early retirement for health reasons- pension option ss income leveling?

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pamcnm
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early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Mon Oct 08, 2018 6:31 pm

I am currently employed as a nurse midwife but have worn away all the cartilage in my right wrist and there isn't a good surgical solution for me. I have mild arthritis in my left hip, low back and both thumbs. I am also a stage 3 colon cancer survivor (6 years). I actually lead a very healthy and active lifestyle but my wonderful job puts me at increased risks for these things and I'm ready to stop working nights and enjoy a good night's sleep every night so that I have the energy I need to exercise consistently and keep my body moving and enjoying the trails for as long as I'm here!

I will be 61 in January and am trying to decide how to take my pension and when to take ss. I have a pension and a 401k with my employer. My children are grown. My tax filing status is single.

I expect to have very low housing costs in retirement as I plan to sell my Bay Area home and buy a less costly home in another state (I've done a ton of research and have been meeting with realtors in both places). I may be able to pay cash so that I don't have any mortgage payments but if I do have a mortgage, I plan to have it paid in full within 10 years of my move.

I anticipate paying off my car when I sell my home.

I have a student loan for one of my children in the amount of $359 a month for 10 years.

I will need to buy my own health insurance at a cost off $800 monthly based on the state exchange estimator until I am eligible for Medicare, and I estimate needing to pay up to $6000 annually out of pocket as well. Other retirement expenses would be related to general living expenses and travel.

I'm trying to decide how to take my pension. I had originally thought I would take 120 fixed monthly payments in the amount of about $4200 a month and delay ss until 70 at which point my estimated payments would be $3700 a month. Then I saw that I have social security leveling options based on my full retirement age of 66 years and 7 months and the estimated total monthly income would be closer to $4200 for the rest of my life.

I have a work-sponsored Fidelity 401K currently valued at about $225,000.

Ideas?

megabad
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Re: early retirement for health reasons- pension option ss income leveling?

Post by megabad » Mon Oct 08, 2018 7:46 pm

pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I am currently employed as a nurse midwife but have worn away all the cartilage in my right wrist and there isn't a good surgical solution for me. I have mild arthritis in my left hip, low back and both thumbs. I am also a stage 3 colon cancer survivor (6 years). I actually lead a very healthy and active lifestyle but my wonderful job puts me at increased risks for these things and I'm ready to stop working nights and enjoy a good night's sleep every night so that I have the energy I need to exercise consistently and keep my body moving and enjoying the trails for as long as I'm here!

I will be 61 in January and am trying to decide how to take my pension and when to take ss. I have a pension and a 401k with my employer. My children are grown. My tax filing status is single.

I expect to have very low housing costs in retirement as I plan to sell my Bay Area home and buy a less costly home in another state (I've done a ton of research and have been meeting with realtors in both places). I may be able to pay cash so that I don't have any mortgage payments but if I do have a mortgage, I plan to have it paid in full within 10 years of my move.

I anticipate paying off my car when I sell my home.

I have a student loan for one of my children in the amount of $359 a month for 10 years.

I will need to buy my own health insurance at a cost off $800 monthly based on the state exchange estimator until I am eligible for Medicare, and I estimate needing to pay up to $6000 annually out of pocket as well. Other retirement expenses would be related to general living expenses and travel.

I'm trying to decide how to take my pension. I had originally thought I would take 120 fixed monthly payments in the amount of about $4200 a month and delay ss until 70 at which point my estimated payments would be $3700 a month. Then I saw that I have social security leveling options based on my full retirement age of 66 years and 7 months and the estimated total monthly income would be closer to $4200 for the rest of my life.

I have a work-sponsored Fidelity 401K currently valued at about $225,000.

Ideas?
Is there a lifetime annuity option for the pension? What is its benefit? Typically, I would lean toward taking the lifetime annuity option whenever your pensions retirement age is. This is typically a flat amount for your entire life (ie. not "leveled"). In the interim you could fund your lifestyle with real estate sale proceeds and 401k. You would still delay SS to 70. The exception in my eyes might be if you view your life expectancy to be more limited than average but you said you lead a very healthy lifestyle so that doesn't seem to be the case.

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Watty
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Re: early retirement for health reasons- pension option ss income leveling?

Post by Watty » Mon Oct 08, 2018 9:01 pm

pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I am currently employed as a nurse midwife but have worn away all the cartilage in my right wrist and there isn't a good surgical solution for me. I have mild arthritis in my left hip, low back and both thumbs.
Could you qualify for disability insurance payments? It might be worth talking to a lawyer that handles that to see if you could.
pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I expect to have very low housing costs in retirement as I plan to sell my Bay Area home and buy a less costly home in another state (I've done a ton of research and have been meeting with realtors in both places). I may be able to pay cash so that I don't have any mortgage payments but if I do have a mortgage, I plan to have it paid in full within 10 years of my move.
Bay Area real estate is hot right now so if you I would think it would be easy to sell your place. If you wait a few years and the market cools off then not only could the price go down but it could take longer to sell your house and potential buyers may be more picky about issue that come up in the home inspection. I don't have a clue what the real estate market will do over the next few years but selling it now could avoid a lot of potential problems.

If you move somewhere else it is highly recommended that you rent for a year to make sure that you really like that place and to give you a chance to learn the housing market in that city. In addition the stuff you can think of unexpected things can happen too. I know someone that was a clerk in an office and decided to move to Hawaii and get a similar job there. Her plan was well thought out and working except that she had horrible allergies to something in Hawaii which had not be a problem on short vacations there. After working with doctors for a year she gave up and moved back.

It looks like other than your pension and home equity you have $225,000 in retirement savings and something like $40,000 in student loans for your kid that you are paying. Unless it is at a very low interest rate you may want to pay off the student loan with the home equity when you sell your house.

I would be extremely cautious about taking on a mortage when you move since you will not have a lot of slack in your budget. You may want to eventually buy a less expensive place when you move or move to a less expensive area so that you could buy a house or condo for cash.
pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I will need to buy my own health insurance at a cost off $800 monthly based on the state exchange estimator until I am eligible for Medicare, and I estimate needing to pay up to $6000 annually out of pocket as well.
COBRA insurance is likely a lot less expensive overall but it might not work well in the state that you move to if there are no in-network doctors for that insurance plan there.

One option would be to get a job in the new state which is not physically demanding and work there just long enough to qualify for COBRA in the new state. You could then have that COBRA for at least 18 months. You could then get another job again to work until you are 63.5 to qualify for COBRA again for another 18 months when you would be 65 and could get Medicare.

I know someone that was retired but went back to work for less than six months then quit when they were 63.5 specifically so they could get COBRA until they were 65. They did this because of the uncertainty in the ACA health insurance and their spouse had some major medical issues.

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 12:48 am

Megabad, thanks for your question. I have a lot of pension payout options. Unfortunately, the lifetime annuity is not enough for me to live on until I qualify for ss. If I retire next spring, per my current pension estimates I could receive a lifetime annuity of $2352. A fixed sum payment for 120 months would be in the amount of $4199, and if I took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 + my ss of $2648 for a total of $4015 monthly.

Watty, I will likely make just enough money to comfortably buy a small townhouse in a new locale. There won't likely be additional real estate proceeds to live on after the sale of my home, although I should be able to pay off my car and perhaps add a bit to my savings. I currently live in an all age, lease space mobile home park half a mile from the beach. My home appraised for $40K last year and per the comps, it's estimated to sell for somewhere between $415-$450K. I'm looking to retire in one of the small towns south of Tucson. I'm familiar with the area, spent some time there last month meeting with a realtor and renting an Airbnb in one of the subdivisions I have been looking at. I have plotted out average property taxes, insurance, utility costs and HOA fees for the two subdivisions I'm looking at, and I plan to keep my total housing costs to around $1000 or less by having little to no mortgage. I do plan to spend more time there before making a decision to buy.

I just refinanced the student loan at a lower interest rate in anticipation of probably needing to make this change.

I love my current health plan and would happily pay COBRA if I could use Kaiser insurance in Arizona. As an aside, the COBRA payments for my policy are almost the same as the monthly premium estimates for someone my age in the zip code I am looking to move to.

I'm open to less physically demanding work. However, the likelihood of securing such employment at age 61-62 seems like a crapshoot.

Disability isn't an option unless my cancer recurs- and it's not enough money to live on.

I do lead a healthy and active lifestyle, but I got diagnosed with cancer while training for a marathon so take nothing for granted:-)

Here are some rough estimates for my expenses in retirement, if that helps:
total housing costs: $1000 or less ( HOA, property tax and utility costs in the new locale)
student loan repayment: $359 a month for 9 years
health insurance policy until Medicare (3-4 years): $800 (I also expect to pay up to 6K out of pocket annually)
other expenses like monthly subscriptions and semi-annual car insurance divided by months in the year: $215 monthly
total: $2374 That would leave me $1700 a month of food and other expenses for the first 4 years and close to 2
$2500 a month after I am eligible for Medicare. That seems like plenty if my house is relatively new, well cared for and paid off, and I have $401k for emergencies.

I am really wanting guidance on how to take my pension if I retire early. Given my circumstances, taking a fixed amount for 10 years or an income leveling option is the only way I see to make early retirement feasible, along with selling my current home and paying cash for a new home with the proceeds. My other option is to have surgery to help stabilize the joint and reduce, but not eliminate wrist pain, keep working, including 12 hour nights (a risk factor for cancer recurrence). I know I will not be able to pay off my current house without some juggling, possibly dipping into my 401k, even if I somehow manage to work until 66+.

vested1
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Re: early retirement for health reasons- pension option ss income leveling?

Post by vested1 » Tue Oct 09, 2018 10:23 am

pamcnm wrote:
Mon Oct 08, 2018 6:31 pm

I have a student loan for one of my children in the amount of $359 a month for 10 years.
Since you seem to be cutting it close I would consider asking the child for whom the student loan was originated to assume the loan. If they graduated they are likely in a better position to pay it off than you are.

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dm200
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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 10:28 am

pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I am currently employed as a nurse midwife but have worn away all the cartilage in my right wrist and there isn't a good surgical solution for me. I have mild arthritis in my left hip, low back and both thumbs. I am also a stage 3 colon cancer survivor (6 years). I actually lead a very healthy and active lifestyle but my wonderful job puts me at increased risks for these things and I'm ready to stop working nights and enjoy a good night's sleep every night so that I have the energy I need to exercise consistently and keep my body moving and enjoying the trails for as long as I'm here!

I will be 61 in January and am trying to decide how to take my pension and when to take ss. I have a pension and a 401k with my employer. My children are grown. My tax filing status is single.

I expect to have very low housing costs in retirement as I plan to sell my Bay Area home and buy a less costly home in another state (I've done a ton of research and have been meeting with realtors in both places). I may be able to pay cash so that I don't have any mortgage payments but if I do have a mortgage, I plan to have it paid in full within 10 years of my move.

I anticipate paying off my car when I sell my home.

I have a student loan for one of my children in the amount of $359 a month for 10 years.

I will need to buy my own health insurance at a cost off $800 monthly based on the state exchange estimator until I am eligible for Medicare, and I estimate needing to pay up to $6000 annually out of pocket as well. Other retirement expenses would be related to general living expenses and travel.

I'm trying to decide how to take my pension. I had originally thought I would take 120 fixed monthly payments in the amount of about $4200 a month and delay ss until 70 at which point my estimated payments would be $3700 a month. Then I saw that I have social security leveling options based on my full retirement age of 66 years and 7 months and the estimated total monthly income would be closer to $4200 for the rest of my life.

I have a work-sponsored Fidelity 401K currently valued at about $225,000.

Ideas?
Have you considered a different job in Nursing that does not have these physical risks and requirements? That might give you more time to fully evaluate your options and choices, as well as improve your financial situation.

vested1
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Re: early retirement for health reasons- pension option ss income leveling?

Post by vested1 » Tue Oct 09, 2018 10:43 am

dm200 wrote:
Tue Oct 09, 2018 10:28 am
pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I am currently employed as a nurse midwife but have worn away all the cartilage in my right wrist and there isn't a good surgical solution for me. I have mild arthritis in my left hip, low back and both thumbs. I am also a stage 3 colon cancer survivor (6 years). I actually lead a very healthy and active lifestyle but my wonderful job puts me at increased risks for these things and I'm ready to stop working nights and enjoy a good night's sleep every night so that I have the energy I need to exercise consistently and keep my body moving and enjoying the trails for as long as I'm here!

I will be 61 in January and am trying to decide how to take my pension and when to take ss. I have a pension and a 401k with my employer. My children are grown. My tax filing status is single.

I expect to have very low housing costs in retirement as I plan to sell my Bay Area home and buy a less costly home in another state (I've done a ton of research and have been meeting with realtors in both places). I may be able to pay cash so that I don't have any mortgage payments but if I do have a mortgage, I plan to have it paid in full within 10 years of my move.

I anticipate paying off my car when I sell my home.

I have a student loan for one of my children in the amount of $359 a month for 10 years.

I will need to buy my own health insurance at a cost off $800 monthly based on the state exchange estimator until I am eligible for Medicare, and I estimate needing to pay up to $6000 annually out of pocket as well. Other retirement expenses would be related to general living expenses and travel.

I'm trying to decide how to take my pension. I had originally thought I would take 120 fixed monthly payments in the amount of about $4200 a month and delay ss until 70 at which point my estimated payments would be $3700 a month. Then I saw that I have social security leveling options based on my full retirement age of 66 years and 7 months and the estimated total monthly income would be closer to $4200 for the rest of my life.

I have a work-sponsored Fidelity 401K currently valued at about $225,000.

Ideas?
Have you considered a different job in Nursing that does not have these physical risks and requirements? That might give you more time to fully evaluate your options and choices, as well as improve your financial situation.
+1

My sister-in-law is a registered nurse who worked for a large hospital chain. She transitioned to call-in service, giving advice to patients and referring them to a doctor when necessary. Her pay remained the same without the burden of lifting patients and all the other labor intensive activities.

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 10:53 am

DM2 I can't think of a job in nursing that doesn't involve lifting and using my hands- unless you're talking about management or education. I wouldn't make enough in education to pay the bills, and I would have more hours, not less in a management job (and I would be miserable beyond measure working in any kind of management). Before my wrist OA, I thought it would be fun to take travel nursing assignments in retirement, or per diem nursing jobs in mother-baby or postpartum care, or even call center work. I've even considered becoming a lactation consultant for retirement, but all these things require using my hands- a lot, in ways that are painful. I am currently exploring consulting work related to my particular areas of expertise, have updated my resume and am using my tuition reimbursement monies to obtain some training and certifications that may be helpful in this regard. I actually thought about substitute teaching in retirement, but wouldn't make enough to pay my bills at my current location (due to the high cost of housing living in the Bay Area). That might be an option after moving.

For all of you presenting me with nursing job ideas, I don't mean to be snarky, but I am a midwife who loves my work and have thoughtfully explored all the ways to work as a midwife/nurse in retirement since returning to work after completing cancer treatment in January 2013. I actually work for a large hospital chain, but as a clinician/provider and I do not have the ability to transfer to a nurse or nurse practitioner job maintaining my current rate of pay. Nurse/nurse practitioners are represented by a union and I am not. I am salaried.

Vested1, I refinanced my son's student loan because he is unemployed and not mentally able to take on the responsibility of making payments at this time.

Anyone out there willing to explain the pros and cons of my original question while I continue to sort through these other things?
Last edited by pamcnm on Tue Oct 09, 2018 11:07 am, edited 1 time in total.

bhsince87
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Re: early retirement for health reasons- pension option ss income leveling?

Post by bhsince87 » Tue Oct 09, 2018 10:57 am

I thought CA law required up to 3 years of COBRA?

If so, maybe you can tough it out one more year? Then you would be covered until Medicare age. Plus you would build up more breathing room budget wise.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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dm200
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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 10:58 am

pamcnm wrote:
Tue Oct 09, 2018 10:53 am
DM2 I can't think of a job in nursing that doesn't involve lifting and using my hands- unless you're talking about management or education. I wouldn't make enough in education to pay the bills, and I would have more hours, not less in a management job (and I would be miserable beyond measure working in any kind of management). Before my wrist OA, I thought it would be fun to take travel nursing assignments in retirement, or per diem nursing jobs in mother-baby or postpartum care. I've even considered becoming a lactation consultant for retirement, but all these things require using my hands- a lot, in ways that are painful. I am currently exploring consulting work related to my particular areas of expertise, have updated my resume and am using my tuition reimbursement monies to obtain some training and certifications that may be helpful in this regard. I actually thought about substitute teaching in retirement, but wouldn't make enough to pay my bills at my current location (due to the high cost of housing living in the Bay Area). That might be an option after moving.
No personal experience, but I know several nurses who are or have been in education and (I believe) have done well. My health plan has 24x7 nurse advice line - as do many other health plans. Health insurance companies also have nurses involved in approval or disapproval of claims.

MJS
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Re: early retirement for health reasons- pension option ss income leveling?

Post by MJS » Tue Oct 09, 2018 11:01 am

Talk to Human Resources about options.

If you cannot transfer to a less strenuous job, then given your musculoskeletal status, you may qualify for Social Security Disability (SSDI) which includes Medicare, https://www.ssa.gov/planners/disability/

Please check California's (short term) disability program: https://www.edd.ca.gov/disability/About ... rogram.htm

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 11:07 am

bhsince87 wrote:
Tue Oct 09, 2018 10:57 am
I thought CA law required up to 3 years of COBRA?

If so, maybe you can tough it out one more year? Then you would be covered until Medicare age. Plus you would build up more breathing room budget wise.
I need to leave California when I retire.

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dm200
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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 11:13 am

MJS wrote:
Tue Oct 09, 2018 11:01 am
Talk to Human Resources about options.

If you cannot transfer to a less strenuous job, then given your musculoskeletal status, you may qualify for Social Security Disability (SSDI) which includes Medicare, https://www.ssa.gov/planners/disability/

Please check California's (short term) disability program: https://www.edd.ca.gov/disability/About ... rogram.htm
As best I understand, you must be on SSDI for two years in order to qualify for Medicare.

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 11:15 am

MJS wrote:
Tue Oct 09, 2018 11:01 am
Talk to Human Resources about options.

If you cannot transfer to a less strenuous job, then given your musculoskeletal status, you may qualify for Social Security Disability (SSDI) which includes Medicare, https://www.ssa.gov/planners/disability/

Please check California's (short term) disability program: https://www.edd.ca.gov/disability/About ... rogram.htm
Disability payments would not provide me with enough money to live on and I need to leave California when I retire. I cannot afford to make my current mortgage payments once I stop working. I spoke with my HR department when I returned to work after completing cancer treatment in 2013. I had to get a doctor's note to be kept off night's for 6 months. They were horrible.

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vineviz
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Re: early retirement for health reasons- pension option ss income leveling?

Post by vineviz » Tue Oct 09, 2018 11:20 am

pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I am really wanting guidance on how to take my pension if I retire early. Given my circumstances, taking a fixed amount for 10 years or an income leveling option is the only way I see to make early retirement feasible, along with selling my current home and paying cash for a new home with the proceeds. My other option is to have surgery to help stabilize the joint and reduce, but not eliminate wrist pain, keep working, including 12 hour nights (a risk factor for cancer recurrence). I know I will not be able to pay off my current house without some juggling, possibly dipping into my 401k, even if I somehow manage to work until 66+.
I'm not sure I'm seeing the benefit to you of paying cash for your new home. I generally agree with the notion of avoiding debt, but in this case it seems like it's tying up a lot of your equity during a period of time (the next ten years) when you could really use it better for other things.

I'd suggest modeling out the cash flows from taking the largest 30 year mortgage you can get at a reasonable interest rate and that avoids PMI.

It's hard to say without seeing some numbers, but my guess is that taking the pension as a lifetime annuity and using withdrawals from the 401k to bridge the gap until you reach age 70 might work out .

The other factor to consider is that waiting to collect SS at age 70 is USUALLY the optimal choice, but if you have reason to expect that YOUR life expectancy will be less than average (due to the progression of your cancer, for instance) you might be a good candidate for taking SS earlier.
Last edited by vineviz on Tue Oct 09, 2018 11:30 am, edited 1 time in total.
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dm200
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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 11:28 am

vineviz wrote:
Tue Oct 09, 2018 11:20 am
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I am really wanting guidance on how to take my pension if I retire early. Given my circumstances, taking a fixed amount for 10 years or an income leveling option is the only way I see to make early retirement feasible, along with selling my current home and paying cash for a new home with the proceeds. My other option is to have surgery to help stabilize the joint and reduce, but not eliminate wrist pain, keep working, including 12 hour nights (a risk factor for cancer recurrence). I know I will not be able to pay off my current house without some juggling, possibly dipping into my 401k, even if I somehow manage to work until 66+.
I'm not sure I'm seeing the benefit to you of paying cash for your new home. I generally agree with the notion of avoiding debt, but in this case it seems like it's tying up a lot of your equity during a period of time (the next ten years) when you could really use it better for other things.

I'd suggest modeling out the cash flows from taking the largest 30 year mortgage you can get at a reasonable interest rate and that avoids PMI.
Yes - taking out an affordable mortgage gives a lot more flexibility financially.

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dm200
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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 11:30 am

A friend of ours (single woman in early 70's) just sold her single family home (as a teardown) for an excellent price and moved from this very HCOL area to a lower cost area and purchased a home (or condo) for about half of what she got for her home here.

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 11:41 am

To those of you suggesting SSDI do you understand how little money that is to try and live on? My payments would be $1792 a month. My OA wouldn't qualify me for SSDI payments at this time. They would make the point I could do another job- which is true. I just wouldn't make enough to pay my bills where I currently live doing the jobs I could do.

My sister received early disability due to fibromyalgia and it's a long process that involves not working for months in order to qualify. Also, most cases are denied- even the ones that are eventually approved are usually denied the first time. There are lawyer's fees. The only way I am going to easily qualify for SSDI and not have to move, and not use my pension to live on is if I have a cancer recurrence while still employed. If that happens, I will use my employer-sponsored life insurance to pay off my house and supplement SSDI payments and leave my house, pension, and 401k to my kids when I pass. I explored this thoroughly when being treated for cancer, and when they thought I had a metastasis in 2013 (thankfully, it was a benign tumor).

pamcnm
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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 11:43 am

dm200 wrote:
Tue Oct 09, 2018 11:30 am
A friend of ours (single woman in early 70's) just sold her single family home (as a teardown) for an excellent price and moved from this very HCOL area to a lower cost area and purchased a home (or condo) for about half of what she got for her home here.
As indicated in my original post, that's what I am looking to do, although I am looking at small town south of Tucson. I am not planning to live in Tucson.

I am just hoping to have a better understanding of the pros and cons of income leveling and fixed payments when deciding how to take my pension.
Last edited by pamcnm on Tue Oct 09, 2018 12:15 pm, edited 3 times in total.

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Watty
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Re: early retirement for health reasons- pension option ss income leveling?

Post by Watty » Tue Oct 09, 2018 11:52 am

A couple of comments;
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I will likely make just enough money to comfortably buy a small townhouse in a new locale.
At least in my area a townhouse implies lots of stairs and multiple stories. I would look for something with one level that would work better for you in 20 years.

It sounds like you will be selling your place in California for over $400K. I might have missed it but it did not sound like you have a mortage so it sounds like would have well over $300K after taxes, real estate commission, etc. That seem like it would be a pretty high end townhouse in Tucson if you are spending most of your home equity on buying the property in Tucson since you can get condos there for less than $100K there. Is that anywhere near right?
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I love my current health plan and would happily pay COBRA if I could use Kaiser insurance in Arizona. As an aside, the COBRA payments for my policy are almost the same as the monthly premium estimates for someone my age in the zip code I am looking to move to.
The Cobra may have lower deductibles and out of pocket maximums so be sure to look at that. Some ACA policies have a very limited network too which can be a problem. There is is still a lot of uncertainty with the ACA from year to year.
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I'm open to less physically demanding work. However, the likelihood of securing such employment at age 61-62 seems like a crapshoot.


It could be hard to find a great long term work position in your field but to get on COBRA in Tuscan all you need to do is to find some job in a hospital for a couple of month to qualify for healthcare.

Unemployment is low and there is a lot of demand for healthcare workers so even though it might pay a lot less I have a hard time imagining that you could not find some sort of office job that is not physically demanding. You probably deal with people in these sorts of jobs all the time.

Just for brainstorming it sounds like you would be very well qualified teach teach something like prenatal classes or general "What to expect when you are expecting" classes. Someone is going to teach those classes, why not you?
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
I am really wanting guidance on how to take my pension if I retire early.


It would be good to list all your options. So far you have mentioned;
1) lifetime annuity of $2352 (starting at Jan 2019, age 61 ????)
The problem with this is that it is not adjusted for inflation so it may not be worth a lot in 20 years so delaying Social Security until you are 70 would likely be a good idea.

2) A fixed sum payment for 120 months would be in the amount of $4199
Not adjusted for inflation so by year ten would be worth maybe 20% less than SS would be your main income.

3) Social Security Leveling, (starting at Jan 2019, age 61 ????)
Might make it hard to delay Social Security until you are 70. I would assume that it is also not adjusted for inflation so 20 years from now it might not be so good. You would have to live a long time past 70 to make this a better choice than #2 and each year if inflation makes it harder to break even. This seems like the worst option to me.

Do you have any other options like starting the pension later or taking a lump sum?

This is more a gut reaction than a definitive recommendation but this is what I would tend to favor if I was in your situation.

a) Take option 2, the fixed sum payment for 120 months.
b) Get a part time job that might pay $1,000 or more a month to stretch your income. With your healthcare background you should be able to find something that is within your physical limitations. This could even be something totally different and just be a "fun" job like working in an art gallery if that is what turns your crank.
c) Do not touch your 401k money to give that ten years to grow, you will need that later when you stop working.
d) Delay starting Social Security until you are 70.
e) Consider a less expensive condo/townhouse if you were planning on spending $300K on it.

A few sort of random things.

1) Just to double check, occasionally there are posters that don't realize this but if you were ever widowed or divorced after being married for 10 year you may be able to claim Social Security on a spouse's higher benefit amount, I would assume that this does not apply in your situation.

2) Once you get on Medicare you will still have monthly expenses that will vary depending on what plan you choose. Between the Medicare part B premium, a good medicare supplement, and part D premiums we are paying almost $400 a month per person. You may be able to reduce that if you have a good Medicare Advantage program in your area but there are a lot of tradeoffs in doing that. You will also be paying for things thing like dental expenses(Don't ask!), hearing aids, and eyeglasses that you also need to budget for that.

3) You will also need to budget for occasional big expenses like getting a replacement car.

4) Unemployment is unusually low, I don't know about Tuscan but in many areas employers are having a hard time finding "warm bodies" that can pass a drug test and don't have a felony conviction. Don't underestimate your ability to find a job that you can work under your terms especially for lower paying jobs that you might enjoy. Not only is this a great time to sell your place in California but it is also a great time to look for work.

5) If you retire in January and you have a healthcare flexible spending account then you can max that out in January and not have to pay it back. This is the flip side of the "use it or lose it rule". For example you could have $2,500 in uncovered dental work done early in January, have get reimbursed from the flexible spending account , then retire on January 31st and not have to pay it back.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 11:56 am

dm200 wrote:
Tue Oct 09, 2018 10:58 am
pamcnm wrote:
Tue Oct 09, 2018 10:53 am
DM2 I can't think of a job in nursing that doesn't involve lifting and using my hands- unless you're talking about management or education. I wouldn't make enough in education to pay the bills, and I would have more hours, not less in a management job (and I would be miserable beyond measure working in any kind of management). Before my wrist OA, I thought it would be fun to take travel nursing assignments in retirement, or per diem nursing jobs in mother-baby or postpartum care. I've even considered becoming a lactation consultant for retirement, but all these things require using my hands- a lot, in ways that are painful. I am currently exploring consulting work related to my particular areas of expertise, have updated my resume and am using my tuition reimbursement monies to obtain some training and certifications that may be helpful in this regard. I actually thought about substitute teaching in retirement, but wouldn't make enough to pay my bills at my current location (due to the high cost of housing living in the Bay Area). That might be an option after moving.
No personal experience, but I know several nurses who are or have been in education and (I believe) have done well. My health plan has 24x7 nurse advice line - as do many other health plans. Health insurance companies also have nurses involved in approval or disapproval of claims.
DM, not sure where you live, but I live in California and currently make about $131k a year. Most nursing education jobs make less than half that. I am not currently working as a nurse, but have looked into call center or advice line work for my organization. There's quite a bit of typing involved in these desk jobs.

I would actually like to work part-time in retirement, for many reasons. I have updated my resume and am using my tuition reimbursement monies to take coursework to boost my options of getting work related to my interests in group care and perinatal mental health. That seems the most likely- and profitable, employment for me post-retirement from my current position.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by Watty » Tue Oct 09, 2018 12:02 pm

A couple of more points;

1) In addition to Social Security Disability payments you may have company provided disability insurance that might cover your own occupation for the first year.

2) Something like disability payments or a different job does not need to cover all your expenses, it would just need to supplement your income.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by dknightd » Tue Oct 09, 2018 12:04 pm

pamcnm wrote:
Tue Oct 09, 2018 12:48 am
took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 + my ss of $2648 for a total of $4015 monthly.
I'd probably do it this way since it seems to cover your estimated expenses.
Best wishes.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Tue Oct 09, 2018 12:18 pm

DM, not sure where you live, but I live in California and currently make about $131k a year.
OK - now I see many of your points.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by yohac » Tue Oct 09, 2018 12:46 pm

Does that 800/month for health insurance include ACA subsidies? If not you should research. 4200/month income may push you over the limit, if it's just you in the household. Staying just under the max can save you hundreds per month.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Tue Oct 09, 2018 12:48 pm

Thanks. Good to know I still make sense :-)

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Re: early retirement for health reasons- pension option ss income leveling?

Post by megabad » Wed Oct 10, 2018 9:17 am

pamcnm wrote:
Tue Oct 09, 2018 12:48 am
Megabad, thanks for your question. I have a lot of pension payout options. Unfortunately, the lifetime annuity is not enough for me to live on until I qualify for ss. If I retire next spring, per my current pension estimates I could receive a lifetime annuity of $2352. A fixed sum payment for 120 months would be in the amount of $4199, and if I took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 + my ss of $2648 for a total of $4015 monthly.
I believe you may have enough to afford to live on via 401k and house proceeds and you won't need the pension until FRA. A nominal amount (for CA) in equity in your current home would result in a massive boost to your retirement savings once it is sold. Financially I believe your best option would be to:
1)Sell current home as you indicated
2)Move to much lower cost area as you indicated
3)Live on home sale proceeds and 401k distributions until at least FRA
4)Take both SS and lifetime pension annuity at FRA or 70.

The reason for this suggested strategy is that you appear to not have a significant cushion of savings relative to your current income. This will of course be helped by moving to a LCOL area, but pushing the pension and SS out to 70 is a form of obtaining the maximum possible "longevity" insurance to me and I believe this will give you peace of mind later in life. There is of course a chance you may not need it, but I always err on the side of living a long and healthy life. And personally I would be worried if my pension disappeared in 120 months which is lower than the life expectancy (unless I knew I had a terminal health condition). The same applies to the leveling option to a slightly lesser extent.

These are just my opinions based on personal comfort level, so you will have to make decisions based on your own. If you are comfortable having a significantly reduced payout in your later years, than your choice may be different.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 9:05 am

megabad wrote:
Wed Oct 10, 2018 9:17 am
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
Megabad, thanks for your question. I have a lot of pension payout options. Unfortunately, the lifetime annuity is not enough for me to live on until I qualify for ss. If I retire next spring, per my current pension estimates I could receive a lifetime annuity of $2352. A fixed sum payment for 120 months would be in the amount of $4199, and if I took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 + my ss of $2648 for a total of $4015 monthly.
I believe you may have enough to afford to live on via 401k and house proceeds and you won't need the pension until FRA. A nominal amount (for CA) in equity in your current home would result in a massive boost to your retirement savings once it is sold. Financially I believe your best option would be to:
1)Sell current home as you indicated
2)Move to much lower cost area as you indicated
3)Live on home sale proceeds and 401k distributions until at least FRA
4)Take both SS and lifetime pension annuity at FRA or 70.

The reason for this suggested strategy is that you appear to not have a significant cushion of savings relative to your current income. This will of course be helped by moving to a LCOL area, but pushing the pension and SS out to 70 is a form of obtaining the maximum possible "longevity" insurance to me and I believe this will give you peace of mind later in life. There is of course a chance you may not need it, but I always err on the side of living a long and healthy life. And personally I would be worried if my pension disappeared in 120 months which is lower than the life expectancy (unless I knew I had a terminal health condition). The same applies to the leveling option to a slightly lesser extent.

These are just my opinions based on personal comfort level, so you will have to make decisions based on your own. If you are comfortable having a significantly reduced payout in your later years, than your choice may be different.
Hi Megabad

I guess you didn't see/read my post about my current mortgage, current home's vslue and my anticipated home sale profits? I''ll likely make somewhere between $160-180 from the sale of my home and my current plan was to use this money to buy a townhome south of Tucson in some developments I like and pay off my car as well. I plan to keep my housing costs under $1000-1200 a month (this amount has mortgage, taxes, utilities and HOA fees factored in).

I am pretty sure that based on my cuurent lifestyle and spending habits I can live on $1700-2500 because I do now, and that's what I would have after the housing costs, health insurance premiums and student loan payment. The health insurance costs will go down considerably in 3 years and the student loan will be paid off in 9 years- sooner if my son can take them over. I plan to leave the 401k alone until I need to take withdrawals, saving it for things like a car replacement, home repairs down the line. I am hoping for some part-time work.

Using my pension to live on during early retirement was my way of saving ss longer and leaving the 401k alone to grow. Selling my house and moving is the only way for me to retire early. I came to this forum already knowing those things after carefully researching current finances, spending habits and resources.

I love my job heart and soul and have lived in Santa Cruz since 1978. If I thought I could keep working without undue physical stress and risk I would. I am a cancer survivor and have developed osteoarthritis and know the quality of my life would be improved with regular hours and adequate sleep. I have been working nights since 1987 and I am now 60. I don't have less stressful work options that will allow me to make my current $2600 a month housing costs- in my manufacturef home in an all age, leased space park.

Trying to live off the proceeds of my current home would have me living in my car in your scenario.

I make $131k and live in a mobile home that will sell for about $425k leaving me about $180k in profits. I don't think some of you understand just how crazy housing in the Bay Area is, or how disability works. Necessity and temperament have required me to be something of a minimalst (I don't have credit card debit and excellent credit scores), and I've also had to be a little brave in pursuing the career path that I have. I'm just trying to figure out out how to continue being that person in retirement with the resources I have.
Last edited by pamcnm on Thu Oct 11, 2018 9:44 am, edited 3 times in total.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 9:09 am

bhsince87 wrote:
Tue Oct 09, 2018 10:57 am
I thought CA law required up to 3 years of COBRA?

If so, maybe you can tough it out one more year? Then you would be covered until Medicare age. Plus you would build up more breathing room budget wise.
I can't afford to retire and live in the COBRA service area. I will need to leave California.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 9:13 am

Watty wrote:
Tue Oct 09, 2018 12:02 pm
A couple of more points;

1) In addition to Social Security Disability payments you may have company provided disability insurance that might cover your own occupation for the first year.

2) Something like disability payments or a different job does not need to cover all your expenses, it would just need to supplement your income.
I do and it gives me about 60% of my income which would require miving- explored all if this during my cancer treatment.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by fposte » Thu Oct 11, 2018 9:14 am

I've got no advice for you on the pension, but I wanted to make sure you'd checked on the Windfall Elimination Provision since you're eligible for both Social Security and a pension. Hopefully it doesn't apply to you, but that's a bite that some people get surprised by.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Thu Oct 11, 2018 9:22 am

fposte wrote:
Thu Oct 11, 2018 9:14 am
I've got no advice for you on the pension, but I wanted to make sure you'd checked on the Windfall Elimination Provision since you're eligible for both Social Security and a pension. Hopefully it doesn't apply to you, but that's a bite that some people get surprised by.
This applies only if your pension was for a period when you did not pay Social Security.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by megabad » Thu Oct 11, 2018 9:48 am

pamcnm wrote:
Thu Oct 11, 2018 9:05 am
megabad wrote:
Wed Oct 10, 2018 9:17 am
These are just my opinions based on personal comfort level, so you will have to make decisions based on your own. If you are comfortable having a significantly reduced payout in your later years, than your choice may be different.
Trying to live off the proceeds of my current home would have me living in my car in your scenario.
This is a personal decision (see my statement above). My rough guess is that living off your home proceeds and 401k as I have suggested would result in you having roughly the same income as you would have by taking your pension early (roughly 4000/mo maybe a little less). So it is my opinion that this would meet your desired lifestyle goals. It was only a suggestion though. The intent of my suggestion was to provide you with roughly the same amount of income in the near term and provide you with a vastly increased income later in life (insuring against "longevity"). To accomplish this, you would use up most of your savings (which I also think can be a good thing for Medicaid reasons). I suggested this because this would alleviate my own personal fears of destitution in old age. If this is not important to you, than it is not a suggestion you would follow. Unless you can predict your expiry date perfectly, this is a personal decision and there is no right or wrong answer.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by fposte » Thu Oct 11, 2018 10:08 am

dm200 wrote:
Thu Oct 11, 2018 9:22 am
fposte wrote:
Thu Oct 11, 2018 9:14 am
I've got no advice for you on the pension, but I wanted to make sure you'd checked on the Windfall Elimination Provision since you're eligible for both Social Security and a pension. Hopefully it doesn't apply to you, but that's a bite that some people get surprised by.
This applies only if your pension was for a period when you did not pay Social Security.
There are several exemptions, fortunately. But since I work for a place that doesn't take out Social Security, I frequently encounter people who've been paying in elsewhere and who then are unhappily surprised to get hit with WEP, so I'm sensitized to it and like to make sure people are aware if they're susceptible.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by dm200 » Thu Oct 11, 2018 10:14 am

fposte wrote:
Thu Oct 11, 2018 10:08 am
dm200 wrote:
Thu Oct 11, 2018 9:22 am
fposte wrote:
Thu Oct 11, 2018 9:14 am
I've got no advice for you on the pension, but I wanted to make sure you'd checked on the Windfall Elimination Provision since you're eligible for both Social Security and a pension. Hopefully it doesn't apply to you, but that's a bite that some people get surprised by.
This applies only if your pension was for a period when you did not pay Social Security.
There are several exemptions, fortunately. But since I work for a place that doesn't take out Social Security, I frequently encounter people who've been paying in elsewhere and who then are unhappily surprised to get hit with WEP, so I'm sensitized to it and like to make sure people are aware if they're susceptible.
BUT - I bet they were very happy when their paychecks were higher because of no SS retirement being paid!

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Re: early retirement for health reasons- pension option ss income leveling?

Post by fposte » Thu Oct 11, 2018 10:28 am

dm200 wrote:
Thu Oct 11, 2018 10:14 am
BUT - I bet they were very happy when their paychecks were higher because of no SS retirement being paid!
It sounds nice, but the deduction for our pension, like many, is actually higher than for SS, so the paychecks weren't higher. That's why WEP is annoying--it's not necessarily a result of your paying less into retirement overall. Hopefully it won't hit the OP, but if she was working at a public facility without paying into SS (a real possibility with municipal or university hospitals) and that's how she got the pension, she'll need to make sure she's right about what she's getting.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by GeoffD » Thu Oct 11, 2018 10:42 am

pamcnm wrote:
Thu Oct 11, 2018 9:09 am
bhsince87 wrote:
Tue Oct 09, 2018 10:57 am
I thought CA law required up to 3 years of COBRA?

If so, maybe you can tough it out one more year? Then you would be covered until Medicare age. Plus you would build up more breathing room budget wise.
I can't afford to retire and live in the COBRA service area. I will need to leave California.
Can you move to a lower cost part of CA and rent for 3 years or 4 years? If you bail out to a different state with low cost of living, chances are pretty high that their ACA options won't be very good. You're trying to bridge to age 65 for Medicare and, if possible, age 70 for Social Security. Personally, I wouldn't do anything that relied on ACA until after the mid term elections and the next Congress is in session in January. Too much risk of a late-December health care bill happening.

I'm wondering if there aren't options where you can work as an RN that don't involve physical work? My mother is in a high end memory care facility where all the residents are mobile. If you can't get out of bed or out of a chair, you get ejected to at least the rehab wing of their skilled nursing building. There are probably jobs like that in assisted living places, too. Does "school nurse" still exist in public schools? Town/county elderly services? It would be a pay cut but it keeps you from touching any retirement money for some years.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by Watty » Thu Oct 11, 2018 1:26 pm

pamcnm wrote:
Thu Oct 11, 2018 9:05 am
I guess you didn't see/read my post about my current mortgage, current home's vslue and my anticipated home sale profits? I''ll likely make somewhere between $160-180 from the sale of my home and....
I did not see that either.

I'm trying to get a handle on all the moving parts. This is what it looks like to me to get everything in one place.

Assets

1) Home equity, about $170K.
2) 401k $225,000

Debt(other than home)
1) Student loan - guess $40,000
2) Car loan - wild guess $10,000


Net worth: $345,000

Pension options.
a) Social Security leveling, initially totals $4,200 but in 20 years the extra is not likely not indexed for inflation.
Open Question: If you do this are you required to start Social Security at your full retirement age?
b) 120 payments of $4,200 a month starting a age 61, January of 2019
c) Lifetime $2352 a month starting a age 61, January of 2019
d) Other options - unclear.

Social Security options
a) Full retirement age, 66 and 8 months, $2648, fall of 2024
b) Age 70 $3,700, January of 2028
c) Age 62 about $1,9000 (estimate)

Disability
a) Getting Social Security Disability - very unlikely
b) Private disability - would pay maybe 60% of income, about $78,000 a year, but that would be enough to live on if you moved to a low cost of living area. Unknown how likely it is to be able to get even partial disability now.

Healthcare options
a) ACA policy in Tuscan, $800 a month + $6,000 a year for other expenses, that is $1,300 month.
b) Kaiser Cobra policy, price unknown, not practical in Bay Area because of high costs.
c) Work briefly someplace in Tuscan to qualify for COBRA there with some other company.
d) After 65 you will still have monthly expenses for the part B premium, part d(drugs), a medicare supplement, deductibles, etc. This can very a lot but we are paying around $400 a month for these.

Open questions:

Could you use Kaise Cobra in some other state where Kaiser is at? It looks like they are just in the Bay Area and Southern California in California. Here is a map of Kaiser Service areas.
https://healthplans.kaiserpermanente.or ... eas-v2.pdf

This might open up the option of moving somewhere else either permanently or for a few years then moving again to settle in Tuscan when you can get on Medicare.

We cannot discussed politics here or future legislation but I would be concerned that the political climate in Arizona might not be very favorable for affordable healthcare.


Overall living expenses;

1) Healthcare - see above, minimum $400 (?) once on Medicare.
2) Housing, after townhouse purchase - $1,000 to $1,200 a month.
3) All other living expenses, including taxes. $1,700 to $2,500 not including student loan or car payments.

Total $3,100 to $4,100(with paid off townhouse) not including additional healthcare, student loan, or car payment.

Looking back there are a couple of things I would do first.
1) Find out for certain if you could qualify for the private disability insurance.
2) Find out if you could use Kaiser COBRA in some other state.
3) Figure out if there are potential problems with the ACA prospects in Arizona, as someone else mentioned the election next month might be important.

If the answer to all of these are no then my prior suggestion was;
Watty wrote:
Tue Oct 09, 2018 11:52 am
This is more a gut reaction than a definitive recommendation but this is what I would tend to favor if I was in your situation.

a) Take option 2, the fixed sum payment for 120 months.
b) Get a part time job that might pay $1,000 or more a month to stretch your income. With your healthcare background you should be able to find something that is within your physical limitations. This could even be something totally different and just be a "fun" job like working in an art gallery if that is what turns your crank.
c) Do not touch your 401k money to give that ten years to grow, you will need that later when you stop working.
d) Delay starting Social Security until you are 70.
e) Consider a less expensive condo/townhouse if you were planning on spending $300K on it.(NA, it would cost a lot less.)
And I don't see any reason to change that.

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Re: early retirement for health reasons- pension option ss income leveling?

Post by windrose » Thu Oct 11, 2018 2:27 pm

What is FRA for the pension? Is it 60? If not, what sort of reduction are you looking at by taking the pension early?

Also, does the pension have a cost of living adjustment?

My pension has a level income option as well, but the end date is 62 for everyone--but they don't know/care if you file for SS or not, it is just to calculate the payment. So you could get the level income option and still apply/collect early at 62. It is probably not a good idea, but you never know.

And just to consider one more option...what would your monthly income be if you chose lifetime annuity pension and early SS?

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Re: early retirement for health reasons- pension option ss income leveling?

Post by #Cruncher » Thu Oct 11, 2018 2:33 pm

pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I will be 61 in January ...
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
If I retire next spring, per my current pension estimates I could receive a lifetime annuity of $2352. A fixed sum payment for 120 months would be in the amount of $4199, and if I took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 ...
The following table compares the present values (PV) of these three options for each age up through 100 when discounted at 4%. It shows that up through 2023 (the year you turn 65) the $4,318/$1,367 per month "level" option has the highest present value. Then up through 2040 (the year you turn 82) the $4,199 per month 10-Year option has the highest PV. But if you live another year, the constant $2,352 monthly option will have the highest PV, and its excess over the other two options increases every year thereafter.

Code: Select all

Row  Col A                       Col B  Col C  Col D  Col E
  1  Discount rate               4.00%   Year  Month
  2  Start pension            5/1/2019   2019      5
  3  Start SS                 9/1/2024   2024      9
  4  End 10 years             5/1/2029   2029      5
  5  Monthly after 05/01/19             4,199  2,352  4,318 
  6  Monthly after 09/01/24             4,199  2,352  1,367 
  7  Monthly after 05/01/29                 0  2,352  1,367

   ColA  ColB    Col C    Col D    Col E      Col F     Col G     Col H      Col I     Col J
               ---- Yearly Payment -----   ---- Present Value (PV) ----  -- PV vs 10-Year --
Row Age  Year  10-Year Constant    Level    10-Year  Constant     Level    Constant    Level

Code: Select all

  9  61  2019   33,592   18,816   34,544     32,300    18,092    33,215    (14,208)      915 
 10  62  2020   50,388   28,224   51,816     78,887    44,187    81,122    (34,700)    2,236 
 11  63  2021   50,388   28,224   51,816    123,681    69,278   127,186    (54,403)    3,505 
 12  64  2022   50,388   28,224   51,816    166,753    93,404   171,479    (73,349)    4,726 
 13  65  2023   50,388   28,224   51,816    208,168   116,602   214,068    (91,566)    5,900  <==
 14  66  2024   50,388   28,224   40,012    247,991   138,908   245,690   (109,083)   (2,301)
 15  67  2025   50,388   28,224   16,404    286,282   160,356   258,156   (125,926)  (28,126)
 16  68  2026   50,388   28,224   16,404    323,100   180,979   270,142   (142,121)  (52,958)
 17  69  2027   50,388   28,224   16,404    358,501   200,809   281,667   (157,693)  (76,834)
 18  70  2028   50,388   28,224   16,404    392,542   219,876   292,749   (172,666)  (99,793)
 19  71  2029   16,796   28,224   16,404    403,452   238,210   303,405   (165,243) (100,047)
 20  72  2030            28,224   16,404    403,452   255,838   313,651   (147,614)  (89,801)
 21  73  2031            28,224   16,404    403,452   272,789   323,503   (130,663)  (79,950)
 22  74  2032            28,224   16,404    403,452   289,087   332,975   (114,365)  (70,477)
 23  75  2033            28,224   16,404    403,452   304,759   342,084    (98,693)  (61,368)
 24  76  2034            28,224   16,404    403,452   319,828   350,842    (83,624)  (52,610)
 25  77  2035            28,224   16,404    403,452   334,318   359,264    (69,134)  (44,189)
 26  78  2036            28,224   16,404    403,452   348,250   367,361    (55,202)  (36,091)
 27  79  2037            28,224   16,404    403,452   361,646   375,147    (41,806)  (28,305)
 28  80  2038            28,224   16,404    403,452   374,527   382,634    (28,925)  (20,818)
 29  81  2039            28,224   16,404    403,452   386,913   389,832    (16,539)  (13,620)
 30  82  2040            28,224   16,404    403,452   398,822   396,754     (4,630)   (6,698) <==
 31  83  2041            28,224   16,404    403,452   410,273   403,410      6,821       (43) <==
 32  84  2042            28,224   16,404    403,452   421,284   409,809     17,832     6,357 
 33  85  2043            28,224   16,404    403,452   431,871   415,963     28,419    12,510 
 34  86  2044            28,224   16,404    403,452   442,052   421,879     38,599    18,427 
 35  87  2045            28,224   16,404    403,452   451,840   427,569     48,388    24,116 
 36  88  2046            28,224   16,404    403,452   461,252   433,039     57,800    29,587 
 37  89  2047            28,224   16,404    403,452   470,302   438,299     66,850    34,847 
 38  90  2048            28,224   16,404    403,452   479,004   443,356     75,552    39,904 
 39  91  2049            28,224   16,404    403,452   487,371   448,220     83,919    44,767 
 40  92  2050            28,224   16,404    403,452   495,417   452,896     91,965    49,444 
 41  93  2051            28,224   16,404    403,452   503,153   457,392     99,701    53,940 
 42  94  2052            28,224   16,404    403,452   510,591   461,715    107,139    58,263 
 43  95  2053            28,224   16,404    403,452   517,744   465,872    114,292    62,420 
 44  96  2054            28,224   16,404    403,452   524,621   469,869    121,169    66,417 
 45  97  2055            28,224   16,404    403,452   531,234   473,713    127,782    70,261 
 46  98  2056            28,224   16,404    403,452   537,592   477,408    134,140    73,956 
 47  99  2057            28,224   16,404    403,452   543,706   480,962    140,254    77,510 
 48 100  2058            28,224   16,404    403,452   549,585   484,379    146,133    80,926
To run this analysis with a different discount rate, follow these steps:
  • Select All, Copy, and Paste [ * ] the following at cell A1 of a blank Excel sheet.

    Code: Select all

    Discount rate	0.04
    Start pension	43586	=YEAR(B2)	=MONTH(B2)
    Start SS	45536	=YEAR(B3)	=MONTH(B3)
    End 10 years	=DATE(YEAR(B2)+10,MONTH(B2),DAY(B2))	=YEAR(B4)	=MONTH(B4)
    ="Monthly after "&TEXT(B2,"mm/dd/yy")		4199	2352	4318
    ="Monthly after "&TEXT(B3,"mm/dd/yy")		4199	2352	1367
    ="Monthly after "&TEXT(B4,"mm/dd/yy")		0	2352	1367
    Age	Year	10 Year	Constant	Level	10 Year	Constant	Level	Constant	Level
    61	2019	=IF($B9>$C$4,12*C$7,IF($B9=$C$4,($D$4-1)*C$6+(13-$D$4)*C$7,IF($B9>$C$3,12*C$6,IF($B9=$C$3,($D$3-1)*C$5+(13-$D$3)*C$6,IF($B9>$C$2,12*C$5,(13-$D$2)*C$5)))))	=IF($B9>$C$4,12*D$7,IF($B9=$C$4,($D$4-1)*D$6+(13-$D$4)*D$7,IF($B9>$C$3,12*D$6,IF($B9=$C$3,($D$3-1)*D$5+(13-$D$3)*D$6,IF($B9>$C$2,12*D$5,(13-$D$2)*D$5)))))	=IF($B9>$C$4,12*E$7,IF($B9=$C$4,($D$4-1)*E$6+(13-$D$4)*E$7,IF($B9>$C$3,12*E$6,IF($B9=$C$3,($D$3-1)*E$5+(13-$D$3)*E$6,IF($B9>$C$2,12*E$5,(13-$D$2)*E$5)))))	=NPV($B$1,C$9:C9)	=NPV($B$1,D$9:D9)	=NPV($B$1,E$9:E9)	=G9-$F9	=H9-$F9
    =A9+1	=B9+1	=IF($B10>$C$4,12*C$7,IF($B10=$C$4,($D$4-1)*C$6+(13-$D$4)*C$7,IF($B10>$C$3,12*C$6,IF($B10=$C$3,($D$3-1)*C$5+(13-$D$3)*C$6,IF($B10>$C$2,12*C$5,(13-$D$2)*C$5)))))	=IF($B10>$C$4,12*D$7,IF($B10=$C$4,($D$4-1)*D$6+(13-$D$4)*D$7,IF($B10>$C$3,12*D$6,IF($B10=$C$3,($D$3-1)*D$5+(13-$D$3)*D$6,IF($B10>$C$2,12*D$5,(13-$D$2)*D$5)))))	=IF($B10>$C$4,12*E$7,IF($B10=$C$4,($D$4-1)*E$6+(13-$D$4)*E$7,IF($B10>$C$3,12*E$6,IF($B10=$C$3,($D$3-1)*E$5+(13-$D$3)*E$6,IF($B10>$C$2,12*E$5,(13-$D$2)*E$5)))))	=NPV($B$1,C$9:C10)	=NPV($B$1,D$9:D10)	=NPV($B$1,E$9:E10)	=G10-$F10	=H10-$F10
  • Format for readability (cells B2:B4 are dates).
  • Copy cells A10:J10 down to row 48.
  • Enter a different discount rate in cell B1.
* If you have trouble pasting, try "Paste Special" and "Text".

pamcnm
Posts: 17
Joined: Mon Oct 08, 2018 5:42 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 2:53 pm

GeoffD wrote:
Thu Oct 11, 2018 10:42 am
pamcnm wrote:
Thu Oct 11, 2018 9:09 am
bhsince87 wrote:
Tue Oct 09, 2018 10:57 am
I thought CA law required up to 3 years of COBRA?

If so, maybe you can tough it out one more year? Then you would be covered until Medicare age. Plus you would build up more breathing room budget wise.
I can't afford to retire and live in the COBRA service area. I will need to leave California.
Can you move to a lower cost part of CA and rent for 3 years or 4 years? If you bail out to a different state with low cost of living, chances are pretty high that their ACA options won't be very good. You're trying to bridge to age 65 for Medicare and, if possible, age 70 for Social Security. Personally, I wouldn't do anything that relied on ACA until after the mid term elections and the next Congress is in session in January. Too much risk of a late-December health care bill happening.

I'm wondering if there aren't options where you can work as an RN that don't involve physical work? My mother is in a high end memory care facility where all the residents are mobile. If you can't get out of bed or out of a chair, you get ejected to at least the rehab wing of their skilled nursing building. There are probably jobs like that in assisted living places, too. Does "school nurse" still exist in public schools? Town/county elderly services? It would be a pay cut but it keeps you from touching any retirement money for some years.
I've actually priced out ACA options currently available in the county I would like to move and think it's affordable, but I do worry about losing the ability to get insurance with early retirement if the current folks keep hacking away at the ACA.

I don't work as an RN. I'm a midwife. I have an RN license and have experience that I allow me to work in OB as an RN, but the same physical issues would apply, maybe with even more lifting. Unfortunately, they've changed the licensing requirements for NP jobs so moving to exclusive clinic work as a nurse practitioner isn't possible for me. I may be able to work as a consultant or doing some kind of video visits and I am exploring those options.

My painful/severe OA is in my thumbs and right wrist. Turning a doorknob is painful.

pamcnm
Posts: 17
Joined: Mon Oct 08, 2018 5:42 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 2:55 pm

#Cruncher wrote:
Thu Oct 11, 2018 2:33 pm
pamcnm wrote:
Mon Oct 08, 2018 6:31 pm
I will be 61 in January ...
pamcnm wrote:
Tue Oct 09, 2018 12:48 am
If I retire next spring, per my current pension estimates I could receive a lifetime annuity of $2352. A fixed sum payment for 120 months would be in the amount of $4199, and if I took an income leveling option I would receive $4318 until 66 years 8 months and then I would receive $1367 ...
The following table compares the present values (PV) of these three options for each age up through 100 when discounted at 4%. It shows that up through 2023 (the year you turn 65) the $4,318/$1,367 per month "level" option has the highest present value. Then up through 2040 (the year you turn 82) the $4,199 per month 10-Year option has the highest PV. But if you live another year, the constant $2,352 monthly option will have the highest PV, and its excess over the other two options increases every year thereafter.

Code: Select all

Row  Col A                       Col B  Col C  Col D  Col E
  1  Discount rate               4.00%   Year  Month
  2  Start pension            5/1/2019   2019      5
  3  Start SS                 9/1/2024   2024      9
  4  End 10 years             5/1/2029   2029      5
  5  Monthly after 05/01/19             4,199  2,352  4,318 
  6  Monthly after 09/01/24             4,199  2,352  1,367 
  7  Monthly after 05/01/29                 0  2,352  1,367

   ColA  ColB    Col C    Col D    Col E      Col F     Col G     Col H      Col I     Col J
               ---- Yearly Payment -----   ---- Present Value (PV) ----  -- PV vs 10-Year --
Row Age  Year  10-Year Constant    Level    10-Year  Constant     Level    Constant    Level

Code: Select all

  9  61  2019   33,592   18,816   34,544     32,300    18,092    33,215    (14,208)      915 
 10  62  2020   50,388   28,224   51,816     78,887    44,187    81,122    (34,700)    2,236 
 11  63  2021   50,388   28,224   51,816    123,681    69,278   127,186    (54,403)    3,505 
 12  64  2022   50,388   28,224   51,816    166,753    93,404   171,479    (73,349)    4,726 
 13  65  2023   50,388   28,224   51,816    208,168   116,602   214,068    (91,566)    5,900  <==
 14  66  2024   50,388   28,224   40,012    247,991   138,908   245,690   (109,083)   (2,301)
 15  67  2025   50,388   28,224   16,404    286,282   160,356   258,156   (125,926)  (28,126)
 16  68  2026   50,388   28,224   16,404    323,100   180,979   270,142   (142,121)  (52,958)
 17  69  2027   50,388   28,224   16,404    358,501   200,809   281,667   (157,693)  (76,834)
 18  70  2028   50,388   28,224   16,404    392,542   219,876   292,749   (172,666)  (99,793)
 19  71  2029   16,796   28,224   16,404    403,452   238,210   303,405   (165,243) (100,047)
 20  72  2030            28,224   16,404    403,452   255,838   313,651   (147,614)  (89,801)
 21  73  2031            28,224   16,404    403,452   272,789   323,503   (130,663)  (79,950)
 22  74  2032            28,224   16,404    403,452   289,087   332,975   (114,365)  (70,477)
 23  75  2033            28,224   16,404    403,452   304,759   342,084    (98,693)  (61,368)
 24  76  2034            28,224   16,404    403,452   319,828   350,842    (83,624)  (52,610)
 25  77  2035            28,224   16,404    403,452   334,318   359,264    (69,134)  (44,189)
 26  78  2036            28,224   16,404    403,452   348,250   367,361    (55,202)  (36,091)
 27  79  2037            28,224   16,404    403,452   361,646   375,147    (41,806)  (28,305)
 28  80  2038            28,224   16,404    403,452   374,527   382,634    (28,925)  (20,818)
 29  81  2039            28,224   16,404    403,452   386,913   389,832    (16,539)  (13,620)
 30  82  2040            28,224   16,404    403,452   398,822   396,754     (4,630)   (6,698) <==
 31  83  2041            28,224   16,404    403,452   410,273   403,410      6,821       (43) <==
 32  84  2042            28,224   16,404    403,452   421,284   409,809     17,832     6,357 
 33  85  2043            28,224   16,404    403,452   431,871   415,963     28,419    12,510 
 34  86  2044            28,224   16,404    403,452   442,052   421,879     38,599    18,427 
 35  87  2045            28,224   16,404    403,452   451,840   427,569     48,388    24,116 
 36  88  2046            28,224   16,404    403,452   461,252   433,039     57,800    29,587 
 37  89  2047            28,224   16,404    403,452   470,302   438,299     66,850    34,847 
 38  90  2048            28,224   16,404    403,452   479,004   443,356     75,552    39,904 
 39  91  2049            28,224   16,404    403,452   487,371   448,220     83,919    44,767 
 40  92  2050            28,224   16,404    403,452   495,417   452,896     91,965    49,444 
 41  93  2051            28,224   16,404    403,452   503,153   457,392     99,701    53,940 
 42  94  2052            28,224   16,404    403,452   510,591   461,715    107,139    58,263 
 43  95  2053            28,224   16,404    403,452   517,744   465,872    114,292    62,420 
 44  96  2054            28,224   16,404    403,452   524,621   469,869    121,169    66,417 
 45  97  2055            28,224   16,404    403,452   531,234   473,713    127,782    70,261 
 46  98  2056            28,224   16,404    403,452   537,592   477,408    134,140    73,956 
 47  99  2057            28,224   16,404    403,452   543,706   480,962    140,254    77,510 
 48 100  2058            28,224   16,404    403,452   549,585   484,379    146,133    80,926
To run this analysis with a different discount rate, follow these steps:
  • Select All, Copy, and Paste [ * ] the following at cell A1 of a blank Excel sheet.

    Code: Select all

    Discount rate	0.04
    Start pension	43586	=YEAR(B2)	=MONTH(B2)
    Start SS	45536	=YEAR(B3)	=MONTH(B3)
    End 10 years	=DATE(YEAR(B2)+10,MONTH(B2),DAY(B2))	=YEAR(B4)	=MONTH(B4)
    ="Monthly after "&TEXT(B2,"mm/dd/yy")		4199	2352	4318
    ="Monthly after "&TEXT(B3,"mm/dd/yy")		4199	2352	1367
    ="Monthly after "&TEXT(B4,"mm/dd/yy")		0	2352	1367
    Age	Year	10 Year	Constant	Level	10 Year	Constant	Level	Constant	Level
    61	2019	=IF($B9>$C$4,12*C$7,IF($B9=$C$4,($D$4-1)*C$6+(13-$D$4)*C$7,IF($B9>$C$3,12*C$6,IF($B9=$C$3,($D$3-1)*C$5+(13-$D$3)*C$6,IF($B9>$C$2,12*C$5,(13-$D$2)*C$5)))))	=IF($B9>$C$4,12*D$7,IF($B9=$C$4,($D$4-1)*D$6+(13-$D$4)*D$7,IF($B9>$C$3,12*D$6,IF($B9=$C$3,($D$3-1)*D$5+(13-$D$3)*D$6,IF($B9>$C$2,12*D$5,(13-$D$2)*D$5)))))	=IF($B9>$C$4,12*E$7,IF($B9=$C$4,($D$4-1)*E$6+(13-$D$4)*E$7,IF($B9>$C$3,12*E$6,IF($B9=$C$3,($D$3-1)*E$5+(13-$D$3)*E$6,IF($B9>$C$2,12*E$5,(13-$D$2)*E$5)))))	=NPV($B$1,C$9:C9)	=NPV($B$1,D$9:D9)	=NPV($B$1,E$9:E9)	=G9-$F9	=H9-$F9
    =A9+1	=B9+1	=IF($B10>$C$4,12*C$7,IF($B10=$C$4,($D$4-1)*C$6+(13-$D$4)*C$7,IF($B10>$C$3,12*C$6,IF($B10=$C$3,($D$3-1)*C$5+(13-$D$3)*C$6,IF($B10>$C$2,12*C$5,(13-$D$2)*C$5)))))	=IF($B10>$C$4,12*D$7,IF($B10=$C$4,($D$4-1)*D$6+(13-$D$4)*D$7,IF($B10>$C$3,12*D$6,IF($B10=$C$3,($D$3-1)*D$5+(13-$D$3)*D$6,IF($B10>$C$2,12*D$5,(13-$D$2)*D$5)))))	=IF($B10>$C$4,12*E$7,IF($B10=$C$4,($D$4-1)*E$6+(13-$D$4)*E$7,IF($B10>$C$3,12*E$6,IF($B10=$C$3,($D$3-1)*E$5+(13-$D$3)*E$6,IF($B10>$C$2,12*E$5,(13-$D$2)*E$5)))))	=NPV($B$1,C$9:C10)	=NPV($B$1,D$9:D10)	=NPV($B$1,E$9:E10)	=G10-$F10	=H10-$F10
  • Format for readability (cells B2:B4 are dates).
  • Copy cells A10:J10 down to row 48.
  • Enter a different discount rate in cell B1.
* If you have trouble pasting, try "Paste Special" and "Text".
Thank you Cruncher for this data.

pamcnm
Posts: 17
Joined: Mon Oct 08, 2018 5:42 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 3:05 pm

windrose wrote:
Thu Oct 11, 2018 2:27 pm
What is FRA for the pension? Is it 60? If not, what sort of reduction are you looking at by taking the pension early?

Also, does the pension have a cost of living adjustment?

My pension has a level income option as well, but the end date is 62 for everyone--but they don't know/care if you file for SS or not, it is just to calculate the payment. So you could get the level income option and still apply/collect early at 62. It is probably not a good idea, but you never know.

And just to consider one more option...what would your monthly income be if you chose lifetime annuity pension and early SS?
My income leveling option is calculated is based on SSNRA (66 years and 8 months for me).

There seem to be quite a few different ways to take my pension, and that's what brought me here with my question. It doesn't seem to make adjustments for inflation, however.

If I take a monthly annuity of $2352 and early SS at 62 in the amount of $1792, my monthly income would be $4144. Then I could leave my 401K alone to grow. Thanks for asking:-)

User avatar
Mlm
Posts: 296
Joined: Sat Apr 09, 2016 6:00 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by Mlm » Thu Oct 11, 2018 3:30 pm

pamcnm wrote:
Thu Oct 11, 2018 3:05 pm


My income leveling option is calculated is based on SSNRA (66 years and 8 months for me).

There seem to be quite a few different ways to take my pension, and that's what brought me here with my question. It doesn't seem to make adjustments for inflation, however.

If I take a monthly annuity of $2352 and early SS at 62 in the amount of $1792, my monthly income would be $4144. Then I could leave my 401K alone to grow. Thanks for asking:-)
With SS of $2,648 @ FRA 66.8 would give you 71.666% at 62 or $1,897
See this chart

https://www.ssa.gov/oact/ProgData/ar_drc.html

jahol000
Posts: 54
Joined: Fri Aug 27, 2010 3:00 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by jahol000 » Thu Oct 11, 2018 3:48 pm

Touched on by others but you may want to explore the income ceilings for each level of the ACA subsidy. You may find that reducing your income between retirement and medicare eligibility will qualify you for a meaningful reduction in your out-of-pocket insurance costs, >$10K/yr. For example, taking the reduced lifetime pension amount and then supplementing it with a portion of your home sale proceeds might do the trick. You could rent until you turn 65 and then reassess the situation.

GeoffD
Posts: 55
Joined: Tue Mar 20, 2018 1:31 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by GeoffD » Thu Oct 11, 2018 4:30 pm

Mlm wrote:
Thu Oct 11, 2018 3:30 pm
pamcnm wrote:
Thu Oct 11, 2018 3:05 pm


My income leveling option is calculated is based on SSNRA (66 years and 8 months for me).

There seem to be quite a few different ways to take my pension, and that's what brought me here with my question. It doesn't seem to make adjustments for inflation, however.

If I take a monthly annuity of $2352 and early SS at 62 in the amount of $1792, my monthly income would be $4144. Then I could leave my 401K alone to grow. Thanks for asking:-)
With SS of $2,648 @ FRA 66.8 would give you 71.666% at 62 or $1,897
See this chart

https://www.ssa.gov/oact/ProgData/ar_drc.html
Yeah, I don't get the OP's Social Security numbers. They're all over the place. I'm the same age as the OP born in 1958. SSDI would more or less be the same as my FRA Social Security check. I've got 29 years of max Social Security contributions and another 6 of good income so I'm within $100/month of the maximum possible Social Security check. The OP is quoting numbers that are nonsensical. Some of them are higher than mine. Some are a lot lower. You kind of have to sit down with SSA publication no. 05-10070, punch in the numbers, and see where you really stand. The estimated numbers on the SSA portal assume you're making your current income until the day you start collecting.

If the pension is really $4,200/month over 10 years, that's a $504K payout. I imagine the lump sum rolled into an IRA would be about $400K. Without knowing the lump sum number, it's hard to say. Add another $225K in tax deferred, that's maybe $625K in tax deferred. I'd guess the OP can spend a COLA-protected $45K per year and not run out of money. In a paid-for house with low ownership costs, that's not horrible for age 60 and not being able to work but not qualifying for SSDI. That's a 75th percentile retirement.

I don't understand why someone age 60 is on the hook for kid school loans so that needs to be addressed. The kid needs to suck it up and pay the loan back. The gravy train just ended.

pamcnm
Posts: 17
Joined: Mon Oct 08, 2018 5:42 pm

Re: early retirement for health reasons- pension option ss income leveling?

Post by pamcnm » Thu Oct 11, 2018 6:02 pm

Mlm wrote:
Thu Oct 11, 2018 3:30 pm
pamcnm wrote:
Thu Oct 11, 2018 3:05 pm


My income leveling option is calculated is based on SSNRA (66 years and 8 months for me).

There seem to be quite a few different ways to take my pension, and that's what brought me here with my question. It doesn't seem to make adjustments for inflation, however.

If I take a monthly annuity of $2352 and early SS at 62 in the amount of $1792, my monthly income would be $4144. Then I could leave my 401K alone to grow. Thanks for asking:-)
With SS of $2,648 @ FRA 66.8 would give you 71.666% at 62 or $1,897
See this chart

https://www.ssa.gov/oact/ProgData/ar_drc.html
That's interesting! I used the estimator for my name and ss number to get my estimates!

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