SEMI-RETIREMENT IN 2017?

HAPPY NEW YEAR and HAPPY NEW STATUS!!! After working since 1980 as a behavior specialist, behavior analyst, behavioral health worker, substance abuse technician, mental health worker, caregiver, and now a relief intake coordinator/behavioral health worker, I have decided to cut down on my work hours and try my hand at semi-retirement. Prior to that, I was a physical fitness instructor in the Philippines for 2 years. If anyone is counting, that would be 38 years of working full time except for a brief 6 month stint of being unemployed after being laid off in 2013.

Why just semi-retirement and not full retirement? Well, there's this thing called medical, dental, and vision insurance that I still need from something called a job, and I am reducing my work hours to the most minimum required to still obtain the insurance benefits, although I have to pay more for them. By the way, if it at all matters, I'm 59 and a half years old and 5 and a half years away from qualifying for Medicare.

Since November 2016, I had been considering cutting back on my work hours. Our full time schedule calls for three 12 hour shifts a week, and in the past 5 months, I particularly, had been assigned to work 2 nights a week on the psych units as a behavioral health worker with the patients, and 1 night a week as a relief intake coordinator in an office (which pays slightly more). I had been waiting to see how much of a pay increase I would get which I found out at the end of November. It was decent enough so I started calculating my monthly expenses against my possible income based on the lesser working hours, taking into account the taxes which would be taken out automatically from my paycheck. Based on this, I figured I might be able to survive with still a little leeway for unforeseen expenses, without dipping into my retirement nest egg.

Finally, a month ago, I emailed my Nurse Manager with a request to change my status from full time to part time, effective New Year's Day 2017. My last shift working full time was New Year's Eve.

I haven't figured out what to do with my free time between nights off yet and that's something I'll have to ponder. I've been having insomnia lately so maybe I'll be able to maintain better sleep patterns. Whatever happens in semi-retirement, it's going to be a new journey.

New Year's Eve at work

Second Thoughts About Retiring in the Philippines

A few years ago, with hopes of retiring early, I started to explore the possibilities of doing so in the Philippines due to the lower cost of living in that country. There were townhomes with two bedrooms in good areas that were selling for as little as $15,000, with three bedrooms costing not too much more. Fast forward about five years later and those same townhomes are now selling at more than double the original prices.

One of the places I considered was Zamboanga City to be close to my mother, however she has passed away since. I also wanted to live there to have closer access to SATTI, hahaha! I still have plenty of relatives and friends in that city but there are problems with electricity and an ongoing turmoil with certain groups trying to take over the area.

Another place I checked out was Cagayan de Oro city, but I hardly know anyone there other than a cousin and an elementary school classmate who said that area was much more peaceful than Zamboanga. Other property values I’ve looked into were in Davao and Cebu.

Currently, a main consideration is to live close to my brother in Quezon City since he is my only immediate family left. Checking properties for sale near his location showed prices ranging from 1.4 million Philippine pesos for a tiny bachelor’s pad condominium all the way to 3 million to combine 2 bachelor’s pads into one, or a one bedroom place. There’s no way I could afford those prices if I wanted to pay for the whole amount all at once. I just paid off my mortgage in the U.S. and I’m not ready to start another one in another country. The only way I could afford to buy a decent home in the Philippines is if I sell my condo here in the U.S., then move to the Philippines. Mentally and financially, I’m not ready to do that. By the way, I am qualified to buy property in the Philippines because I have dual citizenship.

It has often been suggested that before packing everything up and moving, one should try living in the area you want to move to for a couple of months or more to see if you would like it. It would not be possible for me to be off work for a couple of months but it may be possible to visit a week or two every couple of years. In fact instead of retiring in the Philippines as a backup plan, staying where I am now will be the backup plan since my mortgage is already paid off. That takes early retirement off the table though since I won’t qualify for Medicare until I’m 65 (I’m currently 58). If medical insurance was not a consideration, I would be able to retire when I’m 60 and use my retirement plans until I need to collect from Social Security. Medicaid (Medi-Cal in California) could be a possibility except when I die, California has to be reimbursed for whatever expenses they used on me from my assets, before any heirs get to collect their share.

There remain other options or sacrifices if I still want to retire in the Philippines, and that is to buy a home in the suburbs, if you can call it that. Two to three bedroom townhomes in Bulacan and some parts of Cavite remain affordable but they are much farther away from my relatives in the Metro Manila area. However, I may have to buy it now or else they may no longer be affordable in a couple of years.

Another consideration with moving is having to buy a vehicle and getting a driver’s license. It would also be a major adjustment in learning how to drive in the Philippines which I hear has a lot more traffic jams nowadays and driving techniques are way more different than what I’m used to in California.

Let’s also not forget that if I buy a home there, there are start up costs of new furniture, appliances, and utilities.

As far as health insurance, since I’m a dual citizen, I will be able to avail of Philhealth, the universal health insurance of the country, although I will have to pay a certain amount up front to catch up since I have never contributed to the system.

Yet another possibility would be to rent out my condo if I decide to move to the Philippines, become a remote landlord, and use the money to pay for the new mortgage, but that would entail hiring a property management company to maintain the condo, which would decrease my proceeds.

It is due to the recent economic successes in the Philippines that property values and the cost of living have spiked, even though the poorer Filipinos have not seemed to have fared better due to this.

And then there's the politics of the country…

Oh my goodness, how can I neglect to say that one of the most positive things I can say about possibly retiring in the Philippines is the hospitality of the people. 

An Obamacare Loophole For Early Retirees?

This entry was written on April 21, 2013, way before Obamacare took effect. Here is an update concerning my situation dated July 26, 2014: http://aboutlifeandrunning.blogspot.com/2014/07/qualifying-for-medi-cal-due-to-obamacare.html .

I didn’t expect to write about anything today, especially not about politics. But this is not about politics but rather about retirement. After I finished reading about buying health insurance with Obamacare, I just had to share a surprising discovery that could affect me and perhaps you. The main I concern I’ve had about retiring early (if I could), was getting affordable health insurance. I was already dreading the thought of having to work until I reach 65 when I would be eligible for Medicare, or stop working earlier and move to the Philippines. Of course you can always buy coverage from private insurance companies, but they are very expensive and if you have a pre-existing condition, your premiums could be higher or you could be denied coverage. So I decided to do some research on how Obamacare would affect the cost of health insurance coverage for early retirees, who won’t be eligible for Medicare until age 65, and found some interesting things about the Affordable Healthcare Act of 2010.

First I went to this website: coveredca.com to check out how Obamacare would work in California. I read through pages of information but they didn’t clearly indicate how early retirees would qualify. The main criteria they had was income. Where would early retirees get their income and how is that calculated? The website didn’t clearly say. So I asked Mr. Google this question: “Do early retirees qualify for medicaid?” A whole bunch of financial and news websites came up explaining a glitch or loophole in Obamacare. Here are a couple of examples: http://www.forbes.com/sites/financialfinesse/2012/07/03/surprising-ways-the-new-health-care-plan-can-speed-up-your-financial-independence-day/ and http://www.huffingtonpost.com/2011/06/21/obama-health-care-law-medicaid-middle-class_n_881412.html.

Basically, what is says is that early retirees can qualify for subsidized health insurance starting in 2014 or if you fall under a certain income level, then you qualify for Medicaid and don’t have to pay for health insurance. Interesting! If this is the case, then I hope the law isn’t overturned by the powers that be in Washington, D.C.

So hypothetically, if I am able to pay off my mortgage, then I won’t be requiring too much monthly income to cover my day to day expenses and utility bills. Let’s just say I only need $1,000 a month to survive ( I can actually subsist on less). That’s what I have to withdraw from my savings and would make my income $12000 a year which would qualify me for Medi-Cal (California’s Medicaid). So if anybody ever reads this and is familiar with the subject, please correct me if I’m wrong. Based on the California program, I will not have to start paying for health insurance until my income goes over 15,850. If I understand what I read correctly and I actually have to buy subsidized insurance, that would give me a Silver Level coverage. Until the open enrollment starts later this year, I won’t know how much the Gold or Platinum Level coverage would cost, which is the highest tier of coverage available. That means more out of pocket to pay for the insurance monthly, but lesser to pay when you get treatment.

Then I realized, I was actually wrong about withdrawing from my savings as income. Regular banks savings actually don’t qualify as income because they had already been taxed beforehand. Now if I start withdrawing from my regular IRA or 401K at age 59 ½ , that would actually be considered taxable income. So while withdrawing from savings until it runs dry, my taxable income would actually be zero. Right? I don't have enough savings to last until I turn 59 ½ though :( .

If that Obamacare loophole is for real, then it’s almost too good to be true. Will the law be amended to fix this loophole? Because it is to my advantage, then I hope not. You mean to say I could possibly afford to retire in the U.S. and not have to do it in the Philippines?!

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Thoughts About Retirement Revisited

It’s time to revisit my thoughts about retirement  two years after I first wrote about it here: http://aboutlifeandrunning.blogspot.com/2009/04/thoughts-of-retirement.html . From time to time when I think as if I’m getting tired of the rat race, my thoughts wander to what it might feel like to retire early. The primary considerations of two years ago still stand as documented at that link above.

            My mortgage is due to be paid off in about 6 ½ years and by then I would also be able to start drawing funds from my retirement savings without penalty, other than taxes, depending on the type of account. I won’t go into the differences between Roth and tax deferred IRA’s and 401K or 403B plans, all of which I have had in the 30 odd years I’ve lived and worked in the U.S. Certainly, paying off the mortgage will be a big reduction in my expenses. It is after all the biggest monthly expense which covers about 60 % of my self imposed strict budget. If and when that expense disappears, will I be able to retire then, or continue working lesser hours just so I can keep my health insurance going? See, health insurance is my biggest concern because without an employer contributing to the cost, it is something very expensive to maintain, if you pay the whole cost out of your own pocket. Just before I wrote this, I looked it up and the costs terrified me. If I retire at 60 when I pay off my mortgage, the monthly payment which used to go to the mortgage lender  will be used to pay for health insurance instead, at least until I qualify for Medicare five years later. Of course the other option is not to retire early.

            But what if I really, really, want to retire early? Will moving back to the Philippines still be an alternative? The dollars go farther there as I previously mentioned. In recent weeks, I have surfed the web to look at the cost of homes in different areas of the Philippines. Metro Manila is definitely out of the question because it’s expensive to live there. Even if that is to be considered, the most I could possibly afford would be a studio condominium unit, which is so tiny I would feel squeezed in. There have been suggestions about living in the following cities: Dumaguete (a lot of expatriates supposedly live there), Davao, Cagayan Do Oro, and Zamboanga were among the ones I looked at. Compared to homes in the U.S. which would cost more than what I have saved so far in my lifetime, for the price of about 1/7^th of what I have, one could have at least a 2 bedroom condo or house depending on what city you choose. Even though I looked at Zamboanga where my mother lives, it was not one of the suggested places because it is not as safe as the others mentioned. The homes are cheaper there though. There is just one problem with this scenario. Only Filipino citizens can buy a house and lot in the Philippines, although condominiums are exempt from that law. If anyone from the Philippines reads this, please correct me if I’m wrong. I have no qualms about living in a condo, mind you. I live in one now.

            Ok, now let’s say I decide to retire at 60 and move to the Philippines and buy a home there. There is still the health insurance concern. An expatriate living in the Philippines mentioned in his blog that he set aside $10,000 in case he develops any catastrophic illnesses that requires hospitalization and other expenses that follow.

            After the initial major expense of buying a home, I could possibly live on $500.00 a month until I turn 62 when I can start collecting a reduced amount from Social Security . That would still more than double my budget, that is, if Social Security would still be available then. Farther down the road at 65, I start qualifying for Medicare, which is no good in the Philippines. So what now? Move back to the U.S. just because? By that time, out of pocket Medicare premiums may no longer be affordable to me, and besides, where would I live?

Am I thinking too far ahead? ASTAGPIRULA! This is giving me a headache, LOL!

            Another thing I wondered about is if I can retire now. Well I looked at my net worth a few days ago and the available cash I have which are not part of my tax deferred retirement plans. Here is the nitty gritty: I cannot retire at this moment because if I pay off my mortgage, I would hardly have any money left that’s not tax deferred. And I don’t foresee selling off my condo so quickly that I can vamoose to the Philippines right away. If however I can sell my condo, I may have enough to make it last until I can draw funds from the retirement accounts when I turn 60. So darn complicated. Hmm, unless I win big in the Super Lotto soon. Otherwise, forget about tax deferred and think about retirement deferred instead.

            Having said all that, here are some homes that have piqued my interest because of the price and location. There’s just one possible problem – I don’t know anyone there other than a former classmate from elementary and high school: http://www.philippine-real-estate.net/Camella_Lessandra_Residences.1643.0.html

                Does anyone have thoughts on the matter? Your feedback is appreciated.

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