I would add that the wealthiest 1% own 50% of US stocks and the top 10% own 93%. These folks also receive most of the dividend and interest income earned by Americans and are also much more likely to have other forms of non-stock income (e.g., real estate investments) which limits the need of retirees in this group to sell stocks to fund their retirement. I'm sure that I am not the only retiree on HD whose equity holdings are greater than they were when they began taking RMDs. (I have been taking RMDs since 2018 and RDQ, who has been taking RMDs for a few years more than I have has indicated that his wealth has increased since he retired.)
My comment was intended to support your position that it isn't possible that you can't avoid taxes by by paying your LTCI premium with an IRA distribution.
It appears that tax-qualified LTC premiums, subject to age-based limits, can be included as medical expenses for those who itemize. This would only be a tax deductible benefit if medical expenses exceed 7.5% of AGI. Eligible Long-Term Care Premium Limits For 2024, the maximum amount of qualified long-term care premiums includible as medical expenses has increased. Qualified long-term care premiums up to the amounts shown below can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, or in calculating the self-employed health insurance deduction.
You are ignoring the fact that Linda and Dick have been fully covered by their policies for 23 and 30 years (or a significant number of those years if they had a waiting period) while you would have been hard pressed to fund LTC during the years when the amount in your Vanguard account was much smaller. LTC costs are also outpacing inflation and while 1/3 of people will never need it, 20% will need 5 years or more.
I assume the article you are referring to is Wharton professor Adam Grant's No You Don't Get an A for Effort that recently appeared in the NYTimes. While Grant did note that a recent survey found that 1/3 of students thought they should get a B just for showing up, the main point of his article was that today, many students expect to be rewarded for the quantity of their effort rather than the quality of their knowledge. Grant went on to blame this attitude on a recent shift by education theorists from prioritizing praising industriousness over accomplishments to the point that we have gone from commending effort to treating it as an end in itself. We’ve taught a generation of kids that their worth is defined primarily by their work ethic. While Grant's article generated many supportive comments, many commenters took issue with his notion that today's students have a strong work ethic. As a former college professor who retired 5 years ago, the following comment is consistent with the increasingly disappointing changes I observed in my students' classroom behavior and performance in the years preceeding my retirement: One of the problems is that students don’t know what hard work looks like.They might tell me they spent one hour doing their homework, but that one hour was filled with switching back-and-forth from their phones to their homework.They might tell me they spent one hour doing their homework, but that one hour was filled with switching back-and-forth from their phones to their homework. If you have ever watched students do their homework, you know exactly what I’m talking about. They tell us that they are much better at multi-tasking than we are, but we know that the brain cannot process two complex thoughts at the same time. https://www.nytimes.com/2024/12/26/opinion/school-grades-a-quantity-quality.html
The quotes attributed to Seneca ignore the well-established relationships between our genetics and early life experiences and our successes and failures.
I second Cathy's advice to get on a CCRC waiting list. My wife and I were fortunate to to have only had a wait a little less than one year for our apartment (we made our deposit in Dec 2022), which was in large part due to the fact that it was still under construction when we reserved our spot. Now that it has been open for a year, the waiting list has mushroomed and it is estimated that the wait could be several years.
This is a significant benefit for us. We also benefited in 2024 from the elimination of copays after we reached the "catastrophic coverage" category. Another change this year is that you can elect to have your prescription payments spread in monthly amounts over the year.
The point of the article is that increases in property taxes and insurance are much greater than they have been in the past. The article has a link to a July 11, 2024 WSJ article that says property insurance premiums have increased an average of 20% nationally in the past year. Home Insurance Premiums Are Surging—and States Are Allowing It Industry denies ‘bullying’ tactics after getting approval for premium increases averaging 20% since last yearhttps://www.wsj.com/finance/regulation/home-insurance-premiums-surge-states-approve-8656877d?mod=article_inline
This article does a good job of explaining why a "1929-style decline" isn't something we should worry about. However, it doesn't address whether there is less risk of the much more recent sell-offs that happened with the dot-com bust when stocks dropped ~39% or when stocks dropped ~43% in 2008-2009. Sometimes I think many have already forgotten that the market didn't exceed its high in Dec 1999 until Nov 2013.
Comments:
I would add that the wealthiest 1% own 50% of US stocks and the top 10% own 93%. These folks also receive most of the dividend and interest income earned by Americans and are also much more likely to have other forms of non-stock income (e.g., real estate investments) which limits the need of retirees in this group to sell stocks to fund their retirement. I'm sure that I am not the only retiree on HD whose equity holdings are greater than they were when they began taking RMDs. (I have been taking RMDs since 2018 and RDQ, who has been taking RMDs for a few years more than I have has indicated that his wealth has increased since he retired.)
Post: Is There a Change Coming in the Direction of the Markets’ Winds?
Link to comment from January 17, 2025
My comment was intended to support your position that it isn't possible that you can't avoid taxes by by paying your LTCI premium with an IRA distribution.
Post: Retirement Realignment by Ken Cutler
Link to comment from January 15, 2025
It appears that tax-qualified LTC premiums, subject to age-based limits, can be included as medical expenses for those who itemize. This would only be a tax deductible benefit if medical expenses exceed 7.5% of AGI.
Eligible Long-Term Care Premium Limits For 2024, the maximum amount of qualified long-term care premiums includible as medical expenses has increased. Qualified long-term care premiums up to the amounts shown below can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, or in calculating the self-employed health insurance deduction.
- Age 40 or under: $470
- Age 41 to 50: $880
- Age 51 to 60: $1,760
- Age 61 to 70: $4,710
- Age 71 and over: $5,880
https://apps.irs.gov/app/vita/content/00/00_25_005.jspPost: Retirement Realignment by Ken Cutler
Link to comment from January 14, 2025
You are ignoring the fact that Linda and Dick have been fully covered by their policies for 23 and 30 years (or a significant number of those years if they had a waiting period) while you would have been hard pressed to fund LTC during the years when the amount in your Vanguard account was much smaller. LTC costs are also outpacing inflation and while 1/3 of people will never need it, 20% will need 5 years or more.
Post: Obsessed with a financial stress-less retirement
Link to comment from January 11, 2025
I assume the article you are referring to is Wharton professor Adam Grant's No You Don't Get an A for Effort that recently appeared in the NYTimes. While Grant did note that a recent survey found that 1/3 of students thought they should get a B just for showing up, the main point of his article was that today, many students expect to be rewarded for the quantity of their effort rather than the quality of their knowledge. Grant went on to blame this attitude on a recent shift by education theorists from prioritizing praising industriousness over accomplishments to the point that we have gone from commending effort to treating it as an end in itself. We’ve taught a generation of kids that their worth is defined primarily by their work ethic. While Grant's article generated many supportive comments, many commenters took issue with his notion that today's students have a strong work ethic. As a former college professor who retired 5 years ago, the following comment is consistent with the increasingly disappointing changes I observed in my students' classroom behavior and performance in the years preceeding my retirement: One of the problems is that students don’t know what hard work looks like.They might tell me they spent one hour doing their homework, but that one hour was filled with switching back-and-forth from their phones to their homework.They might tell me they spent one hour doing their homework, but that one hour was filled with switching back-and-forth from their phones to their homework. If you have ever watched students do their homework, you know exactly what I’m talking about. They tell us that they are much better at multi-tasking than we are, but we know that the brain cannot process two complex thoughts at the same time. https://www.nytimes.com/2024/12/26/opinion/school-grades-a-quantity-quality.html
Post: A “B” for effort won’t get you far. Results are what matter.
Link to comment from January 4, 2025
The quotes attributed to Seneca ignore the well-established relationships between our genetics and early life experiences and our successes and failures.
Post: Why We Struggle
Link to comment from January 4, 2025
I second Cathy's advice to get on a CCRC waiting list. My wife and I were fortunate to to have only had a wait a little less than one year for our apartment (we made our deposit in Dec 2022), which was in large part due to the fact that it was still under construction when we reserved our spot. Now that it has been open for a year, the waiting list has mushroomed and it is estimated that the wait could be several years.
Post: 2025 Retirement Countdown by Dana/DrLefty!
Link to comment from January 1, 2025
This is a significant benefit for us. We also benefited in 2024 from the elimination of copays after we reached the "catastrophic coverage" category. Another change this year is that you can elect to have your prescription payments spread in monthly amounts over the year.
Post: 2025 and Medicare Rx
Link to comment from January 1, 2025
The point of the article is that increases in property taxes and insurance are much greater than they have been in the past. The article has a link to a July 11, 2024 WSJ article that says property insurance premiums have increased an average of 20% nationally in the past year. Home Insurance Premiums Are Surging—and States Are Allowing It Industry denies ‘bullying’ tactics after getting approval for premium increases averaging 20% since last year https://www.wsj.com/finance/regulation/home-insurance-premiums-surge-states-approve-8656877d?mod=article_inline
Post: A new glitch in retirement planning to consider
Link to comment from December 24, 2024
This article does a good job of explaining why a "1929-style decline" isn't something we should worry about. However, it doesn't address whether there is less risk of the much more recent sell-offs that happened with the dot-com bust when stocks dropped ~39% or when stocks dropped ~43% in 2008-2009. Sometimes I think many have already forgotten that the market didn't exceed its high in Dec 1999 until Nov 2013.
Post: Don’t Expect a Repeat
Link to comment from December 23, 2024