Policy is in the Midwest - sent a PM with further description.
Another modest income retiree and retired DH here with no Financial Planner, tax advisor or wealth manager. Maybe 10 years ago, I had a 1-hour with a fee-only financial advisor, which cost me about $350. I had printed up a one-page sheet with our accounts, future pension benefits, home info, SS info. He basically said, “I wish I had a pension”, and apart from suggesting I move the timing of paying property taxes, didn’t offer me any advice at all.
We are small potatoes. Income consists of my SS, small school district pension, small city pension, DH’s decent city pension, small RMDs from an inherited retirement account. We have Roth accounts through deferred compensation when we were working, and a bunch of cash savings in a high-interest savings account. WE are holding off for DH’s SS until age 70 for his SS.
I am sure there would be better strategies for us, but they all seem so complicated. Our expenses are so minimal right now..basically real estate taxes, some donations to causes and the Gkids 529s, food, utilities, small amount of travel. surplus money gets thrown in the high-yield savings account. When you don’t desire or need a lot., it seems silly to be chasing higher returns.Or trying to avoid paying taxes. I am comfortable, so I’m happy to pay taxes to help support infrastructure and social services. Not so happy to be paying taxes to support corruption, ICE, Doge,..
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No financial advisor but we do have a tax accountant and an estate attorney. The attorney and the accountant work well together and that is all we have needed so far.
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Am curious what you mean here?
Have you considered Roth conversion between retirement date and RMD start date, keeping in mind the marginal cost of IRMAA? And then looked at projected income & marginal tax bracket after the first spouse passes to try to determine if a Roth conversion makes financial sense?
I also consider the tax rates of my children, but it is still a hurdle to convince myself to pay more taxes than I have to, especially when no one can predict what tax rates will be decades from now.
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Additional thoughts/comments to questions –
We’re not worried about buying other insurance, but GEHA hit us with massive increases in OOP expenses, changes in network and out-of-network reimbursements this year. It’s not the great coverage it has been in the past. The GEHA premium for post-retirement is pushing $600/mo right now before adding Medicare coverage. We’re both 65 now but have not signed up for Medicare yet. Will continue GEHA as our creditable coverage til H retires, though may take a serious look at BCBS next enrollment.
What concerns us is that if we pick one plan (GEHA or Medicare D) to cover my meds and that plan then removes my chemo from the formulary (or doesn’t cover the next-gen drug that might prove more effective), we are up a very big creek because that cost becomes entirely out of pocket. The GENERIC(!) version of my chemo is $8000/month at my current dosage. It could go as high as $18,000/mo. This price is consistent across the four different chemo drug regimens I’ve been on over the past 24 years. Discount programs don’t apply to federal health care plans or Medicare. To cover our bases, we are looking at the belt and suspenders approach and carrying both plans. I will never be able to go off the meds; we’ve tried and the leukemia comes rip-roaring back within a month.
@CT1417 – I strongly suspect H will continue to work after retirement (and will be taking his pension and SS), so I think we’d pay more for the conversion than we will just paying taxes at the time of distribution. He is not terribly focused on tax implications should there be anything left for our sons. Your questions are part of why I think we should have a reality check with a professional…
While I don’t think we’ll need to pull from the 401k on a regular basis early on (we’re thinking of it for big expenses and hedge against future inflation), it might make sense to do so to keep the RMDs more reasonable later.
We otherwise have very boring tax returns. We live pretty simply. H is very, very risk-averse. That’s his personality type and it makes him extremely good in his job. If he retired today, I’m fairly certain we’d be fine (but I’d like to run numbers or have someone else tell me that just to be sure!). Between the two of us and our skill sets, we are knowledgeable enough to be dangerous – but also potentially wrong.
My husband is on a very expensive drug for his health issues. So I certainly understand the concern to be on a medication that you absolutely need.
We didn’t have the choice of other health plans. His meds are now available in a generic.
We’ve found that part D formulary have been pretty comprehensive and include an option for him. If not, his doctor could petition the part D provider for an exemption.
It might be worth talking to your oncologist about your medication and its availability once you transition to Medicare.
Your fears are ones you had, last year we had a ACA plan. That was a different concern but Medicare has worked out well. We have a supplement plus plan D which I recommend if your medical needs are complex.
@CountingDown - have you (or your H) attended any federal retirement seminars? I attended several, and even though I knew a lot, I learned a little information at most of them. If you google “serving those who serve” you will see they offer a lot of free information. It looks like there’s a tax related one coming up soon. That’s just one company who does the seminars/provides information. That’s a free and on-line way you could start if you’d like. The guy doing the tax one coming up is very knowledgeable. If you attend their seminars they may also let you ask them questions via e-mail. Stating what’s probably obvious, if you do decide to get a tax accountant or other financial help, make sure it’s someone very familiar with federal benefits.
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Your situation sounds a lot like how my folks were. They both had pensions and SS. Nothing really invested. They lived modestly and just built up cash in retirement.
Are you comfortable modeling cash flow by year between when your husband eventually retires and age 75? (I guess I should not assume that 75 is your mandatory distribution start date.)
You would need to look at a few different income streams & associated taxes:
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Today’s income w/o SS, pension, or IRA distributions, MFJ (the easiest one!);
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Both of you retired and both claiming full Social Security and pension if any, but not yet taking RMDs, MFJ;
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Both retired, full SS & pension, RMDs started for both, MFJ;
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First spouse passes and the reduced Social Security benefit and reduced pension, if any, but same RMD as in #3, but filing single.
#4 is where the tax ‘bomb’ appears. #2 is where you could possibly process Roth conversions. A lot will depend on your tax brackets.
By pull from the 401(k) early on to keep RMD’s reasonable later, do you mean Roth conversions? If you don’t need to spend the money but have the tax headroom for conversions, that would be the ideal scenario.
I’m curious whether anyone here has used or investigated Facet. TIA
If you can qualify to get a USAA policy – if you have a parent that was in the military and still living - DH’s dad took out a small jewelry policy (which we paid for) and once he had a policy, DH and all of our family had USAA numbers and could get USAA insurance. My dad was also in the military but he was deceased.
USAA is a terrific company to work with. We had a major home claim and they handled it well.
We had prior homeowner’s policy with State Farm for over 30 years; had bundled with auto, had an umbrella policy and a valuable articles policy. They would not renew any of them except the valuable articles policy. We could not even apply to Geico homeowners because we had a water claim within 5 years (we previously had auto for a number of years with them). Since I had a car accident years ago - been hit from behind at a stop sign by a college kid covered by a USAA policy and saw how well they handled the claim, I thought about them years when we faced finding another insurance carrier (and in a panic). I called them to see if there was a way for us to get on USAA insurance, and we found a way.
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I do qualify for USAA, and considered switching to them about 4-5 years ago.One issue that prevented my switch at that time, was their requirement for a home inspection AFTER I started with USAA and after I dropped my former insurance . They admitted my premiums might rise after the home inspection. So, in practice, I really didn’t know the actual cost to make an informed decision. I was also concerned about a potential “bait then switch” scenario where the cost could significantly rise after I started with them . I have no problem with an inspection BEFORE I sign up, but they would not do that.
I’m not sure why they required an inspection in my case. Family members did not need one, but their policy is older. Is this something new?
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Since you are both 65, you should apply for Medicare A (free). Once retirement happens and you enroll for Medicare B in the window - or whatever you continue to do with GEHA.
Depending on what state you are in can be how good BCBS is within that state. Within our state, BCBS is good and they don’t operate at a loss. There are some states that band together on claims – we were on BCBS before retirement in two different states as DH’s insurance work plan, then chose BCBS as our Medicare Supplement (so we pay Medicare B and the supplement).
We had a BCBS supplement monthly fee for each of us that was favorable and knew it would stay the same premium rate for the next few years, then bump up slightly higher. This year was a 12% increase but that had to go through state insurance commissions with the show of need for higher premiums. My understanding with BCBS is that if we enrolled later, we would be at a higher premium for supplement than what we now pay.
Since your insurance decision is of course driven by the coverage for your needed high-cost medication, of course evaluate very carefully. Thank goodness you are living with many years under the chemo and have a plan to be sure to continue the drug coverage.
When your DH retires completely, you may have some lower tax years before RMDs kick in - and you can evaluate if you want to pull money off the 401k, pay the taxes on that when you are in lower tax years. We did have some conversion to Roth IRA, but found instead to put it into our own stock account which was more fluid for us and I have higher returns than the Roth IRA. The FA has control of the Roth IRAs and the returns are ‘steadier’ (smoothed out with tighter range of returns), and part of our risk strategy. Our 401k has consistently done well, and our personal stock account has similar investment strategy to that.
I would call and talk to USAA - they will connect you to someone licensed for your state. They can explain what the situation is on inspection, and if that has been a changed situation or something that is with new policy holders.
You can at least find out what it takes to switch to them. With your current insurance policy, what happens toward renewal time.
We had some time with coverage until our policy time ended, it was some months - but it was something pressing for us, especially due to ‘reject’ from both State Farm and Geico.
No ‘bait and switch’. I am in a military town (a lot of retirees and active duty) - I know a retired colonel that totaled two new cars within a 3-year time frame. IDK how much his premiums went up, but USAA doesn’t ‘drop’ policyholders.
I asked our major claims handler (with our home damage - water, roof and lots inside with repair/replace) about number of claims and problems keeping USAA. He assured me he has handled people with multiple major home claims and USAA doesn’t drop policy holders.
I am happy with Fidelity but they don’t do my taxes. They will however, coordinate with my accountant. I don’t believe that my accountant can invest for me because she asked me (jokingly) if I could invest for her, looking at my numbers. I like to keep the two separate.
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USAA is definitely not the cheapest insurance. They are not what they used to be. We have dropped almost everything except their insurance but keep them because they don’t haggle about fixing anything, they just do it. But I think you pay for it. This is not a dis on USAA, just a reality of my 50+ years as a customer.
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I believe investments are tied to taxes. When I used to do asset securitization often time it would be tied to taxes. We would move assets to favored nations in order not to pay taxes. People invest in munis or treasuries in order not to pay taxes, and that’s why yields on munis can be so much lower. People buy homes and take out mortgages because mortgage interests are deductible. Government offers tax incentives to corporations and individuals to encourage us to invest in certain assets.
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Corporations possess significantly more advanced, legally structurally embedded mechanisms to minimize or defer taxes than W-2 wage-earning individuals.
This is what I believe in…
Taxes shouldn’t be the primary driver of your investment strategy , but it makes sense to take advantage of opportunities to manage, defer, and reduce taxes.
Don’t buy or sell assets just to avoid taxes — it could be counterproductive. you’ll pay no more than a 20% tax on long-term investments, unless you are a CA resident like me, where you pay gains as ordinary income as well.
Never let tax savings override performance: An investment that saves you $1,000 in taxes but loses $5,000 in market value is a net loss.
Taxes are a sign of success: Paying investment taxes means you actually made money.
I hope you find that person who can do your taxes AND advise you to the correct investments.
You don’t think I’m envious of all my friends in Hong Kong where they have absolutely zero capital gains taxes!?
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FYI - Capital Gains (2026)
Married Couples Filing Jointly
- 0% Rate: $0 to $98,900
- 15% Rate: $98,901 to $613,700
- 20% Rate: Over $613,700
What this means is that many retirees don’t pay capital gains tax. Even those with higher income getting into 15% rate may have some early years pre-SS with 0% rate.
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