I retired at age 55 thinking my 20 year pension would be enough to cover my pre-Medicare healthcare premiums and other expenses until I reached age 65. I was wrong.
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Retiring early has been great, but the expenses due to inflation have increased dramatically. So, thinking about retiring early? Think again.
Like every fall during open enrollment, I recently analyzed my healthcare plan and was shocked to learn my monthly premium was going up again. Inflation is really taking a bite out of my pension, but there is a silver lining.
The following chart shows the erosion that pre-Medicare healthcare premiums have had on my pension over the years.
As the former spouse of an IBM employee for 21 years, my family experienced six corporate moves. The joke among us was that IBM didn’t stand for International Business Machines, but instead it stood for I’ve Been Moved. I recently moved again. This time I chose to move to be closer to my grandchildren, reduce expenses and to leave a toxic neighborhood.
I have three grandbabies, ages almost 9, 7 and 5. They are growing up so fast. Before Covid-19, they were active in soccer, basketball, dance, piano, volleyball, and t-ball. I drove 30 minutes one way to watch them perform for about 45 minutes and loved every minute of it. Now, I’m just five minutes away when sports start again. Being close to family helps me out too if I need help. No need to consider travel time when planning our outings.
By moving from one county to another and buying a smaller home, my property taxes have decreased. Next year, instead of paying $2,422 in Larimer County, I’ll be paying $1,770 in Weld County, saving me $652. However, I believe Weld County is behind in updating property values so taxes will surely rise in the future. In addition, I moved to a property without an Homeowners Association (HOA) so I will save $544 a year in dues. While these amounts are not large, every little bit helps when health care and other expenses keep rising while my salary as a substitute teacher stays the same.
Some of you may remember I lived in an older (age of homes and residents) and a somewhat toxic neighborhood with a self-managed HOA. I referred to it as a Harassing, Overbearing Authority. The neighbors, with a few exceptions, were busy bodies. They made comments either to my face, through email, or by leaving a note on my door about everything. From what plants are you planting to how often do I walk my dog. One woman even asked me how I was able to afford my home on my own. They were always in my business and the HOA, in my opinion, was mismanaged.
This past January I had had enough when HOA dues were raised again to cover management errors. I tolerated this unpleasant situation for over seven years. I even joined the board as president for 2-1/2 years to try to make a difference.
Even though I spent a lot of time and money on my house to make it a home, I put it on the market and moved in September. After living in Loveland, CO for 24 years, I now live in peace and enjoy the community where I worked as a teacher for 14 years.
So yes, I’ve been moved many times but this time I chose to move. It wasn’t easy, in fact it was overwhelming and very stressful at times, probably why most retirees stay in their homes. I am happy and relieved to have left a toxic situation and begin a new chapter with my family nearby.
If you’ve made a similar move recently, please share your experience in the comment section below.
I just received my new statement of earnings, taxes, and deductions for 2020. While I have received zero increases in my educator’s pension since I retired in 2015, my pre-medicare insurance premium keeps going up. From 6% of my pension in 2015 to over 18% in 2020. Happy new year!
In the May 2019 Fidelity Viewpoint we read, “According to Fidelity’s Decision to Retire research, conducted with the Stanford Center on Longevity,1 people retire an average of 4 years sooner than they had planned. For many who do have gap years between when they actually retired and when they had planned to retire, it can be a mad scramble to find affordable, quality health care coverage until they are eligible for Medicare at age 65.” I hadn’t planned to retire at age 55, but circumstances made it difficult for me to continue being a full time educator. I also felt I could scrape by working part time given my income and expenses at the time.
I receive $2,055.87 a month from the Colorado Public Employees’ Retirement Association and I receive a health care subsidy as part of my retirement benefits. Since retiring, these are my out-of-pocket monthly premiums for identical coverage for one person with a $6,000 deductible:
$131.00 beginning August, 2015
$131.00 in 2016
$170.00 in 2017
$210.00 in 2018
$334.00 in 2019
$384.00 in 2020 ($4,608/year)
Since I am only 60, I have five more years before I can receive Medicare. I already work part time as a substitute teacher but I may have to get another job to keep up with the increase in health care. For instance a recent visit to the dermatologist for minor skin cancer treatment cost me over $800 and they want me to come back in January. I have already decided to cancel this appointment.
What options do we have if we aren’t 65? We could save our premiums and put them in a self-pay fund or maybe look into Medi-Share or Liberty Healthshare. “Medi-Share is a healthcare sharing ministry where members share each other’s medical bills and pray for each other’s medical challenges.” Liberty is similar. The Fidelity Viewpoint article cited above offers other possibilities.
The silver lining is my pension is eligible for a 1.25% cost of living increase in July. Let me see, that comes to an increase of $25.70/month. Wow! I guess it’s better than nothing.
What is your health care situation like? I would love to hear from you about what you are doing to offset this cost. Please leave me a comment and do have a Happy New Year!
How to Make Money in Retirement: A Guide to Turning a Hobby Into a Side Business
By Business.com Editorial Staff
September 24, 2018
“The number of senior Americans who call themselves boss is growing steadily. In 2015, the U.S. Bureau of Labor Statistics found the self-employment rate among workers aged 65 years and older was higher (15.5 percent) than any other age group. Retired seniors are still working, and many are working for themselves.
Seniors certainly have the same drive and entrepreneurial skills as any other age group. Many who want to learn how to make money in retirement turn to their hobbies as jumping off spots for launching a small business. If you match the right hobby with the right business plan, you can make it work. Here are some ways to make money in retirement by turning your hobby into a successful business.
What is a side business for seniors?
Older retirees often confront obstacles they may not have encountered as younger entrepreneurs, whether it’s a tighter monthly budget or age-related physical limitations. But they have an advantage when it comes to their hobby – they’ve already invested in equipment and training.
Making your hobby the seed for your business has other advantages too:”
For the past 20 years, I have had about 40 skin cancers or precancerous lesions removed by either surgery or by liquid nitrogen. Now that I am retired and my insurance coverage has drastically changed due to the Patient Protection and Affordable Care Act, I may have to limit my skin cancer treatments. Maybe it should be referred to as the Unaffordable Care Act as it was called in a July 5, 2015 Forbes article. In this article author Richard Eisenberg stated, “…people are finding themselves facing enormous out-of-pocket health expenses — sometimes leading them to deplete their savings and rack up serious medical debt.”
I had an in-network office visit in December. The dermatologist biopsied four lesions and treated four precancerous lesions with liquid nitrogen. I just received the doctor and lab bills. The copay to the doctor was $80 on the day of the visit. I now owe him an additional $314.02 for his services. The lab charged $544.12 for pathology of the biopsies. That one visit cost $938.14. The really sad part of this story is that I have health insurance and I am scheduled to return to the doctor in February for complete removal of three of the basal cell cancerous lesions and I have several more on my legs which we have not even biopsied yet. How can I afford this medical care without taking money out of my emergency savings account? Isn’t that why we pay for insurance?
I currently pay $210 a month or $2,520 annually for health insurance and my individual in-network deductible is $6,000. My pension check is only $2,055.87 per month. My health insurance coverage (if you can call it that) takes 10.2 percent from my check. I can afford that as long as I don’t go to the doctor.
My mom, age 84, doesn’t go to the doctor to get needed care due to high costs. My late father gave up cancer treatments due to costs and quality of life issues; he chose to die instead at age 80. Am I and others headed toward that same predicament?
I do not want to spend my savings and retirement account on medical bills. That is not why I put money in my 401(k) for 25 years. I invested at least 10 percent of my income so I could travel and enjoy my retirement. With my history of basal cell skin cancer, I can see those life-long dreams disappearing in favor of paying high medical expenses and insurance payments.
Is this situation what the federal government wanted when they passed the socialized medical legislation, Affordable Care Act, and Barack Obama signed it into law in 2010? America used to have the best medical care in the world at a reasonable cost and many people traveled here for treatment. Now, many American citizens, especially retirees, cannot afford much-needed healthcare. Maybe it should be called the Unaffordable Care Act or the No Care Act.
Three sets of flatware (we called it silverware when I was growing up). Each was service for eight in a wooden box. My daughter inherited these beautiful sets from her paternal grandmother and great-grandmother, but she doesn’t know what to do with them. One set is silver the other two are sterling silver; one of those is a like new set. She asked me what she should do with all of these heirlooms. Should she keep them in the trunk she also inherited to pass on to her children or sell them?
The following article from Tom Verde might provide some answers to those of us wanting to pass on family heirlooms to our children…
Aging Parents With Lots of Stuff, and Children Who Don’t Want It
August 18, 2017, The New York Times
“Mothers and daughters talk about all kinds of things. But there is one conversation Susan Beauregard, 49, of Hampton, Conn., is reluctant to have with her 89-year-old mother, Anita Shear: What to do — eventually — with Mrs. Shear’s beloved set of Lenox china?
Ms. Beauregard said she never uses her own fine china, which she received as a wedding gift long ago. ‘I feel obligated to take my mom’s Lenox, but it’s just going to sit in the cupboard next to my stuff,’ she said.
The only heirlooms she wants from her mother, who lives about an hour away, in the home where Ms. Beauregard was raised, are a few pictures and her mother’s wedding band and engagement ring, which she plans to pass along to her son.
So, in a quandary familiar to many adults who must soon dispose of the beloved stuff their parents would love them to inherit, Ms. Beauregard has to break it to her mother that she does not intend to keep the Hitchcock dining room set or the buffet full of matching Lenox dinnerware, saucers and gravy boats.”
“Where are you going to find income once you retire? Even if you’ve got a trunk load of cash saved, you can’t just live off the principal. Because with interest rates stuck in low gear, just to keep up with inflation your money’s going to have to earn income.
And then there’s all those unexpected health care expenses, along with your grandchildren’s college educations.
What should you do?
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Here are seven places to find income once you stop working, with a tip added to each to help nudge your thinking toward the future.
