2 Replies Latest reply on Feb 28, 2015 9:29 AM by jkom51

    to retire then and now

    BoBraxton

      My 1962-1963 first room mate at college became a professor and counselor.

      When retirement (the thought) was not even a gleam in my eye, he and his spouse (also a college classmate) encouraged us to retire.

      "We have done the calculations - retiring early gets you the same benefit over time (life expectancy) - so go for it.

      Retirement is great."

      Today, I learned, my first room mate died - age 71.

        • Re: to retire then and now
          PAULMAC

          Sorry about your friend.  We lose good friends all too often.

          I am not overly concerned with the rate of inflation.  You can retire many times with TIAA with a

          a minimum of $10K.  So, I did my budget, retired with a little more income that I needed, and now 10 years later just

          took out another contract with TIAA.  I always take joint with a 20 year guarantee period to protect both of us and our assets.  A little more paperwork but worth the effort.  Just my 2 cents worth.

          • Re: to retire then and now
            jkom51

            One of the biggest difficulties consumers; e.g., retirees, face is that there is a difference between morbidity and mortality. You needs to estimate your personal risks on both, but the simple truth is that unless a chosen profession teaches one how to do this, most people fail miserably at both.

             

            Mortality is what life insurance policies are estimating: what are the chances this person will die before the average? The factors are heredity and lifestyle. Actuarial data shows well-educated, financially stable people live longer. They have time/money to pay attention to their health, and it shows in the habits they decide to stop doing or start doing.

             

            Morbidity is what long-term care insurance policies are estimating: what are the chances this person will need care and for how long? Again, the factors are heredity and lifestyle, but the emphasis is different. You may not live as long on average, but need more critical care. Or you may live longer than average, with the risk changing that you may need very little care (being one of the fortunates who don't get some form of dementia and have superior physical well-being), or conversely you may end up needing care for a much longer time than the person whose health was below-Premium rating to begin with.

             

            Examples:

            My MIL has superior physical health but suffers from dementia. Her family genes are outstanding; even males live into their 90's in her family. We moved her to a senior facility because isolationism is the worst contributor to dementia-induced decline, something many "I want to die at home" folks forget about. She has blossomed back into her old self, and altho we can see the dementia decline continuing, it has slowed (as we hoped). She can handle the daily social/eating routine because it doesn't change drastically, and there are always residents and staff to help. So her mortality risk is low, but her eventual morbidity risk is high. The longer we can stave off the descent into the "severe" level of dementia, the better for her and her finances.

             

            My spouse's mortality and morbidity, OTOH, are both high risk level. His mother's family is healthy; his father's side is exactly the opposite. Every one of his father's generation, both male and female, died younger than average from heart failure. He himself suffered a stroke at age 50. The doctors did not need to tell me his life expectancy was halved; I knew that from my insurance days. The majority of stroke victims eventually die from heart failure, not another stroke. A new family GP finally treated his hypertension and cholesterol seriously, which is good.

             

            But I urged him to take early retirement at 57, instead of working until he was 65 as he had originally planned. We ran the numbers thoroughly and were as prepared as possible. I was already retired; not by choice, but because salaries had dropped so much it literally wasn't worth the expense to commute to a new job.

             

            I told him straight out that although medical science has improved and his BP/cholesterol medication would probably help extend his life, he needed to realize his chances of reaching average age of death (US males 78.7 yrs) was no more than 50-50. To do so would, in fact, be a full ten years longer than any other male has managed to reach on his father's side. With his stroke at age 50 - younger than anyone on either side of his immediate family history - the odds were that if he reached the age of 68 in decent physical/mental shape, every day past that was going to be a gift from the gods.

             

            He took my advice seriously, and did retire at age 57. We've had a great time these past five years. But he is also showing slight signs of early dementia, something that again, his stroke may have contributed to. This is why I don't need life insurance on him, but it was imperative to have long-term care insurance. We live a very comfortable lifestyle, but there isn't sufficient money to fund more than a few years of care for one of us -- let alone both of us.

             

            When in a relationship, you always have to consider what death or disability will do to the partner. You want to minimize as much as possible, any changes forced by circumstances to your loved ones.

             

            Would we have a bigger pension if he'd worked until age 65? Sure. But as is we are better off than most, which is why I'm an advocate for comprehensive professional financial planning. We made less $$$$ than almost anyone we know, but except for the lucky ones who became millionaires, were able to take retirement earlier and be more financially secure than our friends/family.

             

            Early retirement is great...but you need to cover the contingencies. If you guess right and plan well, you have a sense of security. If you guess wrong but planned well, your partner comes out ahead, which is good. Far better than guessing wrong and planning wrong, and leaving your family scrambling and stressed, trying to cover the bases you should have done to begin with.