Sometimes people think if their house is valued at 1 mill then they need to have a home insurance for 1 mill. The insurance should be the cost of rebuild, not including the land cost.
I own a coop. If there is a disaster (fire, total lost of the building), the coop has insurance to rebuild the building, and my insurance would cover replacement of everything interior. Therefore I don’t have insurance on the full value of my apartment, which cuts down on my premium.
And in cases like mine, it would also not include the total cost of a well and septic system (which can be very costly) and the permits to get them installed.
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It is not what people think - it is how many insurance companies are dictating certain things.
Thankfully we qualified to get USAA insurance when we needed to find homeowner’s insurance and have done well with them.
We had homeowner’s insurance with State Farm for over 30 years, later bundled in car insurance. Also had umbrella policy and jewelry/valuables policy. State Farm decided to not renew anything except the valuables policy some years ago. At one time we had Geico car insurance, and when I called Geico for car and homeowner insurance - they would not quote me on homeowner insurance because any interior water damage in the last 5 years excluded us from getting a quote/getting insurance. Thankfully we found a way to get with USAA.
As others have said - in certain states, with requiring roof replacement as a condition of insurance (when the roof is fine), etc. etc. If a roof is over a certain age and you are purchasing the home, they require the roof to be replaced - family selling a home in GA and they want to have the roof repaired not replaced before selling. A home down the street from me had a roof replaced before new homeowner’s purchase - and I can bet they were told before closing that to insure the home with XYZ company, the roof needed to be replaced.
Due to natural disasters, insurance companies have lost money and have required high premiums or high deductibles. FL and CA, and other states.
With USAA I can discuss the flexibility of the homeowner insurance with underwriting and learn what can be done to fit our circumstances. Due to our state having coastal/gulf area and sometimes hurricane conditions, all homeowner policies needed to include an option for an extra rider for a better roof if damaged by weather – this was extremely helpful for us. I called USAA and added the rider, and it was extremely low-cost addition (I believe $90/year). We had hail damage/roof replacement in 2009 with State Farm, and a few years ago we had hail damage/roof replacement with USAA - and we now have an upgraded roof with a 10-year certificate. When our new gutters were put on our home, the workers left exposed wood, and the fascia had to be replaced around the entire home at a cost of $8,000. Because of the mounting of the new roof, it was included with the roof replacement - thank you USAA. Undamaged fascia was key with this new roof and USAA did the thing our policy was written for. Our new roof will withstand high winds if that happens. I asked our contractor roughly about how much we should insure our home for, and adjusted up with USAA.
The location of our home has us safe from most tornadoes that have hit our area due to some safety with topography – however a tornado has followed over a hill and continued damage on the other side when prior to it happening in our city area SE of us about 15 miles, had not happened in a populated area. Within 12 miles of our home, there are houses that have been hit with 3 tornadoes in a 5-year period - one was during the super outbreak of tornadoes April 27, 2011. On that day, a tornado was in the air over our subdivision at noon but did not touch down - it went over our daughter’s middle school, and they were loading buses for early school release (after having a late start at 9 am; early release at 11 am) and had to get back in the building. I was on a road that went in front of the school with my older daughter, who needed a book from a bookstore (her private HS which was regional, administrators realized the weather would not break so instead of late start they canceled the entire day), and we drove through torrential rain/wind, then the quiet, then torrential rain/wind. I realized then how foolish we were for trying to go get that book (a car is not a safe place when a tornado hits!) The tornadoes that hit our area hard were about 3:20 pm - just before we lost power there were 3 tornado cells close to us (which we saw on the TV weather) - we have trees in our back yard which gives us immediate indication for us to go to our tornado safe spot if needed. Tornadoes took out all power lines going into our city, and our home regained power just hours before being w/o power for 7 days. It was the worst weather day I have been through - tornado warnings started at 6 am (I had DD2 come to the first-floor couch from her 2nd floor BR so if we needed to go to our tornado spot). The tornadoe hits to our area happened in that 3:20 pm timeframe. “Over 175 tornadoes struck Alabama, Mississippi, and Tennessee, which were the most severely damaged states. In Alabama alone, 238 tornado-related deaths were confirmed by the Storm Prediction Center (SPC) and the state’s Emergency Management Agency.” At the time, my husband was in Malasia for business (and I was worried about him!); he got word about tornadoes and called us the next morning at 8:30 am (he was able to get through to my cell phone - I couldn’t get out to anyone – days before I could make any phone calls due either to volume of calls or maybe cell towers damaged). In Malasia, the customer asked DH what a tornado was, and he explained a hurricane w/o as much water but a lot of wind damage. I had never heard of a Derecho storm until that happened in recent years in Iowa where my sister lives. The area airport was one of the first things re-opened, and DH was home with his business concluded but no manufacturing plant to go to w/o the power. Power then restored to main city buildings/fire stations etc. The public library encouraged people to charge their phones/laptops, and our family was there when our neighbor called us when our home got power again. DH was then able to return to work the next day. While we were out of power, grocery stores got semi-trailers of ice – our freezer items were all lost but between keeping the refrigerator door closed, and later using a cooler with ice, we had milk and other food items. Neighbor with gas grill cooked up meat and we all had a potluck by candlelight.
There are details in our homeowner’s policy which protect us if total loss of the building. A clause in our USAA policy which has an additional $120,000 coverage.
In every building I’ve owned, in order to get full replacement coverage, you have to get enough insurance to cover what the insurance company tells you is the “replacement cost”. And there’s no arguing with them about how they came up with that number.
And pretty much every single time, the “replacement cost” they come up with exceeds the market value. Might not be true everywhere, but that’s my experience.
So you can insure it for market value - the land, but that might leave you underinsured or in a big fight to get them to pay.
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My replacement cost is a little more than a third of FMV. Land in SoCal don’t come cheap.
Never had any concern with USAA. About 10 years ago, they did ask if they could send someone out for a validation, and their estimator came up with a similar replacement cost that I had been paying for.
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I owned a home in NJ for many years. The insurance I had was always the replacement value of the house, which didn’t include the land. The insurance did tell me the amount, but it was never over the market value of the house.
For my coop, I only insured for the replacement of my interior, not the building itself.
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Our local tech giant Microsoft recently announced a voluntary retirement program. Apparently, there were quite a few takers. Here is an article profiling some of these retirees. It was interesting to read about what they plan to do next.
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Some of the older ones just might end up like me … at 59, I figured I’d find an interesting new field of work. Instead, I found happiness in a true retirement. Good for them for taking an offer that gives them freedom to decide on a next act.
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Yes. There is a separate rider for my wife’s artwork and a separate policy or rider for my wife’s studio (which is a 2 minute walk from the house). We live in a HCOL area where the house values are very high. 40% of that is an absurd number compared to our possessions.
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40% is absurd for my possessions also, but that was the lowest they would go. Their standard is 50%.
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My situation as well. 40% is the minimum – – crazy.
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My neighbor got offered (and took) the package. Today is her last day. She worked in a group that managed MS’s real estate.
She doesn’t seem ready to retire and has multiple job offers lined up already. The payout was too good to turn down, though.
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TY for sharing. The one fellow (no kids, planned to try to retire by 55 anyway) will have to think about the health insurance after the generous option runs out. Spouse might have health insurance; he can afford insurance coverage between the MS running out and qualifying for Medicare.
”For many, the bigger draw is health coverage. Microsoft pays it in full for the first year, then lets retirees and their families stay on its plans at COBRA rates for up to four more. The tradeoff: because they’re leaving voluntarily, those who take it generally can’t collect unemployment.” That is a big draw.
’Vocation freedom’ - DH is a little bent that way. Loves doing woodworking and also has been interest in learning welding. Smart people in the trades is a win-win for their customers and them.
Does anyone on here not have an accountant or tax advisor? H doesn’t seem to feel the need and part of that is his feeling that we owe what we owe, and part is that he hasn’t had much interest in researching this stuff. (He’s a financial regulator. He is neck-deep in regs and contingency planning already and I can understand that assessing our situation may be a bridge too far at this stage.)
He will have a govt pension, 401k, good SS benefit. He’s also still carrying a big term insurance policy in case he departs before I do. (I question the need for this now – he’s vested, we have no debt, we are pretty frugal, kids are launched – I don’t see the insurable risk.) I have a decent IRA, despite my career being cut short. Never took a distribution and most of my contributions were made before I turned 40. I have not started drawing SS. No Roths – we don’t think it will make any difference because most of retirement income stream will be taxable. We’ve also been saving in non-retirement vehicles. His 401k is in laddered target funds to risk-adjust money we won’t touch for another 20 years. Did that about five years ago. Non-retirement funds are all in Vanguard mutual funds and money market. Because of H’s job, we are limited in the types and sectors where we can invest.
H just turned 65, is not planning to leave til 67.5, if then – and has made noises about other consulting/work in the civilian sector afterwards because he’s worried about being able to pay for medical expenses. We plan to carry Medicare and our current coverage in retirement as a hedge against my daily oral chemo becoming unavailable on the formulary. (it’s beyond expensive)
I was a 401k/pension administrator in my career, so have a decent understanding of the regs and policies, but I’m not a CFA or tax expert. I just want to make sure we’re not missing some relatively simple steps to minimize taxes, ensure the numbers project out, and not make stupid, preventable errors down the road.
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To me, getting an opinion from someone who does retirement planning for a living - a flat fee advisor- is helpful, no matter the level of skill and knowledge of the parties involved.
When talking about something as significant as funding the future - it seems like an important use of money.
Our planner meeting is on a week - I don’t feel comfortable retiring until I’ve had a holistic, in-depth analysis from someone who does this stuff every day. I believe I’d feel that way even if I had the expertise of someone who worked in finance. To me it’s like getting a medical second opinion- when there’s a lot at play/risk - I want extra validation.
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We do not. However, we do have a financial planner, and he takes taxes into consideration. We do not have the kind of financial situation that requires an accountant or tax advisor, though. I have a friend with a similar financial situation to ours, though, and she uses an accountant. I think that it just depends on the individual’s or couple’s composition level - whatever makes you sleep better at night.
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We don’t have tax advisors or accountants. I really don’t understand why most people would need them. Sounds to me like something for rich people.
We also don’t have a financial advisor which I think we could probably use but my husband thinks he knows everything so that’s not happening. I’ve read enough to convince myself he’s not doing big damage by his methods though I do think in the end more taxes will be paid than necessary.
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Our fee-based FA guides our master plan with considerations of taxes.
Before we started that, we attended a few 3-night retirement planning classes. They were helpful for making us get our ducks in a row with paperwork,learning about topics. Also included free FA planning session - that’s a good place to get insights. Now the FAs will all need to know what approximate income (after tax) you need after retirement. As discussed here a few times, there are different ways to get that number.
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We just closed our fee based account at a brokerage firm and moved all our investments to Fidelity. Honestly, they never gave us advice and simply moved our money around based upon some general strategy (their general strategy). I remember explaining our strategy to them to keep income down while we were using marketplace insurance before being eligible for medicare!
We are similar to @CountingDown except my husband is already retired (I have a little part-time gig) - we are 66 and 65. We do not plan on getting an accountant or advisor. My husband is enjoying using the investment tools on Fidelity and I don’t see how we can save on taxes. We have decided to take some distributions now, enough each year to stay below the Medicare AGI to avoid bigger Medicare premiums.
I do our taxes on FreeTaxUSA - no need for a CPA (we used H&R for years and they kept on messing up our NJ state taxes.)
When we had the advisor with our brokerage firm, everything was a big deal. Give us tons of information to put into our software and we will tell you if you have enough money to last the rest of your lives. You can do the same thing on line with Fidelity by entering about 3 numbers and your ages.
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we do not. (No FA either.). Plenty of free advice available on places like Bogleheads.
Speaking of insurance…there is a poster on Bogleheads, who is a former insurance agent, and willingly provides complete analyses on whether to cash in or keep a life policy.
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