dad has had two cancers and Mom has some autoimmune issues like bronchitis, which has landed her in the hospital with pneumonia a few times. There is more, but those are a sampling.

I see no good reason to live on a shoestring so that you can retire early. I want to be able to take my grandkids to Disney some day, travel with my husband, visit friends on the West Coast, etc....

My pension won't start until I am 62.5 years old min. Dh's is similar. Taking penalties on that, or saving enough to live on until that age is not what we want to do.

Dawn

Yes, health insurance is the big question. One of the sites suggested building up a health savings account over several years to use to supplement a high deductible health insurance plan. Another thing for me to research...

For those of you who don't feel the need to retire because you love your job, I'm envious. Although I certainly don't hate my job, give the choice (an $ not being an issue) I may choose something else-- that's all.

 

[sarahk0204]

One of the things an early retirement guru will point out is that you don't need 80% of your INCOME - you need 80% of your SPENDING (assuming your spending goes down when you wear yoga pants all the time and have time to mow your own lawn - but don't forget things like medical expenses). Let's say you take home $60k....if you can live off $30k, you can probably retire in about ten years if you save carefully.

Another thing they'll point out is that a lot of them have side hustles. They aren't fully retired at 40, they just don't hold a job any longer - they might sell a little real estate, or do a little consulting. A lot of them own rental property - and owning rental property is a job - unless you hire a property manager. They buy at garage sales and sell on eBay or Craigslist. Maybe they dog sit.

Finally, for these people the ACA has been a huge boon. Most of them are living off fairly significant savings - but the ACA is keyed off income, not wealth. So if you only take $30k in income a year, you qualify for subsidies on health care. Here in Minnesota, with our two kids, if we took $32k a year in income, we'd be on Medicaid and wouldn't pay for health care at all. And at $40k, our premiums would be less than $2k a year. If you've paid off your house, and are living a fairly small life - you can be pretty comfortable at $40k a year. And for us - with 2 dependents - that would be $40k pretty clear of taxes - there isn't social security taxes on investment income, and with our standard deductions, we'd pretty much pay no federal tax.

Thank you for pointing this out. It is a little bit like those blogs that promote women staying home and taking care of the children. Working and putting children in daycare is seen as evil, practically, yet those women are often doing all of those kinds of side jobs you describe. That is still working, just one with more convenient hours and child care options.

I did wonder why on those retirement sites it kept talking about people going on Medicaid. Now I know.

Oh, and we could never do a high deductible plan, either. Mr Mustache spent around $300 on pharmacy last year. My inhaler alone runs about that much, and both DH and I are on 3-4 chronic medications each.

 

[hollypoast]

One of the things an early retirement guru will point out is that you don't need 80% of your INCOME - you need 80% of your SPENDING (assuming your spending goes down when you wear yoga pants all the time and have time to mow your own lawn - but don't forget things like medical expenses). Let's say you take home $60k....if you can live off $30k, you can probably retire in about ten years if you save carefully.

Another thing they'll point out is that a lot of them have side hustles. They aren't fully retired at 40, they just don't hold a job any longer - they might sell a little real estate, or do a little consulting. A lot of them own rental property - and owning rental property is a job - unless you hire a property manager. They buy at garage sales and sell on eBay or Craigslist. Maybe they dog sit.

Finally, for these people the ACA has been a huge boon. Most of them are living off fairly significant savings - but the ACA is keyed off income, not wealth. So if you only take $30k in income a year, you qualify for subsidies on health care. Here in Minnesota, with our two kids, if we took $32k a year in income, we'd be on Medicaid and wouldn't pay for health care at all. And at $40k, our premiums would be less than $2k a year. If you've paid off your house, and are living a fairly small life - you can be pretty comfortable at $40k a year. And for us - with 2 dependents - that would be $40k pretty clear of taxes - there isn't social security taxes on investment income, and with our standard deductions, we'd pretty much pay no federal tax.

Don't they take into account all of your assets when determining eligibility for such programs? (not just yearly income) To retire early you need a good chunk of money in savings/investments plus a completely paid off home. I think in WI you need a net worth of less than $8,000 or something like that. And they go back 5 years in terms of checking net worth. Maybe I'm wrong and maybe it is different in other states. Plus I might feel guilty about "working the system" when I'm happily doing whatever I want instead of working a 9-5.

 

[hollypoast]

The sacrificing of living with enjoyment "now" for maybe living long enough to have an enjoyable "later" is always poor advice!

Good advice. Both of my parents didn't live to retirement age. My Dad died at 62 and my Mom at 64 so I totally get it. Plus, I work in hospice so I have an almost daily reminder that if you want to do something important, don't wait, do it now. You never know when your time will run out.

I think what I am learning as I get older is that time is worth more than all the "stuff" I've spent my life accumulating. You think you will be happier when you are in your dream home but then you realize, its just more to clean.

 

[nunzia]

I think I need to check him out. We always lived small. At the end of last year after many life hits of loved ones passing away and illnesses I left my hated job and am working on a new career from home. DH still works but was out of work for several months on medical issues. And..we live on under $2,600 a month but I know I can bring it lower. This doesn't count vacations. I won't give up some things like cable TV and eating out with friends once a week..we are older and little pleasures are important to us. I don't buy many clothes and I think I have stuff for my hobbies fully stocked so need to avoid temptation. I spend too much on grandkids. But..house is paid for, cars as well and healthy savings (imo..if you think too much about it you freak out and then nothing is really enough). We had to get a new roof and at the same time put in central heat and cooling and that was a hit. But..we don't really splurge..Like another poster said, I could get new cabinets and countertops..instead we painted the cabinets and got a kit to cover the counter to look like granite. Works for me. Everyone has to find their own balance, but seeing how some can live really frugally can be an inspiration.

 

[Gumbo4x4]

One of the things an early retirement guru will point out is that you don't need 80% of your INCOME - you need 80% of your SPENDING (assuming your spending goes down when you wear yoga pants all the time and have time to mow your own lawn - but don't forget things like medical expenses). Let's say you take home $60k....if you can live off $30k, you can probably retire in about ten years if you save carefully.

Another thing they'll point out is that a lot of them have side hustles. They aren't fully retired at 40, they just don't hold a job any longer - they might sell a little real estate, or do a little consulting. A lot of them own rental property - and owning rental property is a job - unless you hire a property manager. They buy at garage sales and sell on eBay or Craigslist. Maybe they dog sit.

Finally, for these people the ACA has been a huge boon. Most of them are living off fairly significant savings - but the ACA is keyed off income, not wealth. So if you only take $30k in income a year, you qualify for subsidies on health care. Here in Minnesota, with our two kids, if we took $32k a year in income, we'd be on Medicaid and wouldn't pay for health care at all. And at $40k, our premiums would be less than $2k a year. If you've paid off your house, and are living a fairly small life - you can be pretty comfortable at $40k a year. And for us - with 2 dependents - that would be $40k pretty clear of taxes - there isn't social security taxes on investment income, and with our standard deductions, we'd pretty much pay no federal tax.

But, even if you can qualify for cheap insurance, the out of pocket costs associated with receiving medical care are completely out of whack with what was the norm just a few short years ago.

I went from a small deductible, co-pay only plan to:
90/10
80/20
70/30 (this one the RESULT of ACA).

Over the course of 12 years. And each plan has come with a higher deductible. With such dramatic changes since 2002, what will 2026 bring? And even if it doesn't continue to deteriorate, I could still potentially be on the hook for 5 figures worth of expenses per year above & beyond the premiums.

 

[crisi]

Don't they take into account all of your assets when determining eligibility for such programs? (not just yearly income) To retire early you need a good chunk of money in savings/investments plus a completely paid off home. I think in WI you need a net worth of less than $8,000 or something like that. And they go back 5 years in terms of checking net worth. Maybe I'm wrong and maybe it is different in other states. Plus I might feel guilty about "working the system" when I'm happily doing whatever I want instead of working a 9-5.

The ACA is income based, not wealth based. In Minnesota you need that tiny net worth for Minnesota Care, but not for the ACA. (You might for the Medicaid expansion, but you'd still qualify for subsidies under the ACA).

I've had a high deductible plan for years and love it - its what I grew up with in the days before HMOs. Yes, we pay for a huge amount of our own health care - and my husband has some significant spine issues - but its still been cheaper than just a full insurance plan - those things were costing us - even employer sponsored - over $1000 a month. And the point of insurance is to insure against risk - things you can't afford to pay out of pocket. If you are talking about an early retirement situation, you have significant assets - you can pay your out of pocket max if you have to. If you know you have health issues, you'll have to add those costs into your yearly spend so that you don't retire early with too little money to cover medication and doctors visits to manage a chronic condition.

 

[tvguy]

Good advice. Both of my parents didn't live to retirement age. My Dad died at 62 and my Mom at 64 so I totally get it. Plus, I work in hospice so I have an almost daily reminder that if you want to do something important, don't wait, do it now. You never know when your time will run out.

I think what I am learning as I get older is that time is worth more than all the "stuff" I've spent my life accumulating. You think you will be happier when you are in your dream home but then you realize, its just more to clean.

If you work in hospice, you know you need to strike a balance. You can't assume you will live forever, but can't assume you won't. I saw this with my mom in a nursing home, board and care and hospice the past 2 years. She did everything right, but there were people age 97+ who didn't plan for the possibility that they may live 35 years after they retired. They are out of money, their friends have passed away, and in the case of 2 ladies at the board and car my mom was in, all their children had already died of old age!

 

[Colleen27]

The ACA is income based, not wealth based. In Minnesota you need that tiny net worth for Minnesota Care, but not for the ACA. (You might for the Medicaid expansion, but you'd still qualify for subsidies under the ACA).

Same in Michigan. The trick, for those into extreme simplicity/early retirement, is to keep your annual income above the 130% poverty level that is the dividing line between Medicaid and the ACA marketplace because Medicaid looks at assets while the ACA marketplace is based entirely on income. And you're right, the law is a huge boon to people looking to live without a job, whether off investment income or via self-employment or starting a small business.

I do like these extreme early retirement blogs because they can be a source of interesting ideas that can be adapted to other priorities. We're not chasing an early retirement but we traded off a lot of income/financial security in favor of having more time and freedom now, while our children are at home, and it is interesting to read about the ways other people have made simple living work for them.

 

[Dakota731]

Finally, for these people the ACA has been a huge boon. Most of them are living off fairly significant savings - but the ACA is keyed off income, not wealth.

If someone is getting a great deal with ACA then someone else is paying more - it is a subsidy! So a middle class younger person will have a higher premium for their insurance, so someone else can have it cheaper. We are inching very close to socialism with this type of mentality.

 

[Gumbo4x4]

If someone is getting a great deal with ACA then someone else is paying more - it is a subsidy! So a middle class younger person will have a higher premium for their insurance, so someone else can have it cheaper. We are inching very close to socialism with this type of mentality.

Yup, on the surface there appears no reason why millions of existing policies needed to be voided. But then, if they weren't, how would ACA be funded? When you rob Peter to pay Paul, Peter isn't so happy.

 

[akcire]

If you work in hospice, you know you need to strike a balance. You can't assume you will live forever, but can't assume you won't. I saw this with my mom in a nursing home, board and care and hospice the past 2 years. She did everything right, but there were people age 97+ who didn't plan for the possibility that they may live 35 years after they retired. They are out of money, their friends have passed away, and in the case of 2 ladies at the board and car my mom was in, all their children had already died of old age!

My husbands grandmother lived with us the last five years of her life. She died at 99 and 364 days. At the point of her death she had been a widow for 35 years, her only child died 5 years before (how we got her), and all her friends were dead and most of their children were dead too.

Grandma had prepared well but lived in a low cost of living location, so her house wasn't exactly a rock solid investment.

 

[Southernmiss]

My husbands grandmother lived with us the last five years of her life. She died at 99 and 364 days. At the point of her death she had been a widow for 35 years, her only child died 5 years before (how we got her), and all her friends were dead and most of their children were dead too.

Grandma had prepared well but lived in a low cost of living location, so her house wasn't exactly a rock solid investment.

My grandmother is 94 and still living alone. She's outlived my grandfather by 36 years and buried a daughter at Christmas.

Every week when I take her to run errands she laments about getting old and that she's the oldest person she knows. Kind of sad because until 85 she didn't think of herself as old.

She's been very money savvy and has saved her whole life. She received a small inheritance from her father which she invested in CDs in the 80s when she earned great interest that she reinvested. She has said that were it not for that, she'd have been in trouble a long time ago.

 

[crisi]

If someone is getting a great deal with ACA then someone else is paying more - it is a subsidy! So a middle class younger person will have a higher premium for their insurance, so someone else can have it cheaper. We are inching very close to socialism with this type of mentality.

On the other hand, a lot of people who go for early retirement made a lot of money in their lives and have paid a lot in taxes, the ACA is one way for them to get some of their investment in the system back.

Personally, I think that we'd be better off going for socialized medicine like other 1st world countries. Everyone deserves health care. But that gets into the political realm we don't talk about here.

 

[Planogirl]

On the other hand, a lot of people who go for early retirement made a lot of money in their lives and have paid a lot in taxes, the ACA is one way for them to get some of their investment in the system back.

Personally, I think that we'd be better off going for socialized medicine like other 1st world countries. Everyone deserves health care. But that gets into the political realm we don't talk about here.

I agree. I also think that no one has come up with a better solution either. Right now we're avoiding our government version because it's hard to say what it will look like in the future.

 

[tvguy]

Personally, I think that we'd be better off going for socialized medicine like other 1st world countries. Everyone deserves health care. But that gets into the political realm we don't talk about here.

I think the reality is every major medical system has distinct advantages and disadvantages that pretty much balance them out.
I know our systems flaws, cost being one of them.
DD is going to school in the U.K. and was looking forward to being covered by their system, but has learned some of that systems flaws. In her case, some of the prescriptions she needs (thyroid medicine specifically) isn't covered for that use there, but the Doctors concur with her doctor here that it is the best medicine for her thyroid, so they lie about why their are prescribing it so the government will pay for it.
And my family in Canada says their system has created a shortage of specialists, an issue that left my cousins daughter so severely disabled that a Canadian court ordered their system to pay for her transportation and medical care in the U.S.

I guess it just depends which shortcomings you can live with.

 

[Gumbo4x4]

On the other hand, a lot of people who go for early retirement made a lot of money in their lives and have paid a lot in taxes, the ACA is one way for them to get some of their investment in the system back.

Personally, I think that we'd be better off going for socialized medicine like other 1st world countries. Everyone deserves health care. But that gets into the political realm we don't talk about here.

The problem is our gov't already spends more per capita on healthcare than any other nation on Earth. And that's WITHOUT "socialized medicine". We have fundamental flaws in our system that add significant costs and until those costs are addressed, no form of medical care will be workable at an affordable cost. The big problem with ACA is it addressed none of these problems, it just change who and how the issues are paid.