I disagree with Invoice on the value of long-term care insurance coverage. Invoice is so dismissive and improper on this matter. The price of long-term care is insignificant for him as a billionaire. Sure, LTC insurance coverage is “low cost” for him. However, should you aren’t a multimillionaire or billionaire, LTC just isn’t low cost. As these of us with a beloved one with dementia know, significant LTCI is not possible to get in case you have a big medical situation and a number of guardian beforehand recognized with dementia. The one possibility for LTCI that my husband and I had (given my husband’s medical historical past and my MIL’s dementia) was to purchase by his employer for $167/month beginning at age 45 with a lifetime most payout of $300,000 (no inflation adjustment). In nearly all circumstances, we’re higher off saving that $167/month right into a taxable brokerage as an alternative of shopping for LTC. Plus, $300k is prone to be a drop within the bucket by the point we want LTC.
The price of reminiscence care is already very excessive (roughly $8-12k per thirty days, relying on the ability), and the typical lady with dementia wants care for five years. The typical man with dementia wants look after 3 years. Medicaid received’t cowl the prices of care till you’ve gotten exhausted your property and (in most states) your partner’s property. My MIL is 72 and has stage 6 Alzheimer’s, will likely be shifting into reminiscence care throughout the subsequent 6 months, and lives in a state the place a spouses property are counted for the needs of Medicaid qualification. My FIL is 73 and has a household historical past of dwelling into their 90s so he must fund a further 20+ years of his personal retirement plus her care. He at present has roughly $1.2M in property, not together with his home. If he spends down his property for my MIL’s care, he will likely be destitute in his previous age. Its not unreasonable for FIRE folks to put aside a big fund to pay for LTC, and Invoice’s e-book and perspective are VERY dismissive on this matter as a result of for Invoice, $9k per thirty days is lower than his common present month-to-month spending.
Regardless of being in finance, Invoice additionally doesn’t appear to grasp that the 4% rule just isn’t an asset preservation rule. I don’t suppose it helped that on this case that Chris can also be not likely a FIRE individual so he couldn’t name Invoice out on his misunderstanding. Within the worst case SORR, 4% will lead to a ending web price of zero or worse and doesn’t protect the preliminary investments. Nobody within the FIRE group says that you may’t spend greater than 4% plus inflation if you end up in an excellent SORR. And, in truth, many individuals within the FIRE group plan to implement one thing like Kitces’ ratcheting withdrawal charges.
Many FIRE folks additionally plan on some model of Bernicke’s Actuality Retirement Plan, which acknowledges the so known as, “go go, gradual go, and no go years” or the “retirement smile.” That’s constructed into FireCalc, which many individuals use to verify how secure their retirement plan is.
It additionally looks as if neither Chris nor Invoice have heard of the newer variations of FIRE like CoastFI or SlowFI and assume that everybody lives like a monk (a la Early Retirement Excessive) whereas saving for FIRE, when there are many us on the market who imagine within the maxim of “construct the life you need, then save for it.”