I’m thinking of retiring and would appreciate a little advice. My father is becoming very
ill and I would like to spend more time helping my mother.
I’m about 2 years short of qualifying for Medicare and I would be applying for social
security early. I would be interested in hearing about any steps I should take or any other useful information.
Thanks for any info you can give me.
What is your insurance and general health condition? Much advice would be based upon those two factors. Do you have any retirement plan other than SS that you will be receiving income from? Would your parents be providing you support?
I have insurance through my job right now. If I left my job I would have to pay out of pocket. Health is
OK but not perfect - pre-diabetic, slightly high blood pressure and some joint pain.
Will not be getting a pension but have about 400K in retirement savings.
Figure out how much you spend each month now. Then look at your income after you retire. Do the figures match? Income must be greater than outlay. You can get health insurance on the market. The cost depends on what coverage you want. I have excellent health insurance from my employer (a large hospital network) and to get equivalent coverage on market would cost over $800 per month OOP. I decided to work until I turn 65. I retire in 18 days. I have a pension of $900/month, Social Security will be around $2K each month, and I have IRAs valued at about $750K. Do your math.
Assuming that by *qualifying for Medicare" you are talking about age, that puts you at 63 years old. Not to be blunt about it, but what were your retirement plans up to now? Because it’s hard to tell if you had any or not. If not, that’s ok, but don’t do anything without thinking it through. I get that there may be an urgency due to your dad’s health, but consider all options before retiring.
Look at not just how much you spend now, but also at how much you expect to spend after you retire - it might be very different than what you spend now. Are you going to move in with your parents, reducing your living expenses? How much will health insurance cost you between now and Medicare eligibility? It might be a lot - or your income may be low enough that it is free or subsidized. How much were you saving for retirement each month ? - that’s income you won’t need to replace.
Are you positive? I’ve talked to a number of people that were surprised to find out they could extend their employer’s insurance plan. Usually for about half the cost of a “new” plan.
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Yeah, I’m making half of what I made before I retired, but I’m amazed at how easy it was to cut costs. A lot of my travel and going out and pricey lunches and upscale dinners were a way of coping with stress at work. Now I’m happy a-settin’ on the porch with a book, and lunch is a PB&J and an apple… and a homemade Old Fashioned.
Indeed – under the COBRA law, you can indeed opt to continue under your employer’s group coverage, once you leave that job, though you are responsible for paying 100% of the premium cost every month. But, under most circumstances, you can only take advantage of that for 18 months.
Individual coverage (a.k.a. Obamacare) can indeed be pricey, but depending on your income level, you may qualify for a tax subsidy which can defray some of the cost. Also, note that losing your employer-based coverage opens up a “Special Enrollment Period” for buying an Obamacare policy, but that period is only a couple of months long — if the OP doesn’t buy such a policy during that time window, they will not be able to buy one until the annual Open Enrollment Period starts up, in November.
The OP will definitely want to compare prices for their different options – I wound up using COBRA for a year, after getting laid off from one job, and then freelancing for a while. An Obamacare policy for my wife and me ended up, premium-wise, to be fairly comparable to the COBRA payment. Whether COBRA will wind up being a better deal than an Obamacare policy will depend on how good the coverage from the (former) employer is, and what level of policy the OP is willing to buy.
In addition to the financial advice here, I would recommend considering carefully the prospect of becoming a full-time caregiver. A friend of mine has his elderly and frail and early-stage dementia mother living with him and it is a thankless, greuling slog. If you do this by trading your job for this role, have an exit plan and know when to pull the parachute. You likely will not be “retiring”.
At age age 63, expect to pay $700 to $800 per month for typical COBRA policies, not Cadillac plans.