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Old 12-27-2015, 09:44 AM
 
Location: Washington state
450 posts, read 374,070 times
Reputation: 637

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DH and I are early 40s and nowhere near retirement age, I'm posting to get some good ideas/tips from actual retirees.

I think we've taken all the usual advice regarding retirement planning from the usual magazines/web sites. we've contributed to 401K plans since age 22 and max out on those plus IRAs every yr. Now also maxed out the 529 college savings plans for both kids which is about $150k total and they're both under 5 so no college costs yet for a long while. We own primary residence valued about 1 mil which is about 50% paid off. We are not business owners, just salaried workers.

Our questions is what else do we do now in terms of planning for our retirement?
1) Rental properties? several friends are very into owning rental properties as an investment and additional income stream, but I am wary of being a small time landlord.

2) pay off house with plan to do some type of reverse mortgage in retirement? not sure it's a good idea to tie up $1mil in a house given current low interest rates.

3) Annuities? Our financial adviser has suggested annuities but we haven't taken the plunge. How has that worked for anyone here and do you recommend any particular web site for researching annuities?

4) LTC? I am curious if we should be looking into Long Term Care insurance or if that that is too early?
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Old 12-27-2015, 10:37 AM
 
Location: Florida
4,367 posts, read 3,706,500 times
Reputation: 4111
Annuities NO NO NO. They maybe in your future. The only reason for getting them now would be the tax deferred growth. You would want an annuity with no other features and it would probably not pay a commission to an adviser.

You did not mention ROTH. You should put some money in a ROTH or a ROTH 401k if you can. You can transfer money from an IRA to a ROTH if your income is too high. Just contribute to the IRA and then move the money to the ROTH. This is tax free growth. Better than tax deferred.

Yes look into long term care. You can need it at any time. Not sure when to buy to give you the lowest lifetime costs. Probably in your late 50's. I think there are problems with the insurance co's understanding the true cost and a good deal now may not hold up over the years. I would lean toward postponing the purchase and maybe recheck every 5 years. Also look into the state partnership programs.

Reverse mortgage do not seem like a good idea due to costs and terms. Be very careful. Be sure you will not be moving from the home and you can afford the upkeep throughout retirement. If you are short of cash and in your late 70's then they are probably beneficial.
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Old 12-27-2015, 04:28 PM
 
1,075 posts, read 1,118,699 times
Reputation: 1416
Fire your adviser. If he is suggesting annuities at your age, he is only interested in making a huge commission. Invest yourself using index funds. If you want an adviser, use a fee only financial planner.
Stay far away from annuities. It is an insurance product, not an investment.

You are too young to be looking into LTC insurance. By the time you want to purchase it, the rules will have changed.
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Old 12-27-2015, 04:37 PM
 
Location: Massachusetts
207 posts, read 132,087 times
Reputation: 533
Quote:
Originally Posted by organic_donna View Post
Fire your adviser. If he is suggesting annuities at your age, he is only interested in making a huge commission. Invest yourself using index funds. If you want an adviser, use a fee only financial planner.
Stay far away from annuities. It is an insurance product, not an investment.

You are too young to be looking into LTC insurance. By the time you want to purchase it, the rules will have changed.
Very good advice. I hope the OP heeds it.
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Old 12-28-2015, 03:24 AM
 
71,695 posts, read 71,801,099 times
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i agree far to young .

but i will say do not wait to long if you want LTC insurance . you save nothing by waiting . it is priced so by a certain age you pay in about a years worth of premiums .

it just makes it more expensive and likely it will be out of reach price wise , you have no present coverage and the biggest issue is you may have an event that makes you not acceptable or gets you surcharged .

i delayed acting 2 years past when i decided to do it and my blood work was perfect up to that point , but by the time i acted i tested positive for diabetes and even though on no meds and back to just high normal through diet and exercise i got hit with a surcharge now for life .

GETTING LTC REQUIRES A CAREFUL SCREENING PROCESS THAT FOR US INCLUDED BOTH EXTENSIVE BLOOD TESTING , AIDS TEST AND DRUG TESTING AS WELL AS A BUNCH OF MEMORY TESTS .
so it can eventually be quite tough to get down the road .

you never know when you may need it too, my 55 year old co-worker fell off a ladder painting . he broke his wrist and hip .

he had a paralyzing stroke during just a simple hip surgery .

his wife is financially devastated now . so even younger it may not be a bad thing to have . but i think the 50's would be more appropriate .

Last edited by mathjak107; 12-28-2015 at 03:48 AM..
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Old 12-28-2015, 08:30 AM
 
Location: Loudon, TN
5,789 posts, read 4,843,885 times
Reputation: 19489
I got LTC insurance in my early forties through my employer due to an extreme family history of diabetes and didn't want to wait until the eventual day I get diagnosed. Also I watched a friend develop Parkinson's at age 38 and by 55 she was already in LTC. Because I got it at a young age my premiums were very low and increases were capped at 200% of the original premium, so I got a good deal.
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Old 12-28-2015, 08:54 AM
 
27 posts, read 25,239 times
Reputation: 110
Quote:
Originally Posted by mathjak107 View Post
i agree far to young .

but i will say do not wait to long if you want LTC insurance . you save nothing by waiting . it is priced so by a certain age you pay in about a years worth of premiums .

it just makes it more expensive and likely it will be out of reach price wise , you have no present coverage and the biggest issue is you may have an event that makes you not acceptable or gets you surcharged .

i delayed acting 2 years past when i decided to do it and my blood work was perfect up to that point , but by the time i acted i tested positive for diabetes and even though on no meds and back to just high normal through diet and exercise i got hit with a surcharge now for life .

GETTING LTC REQUIRES A CAREFUL SCREENING PROCESS THAT FOR US INCLUDED BOTH EXTENSIVE BLOOD TESTING , AIDS TEST AND DRUG TESTING AS WELL AS A BUNCH OF MEMORY TESTS .
so it can eventually be quite tough to get down the road .

you never know when you may need it too, my 55 year old co-worker fell off a ladder painting . he broke his wrist and hip .

he had a paralyzing stroke during just a simple hip surgery .

his wife is financially devastated now . so even younger it may not be a bad thing to have . but i think the 50's would be more appropriate .

Mathjak let me ask you this. I have thought about LTC insurance for me and my wife (we are in mid 50's. The problems I am seeing is that there is no way to lock in premiuims as one can with a 20 year level term life insurance policy because the insurance companies cannot estimate costs 10-20 years out.

Plus if one starts a policy now, in your 50's, what is to prevent a company from increasing premiums, deductibles, elimination periods to a level that makes these payments unsustainable?

Also, when you look at statistics, the average time spent in a nursing home for a man is 14 months. For a woman ....less than 3 years.

Don't get me wrong, I would love to have a policy in place now ....in our 50's... but what will the premiums be in our 70's???? And what is to prevent the insurance from simply cancelling a policy after 15 years even if they return all paid premiums to date? Which is why it seems that self insuring may be the best option especially given average stays in nursing homes.
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Old 12-28-2015, 08:57 AM
 
71,695 posts, read 71,801,099 times
Reputation: 49262
LTC may be needed at any age . my 5 year old co-worker had a stroke during hip surgery .just like home insurance or auto insurance you pay each year for that years coverage .

each year can and might very will be another rate but if you don't want it stop it . you were covered for the time you paid for .
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Old 12-28-2015, 09:21 AM
 
Location: SoCal
13,252 posts, read 6,345,210 times
Reputation: 9857
I choose my LTC without increase in premium if I like, but I missed the automatic and decided to pay for the increase. Mine is legit because of who is the backer, but do your own research.
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Old 12-28-2015, 04:18 PM
Status: "Is that all there is?" (set 19 days ago)
 
Location: Southeastern Pennsylvania
996 posts, read 864,086 times
Reputation: 2298
Interesting article in the New York Times over the weekend, might be helpful:
http://www.nytimes.com/2015/12/26/bu...=headline&te=1

It references an earlier article, which is here: http://www.nytimes.com/2015/12/19/yo...pgtype=article
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