What happens if I contribute 20% of my income to a 403B and then become institutionalized at 60 yrs old?

Question

Sounds strange, but my mother has passed down a genetic brain disorder. She died when she was 63 in a nursing home. Now my oldest sister has it, and I am starting to think if I end up with it, I may never reach retirement. What happens to the money in my 403B? Will they give it to me and tax me to death? Should I invest in some other way? I am 42 yrs old now and this is pretty darned depressing. If I am socking money away to go to a nursing home, I would like for it to be a nice one and not worry about my fniancial issues?

Answer 1

I can assure you the money will go fast you will only be able to be in a nice nursing home for maybe 1 year and then the state will take over and put you in a dump I would enjoy life as much as I can go to a beach, on a cruise, top of a mountain, all for memorys. just so i could dream when I was in a dump. So I would do stocks for a few years then do some thing fun.

Answer 2

403B, 401K, non-Roth IRAs allow you to save money that has not been taxed. When you take it out it is taxed. In most cases the effect of paying taxes later (when you withdraw the money) rather than sooner (when you earned the money) is better for you. All plans allow you take your money out early but there is (usually) an additional tax (10%) unless:

you become disabled;
you face a financial hardship; or
you are older than age 59 1/2.

Unless your estate is in the millions of dollars the death tax will not apply.

You are right, having these funds will allow you pick a nice nursing home rather than some dumpy place.

Within your 403b you should have some options of how the money is invested. Since you don't need the money for at least 10 years, select a broad based stock mutual fund. Later switch to a bond fund.