Diane C. Would you please detail this "good saver" plan? What's it gonna take to be paying even $225,000 a year 20 years from now for 2-3-4-5-6 years?
Honobob, for fun, go to Bankrate.com and plug in the following numbers (or any others that please you). You'll see that $1M invested now for 20 years at a 7% return with a 3% inflation factor and a 15% tax rate will equal about 3.2 million. Yeah, I can handle that. And yes, if you start saving young and don't do anything silly like prepaying your mortgage without fully funding all available retirement options, you can have that much too. If you get traction when you're young, it's actually remarkably within reach.
Note: Please don't assume that I only have $1M. Just using it 'cause it's a lovely, lovely round number.
[/quote]
_________________________________________________________________________________________________________________
Diane C here: I can't get the quotes to work correctly. This is honobob's reply:
So the Diane C "good saver" LTC plan is:
1. Have $1,000,000.
2. Leave untouched for 20 years earning 7%.
3. Now you have $3.2 million which will provide only 15 years of LTC assuming your rate of return will drop to 5% because you'll need to be more liquid (was the 7% really realistic?) and assume the LTC cost will also increase 5%. Now your LTC fund is totally depleted and you're on Medicaid.
The only quibble I would have would be with number 1 and number 2.
Now over that same time period I am spending only $60,000 and that is only in 240 monthly installments. So I have $940,000 of the million to do with as I please. If I just invested it like you I'd probably have close to $3,000,000. So now 20 years later I need LTC and my insurance will pay the $225,000 plus the 5% annual increase FOREVER. And..and I have almost $3,000,000 FUN money.
Hmmm...exactly how are you sticking it to the insurance industry?
_________________________________________________________________________________________________________________
Honobob, I knew I was approaching quicksand with you when you read my words "good saver" as "good saver plan". Nonetheless, I feel my point is a valid as any other, so I seriously considered your question and made a carefully-thought out response. Now you're calling it the "Diane C 'good saver' LTC plan" and using quotes? Are you the personality Nords seemed to be warning me about? (Thanks, Nords, I've got this one. You rock.)
Some additional corrections to your erroneous assumptions:
1. I never said anything about "sticking it to the insurance industry". Quite the opposite. I strongly advocated disability insurance. Did you miss that part?
2. I specifically stated that I have more than $1M in assets. I chose $1M for my example, because it is a "lovely, lovely round number" and the math is easy.
3. You chose to make fun of $1M. Let me tell you again from experience, if you start early and keep at it long enough, IT'S NOT THAT HARD! I can't help it if you don't believe it, the facts are the facts. If you don't believe in yourself and your ability to achieve this via Mustachianism, why are you here? BTW there's an awesome thread elsewhere on the forums about the first million being the hardest. It's inspiring reading, I recommend it.
4. The 7% was in the Bankrate calculator when I pulled it up. Seemed historically reasonable to me, so I went with it. Bankrate allows you to put in any rate of return you want. I'd invite you to try it, but I already have and you chose to sneer instead.
5. Using my original number of $3.2M and your figures of $225k/year* times 6 years equals $1.35M, simple math says the remainder is $1.85M. And that's without considering that I (or my family) wouldn't pay out the $1.35M all at once. My army of little green soldiers will continue to fight for me, so $1.85M is a very conservative remainder. In the interim, I have all the rest of my significant assets to call "fun money". Those are your words. I call it "Freedom Money". I used to call it "Fuck You Money", but since I've become FIRE, I've mellowed a bit. Oh, and the "20 years" was your number, not mine. Plus, you changed the LTC expectation from "2-3-4-5-6 years" to 20 years. Quicksand, honobob, be careful, you're walking in quicksand.
6. If my Mustachian ways pay off in that I never need LTC, I get to spend/keep/bequeath even more money, woo-hoo! Why? Because it's under MY control, not some insurance company that doesn't consider me anything more than an enemy should I need to make a claim.
7. Never gonna qualify for Medicaid, never gonna eat cat food and I never toss and turn at night worrying about this shit! Oh, I will freely admit I used to, but when I hit my first million, all those worries fell away, as if by magic. Feels great!
Honobob, this forum exists for the free exchange of ideas. If your goal is to belittle others who are ahead of you on life's path and willing to share their experience and perspective, what will you ever learn from your time spent here?
*P.S. - WTF? What Mustachian worth their salt is going to pay $225k/year for long term care? What kind of place it that? Do they serve your food on gold-plated trays? Why, after a lifetime of balanced thrift and fun, would I suddenly turn into a total spendthrift? That number is like the one that says it takes $1M to raise a kid. Mustachians recognize that number as 100% bullshit.