How best to prepare for retirement 5 years out

snappy

Survivor
Joined
Apr 15, 2002
When I obtained my policy 6 years ago at age 60, there were a number of options to pick from, including duration of benefits and daily benefit limit. The way mine works is, there is a pool of benefits. If you use less than the daily benefit, your benefits last longer. I also chose the inflation factor rider and the ability to use family members to provide care if you choose that option. The benefits are covered whether care is provided in your home or in a facility, if you require assistance with 2 of the 5 daily living activities. My best friend and I spent months comparing plans and benefits from a number of insurance companies and talked to a number of professionals familiar with LTC. I was able to obtain a policy through the AIPCA, with Prudential which was accepting new insureds at that time. The benefits have not been reduced nor the premiums increased since that time. I passed underwriting but my husband did not so we were unable to obtain a policy for him.
 

HopperFan

"It's a bug-eat-bug world out there, princess."
Joined
Sep 6, 2003
Only thing...I'm seeing a lot of LTC policies limiting payouts to 3-5 years and having payout total caps (like $300K)...they are getting tighter now that they realize how long people can live, so the question of LTC vs separately saved fund won't be so cut and dried probably by the time those in their 30s/40s retire...
If that happens it is because that is the policy they purchased. A reputable policy allows you to pick all your own monthly and overall cap, and types of needs covered. Your premiums will then reflect what you purchased. If I were in my 30-40's, no I wouldn't buy one and pay in to it that long, I'd be diligent with my own "policy" savings. But for someone not that young, a policy can be way more affordable than risking medical bankruptcy.
 

dvcterry

DIS Veteran
DVC Gold
Joined
Jul 14, 2010
I will retire from teaching in 5 years. My DH will retire from the private sector at roughly the same time. We max out my 403b and his 401k. We have not contributed to a Roth IRA since I expect our taxes to be significantly lower once we retire. We will also delay social security until full retirement age. We will be 63 when we retire. I will collect a pension and DH will as well (smaller than mine, however).

We have no debt. House is paid, kids on their own, etc. We have liquid savings, as well as stocks/mutual funds, etc.

Is there something else we should be doing?
Have you planned all your future Disney trips beginning 5 years from now. That's what's missing. :teacher:
 
  • smiths02

    DIS Veteran
    Joined
    Feb 13, 2009
    I agree on two fronts on long term care insurance. Everyone should have it, but you have to purchase it when you are young.
    I think we were in our late 40s when were purchased ours. Our Financial Planner last year did check to see what what premiums were for a similar plan for us with a different company, we were 61 at the time. Our current plan is $4,000 a year for my wife and I. A similar plan today, the lowest price came in at $12,000 a year!
    I've heard the guideline that around age 60 is a good time to purchase LTC insurance. That way you avoid paying years of unnecessary premiums, but are young enough to get an okay rate.
    Edited to change to 60.
     
    Last edited:

    tvguy

    Question anything the facts don't support.
    Joined
    Dec 15, 2003
    Also, this should be done at any age, but make sure all your estate planning, will, living will, knowledge of accounts, last wishes, etc. is taken care of.
    I was very pleased that my son and his wife did this as soon as they got married, before they bought a house or had a child. They were 29 and 28 at the time. But they say what a wonderful job my mom did with her estate planning, and how much there was still left for me to deal with that could not have been anticipated before she passed.
     

    Frwinkley

    Mouseketeer
    Joined
    Jan 10, 2016
    OP here:

    My father was 12 years older than my mother. She was able to care for him at home until he passed away.

    I agree; it is a much different scenario when both people require extensive care. I’m still not convinced that LTC is the way to go though.
     
  • snappy

    Survivor
    Joined
    Apr 15, 2002
    For what it’s worth my research indicates women tend to linger longer in the condition requiring assistance. Another option you may check out is whether there is a continuing care retirement community (CCRC) in the city where you plan to retire. My mother lives in one. Some residents use theirs LTC benefits here, most like my mom do a buy in to secure a stable amount when moving in at the independent activity which stays level except for 2 additional meals when the need arises to move to a higher level of care which would cost double or triple or more without the buy in. CCRC’s can be both for profit and non-profit.
     

    BridgetBordeaux

    DIS Veteran
    Joined
    Jun 27, 2008
    I will retire from teaching in 5 years. My DH will retire from the private sector at roughly the same time. We max out my 403b and his 401k. We have not contributed to a Roth IRA since I expect our taxes to be significantly lower once we retire. We will also delay social security until full retirement age. We will be 63 when we retire. I will collect a pension and DH will as well (smaller than mine, however).

    We have no debt. House is paid, kids on their own, etc. We have liquid savings, as well as stocks/mutual funds, etc.

    Is there something else we should be doing?
    My first gut reaction to reading your post..............(and I kept reading all the replies so far) ............ was to ask if you have been working with a financial planner. They can run a "Monte Carlo" analysis on all your financial resources and provide a great assessment of where you stand and can factor in optional variables like LTC insurance cost or a prolonged illness.

    In our case, we bought our LTC policies when we were young. Even though our yearly cost is 2.5 times our original amount, we are able to afford to keep it going. Our cost is cheap by today's standards. Yes, buying it in your 60's is an expensive proposition.
     

    tvguy

    Question anything the facts don't support.
    Joined
    Dec 15, 2003
    Only thing...I'm seeing a lot of LTC policies limiting payouts to 3-5 years and having payout total caps (like $300K)...they are getting tighter now that they realize how long people can live, so the question of LTC vs separately saved fund won't be so cut and dried probably by the time those in their 30s/40s retire...
    Except that statistics show people don't live that long once they require long term care. Typical is about 18 months. You certainly can burn through a lot of money depending on the cost of the facility you chose. The places I looked at for my mom six years ago ran $3,800 to $8,000 a month.
     


    Connect

    Disney News and Updates

    Get Daily Email Updates


    Top