Real cost of full timing

[mbrower]

I am nearing retirement and would like to RV full time, traveling the country stopping no longer than 30 days in any one area. I'm not frugal but I'm not extravagant either. I don't want to spend my retirement squeezing every nickel until my DNA is permanently ingrained into Lincoln's head. I have crunched the numbers and I feel I would have around 7K dollars/month to start and 3% increase per year for the remainder of my life. These are before tax figures. I think that sounds adequate for a couple with no debt but I know things can add up quickly. I have no interest in working or hosting post retirement at this time so I'm not considering those options. I think I would just work another couple of years if needed. Looking for some real world guidance from people who live the life every single day. Any advice would really be appreciated!

I only want to retire once.

[stickdog]

rv2go wrote:
I don't think that I could spend $7,000 a month if I wanted too.

The DW could.

[quoyfab]

MBrower sez . " I have a high deductable plan with a HSA that I contribute about 10k a year".

I believe a COUPLE over 55 has an HSA contribution limit of $7,650 for 2015 which is tax deductible, but ONLY if you have qualifying high deductible health insurance coverage. The limit IS less for an individual. I'm curious as to how you contribute about 10k per year to an HSA.(legally)

[TechWriter]

was_butnotnow wrote:
If you are looking at a ACA account SD and TX does not have PPO plans offered for 2016. FA the last I heard still does. Which means the only plans in those sates are HMO plans and no coverage out of state when you travel.

Not true -- you have to remember that after the ACA health care place are based on state counties.

-- 23% of TX counties offer PPO plans, mostly by Scott & White Health Plans. I think a lot of TX RVers use Polk county (Escapees home base). Polk county has no PPO plans.

-- All of SD counties offer PPO plans, all by Avera Health Plans.

-- No FL counties offer PPO plans.

Typically, what people are upset about is that the PPO plans that are available are offered by companies that do not have nationwide doctor networks (like BCBS).

Look at Nevada -- no state income tax, plus Anthem BCBS PPO plans offered in every county.

[was_butnotnow]

If you are looking at a ACA account SD and TX does not have PPO plans offered for 2016. FA the last I heard still does. Which means the only plans in those sates are HMO plans and no coverage out of state when you travel.
Check out https://www.rverinsurance.com/

[PghBob]

If your company retirement "account" is like most "retirement" accounts, do not take the money out yourself, i.e., payable to YOU unless: 1. it is the only way to get it, or 2. you don't mind having to pay Federal income tax on the full amount (and possibly state taxes as well). There is a 60 or 90 day grace period (don't remember) if you do take the money directly to stash it in another retirement account. Instead, recommend a Custodian to Custodian transfer, the money does not come to you and is therefore not taxable at this time. Any first-rate investment company will be glad to help with this. I recommend using Vanguard. You can call them and determine your options with no obligation. Disclaimer: I have my retirement funds with them.

[BarbaraOK]

That sure sounds like a 401k or something similar. You don't want to take it out, what you want to do is a rollover into an IRA and then SLOWLY remove amounts (once you are over 59 ½) because that will be taxed as ordinary income. You really need to get the money into an account IN YOUR NAME and do it as a roll-over so the income tax is spread out slowly over a number of years.

[mbrower]

R. Walter wrote:

mbrower wrote:

TechWriter wrote:

mbrower wrote:

I don't know how long it will take to complete my bucket list but I want to allow at least ten years which means I need to be on the road by age 60

Where I call home for tax and health purposes has also been on my mind and I believe NC is not as senior friendly as other states so If any one can share some insight into calling another state home I would love to hear from you.

If you retire at age 60, you'll need 5 years of buying your own health insurance.

This could be a considerable expense -- far more than the $150/month you said you were spending now. BTW, your health declines as you get older.

The fact that you didn't know Medicare starts at 65 (not 62), want to keep you house (with all its incumbent expenses), and want to take a lump sum payout of your retirement fund has me changing my mind about your estimated budget expenses. I think you could be in for a bad surprise if you retire that early.

this account is a benefit provided by the company I work for. It is not funded by me and could go the way of the dodo bird if the company decides to do away with it, which they say they have the right to do. They have quit providing that benefit to new employees two years ago. My options are to cash it out and spend or reinvest it. I can also draw a fixed stipend from it the rest of my life or until they decide to do away with it. I think I'm going to cash it out. What I do with it I'm still undecided but I like the idea of a new truck/RV.

This account is NOT my retirement account. Sorry about the confusion.

Would you mind sharing what type of account this is to which you are referring? Is it a qualified account? Do you know the IRS code section under which it is organized? Is it a rabbi trust? Curious minds... looking forward to getting better educated. Thanks.

If you are talking about my company funded retirement account, I don't know if I can answer all your questions about it but I'll try. Up until about 1990, my employer provided a pension to all their employees once they retired. The amount you would receive per month was based on years of service. After 1990, they did away with the pension and gave everyone an retirement account which the company placed money in yearly but how much they put in varied by age and years of service and you were vested after 5 years. You could not contribute to it or invest it. Once you left the company you could choose to draw monthly for the rest of your life I think at 59.5 years of age or you could cash it out. If you are young, very little is put in but as you get older the amount increases every year. The longer you are with the company and the older you are, the more you have. Makes sense but makes some employees mad who have worked there for ten years and have less than an older person who has worked 10 years also.

The company has made it clear that this is a fictional account and that no money is actually there and they can withdraw the benefit at any time. However, its a fortune 500 company and they have always paid it out.

They no longer offer it to new employees but do donate 4% of pay to their 401K whether they contribute or not and is capped at 7% to those who contribute. My is capped at 6% of my pay

[mbrower]

R. Walter wrote:

mbrower wrote:

2gypsies wrote:
You definitely can't base health insurance in any of your planning right now. Look at all the changes in the past two years and lots of increases if you have to buy your own. Full-timers now who are not on Medicare are really running into lots of problems. You just don't know what the future will hold in that respect, unfortunately.

I think they will figure out a way to make it affordable to those on fixed income and/or retired.

I hate to burst your bubble, but Medicare (note: age 65 requirement) is the solution to those who have retired (assuming they are 65 or older).

There is absolutely NO political will in this country to subsidize health insurance any further beyond the ACA subsidies currently available for those who have retired early, i.e. before age 65 when Medicare is available.

BTW, in an earlier post you mentioned getting (ACA) subsidies for your health insurance. You need to carefully look at the income requirements for subsidies to be available to you. Because with the way you describe your income (and assets) such as a $7k per month travel budget, those subsidies will not be available to you. They are for much lower income folks, unless that is what you really are.

Yea, you may be right. When I researched it I put in yearly salary of 63K which gave me a subsidy. I believe health care will give me a problem.

If you can't full time on 84K a year before 65, I'm at a lost how so many people can do it and still be paying for healthcare.

[R__Walter]

mbrower wrote:

TechWriter wrote:

mbrower wrote:

I don't know how long it will take to complete my bucket list but I want to allow at least ten years which means I need to be on the road by age 60

Where I call home for tax and health purposes has also been on my mind and I believe NC is not as senior friendly as other states so If any one can share some insight into calling another state home I would love to hear from you.

If you retire at age 60, you'll need 5 years of buying your own health insurance.

This could be a considerable expense -- far more than the $150/month you said you were spending now. BTW, your health declines as you get older.

The fact that you didn't know Medicare starts at 65 (not 62), want to keep you house (with all its incumbent expenses), and want to take a lump sum payout of your retirement fund has me changing my mind about your estimated budget expenses. I think you could be in for a bad surprise if you retire that early.

this account is a benefit provided by the company I work for. It is not funded by me and could go the way of the dodo bird if the company decides to do away with it, which they say they have the right to do. They have quit providing that benefit to new employees two years ago. My options are to cash it out and spend or reinvest it. I can also draw a fixed stipend from it the rest of my life or until they decide to do away with it. I think I'm going to cash it out. What I do with it I'm still undecided but I like the idea of a new truck/RV.

This account is NOT my retirement account. Sorry about the confusion.

Would you mind sharing what type of account this is to which you are referring? Is it a qualified account? Do you know the IRS code section under which it is organized? Is it a rabbi trust? Curious minds... looking forward to getting better educated. Thanks.

[R__Walter]

mbrower wrote:

2gypsies wrote:
You definitely can't base health insurance in any of your planning right now. Look at all the changes in the past two years and lots of increases if you have to buy your own. Full-timers now who are not on Medicare are really running into lots of problems. You just don't know what the future will hold in that respect, unfortunately.

I think they will figure out a way to make it affordable to those on fixed income and/or retired.

I hate to burst your bubble, but Medicare (note: age 65 requirement) is the solution to those who have retired (assuming they are 65 or older).

There is absolutely NO political will in this country to subsidize health insurance any further beyond the ACA subsidies currently available for those who have retired early, i.e. before age 65 when Medicare is available.

BTW, in an earlier post you mentioned getting (ACA) subsidies for your health insurance. You need to carefully look at the income requirements for subsidies to be available to you. Because with the way you describe your income (and assets) such as a $7k per month travel budget, those subsidies will not be available to you. They are for much lower income folks, unless that is what you really are.

[jmtandem]

I think this is very smart and I believe most people would agree with you. After I had posted that, I began to wonder if purchasing a new truck would be the best use of that money. I think investing fairly conservative would yield a 6% return where its fairly common to get very low interest auto loans of new vehicles. A lot of food for thought with purchasing the camper. Ill have to give that a lot of thought.

Since you indicated your employer can cancel your company retirement account, I would definately get that money into another account where only you can touch it. Then, follow the advice of the previous poster and perhaps make payments at low to zero interest on the truck. Having a warranty on a new truck (or nearly new) is peace of mind and should something happen you might be out some time but rarely significant money. And since some manufacturers warrany new trucks up to five years on the engine you should be good to go for at least half your anticipated ten years of full timing.

[mbrower]

GoPackGo wrote:

mbrower wrote:

This has always been a major concern of mine. My plan as of now is to cash out my company retirement account and purchase new truck/fifth wheel the day I file my retirement papers. However, the financial markets may change and put a kink in my plans but barring a complete meltdown, a new truck will at least be in my future. This account is different than my IRA/401K account. I carry a 15k credit card with me when I travel so hopefully that would cover any major expenses that may come up.

First suggestion: I carry two credit cards - Visa and Discover. Sometimes a place will only accept a certain one so I'm always covered. Also, In case there is any kind of problem with one, then you have a fallback. Always have options.

I am going to go against the grain a little with my next thought and I fully expect to be crucified for it. Here we go -

Consider not using your company retirement account to fund a new truck purchase. Loan rates are at historical lows. You may very well be able to get 0% interest on a new truck from the manufacturer. Put the money from the company retirement account in the bank and make payments from that account. I make 1%/year at my credit union. If you have a 0% loan, then you actually MAKE money doing it this way. And best of all, you have a pile of cash available that would not be there if it had been used to finance the truck. You might even consider investing the money in something with a higher return and just making truck payments from the $7k monthly income. This strategy could yield a higher return. And I would consider going this route even if I could not get a 0% interest loan. I like having options.

The camper purchase is a little different. These things depreciate much worse then cars or trucks. So the first thing is to buy them CHEAP. I got mine from one of the large 'wholesalers' for 35-40% off list. This drives your initial cost as low as it can go. Then you may or may not want to pay cash, for all the above reasons I set out. Additionally, the interest on a fiver loan is most probably tax deductible. So you may want to compare the net after tax cost of a 10 year low interest loan vs keeping that money in the bank, credit union or invested in stocks/bonds and earning interest. I will be the first to admit that this will most likely not be a wash, but, on the other hand, you will have the original cash in the bank at the end of the loan period plus a paid off truck and fiver.

Just something to think about.

Tim

I think this is very smart and I believe most people would agree with you. After I had posted that, I began to wonder if purchasing a new truck would be the best use of that money. I think investing fairly conservative would yield a 6% return where its fairly common to get very low interest auto loans of new vehicles. A lot of food for thought with purchasing the camper. Ill have to give that a lot of thought.

Mark

[GoPackGo]

mbrower wrote:

This has always been a major concern of mine. My plan as of now is to cash out my company retirement account and purchase new truck/fifth wheel the day I file my retirement papers. However, the financial markets may change and put a kink in my plans but barring a complete meltdown, a new truck will at least be in my future. This account is different than my IRA/401K account. I carry a 15k credit card with me when I travel so hopefully that would cover any major expenses that may come up.

First suggestion: I carry two credit cards - Visa and Discover. Sometimes a place will only accept a certain one so I'm always covered. Also, In case there is any kind of problem with one, then you have a fallback. Always have options.

I am going to go against the grain a little with my next thought and I fully expect to be crucified for it. Here we go -

Consider not using your company retirement account to fund a new truck purchase. Loan rates are at historical lows. You may very well be able to get 0% interest on a new truck from the manufacturer. Put the money from the company retirement account in the bank and make payments from that account. I make 1%/year at my credit union. If you have a 0% loan, then you actually MAKE money doing it this way. And best of all, you have a pile of cash available that would not be there if it had been used to finance the truck. You might even consider investing the money in something with a higher return and just making truck payments from the $7k monthly income. This strategy could yield a higher return. And I would consider going this route even if I could not get a 0% interest loan. I like having options.

The camper purchase is a little different. These things depreciate much worse then cars or trucks. So the first thing is to buy them CHEAP. I got mine from one of the large 'wholesalers' for 35-40% off list. This drives your initial cost as low as it can go. Then you may or may not want to pay cash, for all the above reasons I set out. Additionally, the interest on a fiver loan is most probably tax deductible. So you may want to compare the net after tax cost of a 10 year low interest loan vs keeping that money in the bank, credit union or invested in stocks/bonds and earning interest. I will be the first to admit that this will most likely not be a wash, but, on the other hand, you will have the original cash in the bank at the end of the loan period plus a paid off truck and fiver.

Just something to think about.

Tim

[jmtandem]

That means work for money is taxable and you could move up to a new tax rate.... don't you just love it?

All other things being equal which they never are, I would always opt for the free campsite and pay in deference to just a free site. Tax brackets are a secondary consideration. But that is just me, you are obviously looking at it differently.