1. Pulling $20k out of his traditional IRA to roll over into a ROTH requires him to pay taxes on that $20k. Sure, he gets deductions, but will still owe some taxes. That tax money has to come from somewhere, so his budget is $15k + his taxes on the ROTH rollover.
2. That 'heavily subsidized Silver' plan has a many thousand dollar deductible. Does Fred have the ability to spend 1/3 of his entire budget on healthcare? Yes, he can then deduct it against his taxes the following year, but he still needs to be able to have that cash available to spend if need be. And that's only if he hits his deductible. If he wants to go to the doctor or need any single kind of healthcare expense, he is on the hook for the first $6k, +/-.
If Fred lives in a state with expanded Medicaid, he can qualify for much lower cost healthcare...but then he has to drive to wherever they accept it. Which could be very far, and/or otherwise undesirable healthcare providers.
3. Is Fred's checking account exempt/immune from lawsuit protection? Does the creditor have the power to tell the bank to garnish the account when he transfers money into it from his traditional IRA? Or when he takes his withdrawals out each year from his ROTH IRA? Is he able to spend directly from his ROTH with 30+ withdrawals a month between his ATM/check card/etc. transactions?
4. And how does Fred pay for filing bankruptcy? It's not free, you know...
Would be a big percent of his $15k budget.
Is Fred able to eke out an existence? Sure. Does it afford him much choice, much less any flexibility? Hardly, if any at all. Many of the readers aren't fully wrapping their heads around the fact that retiring in your 30s (even 40s) will leave you not working for longer than they have been alive up to that point! There's a LOT that can happen between retirement and death, which I don't think they are fully considering.
Imagine someone retiring in 1980 at age 35. Today they would be 70, and still likely have 10-14 more years to go - possibly more! Ignoring the stock market and just focusing on lifestyle and how the world is - do you think someone retiring at age 35 in 1980 would feel the same about life, the world, and their budget now as they did then?
When I make reference to a possible disaster impacting things, I'm not referring to the small chance of a $2MM lawsuit. I'm referring to the more frequently occurring things that happen in life - airfare to visit people, car repairs, homestead things (appliances, house upkeep), etc. - that, while much smaller impact, do add up and can have a big hit to a micro budget.
Or, even the simple act of a SCHEDULED medical procedure that ends up having 3 people who are involved who aren't in-network (even though the hospital and doctor are in-network), and which ends up billing you at the "out of network" rates that you might negotiate down a little but still are higher than your network rates.