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Old 01-02-2016, 02:50 AM
 
71,831 posts, read 71,919,037 times
Reputation: 49405

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the problem is the "great return " as some folks call it does not happen until age 95 or so , once all factors are considered ,you can see a 5-6% real return on what amounts to a gov't bond . anything less in years is really marginal as to worth it or not from a return stand point ..

so the great return is really based on at least passing 90 where there starts to be a sizable difference . lost checks , not getting spousal benefits until the higher spouse files and spending down of invested assets plus not being held harmless under medicare all take their toll .

what i do like about waiting is it shifts some of the risk from interest rate and market risk to longevity risk.

except for heirs longevity risk can be the better deal since dead is dead . but that is not about return .

the actual years to break even will depend on the long term growth rate and inflation . but even using TIPS only alters the difference by 2-3 years .

LOOKING AT 30 YEAR AVERAGE INFLATION AND RETURNS ON A BALANCED FUND IS REFLECTED BELOW . THE LOWER THE RETURNS ARE AND THE LOWER INFLATION THE LESS THE YEARS NEEDED TO BREAK EVEN .


Last edited by mathjak107; 01-02-2016 at 03:55 AM..
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Old 01-02-2016, 03:00 AM
 
71,831 posts, read 71,919,037 times
Reputation: 49405
as of now we are planning to delay just because i want to be less dependent on markets so don't mis-understand i am not against delaying . but from a return stand point the return isn't as great a difference unless you live a whole lot longer then we think just because of all those give ups associated with delaying which are usually over looked when discussing break even age .

it all depends which is more important to you , legacy money or current income and do you prefer longevity risk or market risk ? .

Last edited by mathjak107; 01-02-2016 at 03:58 AM..
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Old 01-02-2016, 08:43 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,953,845 times
Reputation: 6718
So it appears from reading this article that New York doesn't have a health insurance guaranty association:

Hospitals want state officials to establish a special guarantee fund to reimburse medical providers owed money by Health Republic and prevent similar problems in the future if other insurers go broke. These funds are sometimes bankrolled by assessments on health insurers.

That's kind of behind the times. I think the vast majority of states - including Florida - do these days:

https://www.flahiga.org/

Note that this guaranty association also covers life insurance and annuity contracts. It is separate from the guaranty association that covers things like liability and homeowners' insurance:

Florida Insurance Guaranty Association |

The guaranty associations get their money from assessments on insurance companies. Which in turn are allowed to and do pass on the assessments to their policy holders. Our auto and homeowners' and umbrella premiums all include surcharges as a result of the failures of insurance companies in Florida (most of which have been the result of hurricane claims). Claims that are covered by FIGA. We don't have any policies that are insured by FLAHIGA. So I don't know whether any of these policies are surcharged today.

In any event - I am sure these things vary state to state. And people should look into the individual laws in the states where they live/buy policies.

BTW - in terms of the situation in New York - it still seems very unsettled from a legal point of view:

Catskills patients and doctors left in lurch by Health Republic shutdown | Watershed Post

Especially in terms of the doctor/patient relationship and payments. I don't see anything that would preclude a provider from trying to enforce a patient's contractual promise to pay for past care if the patient had signed such a contract. Or anything that would preclude a provider from refusing to accept patients who have certain kinds of insurance. Nothing new about any of this. Various providers have been dropping various insurers - including Medicare - over the years. A fair number are turning to "cash only" and "concierge" practices. And more providers are insisting on patients being primarily responsible for the costs of their care (i.e., if you have a problem when it comes to an insurer paying your claim - it's your problem - not the provider's).

Quote:
as far as the mooch off other people comment ? nonsense .

this is a plan the state put out just to be pitched to folks like myself . they want the high net worth individual , this is who they geared it for and carefully crafted those perks to match going so far as to even legislate a special form of medicaid called mec just so they could circumvent the medicaid restrictions for the high net worth individual ..

what you think really is irrelevant and mis-informed in this case...
Guess New York has to try to be creative in terms of trying to induce middle class baby boomer retirees to stay in the state:

Baby Boomer retirees abandon state

But - in the end - who's going to pay for this? Taxpayers. Which will result in even higher taxes for people who stay put. Making the state even less attractive for all but the uber-wealthy who don't care about taxes and the poor. Of course - there is good evidence that the uber-wealthy do care about taxes:

‘Wall St.’ flees NY for tax-free Fla. | New York Post

Note that for me it's mostly a lifestyle thing. I don't and really never have had anything to do with people who are on various forms of "welfare" (except for some lower income employees - like the people who work for my landscaping service). Whether it's living in a neighborhood with section 8 housing. Shopping at stores where the majority of shoppers are paying with food stamps. Going to doctors who accept Medicaid patients. So why would I want to live in an ALF or a SNF that had a large % of Medicaid residents at the end of my life? Unless I absolutely had to financially. It's not a question of being a snob - it's because you pretty much get what you pay for in this world. And - if someone has saved money for his/her old age - why not spend it on living as comfortably as possible then? Robyn
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Old 01-02-2016, 08:53 AM
 
24 posts, read 32,486 times
Reputation: 67
My husband has LTC insurance from his law firm which will begin to pay a substantial monthly amount now that his Parkinson's has advanced to the point of his needing substantial help.

The policy has an inflation provision so that it now pays twice what the face value of the original policy. It will be a life- (and pocketbook-) saver. Wish I'd gotten it for myself when I was younger.
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Old 01-02-2016, 09:04 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,953,845 times
Reputation: 6718
Quote:
Originally Posted by Larry Siegel View Post
mathjak, as I've pointed out elsewhere (and I thought you agreed), there is an option value to waiting to 70 to take SS that you are overlooking. If you don't get a good deal from the government because you die soon after 70, or for that matter before 70, you won't care because you'll be dead. But if you live a very long time, say past 100, you'll have a great return and also you will really need the money. So you come out ahead by waiting...

UNLESS you have a bequest motive and die young. A strong bequest motive does change the equation in favor of taking SS earlier and investing (not spending) the money.
There are 2 components to this issue IMO. The first is the "dollars and cents" component. Which is pretty much actuarial. When my husband and I decided to take early SS at age 62 - our break even on the dollars and cents component was about age 78-79. Without taking into account any money we would make on our money (if we took this into account - the break even would probably be 80+). Part of the reason for this long break even point is that while full retirement age has gone up over the years - early retirement age hasn't.

The second component is personal financial and emotional and similar factors. Like - for example - is someone still working (it is often disadvantageous to take early SS if you're still working)? Do you need a smaller SS check today - or perhaps a larger one later? If someone is planning on working until age 70 - but doesn't have much in the way of retirement savings/a pension/etc. - the larger later check may make more sense. Just from an emotional comfort POV. OTOH - someone who really could have used the later larger check but had plans derailed by something like a job lay-off or an illness might be in the position to need the smaller check now.

We made our decision based on the first component. But I can see how other people would base at least part of theirs on the second.

Finally - a wildcard that popped up last year was the issue of higher Medicare payments for people who defer taking SS until after age 65. Don't know whether this will be a one-time thing - or something that will happen again down the road. Robyn
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Old 01-02-2016, 09:07 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,953,845 times
Reputation: 6718
Quote:
Originally Posted by EllenPB View Post
My husband has LTC insurance from his law firm which will begin to pay a substantial monthly amount now that his Parkinson's has advanced to the point of his needing substantial help.

The policy has an inflation provision so that it now pays twice what the face value of the original policy. It will be a life- (and pocketbook-) saver. Wish I'd gotten it for myself when I was younger.
Just curious. Do you know what the premiums have been and how long the firm has been paying for them? Also what the total policy benefits are? Robyn
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Old 01-02-2016, 09:17 AM
 
71,831 posts, read 71,919,037 times
Reputation: 49405
Quote:
Originally Posted by Robyn55 View Post
So it appears from reading this article that New York doesn't have a health insurance guaranty association:

Hospitals want state officials to establish a special guarantee fund to reimburse medical providers owed money by Health Republic and prevent similar problems in the future if other insurers go broke. These funds are sometimes bankrolled by assessments on health insurers.

That's kind of behind the times. I think the vast majority of states - including Florida - do these days:

https://www.flahiga.org/

Note that this guaranty association also covers life insurance and annuity contracts. It is separate from the guaranty association that covers things like liability and homeowners' insurance:

Florida Insurance Guaranty Association |

The guaranty associations get their money from assessments on insurance companies. Which in turn are allowed to and do pass on the assessments to their policy holders. Our auto and homeowners' and umbrella premiums all include surcharges as a result of the failures of insurance companies in Florida (most of which have been the result of hurricane claims). Claims that are covered by FIGA. We don't have any policies that are insured by FLAHIGA. So I don't know whether any of these policies are surcharged today.

In any event - I am sure these things vary state to state. And people should look into the individual laws in the states where they live/buy policies.

BTW - in terms of the situation in New York - it still seems very unsettled from a legal point of view:

Catskills patients and doctors left in lurch by Health Republic shutdown | Watershed Post

Especially in terms of the doctor/patient relationship and payments. I don't see anything that would preclude a provider from trying to enforce a patient's contractual promise to pay for past care if the patient had signed such a contract. Or anything that would preclude a provider from refusing to accept patients who have certain kinds of insurance. Nothing new about any of this. Various providers have been dropping various insurers - including Medicare - over the years. A fair number are turning to "cash only" and "concierge" practices. And more providers are insisting on patients being primarily responsible for the costs of their care (i.e., if you have a problem when it comes to an insurer paying your claim - it's your problem - not the provider's).

Guess New York has to try to be creative in terms of trying to induce middle class baby boomer retirees to stay in the state:

Baby Boomer retirees abandon state

But - in the end - who's going to pay for this? Taxpayers. Which will result in even higher taxes for people who stay put. Making the state even less attractive for all but the uber-wealthy who don't care about taxes and the poor. Of course - there is good evidence that the uber-wealthy do care about taxes:

€˜Wall St.€™ flees NY for tax-free Fla. | New York Post

Note that for me it's mostly a lifestyle thing. I don't and really never have had anything to do with people who are on various forms of "welfare" (except for some lower income employees - like the people who work for my landscaping service). Whether it's living in a neighborhood with section 8 housing. Shopping at stores where the majority of shoppers are paying with food stamps. Going to doctors who accept Medicaid patients. So why would I want to live in an ALF or a SNF that had a large % of Medicaid residents at the end of my life? Unless I absolutely had to financially. It's not a question of being a snob - it's because you pretty much get what you pay for in this world. And - if someone has saved money for his/her old age - why not spend it on living as comfortably as possible then? Robyn

as the now famous judge in CT said , the ramifications of impoverishing the people of his state because we have a poor long term care system would be far worse economically then the extra load on medicaid .

he ruled an agreeable amount has to be reached where the community spouse does not take a major hit in lifestyle .
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Old 01-02-2016, 09:22 AM
 
71,831 posts, read 71,919,037 times
Reputation: 49405
Quote:
Originally Posted by Robyn55 View Post
And - if someone has saved money for his/her old age - why not spend it on living as comfortably as possible then? Robyn
the answer is because it depends on how much money you have . unless you are pretty wealthy at 120k-140k a year for the snf and living expenses forever for the community spouse that money may not last long at all . the end result is that you eventually have an impoverished community spouse who ends up on medicaid eventually anyway if it goes on long enough and then needs other subsidy's and serviceses themselves . .

everything is relative to cost of living .

once you start wiping out those who had the resources to do a lot of the spending because they did have some dough everyone else suffers around them too .

in nyc boroughs, an income of 69k qualify's a family of 4 for low income subsidized housing projects .

the last thing states want with 80 million aging baby boomers who are living longer is having to subsidize them in other ways besides the medicaid

Last edited by mathjak107; 01-02-2016 at 10:01 AM..
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Old 01-02-2016, 09:35 AM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,953,845 times
Reputation: 6718
Quote:
Originally Posted by foundapeanut View Post
The annuity we have is from Forethought, it is a division of Mutual of Omaha.

Ask your retail fin planner, if he'll sell. Guaranteed he'll say no, he never heard of it, or he'll say its bad news. He only makes 1%. He wants to sell you something that he makes 6 to 8 % of. Since these are only sold by RIA. Investment advisors who have by law have to act in your best interest not their's.

We are making 6% per year, tax free. Where else are you going to get that with no risk? And we got a $50,000 bonus.
You aren't "making" 6%/year. You are getting some interest and some of your principal back - the total of which is 6%. It's kind of like making a mortgage payment (where part is interest and part is principal). BTW - I'm assuming you're talking about a SPIA. Although your annuity could well be a different "flavor".

Are you sure Forethought is part of Mutual of Omaha? It seems to have been an independent company that was acquired by another company - Global Atlantic:

Global Atlantic Completes Acquisition of Forethought Financial Group

Robyn
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Old 01-02-2016, 09:46 AM
 
71,831 posts, read 71,919,037 times
Reputation: 49405
it is a 6% draw not return .

you give the insurance company 100k and they give you back your own money 6k a year .

when you finally get all your money back years down the road you first go on their dime and see your first penny of return .

the irs imposes a phantom interest rate , as if you will die on cue according to a life expectancy chart for tax purposes . but it is not your actual roi . you really have no return until you first get handed back all the money you gave them 16.6 years later .

what you have is a 6% withdrawal rate with the insurer giving you back your own money at a higher initial cash flow then you could take safely on your own from your own money . you would have failed quite a few times in the past trying to pull that 6% draw rate because of sequence risk . there are time frames we had where you would have run out of money at the rate before you ran out of time .


the insurer has much less sequence risk because they diversify in to dead body's and those who die pay for those who live . .

with the 50k bonus though it sounds like you got one of those variable annuity's with the bonus bucks .

they credit you with 50k additional when you annuitize but you never have access to that money . they give you a little piece of the bonus bucks each year as additional income . in the mean time they take it back because the yearly fees are on your balance including the bonus bucks you can't take .


we had one pitched to us where they guaranteed us 10% a year minimum return for 10 years . but of course we could never take those dollars .

when we annuitized they would add those dollars in and pay us a small percentage of the balance including those dollars .

in the mean time for years the account fees were on the total balance including those bonus bucks . they gave it with one hand and took it back with the other .

Last edited by mathjak107; 01-02-2016 at 10:10 AM..
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