Wednesday, September 29, 2021

A Major Financial Decision

Hubs has been retired since 30 June 2017, so that's 4+ years now.  When he retired his employer set up a RMSA for him(retiree medical savings account)and I.  Since his company phased out paying directly for retiree medical expenses(like they phased out pensions)they give each retiree a lump sum in a RMSA to pay for health insurance and Medicare supplement plans once they are 65 years old.

Since Hubs retired early we've been using this account to cover healthcare premiums as was the plan.  I realized after the first year(and the outrageous rise in premium costs that first re-up year)that the amount in this RMSA was not going to bridge us to Social Security.

I ran the numbers early in 2021 and figured(depending on how much the premiums rise for 2022)the RMSA would be emptied in April or May of 2022 at the latest.  So Hubs and I had a long discussion about how to handle this problem.  April 2022 would be a year until Hubs hit Medicare age in 2023 and I follow him 9 months later and hit 65.

The solution we came up with was for Hubs to take early SS.  He started drawing in August of this year at 63 and 4 months.  We will be putting his SS check in a separate interest earning(not much but it's something!lol)account and once the RMSA runs out we'll use $$ from that SS account to pay for healthcare premiums.  I don't know at this point about getting subsidies for premiums once the RMSA runs out(as long as we had that we didn't qualify for any subsidies)but I suspect our yearly income even in retirement is a smidgeon too high to qualify.

Once we both hit Medicare age we can earmark the SS earnings for other things or just use it for regular expenses as we also have an annuity to pay for living expenses as well as other savings.  The annuity is "front loaded" and will go down a bit once Hubs hits regular retirement age(66 and 10 months for him)but during the time we need the SS check to pay for commercial healthcare premiums the annuity will still be as high as it is now.

This will work out advantageously for us because we aren't relying on a SS check alone for living expenses.  We have a fairly hefty amount of personal savings, a 401K and that annuity mentioned before giving us a financial "4 legged stool".

Hubs early SS check is about $500 more a month than we are paying now for our healthcare premiums so we ran the numbers and we should both hit Medicare with a fair amount left in that SS check account to spare.



I know everyone's financial picture is different but taking SS early worked in our situation.

Sluggy



9 comments:

  1. I am 7 years young than my husband and have been paying for my healthcare for 3 years. I started Social security this year to pay my premiums which in turn raised our income so I pay more for my insurance. Two more years to go.

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  2. Sounds like you all made the right decision for you!
    Glad that you have the funds for the health insurance premiums, and I'm glad that filing for early SS will help.
    Health insurance premiums are what keeps us from planning an early retirement, and I just hope that we live long enough to enjoy retirement.

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  3. My husband died suddenly when I was 60. I qualified for SS as a widow. All the elderly people (aunts and mom) screamed for me to go out and get a job instead of taking SS. I finally hired someone to crunch the numbers. Long story short, I took the SS. I'm now 70 and still happy!

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  4. We'll both be taking SS at 62, as well. We have been running retirement numbers for years (I have 4.5 years to retire at 55 and another 7 to hit 62; he has 6.5 years to retire at 61 and 1 more year to hit 62) and that makes sense for us, too. This will supplement our pensions and deferred comp.

    Sassybear
    www.idleeyesandadormy.com

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  5. I hope this all works out for you guys. I am sure it will.

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  6. Sounds like a good plan and it is fantastic that you sat down and figured it all out. I think the trick to a successful retirement is paying attention and working through the decisions.

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  7. We took our SS at 62. Never counted on it or a pension for retirement. We used the pension to buy and remodel this home along with a car, old truck and down payment for Hubby's work truck. We have SS for both, and IRA's for both. Figure it to be a 4 legged stool but if one of us dies it becomes a 3 legged stool unless you want to count we both have life ins that we got in our 20s.

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  8. I will add our financial people talked to us about in home care costs instead of assisted living/ nursing home costs. We knew some since I had parents in that situation but still we aren't as financially set to cover those costs for BOTH of us

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  9. It's a dilemma. We crunch numbers multiple ways and get different answers! So far, it looks like things should still be set for us both to retire at 62, me 4 years after him. I follow recent retiree's like you closely to learn what I can.

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