The 4% Rule Was Never Designed for FIRE’s Healthcare Reality

22:33The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100 % online. Same day coverage, no medical exam. you just answer a few health questions online, up to$3 million in coverage, some policies as low as$30 a month. So building a two or three layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com slash bpmoney. That is E-T-H-O-S dot com slash bpmoney. Application times may vary and rates may vary. Okay, let's talk about some good news now. So I just modeled out the problem.

23:09Let's start going through some offsets here. Okay. The first offset here is that this is just a bridge from my age 35 year to age 65. This, this, this graphic that I'm showing here, if you're watching on YouTube or you can see on the blog, shows the ramp from that kind of 18 ,000 or so in total healthcare expenditure, all the way up to like almost approaching 40 ,000, the high 30, 30, you know, 38,$39 ,000 in spending by the time I hit age 65 with some bumps as my kids roll off in my 50s and 60s, but that steady upward march. Once I go on Medicare at age 65, those costs drop off a cliff. Premium costs go into like the$6 ,000 or$7 ,000 range, and out-of-pocket costs are going to be in that$5 ,000 or so range.

23:54So that's going to take this problem. I'm actually spending less when I'm age 65 and beyond for out-of-pocket health care costs, not including long-term care costs, which is a different risk that we're not covering here. But just for health care costs, I can expect a huge drop-off when I go on basically the state plan for Medicare in traditional retirement at age 65. So that's actually a huge offset and, again, creates this problem with 4 % rule planning because I can basically assume I'm going to spend$18 ,000 a year. And if I can bridge this difference, I can get into Medicare and that problem resolves.

24:27If I just say, oh, I need to plan for$38 ,000 or$40 ,000 a year in healthcare expense, that's way too conservative and overstates this problem because that's only going to really be a problem in my mid to late 50s and 60s.

24:39Mindy Jensen:So just 30 short years, Scott, and your healthcare costs will drop dramatically. If you can picture this, if you're listening, I'm sorry, this is a graphical problem, but if you can picture this, right? What I think the problem is people assume, hey, my healthcare costs are going to be like 18 grand in 2026. Great. So everything else costs 82. I'm going to spend 100. I'm fired with the$2.5 million portfolio on$100 ,000 in spend. And that's the problem, right? We have to account for this different, this healthcare spend and bridge it. And so the simplest way to do that is say, hey, you know, at age 36, I'm going to pay a little bit more for health care,$500,$600,$700 more that year.

25:20I'm going to pay a little bit more at age 37, 38. So if you take all those costs, all those costs increase, which you can model out with something like ChatGPT or a spreadsheet here, you're going to get basically a curve, right? You're going to get this big lump in increased health care costs. And I'm showing a graph here that colors that blue, right? So we take the starting point, this$18 ,300, and by age 55, I'm going to pay something closer to$35 ,000. $35 ,000 minus$18 ,000 is going to be about$17 ,000 per year for that period of time. If I add up all that space under that curve, I'm going to see that my fire plan is really about$378 ,000 short over a 30-year period to account for that cost.

26:11Did I explain that okay, Mindy? Do you follow on that?

26:13Mindy Jensen:I'm following that. I'm just shocked at the number. $378 ,000. I mean, that's why we're doing this episode, Scott, is to highlight this isn't just you're falling short$10 ,000 one time. You're falling short a lot over the course of multiple years. And$378 ,000 out of$2.5 million, that's going to alter your financial independence situation, especially if we get a period of years, as you have postulated might happen, where the stock market goes down. Yeah, well, the 4 % rule covers that, right? The stock market going down, but the 4 % rule does not cover a known cost escalation well in excess of inflation for a material part of your spending.

27:01That's the problem here with the 4 % rule and health insurance. That's where they're fundamentally incompatible, right? So the problem is I have$378 ,000 in excess spend that is not contemplated by the 4 % rule rules of thumb, right? That I know is likely to happen if I want to stay on traditional insurance throughout that 30-year period. So that's the problem. Now, it's too conservative to say I need to just save up an extra$378 ,000 and fire. We are sophisticated, hopefully, students of personal finance here, and we know that a lump sum of$378 ,000 is not going to produce a complete zero real return over a 30-year period.

27:48If that were the case, we wouldn't be firing. We do have a different fundamental assumption about fire. And those costs for health insurance, by the way, are going to be backloaded. So this problem is not going to be acute at age 36 or age 37 or even age 40. It's going to be acute at age 55. right? So I have some time to invest some money that I can set aside here. So I can really bump that number down to$250 ,000 on top of my FIRE number to cover this cost, right? This exercise of planning for this bridge is much more like the exercise of planning for college education than it is for permanent sustained financial independence with the 4 % rule.

28:29Mindy Jensen:This is super helpful. And maybe you took into consideration, but you didn't say, is if you are retiring at age 35 and all of these problems are hitting you at age 55 or 50, or even like starting in age 45, you're like, oh, I'm consuming a lot more than I thought I was going to. Now you have a 10 year gap in your resume that you are trying to fill if you're going to go back and get a full-time job, or you're working a part-time job that you really might not want. I just, I think that there's a lot of risks that people aren't considering towards the lean fire, barista fire, the lower end of the fire spectrum?

29:12Yeah. If we assume zero subsidies, right, this is not a deal killer for a$2.5 million portfolio, right? I just said you need 10 % more, right? That's not really, you know, that may change things by a year or two for that person, right, in terms of their timeline or how they want to think about things in there. It's probably, you can almost, it's maybe a rounding here or something that you can absorb into like a$5 million, you know, two and a half to three to three and a half to$5 million chubby fire portfolio. And fat fire spending is so flexible, presumably, that it's not a deal breaker. But at lean fire, at a million bucks, right?

29:49If you know you're gonna spend 40 grand, you know, somewhere in the high 30s to 40 grand, that's your unsubsidized maximum risk in healthcare costs. That's a really threat. That's a big threat to a million-dollar FIRE portfolio. That is fundamentally incompatible with that approach at that point in time. You are dependent on subsidies or something else going right in that situation. And I think it's a real risk that needs to be contemplated here on there. And going from a million to 1.25 million portfolio to cover this risk is a serious delay to FIRE. That's a 25 % increase in the timeline to FIRE to cover just this health care risk.

30:26So I think it is a real risk for portions of the fire community. And yes, by the way, as uncomfortable or as absurd as it sounds for me to say that$35 ,000 per year in healthcare costs is a reasonable unsubsidized estimate for someone in their late 50s and early 60s. That is not unreasonable or absurd. That is the reality of healthcare today in the United States for people in that age bracket.

30:54Mindy Jensen:Yeah, that is that. I think that that's something that people have in the back of their head, but not actually fully thought out yet. This is much more fully thought out and kind of stark. But I want people to be aware that this could be a very real problem. Yeah, absolutely. I think it's a miss. I don't think that this structure has been approached in this manner in the fire community. I mean, there's been a couple of folks that have talked about ways to kind of think about this. Physician on Fire did something in 2019 that was really good on this. There was a Good Morningstar article by Vanessa, a MarketWatch article by Vanessa that treated this reasonably well.

31:33But I don't think that there's been a clear, like, how do you actually solve for this? What is the scope of the problem? How big is it? And what is that going to look like? And remember, I'm in Colorado, and I'm going to have a relatively smaller problem here than my peer set in Connecticut or a higher cost state. So anyways, let's go into ACA subsidies, right? So a big offset to this is, oh, but ACA subsidies make this not in practice a problem, right? I mean, most people are going to pay in 2026 way less than this in the FIRE community as long as they keep their MAGI, Modified Adjusted Gross Income, below 400 % of the federal poverty line for their size households, right?

32:16So I've not assumed ACA subsidies at all in this analysis in quantifying the risk, and it's clearly an offset. Again, I'm saying here's the potential problem. Now let's talk about how to plan for it and offset it here. What do you think about my assumption not to include ACA?

32:35Mindy Jensen:I think that that's a really great assumption because this shows the stark problem that this could be. And if you include ACA subsidies, that's great, but they're not guaranteed. That's not the cost of health insurance. Health insurance is, what did you say,$13 ,000 to$16 ,000 for your age? And then you take the subsidies. That knocks it down. But what if you don't qualify for the subsidies? What if the subsidies go away? What if you make a mistake in your math and your MAGI goes over that 400%, even by a dollar? then all of those subsidies go away. Isn't that correct? I completely agree. The way I'd phrase what you're saying here is I think you're making an incredibly aggressive planning assumption to assume that ACA subsidies are gonna be there for 30 years, right?

33:29It may not be aggressive to assume they're gonna be there for five, six, seven years. And it may not be that aggressive to assume they're gonna be there through the end of the Trump administration, for example. But I think it's very aggressive to assume that these are gonna be here for a 30-year early retirement. I think it's actually a very specific political bet that the fire community is not internalizing, right? The three components of that bet are, one, future taxpayers are going to willingly subsidize healthcare for households with high net worth in the millionaire category, but low reported income, low reported magi, and who are otherwise able to work.

34:03That's a specific political bet, right? The second specific political bet is that subsidy formulas are going to remain favorable despite rising financial pressures for the United States government. That's a specific political bet. And the third is that political coalitions are going to continue to support the structure for this population for decades. That's a very specific political bet. Those political bets, those assumptions may prove true, but I don't think that's a neutral base case. I'm not going to plan on that being the case for my family. I do not think that is a strong set of assumptions to ground a base case financial – fire plan, spending plan.

34:41That's my take on it. It's not what ought to happen. I think that's a bad political bet to make as part of the grounding part of your fire portfolio.

34:52Mindy Jensen:Well, and let's say you're wrong, Scott. Let's say that this just continues forever and health care costs go down. Then you just have a little bit more as a buffer. Yeah, I completely agree. That's how I think people should plan around these health care costs, right? Is I don't need them. They're not part of my fire plan. but I'll take them and they're going to offset things. Because the subsidies are so meaningful in offsetting this cost for people below that MAGI threshold, that will make your plan go from like the 94, 96 % success rate of the 4 % rule to something close to 100 % in many cases, depending, you know, especially for like the lean fire folks that are going to really depend on the, that are really, really benefit from that plan.

35:38But that's the cost, right? is we've got a problem here that's real, that's acute, that I think we have to really wrap our heads around and model. And then if we get the subsidies, if they do persist for a very long period of time, it just greatly increases the success chance of our portfolio because it's so consequential. So that's what I'm trying to grapple with here. I don't have the right answer for that in this study. This is a speculative political bet about subsidies. I can't apply probabilities to that or how that's going to work. But I do think that a consequence of taking this fully seriously and planning on the full cost of this healthcare coming into play is going to be that in practice, if you do receive subsidies, your plan is going to be overstabilized and more certain than it needed to be.

36:21And I don't have the right answer for that. Personally, for me, I'm conservative. So I'm going to plan on not getting the subsidies at all and treat them as an offset.

36:29Mindy Jensen:And I think that's a great plan. Now let's talk about other mitigators, right? So we talked about the worst case. Let's talk about, let's continue to go through mitigators, including the sub, you know, after discussing the subsidies, right? First is geographic arbitrage, right? You can move from a high cost state like Connecticut to a low cost state like a New Hampshire and see an enormous decrease in your risk profile. If, for example, subsidies go away, right? Having that option to geographically relocate can make a huge difference. Beyond that, you can, of course, do international travel, right?

36:59We know folks that meet certain qualifications. I think you're actually stronger on this point than me by a lot, Mindy. What's the deal with international travel and health care costs?

37:09Mindy Jensen:They are generally considered to be way lower than the American health care costs. So there's geographic medical tourism. If you have something that can wait to be attended to, a good example is dental work. That's very rarely going to be something that's an emergency. And if you can make your way to another country, your costs are way lower. Different countries specialize in different things. I have a friend who travels a lot overseas and goes to, I can't remember, it's like Czechoslovakia or something, and gets a whole body workup for like$200. Every scan you can think of, just this amazing bank of information, and for$200.

37:55Mindy Jensen:In America, one test would cost$200. That concept of being willing to travel is going to appeal to a certain portion of the population, that's going to drastically offset these risks for that period of time where you are traveling. But you will eventually come home to this risk if you decide to reside in the United States for any extended period of time prior to traditional retirement. So just a risk to be aware of, but that can certainly mitigate portions of this risk in some years and provide additional buffer. Another one is part-time work, right? You can get a job or you can start a business or you can do some kind of work that is going to cover these costs, right?

38:29And this is not like a joke. This is not like fire police are going to come after you. They might. But 80 % of the BiggerPockets money community, 60 % say, I'm definitely going to earn some kind of income in some active way after I fire. And another 18 % are open to that. And I'm one of those people right here. We're doing this right now, this podcast. I like this. This is fun, and it makes some money. And so that's going to generate income that can cover some of these costs and defray my core fire plan. And that is very common in the fire community. Some people think it's not pure in there, but that's not the reality of what folks in this community are saying they want, at least the folks who listen to and watch BiggerPocketsMoney podcast.

39:14So those are serious, real ways that people are dealing with this problem, but none of them change the underlying problem that you've really got to plan on this. And I believe that financial independence is a continuum, but that the end state of that continuum is no requirement to ever earn another dollar of active income for the durations of one's life, even if you do plan to earn some passive income after financial independence is met. that's got to be the core baseline part of the plan.

39:43Mindy Jensen:And I think that a robust fire plan should plan on this risk and cover it. I'm going to cover some alternatives to traditional insurance next here, right? There are basically three kind of alternatives to traditional insurance, right? The first is partial or full self-insurance. Charlie Munger is extremely confident in his approach to self-insurance. He's a billionaire, of course, but he's like, once you reach a certain level of, I'm butchering this quote, but once you reach a certain level of wealth, you know, you'd be foolish not to self-insure. I completely agree with that. However, I also don't have the same guts that he has because health, and this is obvious to full commenters, express it differently than maybe you would, but the, you know, if you self-insure, you're not going to pay premiums.

40:20You're not going to take the bad math that is fundamental to insurance in almost every case, right? But the drawback is that healthcare costs are not just volatile. They're fat-tailed, right? They can get these, the really bad healthcare events can cost hundreds of thousands or even, you know, sometimes approach seven figures in liability. Seven figures is extremely rare. It's a very, very small probability that that's going to happen, but it can happen. And that's something that most people cannot stomach over a 30 year period. And I certainly can't in a fire planning analysis.

40:54Mindy Jensen:Look at expenses, Scott. When Charlie Munger said that, how old was he? Like mid-90s? What is, mid-90s and a billionaire. What on earth could happen to him that he couldn't cover with his billions and would actually like not be detrimental to his lifespan? I mean, he lived a really great life. So I can see why somebody might not want to self-insure. I don't have an eight-figure net worth, but I'm getting closer. I don't want to self-insure because there are situations where a health incident could take a big chunk of mine that worth if I don't have health insurance. The only reason I'm stating self-insurance as one of the options is because it highlights the fact that the math is continually, every year, moving further and further in favor of self-insurance, right?

41:50And that's a problem. That creates a whole bunch of problems for the industry, right? If health insurance is so expensive that people just can't afford it, right? Some people in the fire community have this choice, and I might have to delay or think about this as a planning element in my early financial independence. Other people don't have that luxury, right? It may be I just can't afford the insurance, right? I can't do it. I'm going to have to take the risk, and they're going to move off of those insurance plans. That creates this – this is too extreme of a statement, but the term is the insurance death spiral, right, where the healthy people move off the health insurance plan.

42:26That leaves the people that are more dependent on health insurance on the plan. Insurers know that's the case, so they raise the premiums for the people who remain, and that continues to escalate the departures of healthy people off of those health insurance plans. That's the whole reason that the Affordable Care Act or Obamacare was instituted in the first place was to keep everybody on those plans so that the healthy folks could basically subsidize the costs for less healthy folks in there. There's a political construct behind that. I'm not going to talk about what's right or wrong in that context, but that was the thought process here.

42:58And as that unwinds, that's going to be a challenge that America is going to have to grapple with because the math is bad for insurance right now. And people are going to look for alternatives. Okay, so the second alternative here besides self-insurance is health shares. Health shares are not insurance, but they functionally provide some of the same benefits for that, and they can and should make people uncomfortable because they're not insurance, right? I'm part of a health share personally, as I mentioned in the intro. I'm not going to talk about which one. I have no affiliation with that. This is not a promotion of health shares, but I joined it because of the work I did on expected value leading up to this article.

43:39I knew that the health, the insurer that I was offered a quote for had a good track record, but also had a history of denial of claims. And I know that the health share had a history of denial of claims in there, but the reviews were fairly comparable, right? And so you look at this and you say, what's the risk of a health share denying claim? What's the risk of a traditional insurer denying a claim? Well, they both have risk. The health share may have a slightly higher risk. But when you think in probabilities, I'd have to have believed something very incredible about the risk profile of the health share plan for the premium difference not to make this a mathematically very strong choice for my family, right?

44:17So that's a real challenge for this industry. And I think that these health shares are going to attract more people who are going to be just as uncomfortable leaving traditional insurance as I am. Some people are evangelical about this and really love their health share and talk about how great it is. I'm not one of those people. I'm pretty uncomfortable with it, but I'm also rational in the sense that as someone who's not eligible to receive ACA subsidies at all at this point in my life, this is a really good choice for my family from a mathematical standpoint. So that's going to be one option for folks in here that I think people are going to take seriously even if they don't like it.

44:53I think the last option I think is going to be this world of catastrophic medical liability coverage. This is going to depend on what state you're in and what the regulatory environment looks like. And this is not available right now in Colorado, at least not that I'm aware of. If someone does know that this exists, let me know, scott at biggerpocketsmoney.com, and I'll sign up for that. But basically my thought process is as someone who's financially independent, I would love to self-insure up to a pretty high amount. I know my healthcare costs are going to be fairly low most years unless I develop some sort of problem in the future.

45:30In which case, you know what? Maybe there's something else that goes on or ways we handle things. But I'd be willing to self-insure the first$25 ,000 or maybe even the first$50 ,000 of healthcare costs in any given year. I just want defense against that fat tail, the several hundred thousand dollar or seven-figure problems that could come up and that are the boogeyman. financial planning for this type of situation. So I believe that there's an opportunity for the market to provide some kind of medical liability insurance. This is not an insurer that will interface with hospitals or anything. It's just if you have one of those huge events and you go to the hospital and you accrue$250 ,000 in medical debt as part of that operation, you're on the hook for the first$25 ,000 or$50 ,000 or whatever it is,$1 ,000, and the insurance carrier then pays the rest of the medical liability that comes up.

46:23I believe that's a workaround that's theoretically possible to some of the problems in health insurance because then it's not health insurance. It's something else. It's liability coverage. And I think that that's going to appeal to an increasing number of Americans over time as wealth grows in this country and especially in the fire community. So I really like this concept. If anybody knows anything about this or has serious intent or ability to create something like that or knows of services like that, please email me. It's got a bigger packets money.com. I think it is one of the, the answers for this community, at least the, the healthy and able-bodied portion of this community to the current situation with costs.

47:00Okay. I'll stop there for a second. Any, any thoughts there, Mindy?

47:02Mindy Jensen:Yeah, that kind of mirrors those last two kind of mirror what, uh, Carl and I are doing. We have, it's not a health share. It's a direct primary care relationship with a, uh, medical facility in our town that is so much easier to get into than going to my primary care doctor. I treat my high deductible health care plan as the catastrophic medical insurance plan and primarily use the direct primary care facility, A, because I don't need a lot of doctor visits. I injured my back. It was excruciating pain. It was instant. If I had called my regular doctor, it would have been something like a week or two before she could get me in.

47:50Mindy Jensen:The direct primary care got me in to the facility local to me wasn't available. So I had to drive to the next town over, but they were able to see me within an hour. They got me the medication that I needed. They did some sort of shot in there. I don't know. It was mind blowing. It was so painful. And then it wasn't painful at all. And having that it's an extra cost, but I'm willing to do that because I don't want to wait because when I need a doctor, I need them right away. I am, I don't know, fortunate or unfortunate to no longer have my appendix. I remember that was like, oh, I don't feel good.

48:23Mindy Jensen:And then two hours later, they're like, okay, you're going to go to sleep now. Your appendix is not something you can plan for. And when it needs to come out, it needs to come out right now. So that I believe, and that was in 1996, I think my bills were like$27 ,000 for that, which sounds really low now, but again, it was like 30 years ago. And I had two C-sections because I had enormous babies. The first one was absolutely not planned. The second one was more so planned. And that took the birthing cost from, you know, a nominal amount of several thousand dollars to like$40 ,000. And that, like I said, the first one wasn't planned.

49:08Mindy Jensen:We had no idea she was going to be a C-section. I don't think not having healthcare in America is an option right now, but I also don't like the options that we have. I'll react a couple of thoughts to what you just said there. First, I have a direct primary care doctor as well. And I like my doctor. It's a little expensive for the adults in our family, me and Virginia, but the direct primary care relationship we have with our pediatrician is fantastic. It is so good, right? Dr. Susie is so wonderful. When our kids get sick, whatever, we text her via this app that we have here, that's HIPAA compliant, and say, here's what's going on.

49:49She's like, oh, yep, that's this. We get a prescription. The prescription costs are not high for many of the drugs for the common illnesses for our kiddos. I think we had, we pay like 125 or 150 bucks a month, something like that for the two kids for our direct primary care doctor. When there's a problem, we set an appointment, we go in, there's no administration. It is so much better than the traditional pediatrician. And it might well depend on the doctor, right? And all that kind of stuff. But I believe that the folks who like this kind of stuff and like being very service oriented are the ones who are attracted to direct primary care relationships.

50:24The problem with direct primary care is that I think until recently may actually be changing this year, you could not use HSA funds to cover those expenses in there. And they're not usually reimbursed by traditional insurance carriers. So the fact that I'm on a health share with a DPC is great. The problem is that if there's a true emergency or a major healthcare event, like a cancer diagnosis or a big injury or whatever, you still got to go to the emergency room. And that is where traditional insurance kicks in, right? That fat tail risk is not being covered appropriately.

50:55Mindy Jensen:And Scott, if you think an adult trying to get a doctor's appointment quickly is difficult, try having an emergency pediatrician consult. It's so hard to get your kid into the pediatrician on a traditional insurance way, traditional doctor visit. So having that direct primary care for your pediatrician is life-changing. Let's also acknowledge, like we're talking about the privilege for able-bodied, healthy folks that don't have some of these pre-existing conditions or those types of things. For folks that don't have that, I think there's no choice but to model out the costs for healthcare. And you may want to even go on a silver or gold or platinum plan that has lower out-of-pocket maximums and lower deductibles, depending on if you know you're going to be needing healthcare costs for a long time.

51:42So there's kind of an optimism inherent to what we're talking about in the planning process here around being healthy. I also think I want to call out that some of the really scary medical bills that get really large, there can always be like some weirdo thing. But as I research this, a lot of that often coalesces around the NICU, right, the neonative intensive care unit. And that is for children that are born early, babies usually under about a month or two in age, this first couple months of life. And so during that period of time, there's no way that I would be doing what we're talking about here with different – these alternatives to insurance because the stakes are so high in those situations.

52:26And it's really – I think it's important to have traditional insurance in those areas here. So I think this is a really tough subject here. I hope to get corrected and get additional insight from the community. I'm sure I have all of these different perspectives that I was not able to grasp and collect in the process of research here. One last thing I'll call out is a user. We talked about this recently in another show, but there's also different types of insurance products coming out for specific risks. So one that I actually signed up for, I have no affiliation with this company at all, just mentioned from a user, is Blister.

52:59Blister is an insurance product for active people. So it ensures activities. I think it's like skiing, right? Like cross-country skiing, snowboarding, snowmobiling, mountain biking, road biking, hiking, camping, backpacking, rock climbing, you know, canyoneering, surfing, like those types of things. So there's like a whole list of these activities, which are every conceivable variation of the things that I like to do. I don't play rugby anymore, although rugby has its own, actually have a fun insurance product there for if you get injured on the pitch, they cover that as part of your dues. But this is like a$25 ,000 injury insurance.

53:34So the problem with, again, with something like blister is, yes, if you break your leg, this will be a huge offset to that, right? Because the costs are probably not going to be an order of magnitude higher than$25 ,000 to fix that. But it could be depending on what kind of accident you have. So you still need some kind of wraparound insurance to protect the tail risk. But that's something, you know, given the other choices I've made, I actually signed up for that. It was like$500 or$600, and it covers you for a year for any of those accidents. I like to do those things all the time. So that feels like a reassurance piece like that.

54:06So I don't even know what I don't know about the environment there, whether there are competitors to Blister or other things like that. But I believe that this is an ecosystem that if you're paying attention to it and really think about this problem, opportunities and new entrants are going to come up every year that are going to make this easier for you to – they're going to provide a slowly increasing set of options to traditional insurance that are going to get slowly better.

54:28Mindy Jensen:I have friends. They've been on the show, Darren and Jolene. They travel extensively out of the country. That's something that they're doing in their retirement that they really love. And the insurance that they have, it covers them in America, but it requires them to be out of the country for more than six months out of the year. So they're spending more than half of the year out of the country. And then it covers them. I think it covers them in all the countries that they travel to, and it covers them while they're at home. But because they're out of the country for so long that they are, the chances are that they will either have a medical issue when they're out of the country, or they won't have a medical issue at all because they're healthy and traveling all the time.

55:14Mindy Jensen:It's a risk for the insurance company, but it's not that big risk. I mean, I think that more and more that we're going to start seeing these alternatives popping up because people are tired of paying this$18 ,000 or$30 ,000 a year for insurance that they really don't need. And again, this is speaking to the people who are healthy and able-bodied and not the people with chronic conditions. And again, that really needs to permeate all of this. If there's a chronic condition or not, you know, a different probability of needing healthcare that you know is different in your situation or your family, then this analysis does not apply, right?

55:51There's a different approach that needs to be taken. And you can be very able-bodied and healthy, and that can change in a heartbeat here, and that can change things, right? And I think one of the items here is fire is a privilege. It is like the ultimate reward that can be achieved in a capitalist society here. It's hard to do this. There's a lot of things you got to figure out. You got to accumulate a lot of wealth. You've got to produce a lot more, at least in the format of what people are willing to pay you than what you consume in terms of what you spend. You need to invest that in a strategic way.

56:24You've got to be thoughtful and aggressive to get there. You've got to be defensive once you get there to preserve that position. And then you've got to have some options here, if the worst happens, if things happen, are you insured? Do you have a fallback plan? Or are you willing to go back to work in the event that things really don't go your way? Because there's there is also a case here of we have to be aware of these risks, and we also have to say they're risks, but everything's a probability here, and that fire is a probability, and there's a really good reward to not being so conservative that you're delaying this to an undue extent out of fear of these potential probabilities.

57:00So I hope today's episode and this analysis had outlined the risks, allow you to quantify it in the worst case, put together concrete ways to offset that risk. And, you know, I think that, you know, I still kind of, after all this, settle on, you know, the approach is to really, in my case, tag on about$250 ,000 to my FIRE number to cover the rising costs of Obamacare subsidies, ACA unsubsidized healthcare premiums and out-of-pocket expenses, and then look for these other ways to offset that cost in the meantime. So that's the approach that I'm taking. Would love to hear different approaches and how other people are thinking about this in response to this.

57:40Mindy Jensen:Yeah, Scott, I really wanted to do this episode because I wanted to highlight this could be a big issue. It could be a big issue for your fire journey. It doesn't have to be, but you have to be aware that healthcare costs will most likely rise. Again, there's those two states, Vermont and New York, I think you said, where healthcare costs start off high and just kind of level out because they don't allow, the state law doesn't allow insurers to charge you more as you age. But for everybody else, your insurance costs right now are not going to stay the same. So be aware of it. Make a plan. I mean, this is all what FIRE is about.

58:20Mindy Jensen:You make the plan that your spending is going to be X and you cover your spending. Just make sure that X includes your healthcare costs and your rising healthcare costs. Absolutely. All right, Scott, this was super fun. Should we get out of here? Let's do it. That wraps up this episode of the BiggerPocketsMoney podcast. He is Scott Trench. I am Mindy Jensen saying, see you later, alligator. I'm skeptical of a lot of financial products, but life insurance isn't one of them, at least not term life. For the vast majority of you listening, term life is simply the right answer. And the smartest way to buy it isn't one big policy, it's a ladder.

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