Five Years Retired: Lessons Learned

[eyenitnoy]

I see a lot of posts on Boglehead where the poster has a narrow view on medical expenses and only talks about insurance ( and maybe OOP insurable costs) but completely misses potential risk of uninsurable costs. There are some blockbuster drugs that are not covered by Part D that can set one back some significant coin.

I've never posted on Boglehead and never heard of it before although I did look it up just now. Having said that, I am a believer in Vanguard index fund low-fee investing.

 

[eyenitnoy]

This is a fantastic post. Thank you for taking the time to share with us, OP.

Thank you and everyone else for the positive responses.

Not sure what to make of this new forum look. I am glad I posted before the change. I guess the swarms of ads will keep the site in business.

 

[Koogie]

As someone else who has been on this forum far to long and doesn't post overly much, thanks for this post. It is exactly for information and real world experience like this that I joined in the first place and have been here nearly two decades.

I'll be pulling the plug in the next year or two but am well aware that the plug could be pulled on me as well at any point during that time. I feel that is the most important piece of advice from your posting.

Cheers.

p.s. I don't get any ads whatsoever on the new forum format... perhaps it is something on your end ?

 

[Dtail]

I don't get ads either. Perhaps there is a difference if one is logged in or not.

 

[happy2bretired]

Thought I’d better say something to see how the response worked. I’m enjoying the new software and do not see many ads. I just increase my viewing screen a little and the right hand column hides from my view. Work very nicely from my IPad.

 

[W2R]

No ads here, either. Maybe they'll show up soon, though I hope they don't. Or maybe being logged in is helping me, as Dtail suggested above.

 

[JohnRM]

My 2 cents, watch out for inflation.

 

[LateToFIRE]

Excellent points from OP and commenters. I'm very recently FIRE'd, dust has not settled yet. Not quite the timing I anticipated, but just as well. So very true that life, health and family have a way of disrupting plans.

BTW, I'm envious of all the posters who don't need to draw on their nesteggs - it's taking some getting used to for me to see my bank account draining faster than a whirlpool. At least though, on average the earnings from investments should more than cover our ongoing expenses - and once we finish downsizing and pension/social security kick in next couple years, things will feel a lot more comfortable, just have to manage the SORR for awhile.

 

[TappyGee]

I too retired earlier than planned due to health reasons. I was aiming for 62 and barely made it to 56. Fortunately for me I was federal and had my 30 years in. I am not as flush with funds as I planned but I have enough and am fine. I’m happy I started saving early. I love retirement. Best wishes to everyone!

 

[GaryInCO]

I see a lot of posts on Boglehead where the poster has a narrow view on medical expenses and only talks about insurance ( and maybe OOP insurable costs) but completely misses potential risk of uninsurable costs. There are some blockbuster drugs that are not covered by Part D that can set one back some significant coin.

This. I got 2 cancer diagnoses in 2019. One was easily treated with radiation. The other was put into remission with some of those blockbuster (budget buster) drugs. And unfortunately I have to keep taking them, basically forever.

They're covered by Medicare, but ... My two treatment drugs cost $1000 per DAY. It takes somewhere around $6-8k out of pocket to get up to the 95% coverage level, and then 5% of $1000/day means I still would pay $1500 per month. So all told it works out to about $25k per year, out of pocket, AFTER insurance. Ouch.

Fortunately my oncologist pulled some strings and got me my drugs for FREE. But if he hadn't (or if they decide I don't qualify, and they're examining that now), that would have put a dent in my retirement budget. I just hope I don't end up needing other solid-gold drugs ...

 

[Bullwinkle]

Points 1, 2, and 3 seem to come to, "everyone has a plan until suddenly punched in the face by health issues." Which is definitely true and I think it's rightfully the biggest unknown unknown that people have about both future expenses and future time in which to enjoy them. So there's a conflict between the advice about "retire earlier because maybe you don't need so much or maybe health will take a hit earlier than you think" vs "save more because you may get more expensive health problems than you think" which I guess is why it's a discussion, not a conclusion.

Point 4 I entirely agree with, I see myself simply withdrawing what I need, rather than a percentage of what I have. I'm going to hope that what I need is below what I have, based on records of past expenses and projections about future ones. But that's where point 3 throws a wrench in! While every personal medical situation varies wildly, that's why I'm always interested in hearing about how people modeled health expenses, and what they later learned about their models accuracy or lack of.

I'm mid 40s and doing well health wise, and family has a history of good health, so hopeful. But hope is not a plan! If I ask health sherpa, it's optimistic about low costs but I'm sure it's just because I'm young, they will go up over time. I should research... does anyone know if there is a system that will let you project future healthcare costs, given both current situation and the inevitable increasing decrepitude?

 

[ncbill]

This. I got 2 cancer diagnoses in 2019. One was easily treated with radiation. The other was put into remission with some of those blockbuster (budget buster) drugs. And unfortunately I have to keep taking them, basically forever.

They're covered by Medicare, but ... My two treatment drugs cost $1000 per DAY. It takes somewhere around $6-8k out of pocket to get up to the 95% coverage level, and then 5% of $1000/day means I still would pay $1500 per month. So all told it works out to about $25k per year, out of pocket, AFTER insurance. Ouch.

Fortunately my oncologist pulled some strings and got me my drugs for FREE. But if he hadn't (or if they decide I don't qualify, and they're examining that now), that would have put a dent in my retirement budget. I just hope I don't end up needing other solid-gold drugs ...

Cap if drugs are covered under Medicare is $3,250 in 2024 & $2,000 in 2025.

 

[fishfactory]

Hello Everyone:

I don't post a lot but I have been around here a very long time. I am now 5 years into my post-retirement FIRE life. At this point, I wanted to share where I was off in my planning. The purpose of this is so that readers who are in the saving and accumulation stage of things can potentially learn a thing or two and make a better plan. I want to be brief. And I won't be discussing in depth my own situation, but will just give some basic background information for context.

Background: Single, never married, no kids, retired under age 59.5 and still under that age. I started my FIRE planning before FIRE was even a thing, back in the 80s when I got my first job. I put my savings in index funds, avoided any and all debt, and was always well insured. And, yes, I am frugal.

ERRORS I MADE:

1. The biggest error, by far: Thinking I could control or choose my retirement date. I see this error all the time, usually implied, in posts on this forum. I developed a medical condition that caused me to be unable to perform my job duties. I couldn't control this and there is nothing I could do about it. If there is one thing I could have every reader take away from this post, this is it.

LESSON: Never assume you can control your "retirement" date. Always understand where your FIRE plan puts you if you have to stop working right now.

My FIRE plan really saved me. While I wasn't at the point I wanted to be, it turns out it was good enough and I didn't have to take some minimum wage type job to survive.

2. Disability: I had purchased private disability insurance. It wasn't cheap. I also counted on social security disability to kick in should something terrible happen. What unfolded, without giving details or wanting to get sidetracked in further discussions in this thread (it's not a social security disability thread) is that I was denied social security disability and my private policy, while it *did* pay out money was insufficient to replace in a major way my lost income. There were lots of limitations in the policy fine print.

LESSON: Buy the best disability insurance you can, but never assume it will be enough and never assume you will actually qualify for social security disability, even if you can't work your job. Be ready to live off your FIRE plan.

3. Expenses: I underestimated what I would spend, out of pocket, on medical expenses as well as underestimating my insurance costs. I purchased Obamacare insurance, getting about a 50% premium reduction via subsidies. But I nonetheless paid out of pocket thousands of dollars for various surgeries, eyeglasses, dental care, and hearing aids. In terms of insurance, in addition to Obamacare, I pay: Home, general umbrella liability, life insurance (term), and auto insurance. These add up to more than I expected or planned for.

LESSON: Be very careful when projecting medical expenses, and other insurance expenses. They easily can break your budget.

4. The 4% "rule." I spent countless hours, pre-retirement, planning, projecting, and otherwise thinking about how I was going to draw down my nest egg. So, what did I actually do it once retired? I spent what I wanted or needed to spend on the things I wanted or needed to buy.

LESSON: If you are a FIRE planner, you're probably already frugal. Trust yourself to do the right thing when the time comes. Go ahead and think about how you are going to spend your money if you want, but honestly, you'll probably just end up doing what I did. My "needs" spending is not flexible and my "wants" spending is modest, just like yours.

Summary: FIRE worked for me, but not at all how I expected. I remember well the dreams I had decades back of retiring to a beach in the tropics, toes in the sand and pina colada in hand. Well, that didn't happen. But what did happen was, when the unexpected occurred (i.e. life), FIRE allowed me to be prepared and turn what unprepared would have been a disaster into a comfortable, retired lifestyle. It allowed me to play the cards of life I was dealt in the best way possible.

I'm enjoying every day, I live well, and I focus on the good times ahead. And...I'm not stuck working some low pay job just in order to get by. FIRE works.

Good Luck with your planning.

Thank you for posting this. I also retired 5 years ago at age 55. The biggest shock was how much I have had to spend on healthcare. My spreadsheet estimates were way too low. I was able to stay on my employer's plan, but the coverage gets worse every year while the premium keeps rising. Currently at $6k deductible. Looking forward to Medicare.

 

[Gordomd]

Agree, you cannot resent growing old as many are denied the privilege

 

[jayanu]

Hello Everyone:

I don't post a lot but I have been around here a very long time. I am now 5 years into my post-retirement FIRE life. At this point, I wanted to share where I was off in my planning. The purpose of this is so that readers who are in the saving and accumulation stage of things can potentially learn a thing or two and make a better plan. I want to be brief. And I won't be discussing in depth my own situation, but will just give some basic background information for context.

Background: Single, never married, no kids, retired under age 59.5 and still under that age. I started my FIRE planning before FIRE was even a thing, back in the 80s when I got my first job. I put my savings in index funds, avoided any and all debt, and was always well insured. And, yes, I am frugal.

ERRORS I MADE:

1. The biggest error, by far: Thinking I could control or choose my retirement date. I see this error all the time, usually implied, in posts on this forum. I developed a medical condition that caused me to be unable to perform my job duties. I couldn't control this and there is nothing I could do about it. If there is one thing I could have every reader take away from this post, this is it.

LESSON: Never assume you can control your "retirement" date. Always understand where your FIRE plan puts you if you have to stop working right now.

My FIRE plan really saved me. While I wasn't at the point I wanted to be, it turns out it was good enough and I didn't have to take some minimum wage type job to survive.

2. Disability: I had purchased private disability insurance. It wasn't cheap. I also counted on social security disability to kick in should something terrible happen. What unfolded, without giving details or wanting to get sidetracked in further discussions in this thread (it's not a social security disability thread) is that I was denied social security disability and my private policy, while it *did* pay out money was insufficient to replace in a major way my lost income. There were lots of limitations in the policy fine print.

LESSON: Buy the best disability insurance you can, but never assume it will be enough and never assume you will actually qualify for social security disability, even if you can't work your job. Be ready to live off your FIRE plan.

3. Expenses: I underestimated what I would spend, out of pocket, on medical expenses as well as underestimating my insurance costs. I purchased Obamacare insurance, getting about a 50% premium reduction via subsidies. But I nonetheless paid out of pocket thousands of dollars for various surgeries, eyeglasses, dental care, and hearing aids. In terms of insurance, in addition to Obamacare, I pay: Home, general umbrella liability, life insurance (term), and auto insurance. These add up to more than I expected or planned for.

LESSON: Be very careful when projecting medical expenses, and other insurance expenses. They easily can break your budget.

4. The 4% "rule." I spent countless hours, pre-retirement, planning, projecting, and otherwise thinking about how I was going to draw down my nest egg. So, what did I actually do it once retired? I spent what I wanted or needed to spend on the things I wanted or needed to buy.

LESSON: If you are a FIRE planner, you're probably already frugal. Trust yourself to do the right thing when the time comes. Go ahead and think about how you are going to spend your money if you want, but honestly, you'll probably just end up doing what I did. My "needs" spending is not flexible and my "wants" spending is modest, just like yours.

Summary: FIRE worked for me, but not at all how I expected. I remember well the dreams I had decades back of retiring to a beach in the tropics, toes in the sand and pina colada in hand. Well, that didn't happen. But what did happen was, when the unexpected occurred (i.e. life), FIRE allowed me to be prepared and turn what unprepared would have been a disaster into a comfortable, retired lifestyle. It allowed me to play the cards of life I was dealt in the best way possible.

I'm enjoying every day, I live well, and I focus on the good times ahead. And...I'm not stuck working some low pay job just in order to get by. FIRE works.

Good Luck with your planning.

Very well, structured post. You may have been a Scientist or an Engineer!

Yes there are black Swans: Your personal Health, Your loved one's Health, World Events, natural Disasters (Tornado or fire), economy (Pandemic), health of loved ones, health cost in retirement - Long Term Care etc.

Hardly anyone plans for that, then you get punched in the face. Healthy and Frugal living are a MUST, but we all forget that in youth. Most do not think of the impact (and planning for) the inflation - particularly medical inflation, company management messing up and going in chapter 11 - forced retirement etc.

Many tools do not account for the income tax expenses. I use Fidelity's eMoney. The model is rather conservative (which I like) and does account for the income tax expenses.
We have it run 2 times a year (1 is enough but...!). 1) As the assets are now with 6% return and 3% inflation 2) Same but cut the assets in half 3) reduce 6% return to 2.5% (T bills) in both scenarios. We keep nothing in discretionary spending, everything (charity, travel, to kids etc.) is essential. This approach gives us peace of mind.

I retired first at 55, I wanted to retire, but company HR suggested waiting for 6 months so the age + service years will add up to 75, so I can get a lifetime medical insurance from the company-that was a lifesaver! At first, it was both of us, then for a few years only myself till wife became Medicare eligible. We have UHC from the company for $11/month advantage plan that covers both of us and has max out of pocket of ~$3,500 per person and it is PPO. We have Aetna Dental DMO for $50/month.

A friend asked me to join his company, where I spent 6 years and then went to live in an Active Adult Community for 12 years. Went through Black Swan of my wife's cancer and mother-in-law's nursing home stay for 3 years.

The MOST important move we made was to move to Willow Valley Communities (rated number 3 out of ~2,000 CCRCs in the USA by US News & World). My wife had three cancer surgeries, colon, Liver, and lung and I have diabetes hence we could not qualify for LTC insurance. Even if we could have been qualified (at age) 70 it would have cost us ~$3,000/month for $125K/yr between two of use - not enough - If we both went to nursing home together we would have to pay out of pocket another $150K+ per year.

Willow Valley Communities (Lancaster, PA) is a 5 star gated 210 acre facility with ~2,600 residents and ~1,600 team members with 100+ clubs, lots and lots of amenities, and 500 bed medical facility. All is included in our monthly fees, regardless what the market price is (6% medical inflation) or how long I have to be in the Medical (Parkinson's and Dementia patient can live from 7 to 12 years!). We have "Capped" our black swan event of Long Term Care expense. You must count this when you run models. Look at the Genworth website to see the cost of LTC in your area! And see what the cost will be when you suspect you will need - 70% of the seniors need some form of LTC!

Thanks
Love
Jay Shah

 

[ychuck46]

I have one point and one question:

1. Disability insurance - while there may be a case here or there where it worked very well in the buyer's favor, for the most part this is one of those insurances that the provider will do all they can to not pay out. To me it is something people need to seriously look at whether the odds are for or against them, since the premiums are generally high and the payouts not necessarily positive (Sidelight - I did have low cost disability insurance that I purchased from my employers, but since I have been retired for ten years that went by the wayside awhile ago).

2. You said you are single with no kids. Why are you carrying life insurance? Unless there is another valid reason it seems as those that is an expense that is unnecessary.

 

[flatrock]

Seeing folks younger than me where I worked pass away during the pandemic prompted me to retire early. I still work part time just to stay busy and help pay for two dental implants (10k)

 

[Rich99]

I’m ready to retire financially and emotionally, but my wife isn’t ready (for me to retire) she says. She doesn’t work any longer (nurse) but works very hard taking care of our grandson (another story). This is probably a topic for another post, but what do you do if your spouse isn’t ready yet for you to retire? Our financial advisor has told us both that we should be fine, but she’s not onboard. It’s been a point of friction for us.

 

[Dtail]

I’m ready to retire financially and emotionally, but my wife isn’t ready (for me to retire) she says. She doesn’t work any longer (nurse) but works very hard taking care of our grandson (another story). This is probably a topic for another post, but what do you do if your spouse isn’t ready yet for you to retire? Our financial advisor has told us both that we should be fine, but she’s not onboard. It’s been a point of friction for us.

What reasons has she given to you why you are not ready? Does she trust your advisor and if not, why are you using them?
How many more years does she feel you should work? Conceptually, but not in reality, how would she feel if you took care of your grandson and she would go back to work?

 

[NC 57]

I have one point and one question:

1. Disability insurance - while there may be a case here or there where it worked very well in the buyer's favor, for the most part this is one of those insurances that the provider will do all they can to not pay out. To me it is something people need to seriously look at whether the odds are for or against them, since the premiums are generally high and the payouts not necessarily positive (Sidelight - I did have low cost disability insurance that I purchased from my employers, but since I have been retired for ten years that went by the wayside awhile ago).

2. You said you are single with no kids. Why are you carrying life insurance? Unless there is another valid reason it seems as those that is an expense that is unnecessary.

 

[indiajust]

I do like the what if today's the day? approach to retirement. It is a useful thought experiment to conduct. Reminds me of the cherokee? expression, It's a good day to die.

 

[eyenitnoy]

You said you are single with no kids. Why are you carrying life insurance? Unless there is another valid reason it seems as those that is an expense that is unnecessary.

I don't want to get sidetracked on what I consider a side issue. However, to answer your question, valid reason or not, I maintain modest a term life insurance policy with my sister as beneficiary. This is so that in the event of my death, should my estate be tied up in probate or my money otherwise unavailable, she has sufficient funds to continue to care for our elderly mother. I am currently paying for this care.

In the event my mother passes before I do, I will drop the term life insurance policy.

And as to your comment regarding disability insurance, yes, the insurance company will do their best to get out of paying. But be warned: insurance companies these days will do their best to get out of paying any type of policy they write.

 

[Gordomd]

Just curious-if you're single, why do you need life insurance?

 

[mistermike40]

Thanks for the well-thought out post OP... I'm sure many here I can relate to some parts of your journey. I too didn't have control over my retirement date, but like you all the FIRE planning I did prepared me for the unexpected. I'm more than comfortable financially and enjoying each day. I can't believe it will be seven years in September! Time flies even in retirement

 

[eyenitnoy]

Just curious-if you're single, why do you need life insurance?

Answered in the post above yours.