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Author: PaulEngr Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 46840  
Subject: Re: What to do AFTER the house? Date: 5/8/2005 9:56 PM
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How I think I will feel when I get to a certain age bears little resemblance to the attitudes I actually have when I arrive at that age.

Absolutely true! Even 4 or 5 years ago, I never considered the idea that I would ever hit a point where I felt financially and/or emotionally "satisfied" and ready to move into a totally different direction.

That is one the primary reasons I'm loathe to continue to push more and more liquid assets into encumbered status. Once it becomes encumbered (collected in tax sheltered accounts), you can't use it for different purposes anymore. I have a certain nebulous goal when it comes to retirement but that's 30-35 years from now. So much has changed in the last say 10 years not only in financial terms but my own thought processes that I'm not even going to hazard what I will be thinking that far out.

It's similar to the reason that my wife and I felt that 529's and ESA's were not appropriate for our kids. Our own opinions and attitudes about higher education have changed drastically. For our parents, it was the "standard model"...go to school, then immediately go to college, and get into a degree program with a high salary expectation. Through the process, we both became a little disillusioned. It was worse for me. While I had my suspicions, the whole vision of the emporer having no clothes was positively confirmed while in grad school. If the undergraduates only REALLY knew what goes on in the ivory towers, to say nothing of the parents!

Because of that, we don't want to leave our kids forced into the "standard model" since 15+ years from now, it may not apply or be changed radically.

Regarding disability insurance.....1). It never seems to cover what you (when healthy) think it will cover.

Several points made regarding this. Covers 60% of base salary once I hit the 6 month limit. Below that limit, I draw short term disability which is 100%. I'm not overly thrilled with the disability insurance but it's survivable. Whenever I've been laid off, that seems to be about what our typical cost of living drops back to. I realize of course that paying to go have my kidneys sucked out (dialysis) for instance will seriously cut into that kind of coverage even with the medical part of it.

My kids are covered through my wife under an HMO which is somewhat better when they're at those very young "sniffle years".

I'm under something much different, an HSA. These are very uncommon right now. In fact out of the almost 400 people at the plant where I work, I'm the only one with an HSA. This is something much different than an FSA and just started this last year. For those who don't know, these are really nice if you either rack up huge medical costs every year (such as being insulin dependent diabetic) or you rack up virtually nothing.

First, I have an investment account. It's similar to a 401K in the way it functions. Money goes into it tax free. It comes out either during retirement (pay taxes), or else any time you have medical expenses (tax free). Each year, I can put up to $1500 in it (if I remember the number correctly).

Here's the kicker. It also comes with a traditional major medical insurance policy. My out of pocket limit and deductible limit is the same as my investment limit. Whenever I rack up medical bills, I pay them off and then get reimbursed just like with an FSA. Once I hit that magic number in any given year (the deductible), EVERYTHING else is covered 100% up to $10MM. And as I said, it's a traditional medical insurance policy. No fooling around with referrals, formularies, or the approval process of HMO's and PPO's. If I need medical care that bad, I have access to the best of the best.

The money carries over year to year (no disappearing acts like with the MSA's) and transfers from one company to another.

At the current time, this is much less expensive than what I've been seeing for payroll deductions even for a PPO. It's sort of a return to the traditional medical insurance policy with a new twist. Since I see a doctor mostly just once every couple years and even then, it's mostly for preventative purposes (surveillance). So I don't expect to use it very often.

I'm comfortable with it mostly because we have the same arrangement with the house and car. We have very high deductibles (set to either the limit or wherever the breakeven point is where it doesn't appreciably reduce the prices). Last I remember, my deductibles were $1500 across the board. It's just that I can't fund an investment account as part of those insurance policies (at least technically).

What else will change about you and your needs in disability? Will you need reschooling for a different career? Funds to start your own business venture? Medical costs not covered by insurances? Remodeling the home to account for the disability?

I'm a plant engineer. In my case, that means that I spend time crawling down in whatever nasty hole that the maintenance crew is working in and do whatever I can to help them out. I am not a "shirt and tie" kind of guy. I have a dress jacket buried some place in the closet behind multiple Carhartt jackets and overalls.

If I should happen to part ways with various body parts, I can always be a consulting engineer, programmer, or even a draftsman if necessary. I can do that stuff even if I'm blind or lose my hearing or even limbs. So fortunately I don't expect to worry about training issues. Funding to start a business venture is a problem. That's part of why I'm trying to build up taxable reserves as well. Right now, I'm happy where I'm at. But in the future if that changes, switching to a new career is usually fairly expensive.

I'm already disappointed with several tools that I use at work. If I wasn't working, I'd build a better mousetrap and market it. Or if I decide to move on, I may take that approach instead of getting another plant engineer job. Every time I change jobs, I've considered going solo but so far it hasn't worked out yet.

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