51 year old physician

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mikedomba
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51 year old physician

Post by mikedomba »

I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
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1789
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Re: 51 year old physician

Post by 1789 »

You will get more responses if you post in the following format.

https://www.bogleheads.org/wiki/Asking_ ... _questions
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eye.surgeon
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Re: 51 year old physician

Post by eye.surgeon »

mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
Welcome. I am also a 51 year old physician. I joined the forum a few years ago and it was a game changer. Also consider participation in the white coat investor forum or at least read the articles there.

My simple boglehead advice, fully fund your 401k if available including the extra contribution since you are over 50. For 2020 that's $26k, put it in a target date fund in your 401k if you want to make it as simple as possible. That leaves you with $4k to invest, consider a backdoor Roth IRA, or simply put $4k in a vanguard brokerage taxable account in a target date fund, again if you are looking for simplicity.

Be aware that if you have no substantial retirement investments at this point you will have to save significantly more than $2500 per month to catch up. But you have to start somewhere.
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sycamore
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Re: 51 year old physician

Post by sycamore »

1789 wrote: Sun Jul 05, 2020 5:07 pm You will get more responses if you post in the following format.

https://www.bogleheads.org/wiki/Asking_ ... _questions
+1

A fairly generic answer in the meantime is: contribute to 401k and other tax-advantaged accounts (IRAs, other plans you may have at work). Invest the contributions into a "Target Date" fund that has a mix of stocks and bonds that you're comfortable with, say 70% Stocks, 30% Bonds.

2500 a month = 30k / year. In 10 years that's 300k assuming no growth and no inflation. In 10 years, there's a wide range of possible investing outcomes, including very low growth -- think the "lost decade of investing" from 2000 to 2009. Good chance your expenses will need to be further cut.
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Re: 51 year old physician

Post by MathIsMyWayr »

mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
$2,500 a month > $30,000 a year. You may save up to $26,000 a year in a 401(k) including an age 50 and over catch-up. You should set the savings target higher.
New Providence
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Re: 51 year old physician

Post by New Providence »

eye.surgeon wrote: Sun Jul 05, 2020 5:16 pm
mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
Welcome. I am also a 51 year old physician. I joined the forum a few years ago and it was a game changer. Also consider participation in the white coat investor forum or at least read the articles there.

My simple boglehead advice, fully fund your 401k if available including the extra contribution since you are over 50. For 2020 that's $26k, put it in a target date fund in your 401k if you want to make it as simple as possible. That leaves you with $4k to invest, consider a backdoor Roth IRA, or simply put $4k in a vanguard brokerage taxable account in a target date fund, again if you are looking for simplicity.

Be aware that if you have no substantial retirement investments at this point you will have to save significantly more than $2500 per month to catch up. But you have to start somewhere.
I like this answer. Short and to the point. Low risk, simple approach works best.
lakja
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Re: 51 year old physician

Post by lakja »

mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
Not sure how much you have at the moment, but $2500/month at 10% return is going to mature into $500k in 10 years, which will draw around $20k/year. You can probably get a double out of any other investments you have right now over the next ten years.

Depends on how serious you are, but if you’re not open to extending the time frame to more than 10 years, you have to free up cash flow now to increase how much you’re saving. Easy areas are selling any extra cars, downgrade car and eliminating any car payment, downsize house, refinance mortgage.
The Stone Wall
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Re: 51 year old physician

Post by The Stone Wall »

Financial freedom will probably come more easily by also tackling the "over-spending" aspect of your life.
TheNightsToCome
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Re: 51 year old physician

Post by TheNightsToCome »

mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
I'm also a physician. You will need to save a lot more than $30K/year if you want to be financially independent in 10 years.

Physician on Fire provides an illustration in spreadsheet format in this post: https://www.physicianonfire.com/a-tale- ... lifestyle/
eagleeyes
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Re: 51 year old physician

Post by eagleeyes »

For starters, it would be helpful to know:

Student loan status
Home mortgage status
Car debt
Disability/life insurance
General salary range
Specialty
Lots more...you get the idea.
Blue456
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Re: 51 year old physician

Post by Blue456 »

mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
I am a physician as well. I am in my early 40s, the way to approach the problem is to either work more or pay less. I decided to go with the latter. We moved out of very expensive north east, we rent instead of owning a house and we drive a cheap car. We still have student loans but those bad boys will be gone soon. We have a budget that we follow through. I suggest you follow Dave Ramsey on YouTube for downsizing your life style and minimize spending and hang around here a little bit to get help with setting up investment plan. I bet that you could invest $5,000 a month and be completely financially independent in 10 years. You have a lot of income potential, as long as you are not stuck in expensive city for whatever reason, I think you can very quickly catch up.
Streptococcus
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Re: 51 year old physician

Post by Streptococcus »

Another physician here.
mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
Another physician here.

I think your attempt at becoming financially independent with 10 years of $2500/month saving is the wrong approach.

Financial independence is built off of your living expenses. As a physician who used to indulge in spending, it is unlikely that saving $30,000 a year will cut it.

You should ask yourself an honest question: How much do I spend every year? Multiply that number x 25. Then you have your financial independence number.

Most people who achieve FI quickly, that is <15 years, save over 50% of their take home pay. And we all know that $2500 a month is not 50% of a physician salary.
delamer
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Re: 51 year old physician

Post by delamer »

Streptococcus wrote: Sun Jul 05, 2020 9:42 pm Another physician here.
mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
Another physician here.

I think your attempt at becoming financially independent with 10 years of $2500/month saving is the wrong approach.

Financial independence is built off of your living expenses. As a physician who used to indulge in spending, it is unlikely that saving $30,000 a year will cut it.

You should ask yourself an honest question: How much do I spend every year? Multiply that number x 25. Then you have your financial independence number.

Most people who achieve FI quickly, that is <15 years, save over 50% of their take home pay. And we all know that $2500 a month is not 50% of a physician salary.
As Streptococcus has noted, you can’t determine financial freedom based just on what you have saved.

It is what your expenses are relative to the income that you can derive from those savings.

So for retirement, estimate your expected expenses. Subtract your expected Social Security benefits. The difference is the amount of annual income you need from your nest egg.

In retirement, you can withdraw roughly 4% of your initial nest egg each year (adjusted for inflation) and not have to worry about running out of money before you die. So, for example, if you need $100,000/year income (in addition to Social Security), then you’d have to accumulate a nest egg of $2.5 million.

So, start with your expenses, get a Social Security estimate, and work from there to discover your needed savings.

Good luck.
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Re: 51 year old physician

Post by willthrill81 »

MathIsMyWayr wrote: Sun Jul 05, 2020 5:25 pm
mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
$2,500 a month > $30,000 a year. You may save up to $26,000 a year in a 401(k) including an age 50 and over catch-up. You should set the savings target higher.
Agreed. Even a physician on the lower end of the typical pay scale should be earning over $100k by age 51. If the OP is really serious about becoming FI without SS (as that's not even on the table until age 62), a higher saving rate will be needed.

Pete the Planner did a really nice podcast a year or two ago about people who didn't start saving for retirement in earnest until age 50. It's very doable, especially if the individual (or family) is on track to own a home outright (i.e. mortgage paid off) by the planned retirement age. Delaying SS benefits for as long as possible can help a lot too.
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MathIsMyWayr
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Re: 51 year old physician

Post by MathIsMyWayr »

willthrill81 wrote: Sun Jul 05, 2020 10:18 pm
MathIsMyWayr wrote: Sun Jul 05, 2020 5:25 pm
mikedomba wrote: Sun Jul 05, 2020 4:29 pm I am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
$2,500 a month > $30,000 a year. You may save up to $26,000 a year in a 401(k) including an age 50 and over catch-up. You should set the savings target higher.
Agreed. Even a physician on the lower end of the typical pay scale should be earning over $100k by age 51. If the OP is really serious about becoming FI without SS (as that's not even on the table until age 62), a higher saving rate will be needed.

Pete the Planner did a really nice podcast a year or two ago about people who didn't start saving for retirement in earnest until age 50. It's very doable, especially if the individual (or family) is on track to own a home outright (i.e. mortgage paid off) by the planned retirement age. Delaying SS benefits for as long as possible can help a lot too.
Even I have been able to more than max out 401(k) including age 50 catch-up plus employer match year after year as a starving engineer. I trust you meant $2,500 a week, not $2,500 a month.
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Re: 51 year old physician

Post by novemberrain »

As others have noted, there is a good chance that your nest egg will be somewhere near 300k-500k in 10 years. If you are decided on retiring with that nest egg, the US would be difficult. Maybe some other country is possible. There are some articles on cnn where they profile people retiring in South America for example.
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Re: 51 year old physician

Post by Outer Marker »

Welcome. Interesting you would use the phrase "under accumulating." Did you by chance recently read the Millionaire Next Door? If not, that's a good place to start.

As noted, the board needs more information in "Laura's format" to help you with the specifics of your situation.
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Re: 51 year old physician

Post by goodenyou »

If you are serious about financial independence, I would look at jobs in low-cost areas that pay a premium. There are jobs in places that people may not want to live, and are low cost of living. Therefore, there is opportunity for higher pay and lower cost. It is referred to as geographic arbitrage. I live in such an area and we have recruited several doctors in the same situation as you. My close friend left an academic surgical subspecialty position at UCSD 15 years ago and opened a private practice when he was in his early 40s. He makes 3 times per year what he made in academia and had a great opportunity to invest in a hospital that has rewarded him tremendously. The Stanford tuition for his son this year is not problem nor is his financial worry for retirement. We just hired someone in their mid 50s who came from a HCOL area who needed to make up for many lost years of saving and the financial damage of divorce. His salary has doubled. I would look at a higher paying opportunity if it were me.
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Re: 51 year old physician

Post by BolderBoy »

mikedomba wrote: Sun Jul 05, 2020 4:29 pmI am guilty of long-standing under-accumulating and over-spending. I’ve just turned the corner and am trying to determine how I can get financially free in 10 years with about $2500 per month to invest, so far. Any advice would be greatly appreciated.
You probably cannot become FI in 10 years by investing only $2500/month. But... we need a LOT more info from you to back up that claim. Others have said the same thing.
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Re: 51 year old physician

Post by KingRiggs »

Physician here, as well. We spend WAY more each month than I care to, but still have more than $2500/month to invest. Do you mean in ADDITION to 401k?

A full-time MD with only $2500/month to put towards retirement indicates a large monthly spend. $30k/year is not going to make you financially independent in 10 years unless you drastically change your lifestyle. I second the suggestion to check out Dave Ramsey to get a handle on your expenses.

Best of luck.
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Ferdinand2014
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Re: 51 year old physician

Post by Ferdinand2014 »

goodenyou wrote: Mon Jul 06, 2020 9:35 am If you are serious about financial independence, I would look at jobs in low-cost areas that pay a premium. There are jobs in places that people may not want to live, and are low cost of living. Therefore, there is opportunity for higher pay and lower cost. It is referred to as geographic arbitrage. I live in such an area and we have recruited several doctors in the same situation as you. My close friend left an academic surgical subspecialty position at UCSD 15 years ago and opened a private practice when he was in his early 40s. He makes 3 times per year what he made in academia and had a great opportunity to invest in a hospital that has rewarded him tremendously. The Stanford tuition for his son this year is not problem nor is his financial worry for retirement. We just hired someone in their mid 50s who came from a HCOL area who needed to make up for many lost years of saving and the financial damage of divorce. His salary has doubled. I would look at a higher paying opportunity if it were me.
+1
VLCOL area. I am a 51 year old physician (Hospitalist) as well. Higher than average income for a physician, No need to keep up with the Jones's because there are no Jones's and cheap livin'. I actually prefer to live where I do, although many might consider it less desirable. It has made all the difference in the world.
Last edited by Ferdinand2014 on Mon Jul 06, 2020 5:25 pm, edited 1 time in total.
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Xrayman69
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Re: 51 year old physician

Post by Xrayman69 »

Earn more, spend less, save more.
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PhysicianOnFIRE
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Re: 51 year old physician

Post by PhysicianOnFIRE »

I'm really hoping you dropped a "0" and have $25,000 a month to invest. That would not be unheard of for a physician. If that's the case, this story can easily have a happy ending.

I'm guessing, however, that you do indeed have $2,500 a month to invest at the moment. This story can still have a happy ending, but there will need to be some serious plot twists as you learn to both earn more and slash spending simultaneously.

To go from 0 to FI in 10 years (although I'm guessing you're starting from somewhere north of 0), you'd have to be saving and investing 60% to 70% of your take-home pay, which I suspect is way more than you're saving now.

Please chime in with more detailed info, and this group can help you more.

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Re: 51 year old physician

Post by goodenyou »

Ferdinand2014 wrote: Mon Jul 06, 2020 5:03 pm
goodenyou wrote: Mon Jul 06, 2020 9:35 am If you are serious about financial independence, I would look at jobs in low-cost areas that pay a premium. There are jobs in places that people may not want to live, and are low cost of living. Therefore, there is opportunity for higher pay and lower cost. It is referred to as geographic arbitrage. I live in such an area and we have recruited several doctors in the same situation as you. My close friend left an academic surgical subspecialty position at UCSD 15 years ago and opened a private practice when he was in his early 40s. He makes 3 times per year what he made in academia and had a great opportunity to invest in a hospital that has rewarded him tremendously. The Stanford tuition for his son this year is not problem nor is his financial worry for retirement. We just hired someone in their mid 50s who came from a HCOL area who needed to make up for many lost years of saving and the financial damage of divorce. His salary has doubled. I would look at a higher paying opportunity if it were me.
+1
VLCOL area. I am a 51 year old physician (Hospitalist) as well. Higher than average income for a physician, No need to keep up with the Jones's because there are no Jones's and cheap livin'. I actually prefer to live where I do, although many might consider it less desirable. It has made all the difference in the world.
The happiest physicians I have met have achieved FI very early (late 40s-50s). They are physicians that live well below their means and have saved enough to have the option to quit as healthcare changes. Where I live, we don't have very expensive suburbs, expensive private schools or $50,000+ country club initiations. We have plenty of opportunity to spend, but plenty of opportunity to accumulate stealth wealth. I have seen many physician colleagues sweat it out with huge mortgages, tuition bills and now with COVID. They fall prey to the idea that consumption will bring happiness when all along it would have been financial freedom and choice that would have brought much more happiness. Unfortunately, many learn this very late in their careers. Being able to stroke a check for a new car or a new house is liberating.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
Blue456
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Re: 51 year old physician

Post by Blue456 »

novemberrain wrote: Mon Jul 06, 2020 2:20 am As others have noted, there is a good chance that your nest egg will be somewhere near 300k-500k in 10 years. If you are decided on retiring with that nest egg, the US would be difficult. Maybe some other country is possible. There are some articles on cnn where they profile people retiring in South America for example.
That depends where you want to live in the United States. For $500,000 you can get an annuity which pays out $2600 per month. That alone would be enough to pay for living expenses in smaller towns in the West or Midwest. You would have to live very modestly but it is certainly doable. If you throw on top of that social security and you are healthy individual then you can actually be at pretty good position.
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Re: 51 year old physician

Post by protagonist »

The Stone Wall wrote: Sun Jul 05, 2020 6:19 pm Financial freedom will probably come more easily by also tackling the "over-spending" aspect of your life.
Very good point. And paying off any outstanding debts.
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mikedomba
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Re: 51 year old physician

Post by mikedomba »

This is in addition to a 403B that is maxed.
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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

mikedomba wrote: Thu Jul 09, 2020 4:23 pm This is in addition to a 403B that is maxed.
That changes the landscape significantly.

Assuming you had zero savings prior to this year, the maximum contribution for a 403b for those over age 50 is $26,000. And the $2,500/month you referred to in the OP is $30,000/year, resulting in total savings of $56,000.

Apart from taxes, $56,000 invested at a 3% real rate of return for 10 years would be about $642,000 (that's in today's dollars).

Using the '4% rule of thumb', you could expect to start withdrawing about $25,700 annually at that time. This would be in addition to Social Security benefits and any other income sources you might have. If you're like most physicians, you'll probably get the maximum SS benefit or close to it, and your spouse, if applicable, will get at least 50% of your benefit.
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Re: 51 year old physician

Post by Toons »

goodenyou wrote: Mon Jul 06, 2020 6:10 pm
Ferdinand2014 wrote: Mon Jul 06, 2020 5:03 pm
goodenyou wrote: Mon Jul 06, 2020 9:35 am If you are serious about financial independence, I would look at jobs in low-cost areas that pay a premium. There are jobs in places that people may not want to live, and are low cost of living. Therefore, there is opportunity for higher pay and lower cost. It is referred to as geographic arbitrage. I live in such an area and we have recruited several doctors in the same situation as you. My close friend left an academic surgical subspecialty position at UCSD 15 years ago and opened a private practice when he was in his early 40s. He makes 3 times per year what he made in academia and had a great opportunity to invest in a hospital that has rewarded him tremendously. The Stanford tuition for his son this year is not problem nor is his financial worry for retirement. We just hired someone in their mid 50s who came from a HCOL area who needed to make up for many lost years of saving and the financial damage of divorce. His salary has doubled. I would look at a higher paying opportunity if it were me.
+1
VLCOL area. I am a 51 year old physician (Hospitalist) as well. Higher than average income for a physician, No need to keep up with the Jones's because there are no Jones's and cheap livin'. I actually prefer to live where I do, although many might consider it less desirable. It has made all the difference in the world.
The happiest physicians I have met have achieved FI very early (late 40s-50s). They are physicians that live well below their means and have saved enough to have the option to quit as healthcare changes. Where I live, we don't have very expensive suburbs, expensive private schools or $50,000+ country club initiations. We have plenty of opportunity to spend, but plenty of opportunity to accumulate stealth wealth. I have seen many physician colleagues sweat it out with huge mortgages, tuition bills and now with COVID. They fall prey to the idea that consumption will bring happiness when all along it would have been financial freedom and choice that would have brought much more happiness. Unfortunately, many learn this very late in their careers. Being able to stroke a check for a new car or a new house is liberating.
Bingo!!
:wink:
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kenoryan
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Re: 51 year old physician

Post by kenoryan »

I cant believe how many physicians have such a tendency to blow money on cars and women (and divorces)!

I'm a 60 year old doc. Every time I hire a new grad to our group, I buy them a copy of "millionaire next door' and 'whit coat investor'. Then I sit down with them and help them plan how they are going to pay off their loans. Many have no idea how to manage the big paycheck that comes at the end of the month.
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Re: 51 year old physician

Post by willthrill81 »

kenoryan wrote: Thu Jul 09, 2020 5:34 pmMany have no idea how to manage the big paycheck that comes at the end of the month.
Good for you for helping to give these new physicians much needed financial help.

I'll bet that many of them don't realize how much taxes will reduce that otherwise big paycheck.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
02nz
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Re: 51 year old physician

Post by 02nz »

OP, you've given us very little information to work with. The quality of advice on this forum is very much proportional to the quality of input. You'll get very different advice if you have a $500K 403b, vs. if you just started contributing last month. As others have already suggested, put the information in the "Asking portfolio questions" template.
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Re: 51 year old physician

Post by JediMisty »

kenoryan wrote: Thu Jul 09, 2020 5:34 pm I cant believe how many physicians have such a tendency to blow money on cars and women (and divorces)!

I'm a 60 year old doc. Every time I hire a new grad to our group, I buy them a copy of "millionaire next door' and 'whit coat investor'. Then I sit down with them and help them plan how they are going to pay off their loans. Many have no idea how to manage the big paycheck that comes at the end of the month.
I'm so I impressed with your giving advice to the newbies. If more folks were like you, we'd have a much better society. ☺️
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Re: 51 year old physician

Post by geerhardusvos »

mikedomba wrote: Thu Jul 09, 2020 4:23 pm This is in addition to a 403B that is maxed.
Care to present your post in the proper format? Seems like the least you could do with all these kind folks helping you out...

viewtopic.php?f=1&t=6212
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diabelli
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Re: 51 year old physician

Post by diabelli »

Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
02nz
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Re: 51 year old physician

Post by 02nz »

diabelli wrote: Thu Jul 09, 2020 10:30 pm The thing about medicine is that there's a ceiling if you're doing it honestly.
With a user name like "diabelli," you expect us to listen to you about making an honest living?! :D
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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
I've mentioned before that I had a conversation with a newly graduated gastroenterologist a couple of years ago. Between his student loans, big 'doctor's house on the hill', luxury vehicles, and perennially high tax bill, I doubt that he'll reach a zero net worth until he's at least 40.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
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goodenyou
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Re: 51 year old physician

Post by goodenyou »

RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
You are missing many expenses. Regardless, if you want to maintain the comfortable lifestyle that you are accustomed to with a $500k annual salary, you would want to be saving a significant portion of the after-tax and after-expenses income. I did, and I am very glad I did.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

goodenyou wrote: Fri Jul 10, 2020 7:15 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
You are missing many expenses. Regardless, if you want to maintain the comfortable lifestyle that you are accustomed to with a $500k annual salary, you would want to be saving a significant portion of the after-tax and after-expenses income. I did, and I am very glad I did.
Is $100k not enough savings?

Leaves $150k for all other expenses.
YellowBrickRoad
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Re: 51 year old physician

Post by YellowBrickRoad »

Congrats to admitting the err of your ways and asking for help. You are off to a good start and will see positive reinforcement in your monthly/yearly statements that will motivate you toward saving even more. A journey of a thousand miles begins with the first step.
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goodenyou
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Re: 51 year old physician

Post by goodenyou »

RocketShipTech wrote: Fri Jul 10, 2020 7:27 am
goodenyou wrote: Fri Jul 10, 2020 7:15 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
You are missing many expenses. Regardless, if you want to maintain the comfortable lifestyle that you are accustomed to with a $500k annual salary, you would want to be saving a significant portion of the after-tax and after-expenses income. I did, and I am very glad I did.
Is $100k not enough savings?

Leaves $150k for all other expenses.
It depends on how much you want to have at the endpoint and in what period of time. It wasn’t enough savings for me. But then again, my motivation was to have a lot more and earlier in my life to have options. I achieved that.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
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gr7070
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Re: 51 year old physician

Post by gr7070 »

While the above posts are reasonably correct on the whole, I'll offer a couple differing items.

For starters, don't let the criticism of your 2500 discourage you. As the first reply noted one has to start somewhere.

So, start there. Invest it in your 401k. Post what options you have here for advice on where to invest. Otherwise just pick the target dated fund your plan has. No huge decision needs to be made or investigated. Just start with that. Doesn't matter what debts you have etc. Just do this first.

Secondly, get on a budget. Dave Ramsey was mentioned above. Use him as motivation and advice on the budget side.

You do not need to spend a bunch of extra effort here and post all the particulars that are being asked for. While it would help maximize your finances you do not need maximizing. You just need to start.

So, do items 1 and 2 above. That's it.
Heck do 1. And think about doing a budget... soon.

Stick with that, make simple improvements (largely thorough budgeting) as you go.

Start on these boards, lurking. Listen to Dave Ramsey. Pick up a couple books recommended here and by Dave - Mike Piper's *100-page* book on investing would be a great start.

You're embarking on a big change. The key is to don't stop. Don't get discouraged. Start with that $2500, way more than most start with.
Learn and improve... As with all things in life.
02nz
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Re: 51 year old physician

Post by 02nz »

gr7070 wrote: Fri Jul 10, 2020 10:21 am Listen to Dave Ramsey.
For budgeting and getting out of debt, yes. For investing, h*** no!
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gr7070
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Re: 51 year old physician

Post by gr7070 »

02nz wrote: Fri Jul 10, 2020 10:23 am
gr7070 wrote: Fri Jul 10, 2020 10:21 am Listen to Dave Ramsey.
For budgeting and getting out of debt, yes. For investing, h*** no!
Yep.

OP is here, and hopefully our negative posts, though well-meaning, don't push them away. They'll get the investment side of things they need... eventually. They need none of that this moment.

They need to take a couple baby steps first. They do not need the, again well-meaning, advice to dig deep, spend tons of time pouring over their finances and fund options and debts etc.

They need a couple simple and easy steps to take. Steps that Dave can likely help greatly.
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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
Regarding taxes, you forgot FICA and state. And also student loans, which are quite often $250k for this cohort.
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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

unclescrooge wrote: Fri Jul 10, 2020 11:08 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
Regarding taxes, you forgot FICA and state. And also student loans, which are quite often $250k for this cohort.
And $35k of mortgage interest on a $1 million mortgage; maintenance, utilities, and furnishings for a $1 million home; kids probably going to private school; etc.

There's no disputing that even with all of the above that it's a lot easier to save when you gross $500k/annually. No one is disputing that. But it doesn't mean that you'll accumulate enough income-producing assets to achieve FI without some measure of thought and discipline. Ask Jim Dahle of the White Coat Investor how many emails he gets from physicians in their 50s and older who have relatively little saved for retirement (i.e. in comparison to their spending).

"That what each of us calls our 'necessary expenses' will always grow to equal our incomes unless we protest to the contrary."
- George S. Clason in 'The Richest Man in Babylon'
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
02nz
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Re: 51 year old physician

Post by 02nz »

gr7070 wrote: Fri Jul 10, 2020 10:49 am
02nz wrote: Fri Jul 10, 2020 10:23 am
gr7070 wrote: Fri Jul 10, 2020 10:21 am Listen to Dave Ramsey.
For budgeting and getting out of debt, yes. For investing, h*** no!
Yep.

OP is here, and hopefully our negative posts, though well-meaning, don't push them away. They'll get the investment side of things they need... eventually. They need none of that this moment.

They need to take a couple baby steps first. They do not need the, again well-meaning, advice to dig deep, spend tons of time pouring over their finances and fund options and debts etc.

They need a couple simple and easy steps to take. Steps that Dave can likely help greatly.
I don't see any "negative" posts. The OP hasn't actually given enough info to determine whether they need more help on budgeting, getting out of debt (or if there is even any debt at all), and/or investing. OP is maxing a 403b, not sure for how long now, but he/she probably could use at least some investing advice. Anyway we need at least some basic info here, thus far there's almost nothing to work with and thus the thread is kind of all over the place.
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

unclescrooge wrote: Fri Jul 10, 2020 11:08 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
Regarding taxes, you forgot FICA and state.
Nope.

Image

(Assumes $26k 403b contribution and standard deduction)
Last edited by RocketShipTech on Fri Jul 10, 2020 12:13 pm, edited 1 time in total.
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

willthrill81 wrote: Fri Jul 10, 2020 11:15 am
unclescrooge wrote: Fri Jul 10, 2020 11:08 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am
diabelli wrote: Thu Jul 09, 2020 10:30 pm Physician here in his mid-late 30s and I need to say it... The physician parking lot at my hospital would seem like it must be some ridiculous parody. Tesla, Porsche, Tesla, Tesla, BMW SUV, Tesla, Lexus, Tesla, Tesla.

And I have several friends on about my own level who have just bought houses which I'm certain cost well over $1mil.

The thing about medicine is that there's a ceiling if you're doing it honestly. These people make between $250 and $650, barring a very few outliers, meaning just over half that post-tax. They aren't comfortably affording this stuff.
Annually:
$500k income incurs $150k in income taxes
A $1M mortgage with property taxes costs $70-80k (A third of it being home equity, so not really spending)
A leased BMW 5 series costs $6k

Which leaves over $250k for retirement savings and spending. Sounds plenty comfortable to me.
Regarding taxes, you forgot FICA and state. And also student loans, which are quite often $250k for this cohort.
And $35k of mortgage interest on a $1 million mortgage; maintenance, utilities, and furnishings for a $1 million home; kids probably going to private school; etc.
Who is paying 3.5% on a 30 year these days? Try $25-30k. *2 for principal and property tax.

Furnishings and private school can come out of the $250k.

Look, I get that Bogleheads worship material deprivation. But the judgment of those who don't is a bit much.
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