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There Goes My retirement Plan!

WinniWoman

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http://www.moneytalksnews.com/why-t...campaign=email-2015-10-30-pm&utm_medium=email


Well,first my husband's pension is chopped up and now this. I have no pension, so we planned on the file and suspend strategy as part of our retirement plan.

My husband was going to retire at 66 (his FRA in 5 more years) and me at 65 (so I could get Medicare). He was going to file and suspend. We were going to live on savings for 2 years and then when I reached age 67 (my FRA) I was going to collect half of his and we were going to continue to live on savings. Then, we were going to file for our full benefits at age 70.

Well, no way are either of us working to age 70 and I am hoping we can even somehow hang in there until ages 66 and 67, though we are both burnt out right now and really slogging through.

Of course, who knows what the heck else they are going to do in 5 years when we are ready. Between a bad housing market here and this it is not going to be the retirement I was hoping for.:crash:
 
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Jason245

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These laws change all the time.. back in the good old days your could just put all your checks in the bank earn interest on them and then return the money when you turned 70 and refile at the higher rate. I recommend you talk to a fee based financial planner and try to figure out what the best options for you are.

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WinniWoman

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These laws change all the time.. back in the good old days your could just put all your checks in the bank earn interest on them and then return the money when you turned 70 and refile at the higher rate. I recommend you talk to a fee based financial planner and try to figure out what the best options for you are.

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Yeah- that was on my list anyway for next fall after my last big house update project is done. Need to find someone good. That and an estate atty.

You can't earn any interest on savings; you have to risk more money in the stock mutual funds and bond funds are just as risky.

I am starting to think my parents got it right. Just wing it because you have no real control over most things anyway.
 

Jason245

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Yeah- that was on my list anyway for next fall after my last big house update project is done. Need to find someone good. That and an estate atty.

You can't earn any interest on savings; you have to risk more money in the stock mutual funds and bond funds are just as risky.

I am starting to think my parents got it right. Just wing it because you have no real control over most things anyway.
Save as much as possible, get as big a nest egg as possible and expect nothing from others. In 2006 I was getting 5 percent on cds. .

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VacationForever

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You can't earn any interest on savings; you have to risk more money in the stock mutual funds and bond funds are just as risky.

I know you are against annuity but I have done a lot of research and deferred fixed income annuity gives the best guaranteed returns. There are many options, including ones that you actually don't lose the money if you die prematurely if you pick options that allow guaranteed 10 years stream etc. for your beneficiary. I don't like to be forced to use savings/investments in a downturn, and annuity will help smooth that out.

I have run the initial thoughts with my financial advisor and I was surprised that he actually was very receptive to my proposal.
 

WinniWoman

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Save as much as possible, get as big a nest egg as possible and expect nothing from others. In 2006 I was getting 5 percent on cds. .

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I have always been a big saver. I just worry about the market a lot.
 

WinniWoman

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These laws change all the time.. back in the good old days your could just put all your checks in the bank earn interest on them and then return the money when you turned 70 and refile at the higher rate. I recommend you talk to a fee based financial planner and try to figure out what the best options for you are.

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You can't still do that?
 

Jason245

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That died a while ago..

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Jason245

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I know you are against annuity but I have done a lot of research and deferred fixed income annuity gives the best guaranteed returns. There are many options, including ones that you actually don't lose the money if you die prematurely if you pick options that allow guaranteed 10 years stream etc. for your beneficiary. I don't like to be forced to use savings/investments in a downturn, and annuity will help smooth that out.

I have run the initial thoughts with my financial advisor and I was surprised that he actually was very receptive to my proposal.
It isn't sexy, but for most..even that principal protection is a bad idea since it comes at cost of lower checks..

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WinniWoman

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Now I am thinking the best thing might be for hubby to file and suspend at age 66 when he retires and we will live off savings and my salary;and when I am 65 and have Medicare (if that still exists!) I will retire and we will live off savings for 2 years. When I turn 67 I will take my SS and when my husband is 70 he will take his. And- if it is too hard, he will take his before he is 70 and the hell with it all!

Of course, life is what happens when we are making other plans and plenty more could happen to screw it up, like illness, layoffs, etc. I don't know that I can hack my job until age 67 with the commute and driving all day and in the snow- just the whole schedule is wearing on me. My husband is very tired from his commute and long days as well. And with our property and school taxes here, things could get ugly.:(
 
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Jason245

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What is the benefit of him filing and suspending now that the law changed?

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WinniWoman

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Maybe I should invest in more cases of wine! LOL!:rofl:
 

WinniWoman

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What is the benefit of him filing and suspending now that the law changed?

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Well, I guess not filing and suspending. Just waiting until age 70. I think you can also file and then change your mind and then suspend and wait until 70. Like if he decides to get a part-time job or whatever. (Ha Ha- not)

But- yeah- I meant just wait until 70.
 

Jason245

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Before waiting till 70 I would take a full inventory of your physical and financial situation. If one or both of you are sick or high risk.. it might make more sense to get what you can get when you can get it..

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Now I am thinking the best thing might be for hubby to file and suspend at age 66 when he retires and we will live off savings and my salary;and when I am 65 and have Medicare (if that still exists!) I will retire and we will live off savings for 2 years. When I turn 67 I will take my SS and when my husband is 70 he will take his. And- if it is too hard, he will take his before he is 70 and the hell with it all!

Of course, life is what happens when we are making other plans and plenty more could happen to screw it up, like illness, layoffs, etc. I don't know that I can hack my job until age 67 with the commute and driving all day and in the snow- just the whole schedule is wearing on me. My husband is very tired from his commute and long days as well. And with our property and school taxes here, things could get ugly.:(
Are you both from long lived families?

Filing and reinvestment is an option if you don't need the money and now it is your money not a potential future dollar of your money.

If you are still earning you can divert 18+5k of your earnings to 401k and spend the SS. Maybe even put another 5.5k into an IRA for H.

So while SS will push AGI up. The addition to 401k will pull it back down.

Further if you are well and can flip to a HDHP at work you can shelter $3-6k of income there to pay part D premiums later.
 

WinniWoman

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Before waiting till 70 I would take a full inventory of your physical and financial situation. If one or both of you are sick or high risk.. it might make more sense to get what you can get when you can get it..

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For sure. Who knows what's to be? Plans are for the best case scenario but have to turn on the fly as circumstances change. We'll have the house issue to deal with as well.

Gee- most people look forward to retirement. I wanted to be retired from the day I started working! I am getting a little worried now. But- I am going to try to think positive and we will see what the financial planner says when we finally get one.
 

Jason245

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For sure. Who knows what's to be? Plans are for the best case scenario but have to turn on the fly as circumstances change. We'll have the house issue to deal with as well.

Gee- most people look forward to retirement. I wanted to be retired from the day I started working! I am getting a little worried now. But- I am going to try to think positive and we will see what the financial planner says when we finally get one.
So did i.. which is why I have put away at least 10 percent a year of my gross pay into a combination of iras and 401k since I turned 18..compounding is a great thing on paper . .but watching it happen to my benefit has been amazing and full of shock and awe.



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Another partial solution is to begin to hone in on another skill that might work into a part time job if needed. Also, I think you live in a high tax area. You might want to look into relocating into a much lower tax area if you could be satisfied with moving. Begin to investigate while you still have lots of time.

Fern

For sure. Who knows what's to be? Plans are for the best case scenario but have to turn on the fly as circumstances change. We'll have the house issue to deal with as well.

Gee- most people look forward to retirement. I wanted to be retired from the day I started working! I am getting a little worried now. But- I am going to try to think positive and we will see what the financial planner says when we finally get one.
 

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Will your children be in a position to help you out?

Is it worth continuing to update a house when real estate is down?

You may be best to move away from the snow and find jobs you like without the commute. Even if losing on your house.

I am a long way from retiring. Most likely will never stop working but what is a good estimate on how much to overshoot what I think I will need to retire in 25 years and hopefully live 30 more years.
 

Conan

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The loss of the file-and-suspend mechanism is big news - - I wish this thread had a more informative title to bring it to people's attention.

Even before this change, two-earner couples received very little in return for the social security taxes that the lower-earning working spouse paid.

In the traditional couple model, one goes to work and the other stays home. They pay one set of social security taxes and collect 150% in benefits.

In the two-earner couple, if the second earner is in a lower pay bracket, or does not work for all of the maximum 30 years, they pay two sets of social security taxes and their benefit may be no better for it.

At least file-and-suspend gave the second earner a shot at getting something for that second set of taxes paid (because by waiting to age 70 the benefit on her own record might bring her something more than the 50% benefit that every spouse gets). Now even that will be gone!
 

pedro47

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These laws change all the time.. back in the good old days your could just put all your checks in the bank earn interest on them and then return the money when you turned 70 and refile at the higher rate. I recommend you talk to a fee based financial planner and try to figure out what the best options for you are.

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Yes! Back in the day banks were paying 4% interest on a pass book saving account and money markets accounts were praying on an average 6 to 8 interest all more on your money.
 

am1

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Maybe time to do away with spousal benefits and everyone gets paid based on what they pay in? Not everyone has the need for one to stay home. Maybe spousal benefits for those who have raised children only. No having dogs would not count as having children.

The loss of the file-and-suspend mechanism is big news - - I wish this thread had a more informative title to bring it to people's attention.

Even before this change, two-earner couples received very little in return for the social security taxes that the lower-earning working spouse paid.

In the traditional couple model, one goes to work and the other stays home. They pay one set of social security taxes and collect 150% in benefits.

In the two-earner couple, if the second earner is in a lower pay bracket, or does not work for all of the maximum 30 years, they pay two sets of social security taxes and their benefit may be no better for it.

At least file-and-suspend gave the second earner a shot at getting something for that second set of taxes paid (because by waiting to age 70 the benefit on her own record might bring her something more than the 50% benefit that every spouse gets). Now even that will be gone!
 

SmithOp

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At least file-and-suspend gave the second earner a shot at getting something for that second set of taxes paid (because by waiting to age 70 the benefit on her own record might bring her something more than the 50% benefit that every spouse gets). Now even that will be gone!


Under these new rules it may make more sense for the lower earner to claim at 62 and then switch to the spousal benefit later, they both collect when spouse reaches 70. There is also a family cap to consider.



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WinniWoman

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Will your children be in a position to help you out?

Is it worth continuing to update a house when real estate is down?

You may be best to move away from the snow and find jobs you like without the commute. Even if losing on your house.

I am a long way from retiring. Most likely will never stop working but what is a good estimate on how much to overshoot what I think I will need to retire in 25 years and hopefully live 30 more years.

Yes. Worth it as we are using it NOW. People said what you said to me 4 years ago when I started the house updating. Well, my first rooms- the master bath and our bedroom- are now already 4 years old and guess what? We have been using those rooms! Other 2 bathrooms 3 years old. Central hall and bonus room just completed this past spring. My kitchen- now already two years old and I love it! We have two rooms left (living room and study) and I am finishing up this spring hopefully. Just got rid of our 35 year old couch. I feel that if we have to work for another 5 or 6 years I am going to enjoy our home that we worked so hard for. When we come home from a hard day's work we want to be comfortable and happy with our house NOW. It really needed upgrading. We, of course, have to pay the labor- painting refinishing floors- for our living room- will buy furniture. All big $$$.

We can't move right now because of our jobs. Once we retire we have to give ourselves some breathing room to plan our move to another area. It will take a while to sell our home. (FOR SALE: Saltbox. Sunny. Big 2 car garage. It is only 2 bedrooms and no basement. Master bath has a steam shower. It does have a bonus room with big skylights, and a study (with direct access to garage) and 3 bathrooms. Whole house generator (propane) and central air. Large dog pen attached to garage with doggy door. Small screened porch with outside stamped concrete patio off that and long ground level deck with 2 sets of Marvin glass terrace doors from kitchen and dining room. Ground floor washer and dryer off the kitchen. Not an open plan house and simple- no fancy moldings or architecture or anything. Huge walk up attic. Vinyl siding. 8 year old roof. 8 year old System 2000 oil boiler. Outside above ground tall oil tank.10.5 wooded acres. Paved (twice)700 ft driveway which includes a bridge over a stream. House set way back- totally secluded. Good school district. Very well-maintained and clean by an OCD owner! Some local issues going on as well) The other thing is that despite the market here, new houses have sprung up around us that we will have to compete with. (Not that they are selling). In fact, a builder just bought the 2 lot property next to ours. So having an already somewhat updated house will help a little, although by the time we sell it everything we have just done will already be mostly 10 years old!!

Crazy! Lived here 28 years as of yesterday. We know we will lose on our home. When all is said and done, I think we will have put at least $200,000 into this $200,000 home over the 28 years. Market value - 4 years ago according to 3 realtors- when only the master bathroom was done- was $247,000 and they told us even with redoing the kitchen it wouldn't help too much because of the market/area. Trust me when I say this is a really nice house- such a shame. Not Better Homes and Gardens, but really nice. In other markets- like near NYC or in California or someplace like that this house and property would easily be a million dollars or more.

No way can we change jobs. When we leave these that will be it. Don't have it in us to look for jobs anymore. In rural areas like this- you have to commute no matter what. Part time jobs aren't worth the gas and wear and tear on our cars and bodies. (Heck- the full time ones are barely worth it! Lol!)

We only have one kid and he lives in NH (who is not financially stable) and we have no other family nearby. My brother (who lives about 1.5 hours from here) will probably end up in Florida) No close friends nearby either. So- the plan is to most likely move to NH, although who knows what we will be able to afford there? I told hubby no way am I going into a mobile home park!! We shall see!
 
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