Tuesday, June 29, 2010

Long before retirement or getting old

People need to plan for aging and for retirement. The problem is, even when someone plans and prepares, the preparation isn't always enough.

Let's use my life as an example. Social Security isn't enough for retirement, but I thought with my teacher retirement and  my Social Security and my husband's Social Security, we would manage. We wouldn't live as well as we did before I had to leave teaching, but we could be comfortable.

However, I had no way of knowing that supplement insurance premiums would raise three times in less than a year, and then Medicare and insurance premiums yearly thereafter. However, Social Security and retirement didn't match premium increases, not even close. Cost of living and the crash of the economy and a rise in co-payments and Medicare deductibles reduced buying power of what funds we had left. 

So what could I have done differently? With my poor health, I couldn't teach longer, but I should have prepared more when younger, with extra savings, including an IRA, from the time I was much younger. We should have found a way to have our house paid off before I had to retire. My husband should have had disability insurance. 

When we are young, we think we have time to prepare for old age -- later. Even when people try to save for retirement, often they don't expect economical problems or poor health or other unforeseen problems that wipe out their expectations and savings. Things do happen, so all anyone can do is try to have at least twice what might be needed.

Putting back enough to have twice what might be needed isn't easy. Therefore, many of us face a difficult present and future. Apparently, few others understand or care, including our government. Medicare premiums increase as does the yearly deductible. Co-payments for prescriptions increase to the point that some people have paid up to an additional $200 or more per month for co-payments. Medicare care is limited, not by medical experts, but by rules set by bureaucracy. The list goes on.

A side note, everyone should be prepared for the same medical service under national health care. Medicare was touted as an example as to how universal care will work.

The cost of utilities, groceries, car expenses -- everything -- has risen drastically. Real estate taxes and house insurance premiums have doubled in the past five years. 

Preparing for retirement or aging seems daunting, I know, but everyone needs to do whatever possible to be able to live without worrying about how to fix the roof so it doesn't leak when insurance doesn't cover repairs; to have a way for household help when physically one can't; to have a close friend or friends or family members who will step in when necessary; to have a church family who will put actions with their prayers.

When you're young, prepare for when you aren't.



Ransom said...

I think a lot of people also look at those first paychecks and buy things they don't need, or don't need yet. If you don't change your living from college when you graduate (not for you, but those other youngsters out there) for several years, you can put away quite a bit before you need it. It's easier to save when you don't notice it's gone.

Beverly Stowe McClure said...

You're so right, Vivian. Fortunately our home was paid for when dh and I retired. We have some bonds and our IRAs too. It's a good thing. Dh social security was cut 2/3 since he draws a firefighters pension. I don't know about Oklahoma, but Texas retired teachers have not had a pension increase since 2001. We're doing okay, but many others are not. So young people, be prepared for the future. You won't always be young.

Good post, Vivian.

Vivian Zabel said...

Increase, what's that? Well, other than increases in insurance premiums, that is. About 68% of my retirement check is kept for the Medicare supplemental insurance premiums for my husband and me.

I had to use my IRA for emergencies, which I could without penalty due to my being disabled and needing medical problems.

I thought when we starting buying the house that I would be working at least another five to six years, which would have allowed us to double up on principal payments. Oh, well, young people must prepare so they don't face a bleak old age.

Just wanted to give a bit of advice based on experience.

Vivian Zabel said...

Oh, I had someone send an email saying her children would help when she retired and was old. I have to laugh. Our children have their hands full taking care of themselves and their children. Many children don't live anywhere near their parents, and those that do have their own burdens.

Janet said...

We will soon find out what it will be like. My husband retired at the beginning of this year. HE will have a pension and SS next year, but I have never worked outside the home. We have always been a one income family, so we are not used to having lots of money, but we don't qualify for medicare yet and our insurance premiums are going to be so high next year. If it wasn't for that, I wouldn't have any worries.

Vivian Zabel said...

I hope your experience is better than ours.

I'm facing my husband not lasting much longer and with no one close by. If and when he goes, so will his Social Security.

Insurance premiums are high even if a person is on Medicare. It seems as if a person isn't wealthy, he won't manage well when he retires.

Hopefully the younger people can manage to find a way to save for their retirement and plus some.

Susanne Drazic said...

This is a subject that has kept me up at night. I do hope that the young people of this country are learning to save for their future because it will get here faster than they think. There can be so many unforeseen things that can happen along the way. Things that no one wants to happen, but it just does. Illnesses, disabilities, never ending medical bills, and just the ever rising cost of living. It can all be overwhelming at times.

Sharon K. Mayhew said...

We started saving as soon as we got out of college, but we left college with a ton of student loans. We saved the minimum for a long time. Once we paid off our loans we saved more, plus started a college fund as soon as we could...One thing I think we will do when we retire is buy a smaller house. This is a really good post...( It should be required reading for people getting out of school starting their careers.)

Rena said...

I find very little comfort for my children's future the way our government is spending right now, more or less my own future. I simply don't know what to think anymore.

Rena said...
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Patricia Stoltey said...

This is an excellent post, Vivian. I thought we planned well, even including a small health savings account. Well, the interest kept going down on the account, of course, and then our bank abruptly instituted a monthly charge for maintaining the account and that charge almost eats up the interest. If we take the money out now without spending it on medical, we have to pay taxes on it. One more stupid trap where retirees get backed into a corner.

When you have a minute, Vivian, please stop by my blog. I have an award for you today.