How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? Investment and General Retirement Issues (Part 3)

Parent Cafe
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There are many people, including me, who have had bad experiences with USAA and dumped them. Things like saying every time you called in to ask them a question about something that happened, they considered it a “claim”, and forcing people with higher priced homes to overinsure, paying much higher rates. Armed Forces Insurance is like USAA used to be, before they provided insurance to everyone instead of just military officers.

Though perhaps they changed in recent years. We were happy to dump them.

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I am pretty sure that is an industry practice, not just done by USAA.

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4086

Per Google
It is true that you should be careful when calling your insurance agent or company with questions, as anything you say can become part of your permanent record. Asking about an incident without intent to file can sometimes trigger a rate increase or result in an unnecessary claim being opened

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4087

A retired married couple with 2 SS payments (one for each spouse), a small pension or part-time joab, and some investment income in a high COLA location will hit the 15% rate pretty easily.

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4088

I asked Armed Forces if they did that, and they told me they didn’t. Who knows if that’s still true.

It seems quite shady, if one hasn’t filed a claim, but hey, they’re going to consider it a claim because you ask a question, and potentially raise your insurance rates.

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4089

I’m not trying to maximize assets but I am trying to maximize my risk-adjusted after-tax return on the assets I invest. So, I take tax into account with everything that I do.

You are right that one should never let the tax tail wag the dog, but one should always think in terms of after-tax returns. In that regard, I also tend to think about asset protection as a way of reducing the riskiness of my assets.

When I left Wall Street and was going to start my own firm, I did a search for tax accountants who would be proactive and creative – I’d worked with folks like that were advising for the wealthy family office where I worked – but specialized in entrepreneurial clients. I found one and he suggested a legal structure that enabled me to deduct health insurance (which was not easy at the time) and I then figured out how to set up a medical cost reimbursement plan that enabled me to deduct copays and all medical expenses not covered by insurance. The accountant then suggested I set up a Defined Benefit Plan, which enabled me to save large sums pretax as my business developed.’

Paying taxes is a first world problem. But, I’m happy to reduce taxes by careful structuring. I’m in the process of structuring a new venture that grew out of my current pro bono project. Its purpose is ultimately for the good of the world, but it should make significant profits if it succeeds. I’m thinking very carefully about after-tax returns to the other investors and to the founders. If it doesn’t make good after-tax returns for investors, it won’t serve the world.

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In this groups you are right… couples could get into 15% rate range (not too horrible), especially with pensions and SS. (But the standard deduction of $32k/married mean the threshold is $130K, not $99k). Not so much for average American retirees.

This is the kind of thing that early retirees should think through (with or without coaching from a FA), especially if pension income is low. To hel fund the pre-SS years, it might make sense to sell off assets and be subject to capital gains tax (perhaps at 0% rate). Then again, those doing ACA medical coverage in the lean years may be better off tapping into non-taxable assets. Every situation is different.

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4091

As I’ve already said, corporations generally have more flexibility than individuals when it comes to reducing their tax liability. However, corporations also face higher tax rates, and they must continue generating legitimate business income and operate as real businesses to take advantage of those tax strategies.

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4092

I agree with what you are saying. The average person who had a W-2 career even one that was relatively high paying can’t do that much to avoid taxes. Sure there are some timing things that can be done or investing in tax-free investments like munis. A lot us missed the boat on the Roth 401K. We are currently at the highest tax rate in our careers that we ever have been at so I will still do a normal 401K and decide later if we want to do any converting.

I have been an Accountant for small to mid-sized companies for 25 years. Many family owned. There are so many things the owners are able to do to reduce taxes. Heck we put in solar last year because it was almost free after all the tax credits etc. And right now we are looking to put in a giant battery for it because again it is almost free.

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We are too! We will get a $1000 rebate immediately when our batteries are up and running, plus we will get about $150 a quarter…something about the utility company using our stored energy. Plus they had a deal where the second battery was almost free. These will pay for themselves.

Our CFP works with us on maintaining our tax rate and Medicare costs. And that works for us.

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What’s the deal on the battery? I thought these clean energy tax breaks were dead. Is this a state rebate, or federal?

And what kind of battery is this? It sounds like a good move to get one, with all those rebates, if it’s useful for you. We almost got solar a couple of years ago, and it ended up being a huge mess, because our house is not appropriate for solar in any way. Fortunately, we didn’t get it.

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We are getting two Tesla batteries for the price of one. It’s some special offer. When we initially looked at battery backup for our solar, it was over $20,000. And that was for one battery. We are getting two for $10,000. If the power goes out, there is enough battery power to power our whole house for about 48 hours.

$1000 rebate from Tesla, and about $600 a year from our utility company. BUT the contract had to be signed by the end of March…and it was!

We have had our solar for about 3 1/2 years and haven’t had an electric bill at all during that time. We got in right under the wire with both federal and state rebates which paid more than 1/3 of the cost. 30 year transferable warranty.

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Are you net-metered? We are. No electricity charges other than the grid connection charge of $8/month. We got our solar just before the expiration of the federal rebates.

No batteries yet. My husband is looking into using our old car at some point as a backup battery. For now, he rigged our panel so that the fridge can be run from the truck’s inverter.

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We installed a 24.5kW solar array on our roof. Our electrical bill has been $4.42 a month during the summer. Much higher in the winter – they were covered by snow for at least one month. I installed a natural gas generator so that we would have power if the power went out. I also intended to put in two PowerWalls but they were very expensive and the solar installer suggested waiting until the price dropped. @thumper1, how did you get the batteries at such a good price. We’ve left a place for them.

We recently bought a Tesla that charges in the middle of the night.

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It was offered through the folks who installed our solar array.

We have $0 in electric charges with our solar. Plus we also get about $500 a year back from the utility company already (we get a check every quarter).

We must have just hit the timing right.

We have a generator that can power most of our house, but the battery back up to the solar will give us a 48 hour window to get that going (it’s not an auto one…we need to switch), and that will give us some ease of mind. And hopefully, our power won’t be out more than 48 hours!

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I’m curious about how these rebates lead to being “almost free”? $1000 seems like only a small fraction of the battery cost. Or is this more in relation to the purchases “paying for themselves” in terms or reduced electric bills? Solar can absolutely pay for itself in certain situations with dependence on climate in your location, electric rate in your location, state solar rules in your location, cost of installation in your location, etc.

I live in what may be the most optimal location in USA for solar due to a combination of some of the highest electric rates in the United States, sunny weather, no snow, and little rain, and favorable state rules. I also installed under NEM 2.0 (grandfathered for 20 years after installation date), which is tremendously more favorable to current customers than the newer NEM 3.0, purchased when max tax rebates were available, and negotiated an especially good deal. The result was the initial investment being paid off in electric savings, in under 4 years. I generate quite a bit more electricity than I use each year. In previous years, my net electric bill for the year was ~$0. With the rule changes this year, it will probably be closer to $100 for the year.

When I looked in to batteries years ago, the net finances were far less favorable than for solar panels. However, as noted above, I live in a climate without snow, so I’m not particularly concerned about maintaining power during storm power outages. I also installed under a state plan where electric company pays retail rate for excess generation during summer/spring that is credited towards under generation in winter/fall.

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I just want everyone to know what I was talking about is for a company with a 100,000 sq ft building. We put in solar in 2025. I believe the big solar credits have stopped sometime in 2026. Like I had said my company is looking at a battery. Those credits are still in place for sometime. The battery will cost about double the solar on the roof.

My company has gotten big tariff refunds in 2026 so they are trying to find ways to reduce taxes.

I am just a W-2 employee so none of this really affects me. Although we didn’t get bonuses in 2025 because of the tariffs and they are now giving us our 2025 bonus since we qualify because of the refunds. Ownership did us right. The real losers in the tariffs are the consumers who paid higher prices.

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We also get an SRECT payment (now called something else) either monthly or quarterly. I will have to see if there is a deal on PowerWalls.

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All insurance companies will call it a ‘claim’ when you ask specific questions on your policy with an event, even if you don’t file an actual claim.

Sorry you had issues - how long ago?

”Forcing people with higher priced homes to over insure….” again, how long ago? Maybe something was state-specific. Many very good companies have strengths and weaknesses at various times and perhaps in various locations. Insurances have changed a lot, especially homeowner’s, and some regions have had a lot of problems – the claims rates with natural disasters and the strength/capabilities of state insurance regulations are some caveats. How homeowner insurance companies are dealing with (or not dealing well) with roof claims - and demanding a new roof to have the house insured with them for example.

USAA doesn’t provide insurance to everyone - there are specific restrictions to being military, prior military (Veteran) and Veteran family members (Veteran has to have a USAA policy and list immediate family members at that time/each gets a USAA number).

Fortunately, it was hail damage both times our roof needed to be replaced with insurance (first time with State Farm, and second time with USAA). The second time, hail hit along a bathroom vent and water ran down damaging wall and flooring - and it was a very big claim. Once we got the right USAA adjuster and claims status, it all went on track - it took time and some back and forth between our contractor and USAA specifically because USAA adjuster needed feedback from contractor and the individual who would then inspect and certify our Fortified Roof - we have a 10-year designation certificate with registration number). Since we had the low-cost added rider for ‘optional upgrade to fortified home ™ roof’ (our state insurance required companies to notify up of this available option) we added it a year or two prior to our damage – so we got a much better roof replacement. Can withstand high winds (we are not in a hurricane area but are in a tornado area per se).

Years ago, we dealt with a State Farm adjuster on a major home claim (the water heater manufacturer ended up paying the claim and we received our State Farm deductible back) - and he was a younger guy that maybe made some kind of bonuses on his work. He was not easy to deal with because he wanted to ‘approve’ everything each step of the way and we needed to ‘wait’ on his call back/attention. He let our flooring company know he was going to be on vacation in Europe over the holidays (our claim started the beginning of December); while he never let DH or me know squat. So, I took executive action and proceeded with everything as if it all was approved - no news is good news. When he got back (this was in fax times, before internet and more sophistication with computers) I faxed him 11 pages of everything from my office - I had had written each action item along with the expense, much paid by me and all to be reimbursed expenses. He asked, “who authorized” and I said since he was unavailable and didn’t tell me who to call, we just moved forward. He approved it all. Done. He was a jerk. The carpeting guys who did major rooms Dec 23rd (thankfully my in-laws were here, and my MIL directed things just fine) - DH and I couldn’t be away from work. DH had production deadlines and engineering action items overseeing - including end of year goals to be met, and I had month-end and year-end financials to do at work for a physician specialty group, and our daughters were 1 1/2 and 3 1/2 - our hands were full w/o delaying because of a jerk insurance adjuster.

Our USAA claim was a lot more complicated. The roof delayed things, and interior could not be worked on (except tear out of mold/damage) until roof completed and inspected. That makes sense but delayed having our interior restored. Once one learns the claim system (and how to handle - using their electronic system for documentation) the claims adjustor is going to be responsive - and they also have a policy on returning calls within I believe 24 or 48 hours. Our claims adjuster did take a one-week vacation and also told me the dates he was out of the office.

Once our USAA claim was done, we actually increased the insurance on our home to the correct level. We were not ‘over-insured’.

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This is how it was when I got my USAA credit card when I was 17, but I don’t believe it’s still the case. I think as long as you are a family member of a current member, that works too. After college/becoming independent, both of my kids got USAA car insurance despite neither H or myself having served, nor did my Dad have to list them anywhere. I am still a member. Younger S is an authorized user on my USAA CC, but older S is not.

USAA car insurance was by far the cheapest for them. I suppose they are used to insuring 22-25 year old single men. We have never had USAA insurance. Several years ago I got a quote, since ours had jacked up the rates so much, but even then USAA car alone was higher than our car plus home.

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