Retirement Planning - Social Security, Reverse Mortgage, & Medicare

Gloobnib

Travel Burninator
A combination of Tax Season and a death in the extended family has me pondering/planning/wargaming scenarios for early retirement. One wildcard/impediment between me and early retirement is the question of healthcare.

Long story short, there is a distinct possibility my wife and I will be financially able to retire somewhere between the ages of 55 and 72. Yes, that is quite a range. KEY: Of the two of us, my wife is much more likely to encounter significant health issues before I do. Neither of us is chronically ill, but I'm taking into account several factors including family history etc. Also Key: She is 3 years younger than me.

As I see it there are several inflection points in terms of when I might choose to retire (below). In all of them, I am assuming we will have enough invested in IRA/ROTH/401(k) to live roughly the same lifestyle as we do now. We will be 100% debt free before any of the below inflection points happen. All of them assume she is not working outside the home.

  • I retire at age 55 and we begin living off of savings/investments. Private health insurance is likely to be prohibitively expensive and will rapidly deplete savings and/or investments
  • I retire at SSI early retirement age (62) or medicare eligibility age (65). Private health insurance is still an issue but 3-6 years is easier to swing than 10-13 years.
  • We wait until she is eligible for medicare for me to retire (age 68).
  • We wait until my full retirement age (age 72)
Would a Reverse Mortgage be a feasible way to bridge the medical insurance gap (paying our premiums) for one of the first two scenarios? I've done a little research and it seems like that is a plausible solution, especially if we can manage our investments in such a way as to keep our AGI at roughly the Federal Poverty Level (means we can buy insurance on the exchanges at subsidized rates and also get Cost Sharing Reductions on out-of-pocket). If we can basically use a reverse mortgage to cover our fairly low living expenses (remember - debt free), then the AGI thing should be easy to swing.

Am I missing something important here?

Gloob
 

GettingReady

Level 2 Member
My husband waited until he was eligible for Medicare due to his health. He also went with a Medigap Policy. No more worrying what our 20% or copays will be. As far as SS, he filed and restricted and is drawing off of mine until he turns 70 when he’ll draw his own. He was the older, higher wage earn and statistically I’ll outlive him giving me the higher survivor benefits.

I’m six years younger, not on any meds, and retired a little early at age 59. I was covered under his health insurance until he retired and then went to a healthcare sharing plan (which I haven’t used).

We’ve also chosen to sell our home, downsize, and go to a rental with a fixed expense. I absolutely love it.
 

volker

Level 2 Member
Depending on health, number of medications and their cost as well as number of doctor visits a year, a health insurance via healthcare.gov doesn't need to be too bad. Future will show how much this will change or not.

Since health insurance (and not savings) seem to be your main concern, you could also consider reducing your work hours. A lot of companies require you to work X hours for their health insurance, but you could try to negotiate less hours. You could also take a lot of unpaid leave if the company allows it, usually they are restricted in the contract, but this is also negotiable. Or work only 3 months a year, like a lot of Santa Clause due.
 

MickiSue

Level 2 Member
Supporter
My husband waited until he was eligible for Medicare due to his health. He also went with a Medigap Policy. No more worrying what our 20% or copays will be. As far as SS, he filed and restricted and is drawing off of mine until he turns 70 when he’ll draw his own. He was the older, higher wage earn and statistically I’ll outlive him giving me the higher survivor benefits.

I’m six years younger, not on any meds, and retired a little early at age 59. I was covered under his health insurance until he retired and then went to a healthcare sharing plan (which I haven’t used).

We’ve also chosen to sell our home, downsize, and go to a rental with a fixed expense. I absolutely love it.
I’m semi retired, at 68. Most of my income, other than pension and SS comes from C/B cards and low level reselling. In fact, I m currently doing a down to to minute details inventory of my Amazon Marketplace stock, with the thought of selling it for lump sum.

Husband is younger, still working, so Medicare isn’t cure an issue.

I would look into what’s available at what price on the exchanges in your state, for insurance. In mine, costs and coverages vary greatly, even within a particular insurer’s offerings. The same goes for the Medicare Part C coverage, as well.

As for reverse mortgage, I’d look long and hard at that idea. Getting Ready’s choice to sell, bank the profit and rent makes more sense to me, actually.

Or even to sell and downsize to a condo or townhome, putting the price difference into savings/investment. The special upside to either downsizing to a shared community or apartment is, of course, that outdoor maintenance is unnecessary, and with all the travel you have planned, (of course, right?) you can close your door and leave, knowing all that will be done while you’re gone.
 

JJAviator

Level 2 Member
Consumer Reports advises that a reverse mortgage should only be used as a last resort. Also, check out Clark Howard's site; he has good in-depth info on this topic.
 

Hatablig

New Member
If you were like Fedor Holz, you could retire like him (check Fedor Holz leaving poker) and look for some ideas from his plans for retirement. But unfortunately, there are not so many millioners among us. Anyway, your plans for traveling seem great
 
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