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November 1, 2007 at 1:49 PM in reply to: Advice wanted concerning retirement options! Please read #94318November 1, 2007 at 1:49 PM in reply to: Advice wanted concerning retirement options! Please read #94280NYCLurkerParticipant
I happen to be an employee benefits manager at a large bank, so here goes:
1. You need to talk to a qualified financial planner — this is a complicated issue.
2. If you dont want to do #1, then consider the following:— Read this summary (I snagged off the web) about the issue (deciding between a single life or “joint and survivor” pension):
**Retirees in traditional defined benefit (DB) plans generally choose between single life annuities, which provide regular payments until the death of the pension recipient, and joint and survivor annuities, which continue to make payments to the spouse after the death of the retired worker. For a given pension, a single life annuity generates higher monthly payments than a joint and survivor annuity, because it generally provides payments for a shorter period of time. Married retirees who select the joint and survivor option typically accept lower monthly payments when both they and their spouses are alive, in return for insurance against the risk that they will die before their spouses and leave them with insufficient income. Whether retirees are willing to accept this trade-off may depend on a number of factors, including their economic situation and desire for additional income to meet current consumption needs, the availability of other resources that could protect the surviving spouse in the event of widowhood, and the relative life expectancy of each spouse. Overall, 28 percent of married men and 69 percent of married women opt for single life annuities instead of joint and survivor annuities. Although this choice may jeopardize their spouses’ economic security if they become widowed, most married retirees appear to make their pension payout decisions by rationally balancing the costs and benefits of each type of annuity. For example, retirees are more likely to reject survivor protection when:
the spouse has access to alternative sources of survivor protection, such as pension coverage in their own names;
they have limited pension wealth, increasing the financial pain of trading current pension income for survivor protection; they expect to outlive the spouse; and
the relationship with the spouse is weak.
After accounting for other sources of spousal survivor protection, the affordability of spousal protection, and health status, only 7 percent of married men and 3 percent of married women reject spousal survivor protection without evidence of potentially compelling reasons.**Now, (back to me here), this whole issue is primarily concerned with RETIREMENT INCOME. You need to sit down and do some financial planning and figure out:
1. how much $ do you HAVE in retirement (with and without your wife) factoring in cash, real estate, other assets, current income, life insurance, etc etc.
2. how much $ do you NEED in retirement, considering all the possible variables here — lifestyle, monthly expenses, life expectancy, etc etcA SEPARATE issue is on the table here (part of #2 above) — that of health insurance and its cost — I assume you are referring to health insurance eligibility when you say “insurance”?
Health insurance is important (and expensive), but remember, the key age here is 65 NOT 62 because that is when you are eligible for MEDICARE (NOT Medicaid — Medicaid is for the INDIGENT, i.e. poor people with little or no assets and is primarily a state-based “program”).
So, step one, identify your eligibility for Medicare — here’s a summary (Check the Web or call Social Security):
People age 65 and older who are citizens or legal residents of the United States and who have worked (or their spouse has worked) for at least 10 years (or 40 quarters) in Medicare-covered employment.
People who have worked 30 to 39 quarters are eligible and can enroll in Medicare, but they will pay a monthly premium for Part A ($226 in 2007), as well as the Part B premium ($93.50 in 2007).
Understand what Medicare covers: Medicare covers hospital costs (Part A) and some medical costs (Part B) and some drug costs (Part D). Check the Web.
Decide if you need or can afford medicare-supplemental coverage after age 65. Many many people >65 have Medicare with no supplemental coverage to fill in the gaps — it’s not the end of the world.
Decide how you can go about securing coverage between now (you are 57 right?) and when you will turn 65. Identify how much this coverage will cost (individual plans are MUCH more expensive than your wife’s group plan). If you lose employer-sponsored coverage, COBRA will get you 3 years of coverage at 100% of your wife’s employer’s cost — depending upon the medical plan design that could be around $400 a month (if your employer treats employees and retirees <65 as a single risk pool). $600-800/month if they price <65 retirees as a self-supporting pool. Then do the math and compare to the pension decrement.
But what to do after 3 years when COBRA runs out? An individual policy -- IF you can get one, would cost many times more than employer-provided coverage. So think carefully about whether you are willing to "self-insure" your health risk between age 60 and age 65 (years when your statistical "morbidity rate" is quite high!).
I could go on and on, but I get paid to give this info to our employees not on real estate boards. π
NYCLurkerParticipantSorry for being so NY-centric. Now that you mention it, I suppose pied-a-terre carries a highly specific meaning to Manhattanites — “a studio or 1 br owned by out-of-towners so they can occasionally fly in, enjoy the theater/museums/restaurants, sleep on a bed without other peoples’ fluids all over it, and fully enjoy the mortgage interest deduction”. Another way of saying “crash pad that you DONT rent out when you’re not there”.
Anyway — any info on the Martinique complex would be much appreciated.
NYCLurkerParticipantSorry for being so NY-centric. Now that you mention it, I suppose pied-a-terre carries a highly specific meaning to Manhattanites — “a studio or 1 br owned by out-of-towners so they can occasionally fly in, enjoy the theater/museums/restaurants, sleep on a bed without other peoples’ fluids all over it, and fully enjoy the mortgage interest deduction”. Another way of saying “crash pad that you DONT rent out when you’re not there”.
Anyway — any info on the Martinique complex would be much appreciated.
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