Good Article: The Retirement Lies We Tell Ourselves.

[fkj2]

I can't remember how long I've had my LTC insurance--close to a decade or a bit longer. My premium was locked at $99/month for six years; it's now gone up to $149 a month.

The notice that announced the last increase, which was approved by the state, came with the offer to buy out the policy at a flat rate or the option of decreasing the benefits I chose in order to decrease the premium (ie, eliminate the inflation adjustment). My particular policy provided payments to caregivers even in my home, so I could avoid being placed in a facility.

I wonder if the day will come when insurers may quit offering LTC insurance because THEY won't be able to pay off their policies as the population ages, much like property/casualty insurers who now are avoiding underwriting properties along coastlines.

 

[MrsPete]

So you're saying if I got a policy now my premium would NEVER go up in all the years that I have it? I mean how is that possible? Everything goes up, always, life insurance, car insurance, medical insurance...how can long term care insurance not go up? I mean if that's the case then yeah you're right I should get it now to lock into a premium. Please tell me more because this is not how I understood it to work.

But it all balances out: One person starts paying for long term care insurance at age 30 and enjoys a lower rate . . . but he's paying a decade longer than the person who buys the same insurance at 40 (at a higher rate).

I turned 40 last year, and I started looking at long-term care and supplementary insurance. Based upon my own health and my family's health history, I chose to wait. I'll look again very seriously -- and will probably buy -- just before I turn 50. Will I be sorry I didn't buy at a younger age? Maybe, but all insurance purchases are an educated guess.

 

[MrsPete]

I wonder if the day will come when insurers may quit offering LTC insurance because THEY won't be able to pay off their policies as the population ages, much like property/casualty insurers who now are avoiding underwriting properties along coastlines.

I don't think so, but I wouldn't be surprised at higher premiums and lower pay-outs.

 

[dvcgirl]

Interesting article! I, too, like to read things like this to make sure I"m on track financially. I can honestly say that I don't tell myself these particular lies.

"I'm going to work in retirement."
I expect to retire from my "real job" at 57, and I'm not opposed to working for a while, BUT I have three conditions: 1) I want it to be a CHOICE, not a necessity, 2) I want it to be part-time and flexible, and 3) I want it to be something creative, fun, and entirely different from my current job. In other words, it has to be fun. And if it could give me some type of nice benefit (i.e., discounts, free Disney tickets, whatever), that'd be nice.

I do find one fault with the article's statement that only 27% of all retirees work right now: Today's retirees are better prepared than my generation (just-turned 40s) will likely be. They have paid-for houses and pensions -- people my age probably won't enjoy those niceties; thus, I think people my age will be more likely to work rather than cut back.

"My home is my safety net."
I'm planning to downsize from my large, paid-for house to a luxury townhouse once my kids are out of the house (that'll be a few years before retirement). DH and I don't enjoy yardwork, and if all the kids (and their kids) come home at the same time, it'll be less expensive to pay for them to have a nice hotel room than it'd be to maintain that living space year-round.

We expect that our house'll be a fairly even exchange for a smaller place. If we have to pay a little more, we're prepared, but I'm hoping it won't be LOTS of money. So I don't expect my house to "save me", but I do expect it to continue to house me, even after I sell it.

"I can live on 70% or 80% of my pre-retirement income."
If I'm lying to myself about anything, this is it. Right now, between college savings and retirement savings, I put aside a good portion of my salary. Once my kids are out of the house, I expect my expenses to go down. I have no doubt that I CAN live on 70-80% of my salary, but I want it to be a CHOICE, not a necessity. I expect to continue to live frugally day-to-day -- that's how I've always lived, and it's no sacrafice to me -- but I want to be able to splurge on several nice trips each year.

"I'm comfortable with debt."
Those words have never passed my lips!

"I'm going to get an inheritance."
Yeah, right.

"I'm going to get a pension -- and it's safe."
As a state employee, I have a pretty safe pension, which I expect will provide a major portion of my retirement income; however, if it were to go sour, while it would hurt, I wouldn't be destitute: DH and I would both have our 401Ks, a paid-for-house, and Social security. If my pension disappeared, we'd have to scale down our plans, but we wouldn't be forced to keep working against our wills.

"I won't need long-term care."
This is something I'm a bit worried about. Health-care in general is the wildcard in the retirement plans.

I agree with everything you've said Mrs. Pete. I'm not sure how we'll feel about totally quitting any type of work. Like you though, we're planning for that scenario. We may decide that we'd like to do something totally different, or that we'd like to work on something together, but it will be our choice and not because we need the money.

Like you, I know we can live on 80% of our income, in fact, that's the percentage that we use. This year we've set our budget to live on 58% of our gross income and we carry our own health insurance. And so, effectively we'll see a nice raise in retirement. Social Security isn't factored into our "number" at all and so if we get that....it will be icing on the cake.