Live aboard - advice on how to pay for it

[gulfcoast john]

Mike,
El and Bill made it work for them, and thanks for your thoughtful post on what might work for you guys and others.
We agree on all your points. Good job!

As you have no doubt already figured out, there is scant reliable financial planning literature on planning for a 40 or 50-year 'retirement' (age 55-105) as opposed to the standard 30 years (age 65-95). Does your 'safe withdrawal rate' drop from 4% to 3% or 2% , or even lower? Who knows what the future holds?

Always the outliers, we find that paying our financial planner 1.55% is well worth it for us...a 25 year relationship (including his mentor) in which we know our email or phone call will be answered right away. They've made us more money than we need to spend, what's to complain about? There is a credible argument that once 'too many' are in algorithm machine funds that bad unexpected outcomes could happen. I'm again an outlier in wanting a human at our financial helm. We're willing to pay him (mostly hers). Your mileage may differ.

I'm a Family Practice MD who worked as a contractor at Keesler AFB, MS for 11 years before retiring in March. 4 years ago, I saw a long-term patient (an RN) who came in with widespread bone pain that turned out to be metastatic cancer, and she was dead in less than 6 weeks. An FP gets to know the family, and I knew this one had planned to buy an RV and tour the country, plans interupped by a father in law with dementia they had to care for, but she died first.
That night I said to Eileen, 'after this, we should tell Thom we want to retire at age 62 rather than 65, 'cause we might not be able to manage a Tom Cat at age 75 and we want 10 good years on it.' So that's what we did.

I don't think you give enough weight to the question of medical insurance for the crowd under 65 (when Medicare kicks in for most). Our dentist is 'rich' at 60 in the 'top 3%' sense but says he can't retire because a family policy is $15,000 a year with a $7,000 deductible, and one teenage son blew through that with a broken bone skateboarding.

We are blessed with Tricare medical insurance as retired military (and a gold-plated pharmacy benefit). And also with a military retirement with COLA and a Civil Service retirement with COLA. But these are very rare to non-existant these days.

We saved/invested 12-20% every year of everything we earned since being married in 1985, and it has paid off in spades in allowing us a retirement above and beyond our expectations.

El and Bill set down a very nice baseline on how a couple of teachers can make the retired C-Dory lifestyle work for them (Thanks, guys!!! We read your book!).

Thanks Mike for adding to it, some very well-thought out comments!
Cheers!

John

[thataway]

Having been retired for 25 years, I have lots of thoughts. First, be sure you have adequate health care! We don't know where the health care system in the USA is going, but even with medicare, I see many of my friends who are out thousands a year and don't get good medical care. I spent half of my working life in private practice, and half under a system which gave me a modest pension and excellent health benefits--basically no costs for my and my brides lifespans. That is worth thousands of dollars a year.

I have also seen several friends who took the 100% retirement in a pension with no survival rights, and did not adequately prepare to care for their spouses--a spouse who finds she is impoverished at the same time her husband dies is very tragic.!

IRA's alone give adequate investment income for old age, even with maximum contributions and employee match.

Don't assume that tax laws will always be the same. Make your investments flexible enough that they will endure both changes in tax laws and ups and downs of the economy.

Be sure that both of you know all about the finances! Discuss goals, and how the investments are doing, plus what the future holds. Be sure your spouse knows all about all of your accounts. I had a friend who apparently had some executive dementia, and had lost an enormous sum of money in the stock market. He had been a economics professor in a college, so his wife assumed that all was well. When he died, they had $30,000. and only social security, a small pension--and an undisclosed mortgage on the house in Newport Beach...Fortunately a daughter gave up her inheritance from a grandparent to take care of her mother..

Prepare for old age and infirmity. I see many who don't--and all of a sudden they can no longer live in their home, because it is not handicapped equipped. They cannot care for themselves; they need caregivers, or they need nursing home care. Prepare ahead of time.

Account for inflation--it is real, and it may be severe. Also remember that there can be recessions, and even catastrophic events in life. Prepare for these.

Ladder and protect investments, but be sure to keep up with inflation.

There are always going to be opportunities to make extra investments--such as rental properties. Start on these when young.

Even if you are "young" have a will, durable power of attorney for both health care and finance, an estate planner/attorney, and advanced directives.

Enjoy life to the fullest when you can!

[ssobol]

Yes, the health care system in this country is broken. I had a Colles fracture of my wrist that required pins in a closed reduction. It has cost me close to $9K so far.

In the ER it cost over $1K just for x-rays ($900+ to use the machine, $100+ for someone to look at the images). The same series of x-rays cost me $29 at another location. Another place it was $226, and the Dr. who did the pins charged me $75. These are the self pay prices, not the insurance company rates. As far as I could tell the $29 images were exactly the same as the $1k images, they came off the same model of machine.

I know someone with cancer whose insurance company pays ~$89K/month for just one medication.

If you get sick in this country and don't have (very) robust insurance or are a 1%er, you're pretty much screwed.

Sorry. Rant over.

[colbysmith]

I think both Bob and John have added some excellent points to Mikes. In my case, I retired early from the airlines. But it was driven, 1. Because I was about to lose part of my pension due to bankruptcy and merging, 2. Burned out, 3. Life is short. (I lost my first wife to cancer at the age of 48.) I am very fortunate to have retired with my reduced pension (early retirement at 55), and also the fact that I had saved/invested all of my working life. BTW, I'm quite happy with paying my investment managers 1% to take care of my money. My expertise was in flying, not investing. My wife is 10 years younger, enjoys her job, will also have a pension, and while I hope she too decides to retire early, she still has some time to go. Our biggest concern is with health care. (As I'm sure is the concern of many others.) My airline retirement did not provide a retiree health plan, nor will my wife's when she retires. So that becomes a rather serious bump in the road for both of us to be retired early. Who knows what the future holds for health insurance or health care costs. But this is the one stumbling block that we need to figure out how to get over, if my wife is to retire early. I'm 60 now, so will be qualified for Medicare about the time my wife would be able to retire early. That solves some of the problem, but not all. I would be interested in hearing how others have gotten over this obstacle in this current economic time.
BTW, I still stay quite busy in "retirement". I love traveling all over the country with my C-Dory during the extended boating season. Sometimes my wife can join me, sometimes sadly not. (She's still working, remember?) I also stay quite busy during the down winter months volunteering for Habitat for Humanity and driving school bus as a substitute. Also while rather infrequent, became a chief inspector for elections. All things to keep my sanity and stay involved with (along with giving back to,) my community and for socializing with others. BTW, these three "jobs" are excellent suggestions for others looking to do something in "retirement". Colby

[westward]

Thank you guys for the thoughtful observations. And Colby I'm truly sorry for your loss of your first wife. A big theme mentioned is post-retirement health care, which is a major issue for almost everyone I talk with about this subject. My wife and I can purchase the same insurance we have at the hospital for the group rate: currently $1,300/month or $15,600/year. This is for excellent coverage and we have plugged it into our retirement budget with an inflation buffer. I realize everyone has a different situation but nothing can burn through money quite like medical bills, so everyone needs a plan, even if that means continuing to work. We will make provisions for additional skilled care from our IRA, which I hope to largely leave alone to grow until mandatory withdrawls are required. Like some others we started saving early, and we tried to max out our contributions every year. We never really missed that money because we "paid ourselves first" by contributing pre-tax rather than investing what was "left over" (which might have been very little). 30 years goes by quickly whether you invest or do not! We've also been fortunate to have parents and mentors who modeled frugality, restraint, delayed gratification, avoiding debt, and hard work. And neither of us has had a major health issue. So we feel very blessed. With the particulars of our situation our CPA advises we can proceed but we've decided to begin with semi-retirement to ease into the new chapter and still maintain our professional licenses. That way we can "stress-test" our budgetary assumptions and develop other activities, including more boating, while hedging our bets somewhat. Ultimately, though, we will need to make a leap of faith. Please keep the ideas and suggestions coming as this is uncharted territory for us!

Best, Mike

[dotnmarty]

Well, here's my two cents, "Don't try to have it all." If you have a pension, an IRA, deferred compensation, a bunch of CD's and no debt, but no free health insurance, you're a very lucky guy. Buy the health insurance , live with one vehicle and a 16 footer. Then volunteer somewhere as long as you are able and maybe get a low paying parttime job you love. Join the Y. Work out as long as you're able, then sit in the hot tub. From this, my 81 year perch, I look back and am grateful for many things, not least of which are my genes.

[Peter & Judy]

Thank you all for the interesting advise on retirement. I am not retired yet, but getting closer. We have a bison ranch in Alberta and are now just winding down our part of the business, by bringing in younger partner that will buy the herd over a few years, take over much of the work and eventually buy the ranch. Ranching, like most agricultural enterprises is not highly profitable, but if you live a frugal lifestyle, invest properly in you business and out of it, you will do alright in the end. Most of the profit from farming comes from equity growth in your land, herd and business. I have been self employed for most of my life, first as a professional photographer and then as a bison rancher. My wife was a teacher for 20 years years. So I have no pension and she has a small teachers pension. We will also be able to withdraw from our Canada Pension Plan at age 65. One of the biggest things for us will be determining how much money we will have to spend annually and how to make it last. In both our families there are many who have lived to their late 90's and even to over 100. But, there are others that did not live that long. So we need to consider both possibilities, enjoying ourselves early while we are still fit and healthy and the possibility that we might live to 100 and hopefully not in poverty. We are child free, so the burden of leaving an inheritance in not one that we bear.

Another line that I am reading in this thread and I hear often when I talk with my American relatives and friends is the high cost of health care. I feel very fortunate to not have that concern as a Canadian. Our pubic health care is funded by our government and is universal. The health care received by the corporate executive and bottle picker living under the bridge is the same. It is not perfect and far better than Fox News would leave you to believe. Just this week my 50 year old brother in law underwent emergency surgery for a twisted bowel, he came close to dying on the operating table, but the excellent care of our health care professionals ensured that this did not happen. He is very fortunate because if he was living in many other places in the world he might now be dead or bankrupt.

I am looking forward to meeting with some of the excellent C-Brats I have met in this forum in my retirement and maybe we will share a bottle of my overtaxed Canadian Whiskey that helps fund my 'free' healthcare.

I like to say that nothing is free in this world, because if you do not pay out of your right pocket, you will have to pay out of your left pocket.

[colbysmith]

[thataway]

Currently in the USA when you have Medicare you have a choice for what Medicare does not pay. This is the "Medigap". You have several choices:

-1.don't take anything, and pay yourself: (a bad choice if you have major expenses). Hospitals and most doctors will take what Medicare allows (which is more than what Medicare pays) as full payment. For example I had a cardiac ultrasound recently which the hospital billed $3500! Medicare allowed $350, paid about $315, and my Blue Cross/blue Shield supplement paid the remainder. If you didn't have the Medicare/insurance--the hospital could go after you for the full $3500!..

2. Buy a supplement which pays the gap--could pay it all or only part. You may be restricted in hospital or physician choice.

3: Then there are "Medicare Advantage plans"--these subjugate your Medicare to the company (HMO or PPO) who is carrying your plan. Medicare may give the plan $1000 a month for their part of the care. So the less the program spends on your the more money the company (HMO or PPO) makes. After you sign up for these plans, you may not have choice of doctors or hospitals--you are locked into what they provide until the next period when you can change providers or plans.

Why is it important to have free choice of facility and doctor? I use my self as an example. My cardiologist is Stanford trained, and highly skilled. But he realizes he and his group (about 30 cardiologists and cardiac surgeons has limits). I have unlimited choices with Blue Cross/Blue shield. (I could have gone with the basic PPO/HMO my ex-employer provides for "free", but there is $850 deducted from my pension to pay for this choice provided by Blue Cross) Thus when it is beyond what my cardiologist feels is available in Pensacola--I am referred out. For example, I had procedures at Cleveland Clinic, University of Alabama, Birmingham, and in a medical center in Torrance Calif. where he and I feel the very best medical care can be given. I believe in my case, this has extended my life by many years, and decreased morbidity.

I left a multi speciality group,( all board certified, all clinical faculty at UCLA,) when the group started buying other groups of non board certified physicians, became an HMO (and an early member of Health Net). This basically limited where patients could get medical care. I found that I was able to spend less time with each patient, and was not able to give the same standard of care.

So when you buy health insurance, including gap insurance, know what you are getting, and what it will cover.

[RobLL]

Some of my observations:

Retiring early is a goal of many of us.

It is reasonable to frontload the more expensive hobbies for the earlier years of retirement. Trips, big boats, fancier condominium or housing

A lot of that is easier to do in your 60s and early 70s. Unfortunately I find that even while I am in excellent shape in late 70s medical issues for me and wife limit what we can do (and damn - last 3 summers of boating saw us unable to boat, business one year, medical issues the next two).

Strenuous vacations, backpacking in far off exotic lands, and the like get harder as you get older. I am glad I traveled a lot in my 60s and early 70s.

Consider saving those 'bucket list' things which are more local and require less energy for your later retirement. And maybe less expensive.

In really old age (not there yet), scale down housing, transportation, and hobbies, but be sure you figure out how to have fun so long as you are mobile.

I did my strenuous, far off, and more expensive things earlier. I will keep the boat IF I get to use it this summer, but meantime my wife and a do a lot of local things, and also got a small pied-à-terre in our nearest big city, and close to kids

[colbysmith]

Bob, thanks for the Medicare information. Needless to say, this stuff is coming much closer into view now, and I for one wouldn't mind seeing an entire thread dedicated to the subject. That and Social Security. But I know there are plenty of other resources available, than a boating forum to research. And seminars on the subject that I will probably start signing up for in the not to far future! Colby

[westward]

Colby: like you I have some concerns about the tenuous tie-in to boating with this thread. However I love having the discussion with folks who are like-minded in their desire to pursue physical adventure such as cruising or fishing, (or carry-on travel, etc.), are socially and service oriented, and whose interest in C-Dories indicates at least a modicum of practicality. What a great source of functional wisdom and novel ideas here! As mentioned, many of our desired activities need to be done sooner rather than later d/t the future physical constraints which eventually affect all of us. It's very encouraging to hear real examples of how this retirement thing can be done, and done well, and not put off until it's "safe" to do. I remember years ago reading Bill and El's Halcyon blog and dreaming my wife and I could do a version of what they did. Ours will look a bit different but they definitely helped plant the seeds of freedom in my subconscious mind. We are currently in the process of deciding which material things we'd like to hold on to, and which need to go. I know that as I get older, my time freedom becomes relatively more important than new toys, fancy homes, etc.

Best, Mike

[RobLL]

I will 'third' what Bob said.

I prefer standard Medicare along with my generous retirement supplement plan. I also use VA which I have found excellent for the most part, although the system is stressed from the huge number of more recent influx of patients. I like doing some of my own research and with a couple sessions of cancer, diabetes, and keeping my blood pressure low, and ongoing sports injuries see a variety of providers.

I think I receive great care despite bouncing around seeing several providers. With regular Medicare you do not need a referral to go to specialists. Oddly enough those choosing that route do not use anymore specialist care than those in the Advantage plans without that flexibility.

My wife prefers Kaiser (not nearly as good as it was several years ago), because she prefers having one system do all of her care.

By the way if you are eligible for VA benefits I recommend you consider applying. The various veteran organizations do a good job providing assistance. It is generally complicated, and missteps can cause you to be permanently rejected. Use the volunteers. I am not a counselor, but volunteer once a week for several hours.

[thataway]

Robb,
Good points about the VA. I have worked in several VA hospitals and clinics. Many friends use the VA. If you live near one of the major VA centers or hospitals, the care can be excellent. It is a system, you need to know how to work. If you have service connected disability, it is much easier to get good benefits. Generally, service connected disability is given at the time of discharge (my MOS was a Medical Board Officer). I am aware of disability given after discharge, if a condition occurred during active duty. (there are various time and condition limits).

One close friends depends on his VA benefits entirely for medical care--and is able to get local referrals when our local large VA clinic facility is impacted, and the wait is extraordinary.

Some get their medications at the VA because they are free or low co-pay. You must be seen by a VA physician, who writes the RX. The formulary is somewhat limited, but exceptions may be made.

I'll make a short comment on Kaiser--I had several friends who have worked there (including my son in law's father, who works part time), family members who were patients, including my aunt, who I am actively involved with her care. If you know the system, you can get excellent care. It has a lot of similarities to the VA system. I have been impressed with care given during acute illness.

[colbysmith]

Another thought has come up a few times. "Know the system". Just before I retired from flying in the airlines, and for a short time after, I took a course to receive a Certificate in Patient Advocacy. Thought I might retire into that field, but for various reasons, have not gone any further pursuing that field. One of the things I learned from that course, and from my own personal experience, is that the best medical care we can receive, also comes from our own active participation in it. In other words, you can be your own best advocate. However, when crap really hits the fan, your spouse, or another family member, or entrusted friend can become your own best advocate. Take the time to understand your billing statements and what your doctors are telling you. If you disagree with something on your bill, don't just ignore it as something insurance will pay, but question it and have it corrected if wrong! If you question something your doctor says or tests they give, ask! Respect their experience and education, but also trust your body and feelings! Make use of the many organizations available in various medical fields. (Ie, American Cancer Society, etc.) Then there are the "professional patient advocates" or ombudsmen that can help one navigate the system as well. Sure all this stuff takes some time. But I personally feel in the end it is worth it. After all, it is YOUR health.
And with that same attitude, my next quest is to learn more about Medicare and the VA in the next several years. While I'm not retired from the military, I did spend some time in the USCG before deciding to get out and fly commercially, taking a Honorable Discharge.