Poll of the retirees among us--spending in retirement

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
vested1
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Re: Poll of the retirees among us--spending in retirement

Post by vested1 »

TN_Boy wrote: Wed Aug 26, 2020 7:50 am
vested1 wrote: Wed Aug 26, 2020 5:57 am
Sandtrap wrote: Tue Aug 25, 2020 8:49 am Baseline retirement expenses are generally consistent year to year.
Large lumpy expenses for property additions and renovations, misc. random expenses, spread out over years add to that.
None of this is so predictable or quantifiable to be able to fit on a spreadsheet or curve. Thus "lumpy".

How is this data actionable to a fellow retiree, also with unique financial circumstances, etc?
j :happy

stuff snipped ...

There are factors that make an estimate of future spending almost impossible to do accurately, such as unexpected home/vehicle maintenance events, medical emergencies, and changes to health insurance costs that you have no control over. Our insurance costs increased dramatically with the onset of Medicare, yet we are in the same health condition that we were in before the onset of Medicare. That was unexpected. For others the opposite is usually true.
I understand that health care costs can be very unpredictable, making those expenses difficult to manage.

But I quibble a bit with this comment "such as unexpected home/vehicle maintenance events." Okay, obviously the exact timing and amount of such costs vary. When doing retirement planning, we went back 10 years and estimated overall spending during those years. During that timeframe we bought two cars, had a major home repair, and did a moderate home renovation. Plus other "non-routine" costs. Our spending estimate going forward was the average of those 10 years, which of course included those "unexpected" expenses.

Estimating expenses retroactively is not extremely hard if you have the right tracking. I have a spreadsheet showing inflows/outflows to investments and I have our tax returns. So I could look and see that net income after all taxes and retirement contributions was $X. I could see that we contributed $Y to taxable investments. I reckon we spent the rest ..... that assumes one is not simply putting debt on credit cards etc. Anyway, doing that gave us confidence in spending across multiple years at a high level. What we've not had are any medical cost shocks.

And of course you would then, in a retirement scenario, estimate taxes (for most people their tax situation changes a lot when retired .... no more payroll tax, often lower income taxes, etc).
Unexpected maintenance costs in our case were due to our new location in a different State, and are related mostly to weather, which can't be predicted long term. We have 150+ trees on our property which fall during storms or for no apparent reason, making removal costly and impossible to predict. We've had 4 incidents within the last year resulting in 13 trees that had to be removed. That wasn't a problem where me moved from. Neither was air conditioning maintenance for the house and cars because we didn't need air conditioning where we came from. Neither did we have damaging hail, tornados, or hurricanes.

Another factor that was unknown was the amount of property taxes we would be paying in our new State of SC. While State taxes are about $1,000 lower, we pay property taxes on the house, the cars, the boats, and the motors on those boats every year. Vehicle registration is every two years and boat registration is every three. You don't pay property tax on the boats or the motors unless you owned them on January 1st, so we didn't owe taxes on them last year, but just received our bill for this year for about $1,300. The amount was surprising to me this year, but won't be next year. As it turns our total property taxes are about $500 more per year here than we paid in Ca.

As a side note, SC has different vehicle registration costs than we are used to, with additional fees. There is a $250 one time fee to register an out of State vehicle in SC. You have to pay your property taxes on your cars before you can register them, and you have to have a valid SC driver's license to be able to pay property tax on your house. There is a high mileage discount, which I suppose is intended to lower your vehicle property tax because the value of the car is less with higher mileage. But to obtain that higher mileage you have to use the roads more, requiring more maintenance of the roads. The are also additional fees if you drive an electric or hybrid car, which seems odd. Insurance for cars and homes is more expensive here using the same company we had in Ca. Real estate transactions are more expensive here as you are required, as a buyer, to retain a RE lawyer. (about $2,500 added in our case above purchase price).

We're still in a learning curve here, but are hopefully nearing the end of it. I thought I had done all the research necessary before our move, but learned otherwise quickly. Regardless we made a good decision to move, not because we didn't like Ca, but because we have a much better home that's paid for in a great location. Some of the unknown costs surprised us though, which shows the value of having an adequate cushion of non-taxable $.
tibbitts
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Re: Poll of the retirees among us--spending in retirement

Post by tibbitts »

It depends too much on the individuals. Some people - maybe particularly Bogleheads - will see a massive surge in expenses after retirement due to Roth conversions for example. And of course Covid-19{20,21,22...?} changes everything.
tibbitts
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Re: Poll of the retirees among us--spending in retirement

Post by tibbitts »

vested1 wrote: Wed Aug 26, 2020 8:57 am Some of the unknown costs surprised us though, which shows the value of having an adequate cushion of non-taxable $.
I think even Bogleheads underestimate the effects of nuances on state and local taxes. It's difficult to research everything, and exactly how it might impact you differently than most people. Bogleheads have a notion of high tax and low tax areas but those areas aren't always high or low tax for everyone.
jebmke
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Re: Poll of the retirees among us--spending in retirement

Post by jebmke »

bltn wrote: Wed Aug 26, 2020 8:05 am
iamblessed wrote: Tue Aug 25, 2020 11:37 am I think that unless you reduce travel or downsize your home spending will be about the same.
There are other aspects of less spending as one ages. We find that we are going out to eat less, and when we do, we have less interest in expensive “gourmet” restaurants. We also have less interest inexpensive gifts at birthdays and Christmas.
I am considering spending a little more on my next car. But I may change my mind!
Material things become less important, and relationships more important. And this is at a time when we can afford more than ever. Ironic.
On the other side of the equation, taxes can pop - especially when RMDs start. We are also making much larger charitable donations than we did when we were younger. Some of this is a function of having the time to assess where the donations can be effective.
When you discover that you are riding a dead horse, the best strategy is to dismount.
RadAudit
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Re: Poll of the retirees among us--spending in retirement

Post by RadAudit »

I'm 73. Retired since 2010. Income goes up every year due to RMDs. DW and I were OK with the increases in spending every year. COVID - 19 (?) interrupted planned cruises in 2020. DW plans to make up for lost time before I get too old to be wheeled up on to the ship (add: When that happens, she'll go without me.)
Last edited by RadAudit on Sun Sep 13, 2020 9:32 am, edited 2 times in total.
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PSM
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Re: Poll of the retirees among us--spending in retirement

Post by PSM »

I did some rough calculations and concluded that saving $$$ in health insurance premiums for 4 years was a huge cash flow benefit for early 60’s. After we both have turned 65 after next year, we will have 6-7 years to do conversions if that seems prudent. It will be a matter of choosing how much to convert to the top of whatever tax bracket will be lower than future RMD brackets at age 72 and beyond. Even if I might have been a little better off by paying higher ACA premiums now and starting some conversions, I don’t regret what I am doing.
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Toons
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Re: Poll of the retirees among us--spending in retirement

Post by Toons »

We spend about
40k a year,
Excluding any major purchase
Retired
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
shell921
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Re: Poll of the retirees among us--spending in retirement

Post by shell921 »

72 yr old widow - my husband died 6 years ago.

He was 9 years older and he retired at age 55 in 1995
I retired in 2003 when i turned 55.

Once we were both retired we took lots of trips - entertained a lot and gave gifts
of $$ to some relatives.

Since his death I have not done much of those things and I have tracked my expenses. Here they are for last 3 years:

2017-- $55,496
2018 - $57,202
2019 - $74,112
MathWizard
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Re: Poll of the retirees among us--spending in retirement

Post by MathWizard »

Sheepdog wrote: Tue Aug 25, 2020 12:43 pm Retired 10/1998 age 65

Spending averages after that in 4 year increment averages
1999-2002 56,285
2003-2006 57,806
2007-2010 60,879
2011-2014 68,923
2015-2019 70,977 (note this avg is the last 5 years)
Well, so much for Kitces' article. It shows that you are who you are. We aren't the same.
Where we spent more for vacations in the earlier years, we spend more on medical and dental these days, but other spending has been very similar (same house maintenance, food, auto purchases, restaurants, entertainment, and so forth.)

On thinking about this, there is a change for us in that we gave away more the last 5 years than then. I include donations and gifts in my spending averages, so take that into account. (Example: We gave away $3,954 in 2000 and we gave away $12.780 in 2019.)
Woof
Wow, you keep good records.

Thanks for the info!
flyingaway
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Re: Poll of the retirees among us--spending in retirement

Post by flyingaway »

Spending, especially the discretionary part, is discretionary. If you have money, you can spend more if you want. You can spend less if you want to leave an inheritance.

Most people on this forum probably have much more money than what they can spend. They don't spend that much because they don't want to. For example, I could spend based on the 4% rule, but I think I am going to spend based on the 3% rule.

In my opinion, the spending level really matters when you just don't have any spare money.
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Sheepdog
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Re: Poll of the retirees among us--spending in retirement

Post by Sheepdog »

MathWizard wrote: Wed Aug 26, 2020 11:10 am

Wow, you keep good records.

Thanks for the info!
And, thank you!
I keep this data because I enjoy doing it and it is easy to do with my Microsoft Money 2002 software on my computer, plus it helps keep my mind active as I have aged.
I guess this arithmetic data-keeping is left over from my occupation as engineer and factory manager where record keeping was required,. at least it was for me

Woof
Time is the school in which we learn, time is the fire in which we burn.~ Delmore Schwartz
Cruise
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Re: Poll of the retirees among us--spending in retirement

Post by Cruise »

My parents, who were very frugal were a good model for how it goes in retirement: You travel, eat out and spend assets early on (60s and early 70s in their case). Infirmities set in and limit one starting in the late 70s. By the 80s and 90s, just moving out of your chair requires assistance, so you are spending on home-care and later assisted living.

For us, our plans of early big spending on travel have been put on hold with COVID-19. Hopefully we don't have to start our big spending on medical care for the same reason.

Stay safe out there.
rgs92
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Re: Poll of the retirees among us--spending in retirement

Post by rgs92 »

If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
delamer
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Re: Poll of the retirees among us--spending in retirement

Post by delamer »

rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
Dental care & hearing aids can require large out-of-pocket payments.
Katietsu
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Re: Poll of the retirees among us--spending in retirement

Post by Katietsu »

rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
I think it depends on how you define “high” and how you define “medical expense”. Is a $6,000 hearing aid high? Is a bathroom remodel to replace the conventional tub with a walk in shower defined as a medical expense? And I think hiring people to help with your property and your personal care because you are no longer physically able is part of that health rated rise in spending in a more generalized way.
jebmke
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Re: Poll of the retirees among us--spending in retirement

Post by jebmke »

delamer wrote: Wed Aug 26, 2020 1:25 pm Dental care & hearing aids can require large out-of-pocket payments.
And eye care; even for something like cataracts which are covered by Medicare, only the bare-bones is covered. The higher end procedures and implants can be quite expensive.
When you discover that you are riding a dead horse, the best strategy is to dismount.
jebmke
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Re: Poll of the retirees among us--spending in retirement

Post by jebmke »

rgs92 wrote: Wed Aug 26, 2020 12:47 pm Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
If a dollar sails away, never to return, I count it as an expense. Taxes, charity etc.
When you discover that you are riding a dead horse, the best strategy is to dismount.
marcopolo
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Re: Poll of the retirees among us--spending in retirement

Post by marcopolo »

vested1 wrote: Wed Aug 26, 2020 8:57 am
TN_Boy wrote: Wed Aug 26, 2020 7:50 am
vested1 wrote: Wed Aug 26, 2020 5:57 am
Sandtrap wrote: Tue Aug 25, 2020 8:49 am Baseline retirement expenses are generally consistent year to year.
Large lumpy expenses for property additions and renovations, misc. random expenses, spread out over years add to that.
None of this is so predictable or quantifiable to be able to fit on a spreadsheet or curve. Thus "lumpy".

How is this data actionable to a fellow retiree, also with unique financial circumstances, etc?
j :happy

stuff snipped ...

There are factors that make an estimate of future spending almost impossible to do accurately, such as unexpected home/vehicle maintenance events, medical emergencies, and changes to health insurance costs that you have no control over. Our insurance costs increased dramatically with the onset of Medicare, yet we are in the same health condition that we were in before the onset of Medicare. That was unexpected. For others the opposite is usually true.
I understand that health care costs can be very unpredictable, making those expenses difficult to manage.

But I quibble a bit with this comment "such as unexpected home/vehicle maintenance events." Okay, obviously the exact timing and amount of such costs vary. When doing retirement planning, we went back 10 years and estimated overall spending during those years. During that timeframe we bought two cars, had a major home repair, and did a moderate home renovation. Plus other "non-routine" costs. Our spending estimate going forward was the average of those 10 years, which of course included those "unexpected" expenses.

Estimating expenses retroactively is not extremely hard if you have the right tracking. I have a spreadsheet showing inflows/outflows to investments and I have our tax returns. So I could look and see that net income after all taxes and retirement contributions was $X. I could see that we contributed $Y to taxable investments. I reckon we spent the rest ..... that assumes one is not simply putting debt on credit cards etc. Anyway, doing that gave us confidence in spending across multiple years at a high level. What we've not had are any medical cost shocks.

And of course you would then, in a retirement scenario, estimate taxes (for most people their tax situation changes a lot when retired .... no more payroll tax, often lower income taxes, etc).
Unexpected maintenance costs in our case were due to our new location in a different State, and are related mostly to weather, which can't be predicted long term. We have 150+ trees on our property which fall during storms or for no apparent reason, making removal costly and impossible to predict. We've had 4 incidents within the last year resulting in 13 trees that had to be removed. That wasn't a problem where me moved from. Neither was air conditioning maintenance for the house and cars because we didn't need air conditioning where we came from. Neither did we have damaging hail, tornados, or hurricanes.

Another factor that was unknown was the amount of property taxes we would be paying in our new State of SC. While State taxes are about $1,000 lower, we pay property taxes on the house, the cars, the boats, and the motors on those boats every year. Vehicle registration is every two years and boat registration is every three. You don't pay property tax on the boats or the motors unless you owned them on January 1st, so we didn't owe taxes on them last year, but just received our bill for this year for about $1,300. The amount was surprising to me this year, but won't be next year. As it turns our total property taxes are about $500 more per year here than we paid in Ca.

As a side note, SC has different vehicle registration costs than we are used to, with additional fees. There is a $250 one time fee to register an out of State vehicle in SC. You have to pay your property taxes on your cars before you can register them, and you have to have a valid SC driver's license to be able to pay property tax on your house. There is a high mileage discount, which I suppose is intended to lower your vehicle property tax because the value of the car is less with higher mileage. But to obtain that higher mileage you have to use the roads more, requiring more maintenance of the roads. The are also additional fees if you drive an electric or hybrid car, which seems odd. Insurance for cars and homes is more expensive here using the same company we had in Ca. Real estate transactions are more expensive here as you are required, as a buyer, to retain a RE lawyer. (about $2,500 added in our case above purchase price).

We're still in a learning curve here, but are hopefully nearing the end of it. I thought I had done all the research necessary before our move, but learned otherwise quickly. Regardless we made a good decision to move, not because we didn't like Ca, but because we have a much better home that's paid for in a great location. Some of the unknown costs surprised us though, which shows the value of having an adequate cushion of non-taxable $.
This is why I think people worry too much about different l levels of taxation in various states. in the end, services/infrastructure have to be paid for one way or another.

By the way, the added tax for electric/hybrid vehicles makes sense as an interim solution. Highway maintenance is currently paid for mostly through gasoline taxes. those vehicles put same wear and tear on roads but are paying way less for their maintanence in the form of gasoline taxes. Until there is a different mechanism to raise money for usage, taxing those vehicles more seems like a reasonable way to equalize road maintanence costs.
Once in a while you get shown the light, in the strangest of places if you look at it right.
TN_Boy
Posts: 1881
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Re: Poll of the retirees among us--spending in retirement

Post by TN_Boy »

vested1 wrote: Wed Aug 26, 2020 8:57 am
TN_Boy wrote: Wed Aug 26, 2020 7:50 am
vested1 wrote: Wed Aug 26, 2020 5:57 am
Sandtrap wrote: Tue Aug 25, 2020 8:49 am Baseline retirement expenses are generally consistent year to year.
Large lumpy expenses for property additions and renovations, misc. random expenses, spread out over years add to that.
None of this is so predictable or quantifiable to be able to fit on a spreadsheet or curve. Thus "lumpy".

How is this data actionable to a fellow retiree, also with unique financial circumstances, etc?
j :happy

stuff snipped ...

There are factors that make an estimate of future spending almost impossible to do accurately, such as unexpected home/vehicle maintenance events, medical emergencies, and changes to health insurance costs that you have no control over. Our insurance costs increased dramatically with the onset of Medicare, yet we are in the same health condition that we were in before the onset of Medicare. That was unexpected. For others the opposite is usually true.
I understand that health care costs can be very unpredictable, making those expenses difficult to manage.

But I quibble a bit with this comment "such as unexpected home/vehicle maintenance events." Okay, obviously the exact timing and amount of such costs vary. When doing retirement planning, we went back 10 years and estimated overall spending during those years. During that timeframe we bought two cars, had a major home repair, and did a moderate home renovation. Plus other "non-routine" costs. Our spending estimate going forward was the average of those 10 years, which of course included those "unexpected" expenses.

Estimating expenses retroactively is not extremely hard if you have the right tracking. I have a spreadsheet showing inflows/outflows to investments and I have our tax returns. So I could look and see that net income after all taxes and retirement contributions was $X. I could see that we contributed $Y to taxable investments. I reckon we spent the rest ..... that assumes one is not simply putting debt on credit cards etc. Anyway, doing that gave us confidence in spending across multiple years at a high level. What we've not had are any medical cost shocks.

And of course you would then, in a retirement scenario, estimate taxes (for most people their tax situation changes a lot when retired .... no more payroll tax, often lower income taxes, etc).
Unexpected maintenance costs in our case were due to our new location in a different State, and are related mostly to weather, which can't be predicted long term. We have 150+ trees on our property which fall during storms or for no apparent reason, making removal costly and impossible to predict. We've had 4 incidents within the last year resulting in 13 trees that had to be removed. That wasn't a problem where me moved from. Neither was air conditioning maintenance for the house and cars because we didn't need air conditioning where we came from. Neither did we have damaging hail, tornados, or hurricanes.

Another factor that was unknown was the amount of property taxes we would be paying in our new State of SC. While State taxes are about $1,000 lower, we pay property taxes on the house, the cars, the boats, and the motors on those boats every year. Vehicle registration is every two years and boat registration is every three. You don't pay property tax on the boats or the motors unless you owned them on January 1st, so we didn't owe taxes on them last year, but just received our bill for this year for about $1,300. The amount was surprising to me this year, but won't be next year. As it turns our total property taxes are about $500 more per year here than we paid in Ca.

As a side note, SC has different vehicle registration costs than we are used to, with additional fees. There is a $250 one time fee to register an out of State vehicle in SC. You have to pay your property taxes on your cars before you can register them, and you have to have a valid SC driver's license to be able to pay property tax on your house. There is a high mileage discount, which I suppose is intended to lower your vehicle property tax because the value of the car is less with higher mileage. But to obtain that higher mileage you have to use the roads more, requiring more maintenance of the roads. The are also additional fees if you drive an electric or hybrid car, which seems odd. Insurance for cars and homes is more expensive here using the same company we had in Ca. Real estate transactions are more expensive here as you are required, as a buyer, to retain a RE lawyer. (about $2,500 added in our case above purchase price).

We're still in a learning curve here, but are hopefully nearing the end of it. I thought I had done all the research necessary before our move, but learned otherwise quickly. Regardless we made a good decision to move, not because we didn't like Ca, but because we have a much better home that's paid for in a great location. Some of the unknown costs surprised us though, which shows the value of having an adequate cushion of non-taxable $.
Well I hadn't considered the old "trees keep falling down" problem. Though we did lose trees in an ice storm many years ago; I think we wound up having 50 smallish trees (mostly 20 foot pines) taken down. They bent over from the ice. They did not straighten up after the ice was gone. Ever.

And taxes, yeah, the "low tax" states do find a way to get you in ways other than income tax.

In our state we need a lawyer for house buy/sell, but the cost is well south of $2,500 for a standard purchase.
vested1
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Re: Poll of the retirees among us--spending in retirement

Post by vested1 »

rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
ncbill
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Location: Western NC

Re: Poll of the retirees among us--spending in retirement

Post by ncbill »

vested1 wrote: Thu Aug 27, 2020 6:00 am
rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
Are you a veteran?

The VA covers (at no cost) the most expensive meds a relative of mine (USAF veteran) requires, post-kidney transplant.

Have you looked at obtaining the medication from Canada or Mexico?

Or lower out-of-pocket costs for it under a Medicare Advantage plan?
vested1
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Re: Poll of the retirees among us--spending in retirement

Post by vested1 »

ncbill wrote: Thu Aug 27, 2020 8:37 am
vested1 wrote: Thu Aug 27, 2020 6:00 am
rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
Are you a veteran?
The VA covers (at no cost) the most expensive meds a relative of mine (USAF veteran) requires, post-kidney transplant.

I'm a veteran, but don't qualify for full veteran medical coverage, having spent 6 years in the National Guard.

Have you looked at obtaining the medication from Canada or Mexico?

The medication costs about 80k a year, and is not covered by insurance if obtained outside of the U.S.

Or lower out-of-pocket costs for it under a Medicare Advantage plan?

I checked Medicare Advantage as compared to what we had last year, and the co-pays for everything else are higher than what we pay, so even though there are no premiums we would be paying more out of pocket per year.

Obviously something needs to be done about prescription costs, but I won't get into that in order to avoid deletion. Luckily my prescription costs are almost zero. This is one of my wife's prescriptions. If I needed an expensive medication the combined costs would be far more because every person, regardless of marital status, is treated as an individual by Medicare.
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cresive
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Re: Poll of the retirees among us--spending in retirement

Post by cresive »

TN_Boy wrote: Tue Aug 25, 2020 10:07 am
Chuck107 wrote: Tue Aug 25, 2020 8:38 am Age 66, retired for 16 yrs.

Spending has been the same each year.
Are you adjusting for inflation?

I.e. if you spent $60k in nominal dollars in 2004, and also spent $60k in nominal dollars in 2019 your spending dropped substantially.

60k in 2019 dollars is about 44k in 2004 dollars.

[Edited to add] In these posts where people report how their spending changed (or did not) over a longer period of time, almost no-one adjusts for inflation when posting their numbers.

No, the data are taken as a snapshot to reduce the effect of inflation. They polled people of difference ages, then pooled the age groups to report average spending.
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LilyFleur
Posts: 1513
Joined: Fri Mar 02, 2018 10:36 pm

Re: Poll of the retirees among us--spending in retirement

Post by LilyFleur »

vested1 wrote: Thu Aug 27, 2020 6:00 am
rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
Tax-free employer insurance is one of the largest tax subsidies available in the U.S. You had it good and were enjoying an entitlement that many Americans don't understand until they lose it.

From the link below: The ESI (employer-sponsored insurance) exclusion will cost the federal government an estimated $273 billion in income and payroll taxes in 2019, making it the single largest tax expenditure. Note, too, that the open-ended nature of the tax subsidy has likely increased health care costs by encouraging the purchase of more comprehensive health insurance policies with lower cost sharing or with less tightly managed care.

I am 60 and currently pay $20,000 to $25,000 out of post-tax money annually for my health care premiums and co-pays for labs, doctor visits, and prescriptions. I buy individual insurance on the open market as I am not eligible for ACA subsidies. I'd gladly take half of your Medicare bill (I'm single) in a New York minute!

https://www.taxpolicycenter.org/briefin ... rance-work
TN_Boy
Posts: 1881
Joined: Sat Jan 17, 2009 12:51 pm

Re: Poll of the retirees among us--spending in retirement

Post by TN_Boy »

cresive wrote: Thu Aug 27, 2020 12:42 pm
TN_Boy wrote: Tue Aug 25, 2020 10:07 am
Chuck107 wrote: Tue Aug 25, 2020 8:38 am Age 66, retired for 16 yrs.

Spending has been the same each year.
Are you adjusting for inflation?

I.e. if you spent $60k in nominal dollars in 2004, and also spent $60k in nominal dollars in 2019 your spending dropped substantially.

60k in 2019 dollars is about 44k in 2004 dollars.

[Edited to add] In these posts where people report how their spending changed (or did not) over a longer period of time, almost no-one adjusts for inflation when posting their numbers.

No, the data are taken as a snapshot to reduce the effect of inflation. They polled people of difference ages, then pooled the age groups to report average spending.
I'm sorry, I'm not understanding your comment. In the linked blog post:

https://www.kitces.com/blog/age-banding ... -category/

Kitces refers to several studies. The studies that follow people over time show that in real terms, spending tends to follow that smile pattern.

You might be referring to this study, the Bernicke study, about which Kitces says:

Notably, though, the Bernicke study looked at a cross-section of people in the same year to see the differences in spending by age, rather than actually track a cohort of people to see how their spending changed over time. When a subsequent study by the Center for Retirement Research looked at multiple age cohorts in the CES data, though, they still found that retirement spending drops persistently, by about 1% per year as a cohort ages, even after controlling for a number of other factors.

My point is, if posters to this thread say well, I tracked my spending and here are the numbers across the years, then either

1) that poster should inflation adjust, or
2) you, as the person asking "For those well into retirement, has anyone tracked their spending levels? Does it roughly approximate the above +/- inflation?" should.

Otherwise you don't know how to interpret their numbers.

Since you asked about the reduction in spending (in your original post) I assumed you needed inflation adjusted data.

Or am I completely wrong in what you were looking for?
vested1
Posts: 2242
Joined: Wed Jan 04, 2012 4:20 pm

Re: Poll of the retirees among us--spending in retirement

Post by vested1 »

LilyFleur wrote: Thu Aug 27, 2020 2:59 pm
vested1 wrote: Thu Aug 27, 2020 6:00 am
rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
Tax-free employer insurance is one of the largest tax subsidies available in the U.S. You had it good and were enjoying an entitlement that many Americans don't understand until they lose it.

From the link below: The ESI (employer-sponsored insurance) exclusion will cost the federal government an estimated $273 billion in income and payroll taxes in 2019, making it the single largest tax expenditure. Note, too, that the open-ended nature of the tax subsidy has likely increased health care costs by encouraging the purchase of more comprehensive health insurance policies with lower cost sharing or with less tightly managed care.

I am 60 and currently pay $20,000 to $25,000 out of post-tax money annually for my health care premiums and co-pays for labs, doctor visits, and prescriptions. I buy individual insurance on the open market as I am not eligible for ACA subsidies. I'd gladly take half of your Medicare bill (I'm single) in a New York minute!

https://www.taxpolicycenter.org/briefin ... rance-work
Yes, I'll happily admit we were lucky to have employer and former employer subsidized health insurance, for which my wife and I gave up significant wage increases. How is that measured, or is it not? Our former employers are no longer so generous to newer hires, so once again, a previous trade off is now one-sided with real wages and greater employee participation in health insurance costs lagging far behind inflation over the long term. Is that a good thing?

As far as employer sponsored health insurance being tax deductible, do you really think that employers would provide that insurance out of the goodness of their heart if it weren't a tax advantage? Providing health insurance for prospective employees and maintaining it makes that company more desirable to work for, and leads to lower turnover, which is also a part of the equation. Unfortunately, over the years since the beginning of my previous career, turnover seems far less of a concern than it used to be, especially in times of high unemployment when employers can afford to be more discerning in their choices in hiring, The inception of "Right to Work" which is spreading to more and more States, seems to be more of an oxymoron than an accurate appellation. That "Right" appears to belong entirely to the employer.

I feel your pain concerning the exorbitant amount you pay for your health care while working, which I alluded to in general in my previous post, but are you saying that we shouldn't object to ridiculously high health care insurance costs, and that we should be happy to only be paying as much as we do as Medicare recipients? If so then I think we need to redefine happiness.

[OT comment removed by admin LadyGeek]
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LilyFleur
Posts: 1513
Joined: Fri Mar 02, 2018 10:36 pm

Re: Poll of the retirees among us--spending in retirement

Post by LilyFleur »

vested1 wrote: Fri Aug 28, 2020 6:46 am
LilyFleur wrote: Thu Aug 27, 2020 2:59 pm
vested1 wrote: Thu Aug 27, 2020 6:00 am
rgs92 wrote: Wed Aug 26, 2020 12:47 pm If you have Medicare and decent supplemental insurance and drug insurance (and also long term care insurance), are you still vulnerable to high medical expenses as you age?

Also, I am curious if the reported expenses here (from the study and the comments) include income taxes or not.
Thank you.
My wife and I pay almost 14k a year on Medicare, from co-pays and premiums. That includes Part A (free), Part B ($280/mo) Plan N (medical $195/mo), and Plan D (prescription $50/mo) combined. Over 6k of that 14k is the co-pay on a single medication.

Is that total cost high? Some would say no compared to what they pay now while working, but it was an increase for us having had former employer insurance that covered everything more comprehensively for about $150 a month combined during retirement for 2 years prior to age 65. I have fond memories of paying nothing for insurance for our family of 5 many moons ago. Having a baby delivered in the hospital was basically free.

The co-pay of the expensive drug went from $10 every 90 days to over $6,400 a year after reaching Medicare age. Although it's been on the market for over 21 years it went up 9% in 2020, even with inflation at historic lows.

I guess the cynic in me would say to go long on pharmaceutical stocks, but my conscience won't let me.
Tax-free employer insurance is one of the largest tax subsidies available in the U.S. You had it good and were enjoying an entitlement that many Americans don't understand until they lose it.

From the link below: The ESI (employer-sponsored insurance) exclusion will cost the federal government an estimated $273 billion in income and payroll taxes in 2019, making it the single largest tax expenditure. Note, too, that the open-ended nature of the tax subsidy has likely increased health care costs by encouraging the purchase of more comprehensive health insurance policies with lower cost sharing or with less tightly managed care.

I am 60 and currently pay $20,000 to $25,000 out of post-tax money annually for my health care premiums and co-pays for labs, doctor visits, and prescriptions. I buy individual insurance on the open market as I am not eligible for ACA subsidies. I'd gladly take half of your Medicare bill (I'm single) in a New York minute!

https://www.taxpolicycenter.org/briefin ... rance-work
Yes, I'll happily admit we were lucky to have employer and former employer subsidized health insurance, for which my wife and I gave up significant wage increases. How is that measured, or is it not? Our former employers are no longer so generous to newer hires, so once again, a previous trade off is now one-sided with real wages and greater employee participation in health insurance costs lagging far behind inflation over the long term. Is that a good thing?

As far as employer sponsored health insurance being tax deductible, do you really think that employers would provide that insurance out of the goodness of their heart if it weren't a tax advantage? Providing health insurance for prospective employees and maintaining it makes that company more desirable to work for, and leads to lower turnover, which is also a part of the equation. Unfortunately, over the years since the beginning of my previous career, turnover seems far less of a concern than it used to be, especially in times of high unemployment when employers can afford to be more discerning in their choices in hiring, The inception of "Right to Work" which is spreading to more and more States, seems to be more of an oxymoron than an accurate appellation. That "Right" appears to belong entirely to the employer.

I feel your pain concerning the exorbitant amount you pay for your health care while working, which I alluded to in general in my previous post, but are you saying that we shouldn't object to ridiculously high health care insurance costs, and that we should be happy to only be paying as much as we do as Medicare recipients? If so then I think we need to redefine happiness.

[OT comment removed by admin LadyGeek]
I am retired, and cannot do my part-time job due to at-risk health conditions. I am self employed and can deduct my health insurance as a business expense, but not if I am not working. I do agree that ridiculously high health care insurance costs need to come down. I have paid my share of taxes over the years as well and continue to do so in the single tax brackets. Unfortunately, with the state of health insurance in our country, I feel like I should be grateful that I still have coverage despite my pre-existing conditions. We are the only wealthy nation where diabetics ration expensive insulin and then die. It's unconscionable that people with pre-existing conditions have to worry every election about the future of their health insurance. I've got 5 years to go until Medicare. I think it's also ridiculous that the medical deduction is now back up to 10% for 2020 for an expense that increases at greater than the rate of inflation for those of us who do not have access to tax-subsidized employer coverage. Health insurance is the giant wild card in retirement spending.
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