I disagree with Bill on the price of long-term care insurance. Bill is so dismissive and wrong on this topic. The cost of long-term care is insignificant for him as a billionaire. Yes, LTC insurance is “cheap” for him. But, if you aren’t a multimillionaire or billionaire, LTC is not cheap. As those of us with a loved one with dementia know, meaningful LTCI is impossible to get if you have a significant medical condition and one or more parent previously diagnosed with dementia. The only option for LTCI that my husband and I had (given my husband’s medical history and my MIL’s dementia) was to buy through his employer for $167/month starting at age 45 with a lifetime maximum payout of $300,000 (no inflation adjustment). In almost all circumstances, we are better off saving that $167/month into a taxable brokerage instead of buying LTC. Plus, $300k is likely to be a drop in the bucket by the time we need LTC.
The cost of memory care is already very high (roughly $8-12k per month, depending on the facility), and the average woman with dementia needs care for 5 years. The average man with dementia needs care for 3 years. Medicaid won’t cover the costs of care until you have exhausted your assets and (in most states) your spouse’s assets. My MIL is 72 and has stage 6 Alzheimer’s, will be moving into memory care within the next 6 months, and lives in a state where a spouses assets are counted for the purposes of Medicaid qualification. My FIL is 73 and has a family history of living into their 90s so he needs to fund an additional 20+ years of his own retirement plus her care. He currently has roughly $1.2M in assets, not including his house. If he spends down his assets for my MIL’s care, he will be destitute in his old age. Its not unreasonable for FIRE people to set aside a large fund to pay for LTC, and Bill’s book and attitude are VERY dismissive on this topic because for Bill, $9k per month is less than his average current monthly spending.
Despite being in finance, Bill also doesn’t seem to understand that the 4% rule is not an asset preservation rule. I don’t think it helped that in this case that Chris is also not really a FIRE person so he couldn’t call Bill out on his misunderstanding. In the worst case SORR, 4% will result in a ending net worth of zero or worse and does not preserve the initial investments. No one in the FIRE community says that you can’t spend more than 4% plus inflation if you find yourself in a good SORR. And, in fact, many people in the FIRE community plan to implement something like Kitces’ ratcheting withdrawal rates.
Many FIRE people also plan on some version of Bernicke’s Reality Retirement Plan, which recognizes the so called, “go go, slow go, and no go years” or the “retirement smile.” That’s built into FireCalc, which many people use to check how safe their retirement plan is.
It also seems like neither Chris nor Bill have heard of the newer versions of FIRE like CoastFI or SlowFI and assume that everyone lives like a monk (a la Early Retirement Extreme) while saving for FIRE, when there are plenty of us out there who believe in the maxim of “build the life you want, then save for it.”
