As I inch closer and closer to retirement, I am starting to take a harder look at things like what I have, what I need, and what I might have done differently. I know that last part is a tricky one. There isn't anything I can change now, so it is silly to dwell on it, but I still find myself kicking my own butt now and again.
Actually, as of this last pay, I am fully vested and in a perfect world, I could retire whenever I want. I won't of course, I still have a mortgage to pay off and at 50 years old, I am still a bit too young to collect the majority of my hard earned savings I have been accumulating over the past 25 years.
I've said it before here, that the thing that scares me the most about my post-work life is health insurance. Well, imagine my dismay the other day when I realized I may have made a critical error in a decision I made several years ago.
If I had to guess, it was about ten or fifteen years ago, and we got a message that the State of Michigan was changing a few things about thow the retirement system worked. The first change had to do with how our pension was funded. That's right, state employees get a pension. I know that is a hotly contested issue among people who think public school employees are overpaid.
The truth is, compared to the private sector we are severely underpaid, the fact that we get a pension (and some other benefits I will explain in a bit) is just a small token for the things we go through trying to raise and educate the next generation. Sure, tax dollars don't pay private sector employees, so people feel like they have a vested interest in public education salaries, but trust me when I say, the majority of your tax dollars that are supposed to go to schools get reallocated other places anyway.
If you really knew how the system works, you might be more forgiving to public school employees.
Anyway, when this change over happened, the first choice we were given was we could either have more money taken out of our check each pay to continually increase our pension percent, or we could cap the pension percentage at 1.5% and then do our own thing. Since @mrsbozz and I both work in the school system, I thought it might be smart to hedge our bets and have one of us do the first option while the other person selected the second option. While the deduction from her paycheck has slowly increased over time, my deductions have stopped, and instead, I started pulling out more money on my own each month and putting it into my own investments via a Roth IRA and a 403B.
The second option had to do with our health insurance. We could either select subsidized health insurance in retirement for the rest of our lives, or a matching contribution into a VOYA account that we can eventually use to cover any medical costs we have in retirement. The problem is, at the time, there was very little information about the choice and our business director at school was very dismissive about questions concerning the plan because they didn't want to be accused of influencing anyone's choice.
With the limited information I had available to me at the time, I once again hedged my bets and I selected the subsidized health care for my wife, and the investment plan for myself. Now, as I start to look at what retirement will mean for me, I am realizing I may have not made the best choice. Especially given the ever increasing cost of healthcare.
Estimates from Google indicate that purchasing your own stand alone healthcare from the age of 60 until you die can cost somewhere in the neighborhood of $385,000 to $500,000. I'm not going to give the number, but trust me when I say, my current investment account is nowhere near that.
The good news is, as long as @mrsbozz is okay, she covers the health insurance for the two of us. Additionally, if she retires, I think she can keep me on her subsidized health insurance plan. However, if something happens to her, and I have already retired, I am going to be on my own.
Knock on wood that doesn't happen, but it something I have to consider as I look at this next stage of my life.
I reached out to the state retirement office and expressed my concerns about how little information we got. I asked if we could change our selection and they stated that the choice we made back then was irrevocable.
Granted, I realize that my position is really no different than most peoples who don't have a state funded retirement program. However, part of me feels like if they had implemented the investment plan earlier, I might be sitting in a better position. Maybe by the time I need it we will have universal healthcare and it won't matter. I guess the most important thing is @mrsbozz will be taken care of if something were to happen to me.
At the end of the day, that's really all that matters right?
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Damn, you have a complicated system!! I don't know what is best or not, but I guess it doesn't matter for me, since you know my retirement "plan" already :) In Finland though, healthcare is one of those human right things (to a point) that everyone gets. I don't know how long that can last though, as we keep shifting closer to the US system - more profit for companies, crappier conditions for people.
We need some change in a big way here. It's getting to the point where no matter how much money we have saved up, it isn't going to be enough. All I can really do at this point is just keep stuffing money away and hope it's still there when I need it!
Try not to beat yourself up. It's so tough to know the right thing to do in those situations—especially since you were younger when you were faced with the decision and information was sparse. My SIL worked as an auditor for the IRS for decades and when she left her job to move to Sedona, AZ in 1995 she was faced with the option of a lump sum payout that greatly reduced her Social Security payments when the time came for her to collect it. She was in need of $$ at the time, for the move, so she took the lump sum payout. Now her SS payment is now only around $300 per month, not nearly enough to live on.
The price of private healthcare was the main thing holding me back from leaving my day job so long, especially before the Affordable Care Act was put into place. Healthcare costs are high atop of the list of things I continue to worry about as well. My wife will be eligible for Medicare in a couple of years and then I'll have to stay on UCare for another seven years. UCare so expensive, even with income subsidies, as well as being very complicated to navigate. The past two years in a row we've been kicked off the program due to "clerical errors", put on county assistance which made us lose access to most of my wife's specialists, and had to spend countless hours getting things straightened out. Our healthcare system is so broken, there are so many layers of bureaucracy it makes your head spin. We desperately need universal healthcare in the US.
The good news is, as long as I work here, I am still contributing 2% and they are matching it, so I at least have something. It's just the unknown of knowing if it will be enough when the time comes. They way it works, a lot of that depends on the markets, so who really knows. I'd even be open to a tiered system like they have in other countries where you get basic healthcare, but then if you can afford it, you can get a premium level of care. My hope has always kind of been that I can be a bit better off once I am retired than I am now, but who knows.
Teachers definitely don't get the support or funding you guys deserve. It's among the most important jobs possible, and constantly you guys get the short end of the stick.
Indeed they do!
Seems like education doesn't get what it deserves and this is the case in most countries. The pension system and state funded retirement program is different everywhere though.
Yeah, it's kind of a thankless job, but many of them are, even outside of public education.
There's something I keep seeing in movies and don't understand, maybe you can explain it to me.
In cop movies I often see they say if they are let go due to misconduct or such things, they lose their pension. This is kind of crazy as that's their own contribution, their money, so how can anyone take it away from them?
It's more of a matched thing. Yes, they should really get back the portion they paid into it, but they wouldn't necessarily get the portion that the state paid into it. That goes back to people being mad that their tax dollars are paying for our salaries and pensions. They fail to look at the services we are offering their children.
Education and healthcare should be among the 1st, but they don't get it.
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