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Estate Planning, Long-Term Care Costs, and F.I.R.E. (Financial Independence Retire Early)

Catch Sarah's latest conversation with WHBY's Josh Dukelow here.

Transcript

Josh: Welcome back to the show.

Sarah: Thank you so much.

Josh: So glad to have you here. And, yes [...] we are talking retirement, a little different than what we normally talk about but that's because next week, Wednesday, July 17th Hooper Law Office, Duell Financial Strategies and WHBY are hosting a screening of the "Playing with FIRE" documentary. We're talking about a lot of the station and I encourage people to go check it out. Learn more about what this is. But, for those who've been reluctant. What exactly are we talking about here? What is F.I.R.E.?

Sarah: It's basically a different approach to the concept of retirement. Most people think of retirement as something that you do sometime between the ages of 65 and 75 depending on your situation. And FIRE really talks more about retiring at a much earlier age and this can be accomplished through very aggressive saving and very simple living. Kind of a combination of those two things and how you can retire because you've saved all of this.

Josh: Yeah, that's a really interesting approach because I think this is one of those things that it's not itself new but it's in a new package. This idea of FIRE kind of gives a little bit of pop to this old notion of don't spend too much money and save more. It's pretty traditional thinking but this is a pretty aggressive approach isn't it.

Sarah: Oh absolutely. They tend to follow what's called the 4 percent rule where they're only using 4 percent of their regular assets in order to live off of entirely.

Josh: That's pretty low, but it allows people to retire really early. How early we talking about here.

Sarah: It depends on the situation but you can people retire in their 30s, 40s, or 50s. And, to retire isn't necessarily to withdraw. It is simply not being required to work for income. It's not unusual for people to invest in things that then require maintenance, like property. For example, they become landlords so then that creates additional obligations. Some people continue working because they're very motivated by their career path. Some people start businesses. So it's all about finding what it is that you're passionate about because you've created stability in your life in a financial way.

Josh: So, the retire early part is sort of the conventional thinking about what eventually happens once you achieve financial independence. But this is really about the financial independence. This is about using your money in such a way that it frees you from having to work in order to continue living.

Sarah: Exactly, it's taking away that obligation so that you can pursue other interests. And I mean from an estate planning perspective it's important to understand where a person is coming from when they're coming to see us. We've talked a lot about individualizing Estate Planning. What you're pursuing from either a retirement or a financial standpoint is relevant to that conversation as well.

You start thinking about insurance. So, if you have these very aggressive plans what kind of insurance do you have in case something happens to someone? What kind of documents do you have in place? So it all kind of ends up being relevant to the same questions that we asked all of our clients.

Josh: It's even just having that window bigger where you have to consider these things that you're looking at some of these questions you might think, "oh I don't have to worry about this insurance 60 or 70 years old." Well if you want to pursue this lifestyle and you successfully get to that point you might have to think of these things a little early.

Sarah: Oh absolutely. You want to make sure that you're prepared. If you are, but you're not in a position to be completely independent financially, you have to be ready for some of the things that most people don't think about facing until they're much older like the costs of long term care. You need to be prepared for that. So, how are you going to do that? Is it through protecting? Is it through insurance? How are you pursuing that?

Josh: And that's it. Having those intentional conversations about what tools are using to make sure, maybe it's not for 40 or 50 years, but you want to be ready to know that when that time comes you've got the assets you need to get the coverage [and] the care that you require.

Sarah: Absolutely. When you have a plan like [FIRE] it's a little different. It's very aggressive in some ways. You need to have a plan for other aspects of your life as well. It all has to fit together.

Josh: And that really is the big picture. That's why Hooper Law Office is coming together with Duell Financial to really bring this message to the Fox Valley and this is a big hit. I know they just screened this a couple of weeks ago in the Brookfield area and it sold out. So I'll bet we'll have some Brookfield people coming up.

Sarah: We're expecting it. Yes, we're pretty sure that we're going to sell out which is exciting.

Josh: Yeah it is exciting. If you want to get your tickets now fi-appleton.com.

We've got Ann on the Settler's Bank phone line with some thoughts for us. Ann, do you have a question?

Ann: I'm retiring soon myself. So I am wondering how this going how is it going to affect those of us who are going to retire or are already retired?

Josh: Yeah. Great question and I appreciate that. So thinking about sort of financial independence retire early as something people are starting early in their lives, is this still relevant message for those who might already be nearing a more traditional retirement age?

Sarah: Oh I think absolutely. Because it's just like anything else for your planning. So what aspects of the planning do you have to do, what do you not? When you're already close to retirement you don't have to necessarily have as aggressive [...] saving that you may have to in order to retire early. But, if you are thinking about retiring at this point you want to make sure you have your Estate Plan in order. You want to make sure that you understand what you're going to be doing for long term care. It's the same type of preparation, regardless if you're close or not. You just don't have the same savings requirements.

Josh: Oh that's it, it's all about timeline. So that the factors, the rules, the guide is going to be the same. You want to spend less and save more. The question is how much time do you have to actually execute that plan?

Sarah: Well how do you also continue to do that in retirement, so that you're not overspending accidentally?

Josh: And that was a big thought here is I'm thinking "OK, but I retire at 40 because I've been living on nothing. You know I'm saving all this money. Do I have to keep living that way?" Well that's part of the factor and that's part of what the film really illustrates and I think this is going to be the interesting part. The film follows thirty-five-year-old Scott Rieckens as he sets out to try to live this lifestyle with his wife and child. So you can see what this actually looks like. And, for some folks who might be in a different financial or family situation, you have to kind of apply your own scenario to this. But I think it's gonna be really exciting. Again fi-appleton.com is the place to get your tickets and your $15 ticket purchase triggers a $15 charitable donation to a local nonprofit that teaches financial literacy in local schools.

Sarah: Yes absolutely. We're very excited that they're going to be able to do this locally.

Josh: Now that's so cool that they're bringing some of this into the schools with younger people learning these lessons. So, the other thing I want to mention here is you also have another seminar coming up Sarah and that is one of your free estate planning, long-term care focused seminars. The general public, as well as people pursuing the FIRE lifestyle, can come and check this out. [...] No charge for these and just a lot of good information.

Sarah: Absolutely. We go through estate planning and we do talk a bit about long term care and the cost associated with that towards the end. So we cover everything.

Josh: I have found so much good value is the information that I get from you and Peter and the folks at Hooper Law Office. And, bringing this documentary, this is something I never heard. And I think there's a lot of people in our audience who are probably not aware this was going on out there. Even to just check this out and see what this is all about. It'd be fun to have you join us on July 17th that's next Wednesday for the film.  Get your ticket at fi-appleton.com. And, don't miss out on the latest estate planning and long term care seminar

Thanks so much for all the insights and always good to talk to you.

Sarah: Thanks, Josh.