A Reader Asks Some Financial Questions Regarding Retirement

My Financial Meeting Post, which is located HERE brought this comment from "Jenn in Indiana" that I'd like to discuss as it might explain our current position a bit better and it might help others struggling in some way with retirement planning.

Jenn said......
"I feel so behind for retirement.  How did you and your husband know where to even start when saving/investing? I would like to go to a planner but my husband has no trust in them. Maybe you could write some blog posts on how you made retirement so successful? And how do you pay for such expensive insurance since you don't yet get Medicare? You seem very knowledgeable and would love some advice?
J"

Let me put out there that I am no way a financial expert nor do I pretend to be one.  My Hubs did spend 33+ years in the insurance business(not sales though)and the last 20+ of those in retirement services specifically.

And again, everyone's financial journey is different so take any advice with a grain of salt and mine is worth about what you paid for it(which is nothing). ;-)
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Let's take this part by part......

"How did you and your husband know where to even start when saving/investing?"

It took years to get traction financially.  When we first married it was "keep your head above water time".  We were young, a year out of school(Hubs was still in a graduate program)with no 'real' jobs yet.  Getting Hubs established in his career took awhile and we relocated twice(2 different states)before he was offered a living wage.  We lived with family in 2 different states then rented half of a 2 family house from a family member before things got to a point financially when we could breathe.

As soon as Hubs began his corporate job in 1984(where he would work various jobs his entire career of 33 years there)we took advantage of ALL the employee programs to save--we bought US Savings Bonds, we contributed to the company 401K and received a 3% match(free money! always take that at the very least!!), and he got credits into a company pension plan once he was vested.  We always had everything taken out before we got his paycheck so we didn't see that money and never expected to spend it, living off what was left.
And when Hubs got raises and bonuses we never inflated our lifestyle to use up all that "extra" income.  We sat down and planned out if/when we wanted/needed to spend any of those windfalls but mostly we put them toward a goal(buying a house, college, etc.)or threw them into savings and didn't plan on touching them.
The only time you EVER touch retirement monies is in a severe financial emergency(if even then).  99% of emergencies don't meet this criteria IMHO and the penalties just make it an even worse idea.  We did withdraw a small portion from our 401K early on to buy our first house(one of the few exceptions they allow a withdrawal before 59.5 years old) but repaid it within a few years so it didn't set us back much.  If we had to do it all over again, we might not have taken that option.

The take away here is to ALWAYS put money into something your employer offers-401K, HSA, MSA, Savings Bonds, IRAs, etc. And read up on what each thing your employer offers is before paying into any of them!
And don't look at windfalls as "time to have a good time" money.  Put it to work for you for retirement.  The earlier you start socking money away for your old age the better but it's never too late to start!

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"I would like to go to a planner but my husband has no trust in them."

There are two kinds of financial planners--
The first kind are the ones who want to sell you their financial instruments.  They make a commission off of you so unless you want to be pressured into buying financial products or truly go to them planning/wanting to buy what they offer, and you aren't financially savvy, don't use one of these.
The other kind of planner is a Fee-Only Financial Planner.  This is someone you will pay by the hour or session to go over your finances and offer their best advise on what actions you need to take to grow your money.  They are a true fiduciary--someone is is ethically bound to look out for your best interests.  True that a financial planner who is working on commission to SELL you stuff is capable and suppose to be a fiduciary but seriously, given the choice of a planner who you pay for their advise vs. a planner who is also trying to sell you a financial product he has a vested interest in.....who do you think is more likely to have your best interests at heart?(Not to say that some sales planners aren't fiduciary but why take that chance if you aren't schooled in finances?).  Pay a planner to for his/her advise.  They won't pressure you into buying an investment since they make no money off selling such.
I've got a funny story(well not funny ha-ha)about meeting with a "financial planner" from our then current bank, a "free" meeting since we were that bank's customers.  His advise to us was to stop trying to pay off our mortgage early and to throw that extra cash into some financial investment his bank/he made a commission off of.  Well of course he wanted all that extra interest we paid them on our mortgage loan to continue to flow in plus the added bonus of a commission to get us to invest in one of their financial investment products.  He actually tried to tell me that paying off your house early was a bad "investment".   Yeah, a bad investment for HIM! lolz

I'd go HERE and find a Fee-Only Financial Planner in your area or use a similar site for licensed, reputable advisers.  Make sure you know up front what the planner charges and for goodness sake find out what documents you need to take and have it all organized.  This will mean your appointment will go smoothly and your hourly rate will be less if you aren't having to rifle through files and having to make subsequent appointments.  And it's learned advise but you are free to adhere to it or disregard it but if you aren't financially literate it's a GOOD thing to go get!  That few hundred $$s you spend on a planner may well be worth it's weight in gold.

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"Maybe you could write some blog posts on how you made retirement so successful? "

I plan on going in depth in a post on how our journey-from college to retirement-has played out in the near future.  It might help explain how we got to this financial point.
It would be too long for this post but look for it in the coming months(I've already begun work on it.). ;-)

********************** "And how do you pay for such expensive insurance since you don't yet get Medicare?

Ok, Hubs company(Prudential)offered a medical retiree plan for many years.  It was free and one of the perks of being a vested, "I don't know how many years exactly", employee retiree.  But about 10 years or so ago Pru changed things up.  They did away with the free retiree medical until Medicare plan.  Everyone who retires gets credits into a RMSA account(RMSA=Retiree Medical Savings Account)depending on years of service at retirement and your pay level/etc.).  Hubs was due to get approx. $60K in RMAS as of 2017.  But once we began the process we learned that since he was married Pru added another 50% of credits into the account for the spouse so our RMSA account at his retirement date was $90K+.   This was a surprise and make the decision to retire when he did highly doable and I  wouldn't be kept up at nights worrying about that cost. This money is not an HSA and can only be used to pay for health insurance premiums.

Prudential's thought was this RMSA would be enough to bridge any early retiree until age 65 to pay for private health insurance.  Unfortunately with the escalating cost of premiums it won't be enough to get us both to age 65 without having to use a bit of our savings.
Once it runs out(about 9 months before Hubs hits Medicare)we'll be eligible for the ACA exchanges(if those are still around then or whatever takes their place).  But for now the RMSA means we make too much money as it counts as income for ACA purposes.
So medical care is still a big unknown once the RMSA runs out but we've got lots of cash saved and we'll come up with a plan once we come to that bridge.

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The only other advise I'd offer up here is to go find this book at your local library.......
"The 5 Years Before You Retire: Retirement Planning When You Need It the Most" by Emily Guy Birken.

I've found it so useful that I've given a couple copies of this book away on the blog as I find them cheaply.

Some specific figures may be out of date as my copy was written in 2014 and I don't know if there is an updated edition of that book.
It's a handy little book and will help you see what you need to do/where you need to adjust/where you are doing well heading into retirement.  I'd say it would be better to get a hold of it 10 years before you plan to retire rather than 5 but that's just MHO. ;-)

If anyone wants to add any advise for Jenn, or ask a question, feel free to leave a comment.  

Sluggy