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I retired at age 65 1/2, just a tick over two years ago. Financial plan is unfolding as envisioned. Biggest unexpected "surprise" is the Medicare IRMAA penalty, but it really hasn't impacted my standard-of-living. Finally starting Social Security benefits next month.
Yeah, IRMAA is a real b. I didn't know they would apply it to Part D as well.
Were those median households taking four trips a year, as the OP and his wife are planning?
The median household has a mortgage, funds their 401(k)s, and pays 7.65% payroll taxes on earned income. In most states, Social Security income is excluded from state income taxes. If you’re retiring at median household income, your cash flow probably looks a heck of a lot better than a working couple at the same income. The only thing that probably goes up is health care assuming you had an employer who paid most of it.
Trips don’t have to be expensive. AirBnB has really changed the costs in a lot of destinations since you’re not stuck with the expense of eating in restaurants for all your meals. You can go off peak and fly cheaply. Pick places that are walkable and with good public transportation.
Can someone please explain Medicare IRMMA penalty?
It sounds to me like you will be just fine OP. As others have stated, you will have a total of around $90K a year in income with a paid off house, in a relatively low tax state. You will need to pay health insurance for a couple years prior to Medicare, and your supplement premiums after that, but you should be fine. I would make sure that your 4 vacations are not all big splurge type trips. Maybe for the first few years at least, until Medicare kicks in, make your vacations a bit more budget friendly, and then after 65 you can spend a bit more. By that time you will know how much discretionary money you have in your budget.
OP asked how OUR plans worked out. Mine have worked out very well for my hubby and self. We retired early (our 50's) with a total income in the low $80's, but health care paid for by our former employers. We carry a moderate size mortgage, but live in a low tax, lower COL state. With hubby starting SS this year, we have been able to stop pulling money from our fairly small investment accounts, while keeping the household income pretty much the same. I will start SS in a few years, and that will be great for more "leisure money", but we are far from frugal. We scrimp in some areas so we can splurge in others.
Like water finding it's own level, people live on what they are getting.
Last edited by TheShadow; 04-11-2019 at 07:39 AM..
My MIL helped out a family member with a significant expense and bought a car last year, pulling out cash for both. Her Medicare payments increased significantly. She is of the generation that likes to pay cash and not have loans and payments, but realizes now she should have taken loans out for both.
Mistakes like that can change how much you need for retirement.
My MIL helped out a family member with a significant expense and bought a car last year, pulling out cash for both. Her Medicare payments increased significantly. She is of the generation that likes to pay cash and not have loans and payments, but realizes now she should have taken loans out for both.
Mistakes like that can change how much you need for retirement.
paying cash means nothing , that makes no sense ..... it has to be taxable cash like selling an investment with gains or taking money from an ira .
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