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Posted by Avrum Lapin on September 10, 2008, 5:38 pm
> >
> > I don't think anyone can plan for employer-provided health benefits in
> > retirement. You might have them when you retire, but how long will it be
> > before the employer makes unilateral changes?
> > --
>
> There are several "tiers" to the PERS retirement system in Alaska. The court
> has ruled that the retirement benefit package promised to the employees,
> including system-paid health care, are a contract and cannot be unilateraly
> revoked. I don't know why this doesn't seem to apply to privately
> admnistered pensions. Perhaps the employees aren't so well organized nor
> represented.
>
My recollection of the deciding case (Douglas Aircraft - before it was
part of McDonnell Douglas now Boeing) was that the offer of health care
after retirement was not a contractual promise and was not covered by
ERISA (pension law).
I suspect that if you read the Alaska plan it specifically promises
coverage after retirement. I no longer have the booklets that I got from
General Dynamics which offered coverage until age 65 and then an
allowance to cover the cost of Part B. After GD sold the missile
business to Hughes, we were left to Hughes' generosity - the ability to
buy health coverage at COBRA rates until age 65 and then you depend
solely on Medicare. There was a legal challenge but the Douglas
precedent held.
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Posted by HW \"Skip\" Weldon on September 11, 2008, 8:55 am
wrote:
>> The court
>> has ruled that the retirement benefit package promised to the employees,
>> including system-paid health care, are a contract and cannot be unilateraly
>> revoked. I don't know why this doesn't seem to apply to privately
>> admnistered pensions. Perhaps the employees aren't so well organized nor
>> represented.
>>
>I suspect that if you read the Alaska plan it specifically promises
>coverage after retirement.
The problem here in SC is that employers who still continue coverage
on retired employees - primarily public employers like State and
Federal government - are not dropping the benefit, but hiking the
retiree's out of pocket costs by a noticeable amount. Ditto for the
plan deductibles and co-insurance benefits.
-HW "Skip" Weldon
Columbia, SC
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Posted by joetaxpayer on September 4, 2008, 2:12 pm
HW "Skip" Weldon wrote:
> I'd like to see comments on the issue of early retirement.
>
> First, consumers in their 50s and 60s spend more on healthcare than
> youngsters, so they will need a good insurance policy. Around here
> that costs around $1000/month. Ignoring taxes because I don't know
> what they'll be a decade or more from now, using a 4% withdrawal
> factor requires a present value sum of $300,000 just for health
> insurance (that's for those who retire today).
>
> Given that number, and looking at a 4% withdrawal factor, future
> yearly inflation and obstacles to withdrawing from 401k and IRAs, I
> question the practicality of a normal person trying to plan for an
> early retirement that comes anywhere near maintaining their present
> lifestyle.
As Dave responded, the health issue may be more about bridging the gap
to 65. If 'normal' is median, then it just doesn't happen. On the other
hand, you read about the $80,000 earners who never changed lifestyle as
they worked up from $40,000. If one can save a high (25-30) percent of
income, they may find they are saving toward that 20X number but they
can live on less than half their pre-retirement gross.
I think the health warning is the one to worry about more than any
other. I can plan for a certain lifestyle yet cut back on things like
vacations, dinners out, etc. in bad times, but the rising health costs
are toughest to plan, and will eat into everything else.
Joe
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Posted by jIM on September 4, 2008, 2:52 pm
>On the other
> hand, you read about the $80,000 earners who never changed lifestyle as
> they worked up from $40,000. If one can save a high (25-30) percent of
> income, they may find they are saving toward that 20X number but they
> can live on less than half their pre-retirement gross.
>
> I think the health warning is the one to worry about more than any
> other. I can plan for a certain lifestyle yet cut back on things like
> vacations, dinners out, etc. in bad times, but the rising health costs
> are toughest to plan, and will eat into everything else.
>
I see two issues:
1) accumulating the money
2) expenses in retirement
As joe alludes- most of my ER strategy now is accumulation. I started
saving 6% of my pay (small amount- just graduated and single) in
1997. Fast forward a marriage, twins born in 2008 and our savings
rate is 20% of 3X my original salary now. Every year I will attempt
to bleed another % or two out of this. If I am saving 50% my personal
savings will mean more than compounding in many ways to reach the
desired level. Most people which ER have a savings rate of 30-40% (or
so I read).
The expenses part also varies, but if a person could LBYM to save
30-40% then they could easily retire spending less than they earned
while working. I think the living below one's means is an important
part of early retirement planning.
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Posted by Ignoramus17332 on September 4, 2008, 3:45 pm
> I'd like to see comments on the issue of early retirement.
>
> First, consumers in their 50s and 60s spend more on healthcare than
> youngsters, so they will need a good insurance policy. Around here
> that costs around $1000/month. Ignoring taxes because I don't know
> what they'll be a decade or more from now, using a 4% withdrawal
> factor requires a present value sum of $300,000 just for health
> insurance (that's for those who retire today).
>
> Given that number, and looking at a 4% withdrawal factor, future
> yearly inflation and obstacles to withdrawing from 401k and IRAs, I
> question the practicality of a normal person trying to plan for an
> early retirement that comes anywhere near maintaining their present
> lifestyle.
The 401K withdrawal difficulties only would last until the age when
the withdrawal penalty goes away.
Also, younger people spend more than older people, on things such as
kids and mortgage. So when one gets to the point of retirement,
hopefully the kids are grown and do not require maintenance, house is
paid off, etc.
Also, instead of full retirement, one could opt for working part
time or just getting a less demanding job.
--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
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