51 year old physician

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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

RocketShipTech wrote: Fri Jul 10, 2020 11:48 am
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.
Who is getting a 2.5% 30 year mortgage these days? BankRate.com says that 3.25% is average for a 30 year mortgage.
RocketShipTech wrote: Fri Jul 10, 2020 11:48 amLook, I get that Bogleheads worship material deprivation. But the judgment of those who don't is a bit much.
Many here spend significantly more than most Americans. Not everyone here 'worships material deprivation'.
“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
caffeperfavore
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Re: 51 year old physician

Post by caffeperfavore »

I'm always impressed with Bogleheads' ability to spin an entire thread out of a cryptic post or two. :P
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gr7070
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Re: 51 year old physician

Post by gr7070 »

02nz wrote: Fri Jul 10, 2020 11:24 am
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.
Call them whatever you wish. They're critical and not encouraging. I don't disagree with the correctness. Surely this is simple to grasp.

There's plenty there to work with. To get started.

They don't need tons of specialized advice today. They simply need to save something, which they've started.

It needs to be in tax-advantaged option. Today it can even be just about any fund, too.

It's obvious they need budgeting help.

Then they can start small. Only need the bare minimum to make some positive progress, and build from there.

I used to do one on one counseling with folks like the OP. Some were your typical Dave Ramsey type folks. It's usually incredibly difficult for them to change. Less than encouraging response can be detrimental. Let's get than on track with very easy, low effort basics and build from there. No need to jump in fully and overwhelm.
02nz
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Re: 51 year old physician

Post by 02nz »

gr7070 wrote: Fri Jul 10, 2020 12:02 pm
02nz wrote: Fri Jul 10, 2020 11:24 am
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.
Call them whatever you wish. They're critical and not encouraging. I don't disagree with the correctness. Surely this is simple to grasp.

There's plenty there to work with. To get started.

They don't need tons of specialized advice today. They simply need to save something, which they've started.

It needs to be in tax-advantaged option. Today it can even be just about any fund, too.

It's obvious they need budgeting help.

Then they can start small. Only need the bare minimum to make some positive progress, and build from there.

I used to do one on one counseling with folks like the OP. Some were your typical Dave Ramsey type folks. It's usually incredibly difficult for them to change. Less than encouraging response can be detrimental. Let's get than on track with very easy, low effort basics and build from there. No need to jump in fully and overwhelm.
You're making all sorts of assumptions. All we know is OP is maxing 403b (that's $26K/year at OP's age), has another $2500/mo to invest, and thinks he/she has been overspending, but if OP has been maxing 403b for a long time there's not really a problem (at least in terms of retirement savings). If the OP has $50K in retirement savings, our advice would be dramatically different than if OP has $500K. We just have very little to work with, which is why we're engaged in this little debate (and sidebars about hospital parking lots) :wink: instead of offering actionable advice to OP.
Last edited by 02nz on Fri Jul 10, 2020 12:25 pm, edited 1 time in total.
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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

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.

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
02nz
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Re: 51 year old physician

Post by 02nz »

caffeperfavore wrote: Fri Jul 10, 2020 11:58 am I'm always impressed with Bogleheads' ability to spin an entire thread out of a cryptic post or two. :P
It's also a good demonstration of what happens if you don't come back to your own thread to provide basic info. We've already covered the usual suspects - cars, Dave Ramsey. Surely international vs domestic is next? :happy
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

unclescrooge wrote: Fri Jul 10, 2020 12:25 pm
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.

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
They can afford the leases and you were wrong about the taxes.
chipperd
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Re: 51 year old physician

Post by chipperd »

Anyone wondering, as I am, why, in face of several requests, the OP doesn't provide more info?
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onthecusp
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Re: 51 year old physician

Post by onthecusp »

sycamore wrote: Sun Jul 05, 2020 5:19 pm
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.
Yes, as others have said, ramp that savings up. But that is a very good start. Get rid of debt if that is an issue for you then put what you would have sent to payments to additional savings.

As for a another lost decade of investing returns, it is an ideal time to be saving and slowly ramping that savings up, as stocks may trend towards a more favorable P/E ratio. Look what returns came after 2010.
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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

unclescrooge wrote: Fri Jul 10, 2020 12:25 pm
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.

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
I wasn't disagreeing with you, just adding to the list of expenses. I'm still amazed at how many people (not you) think that a high income means that wealth will be an inevitable outcome.

At any rate, unless/until the OP returns with more information, this thread isn't likely to be productive for anyone.
“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
smitcat
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Re: 51 year old physician

Post by smitcat »

RocketShipTech wrote: Fri Jul 10, 2020 12:28 pm
unclescrooge wrote: Fri Jul 10, 2020 12:25 pm
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

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
They can afford the leases and you were wrong about the taxes.
Yes - agreed in NY as well. $500K in income is about $150 in taxes total with 401K and a couple of kids.
Sweetbriar
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Re: 51 year old physician

Post by Sweetbriar »

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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

RocketShipTech wrote: Fri Jul 10, 2020 11:42 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.
Nope.

Image

(Assumes $26k 403b contribution and standard deduction)
I guess it's state dependent. In California you would be paying over 10%. Plus there is property taxes. I pay $16.8k on an assessed value of $1.3 million.
smitcat
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Re: 51 year old physician

Post by smitcat »

unclescrooge wrote: Fri Jul 10, 2020 12:47 pm
RocketShipTech wrote: Fri Jul 10, 2020 11:42 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.
Nope.

Image

(Assumes $26k 403b contribution and standard deduction)
I guess it's state dependent. In California you would be paying over 10%. Plus there is property taxes. I pay $16.8k on an assessed value of $1.3 million.
Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

smitcat wrote: Fri Jul 10, 2020 12:50 pm
unclescrooge wrote: Fri Jul 10, 2020 12:47 pm
RocketShipTech wrote: Fri Jul 10, 2020 11:42 am
unclescrooge wrote: Fri Jul 10, 2020 11:08 am
RocketShipTech wrote: Fri Jul 10, 2020 1:04 am

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)
I guess it's state dependent. In California you would be paying over 10%. Plus there is property taxes. I pay $16.8k on an assessed value of $1.3 million.
Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
Is that one working spouse or both?
smitcat
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Re: 51 year old physician

Post by smitcat »

unclescrooge wrote: Fri Jul 10, 2020 12:53 pm
smitcat wrote: Fri Jul 10, 2020 12:50 pm
unclescrooge wrote: Fri Jul 10, 2020 12:47 pm
RocketShipTech wrote: Fri Jul 10, 2020 11:42 am
unclescrooge wrote: Fri Jul 10, 2020 11:08 am
Regarding taxes, you forgot FICA and state.
Nope.

Image

(Assumes $26k 403b contribution and standard deduction)
I guess it's state dependent. In California you would be paying over 10%. Plus there is property taxes. I pay $16.8k on an assessed value of $1.3 million.
Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
Is that one working spouse or both?
The income does not matter if its one or both the ability to get pretax savings would be affected by one or both working.
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goodenyou
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Re: 51 year old physician

Post by goodenyou »

caffeperfavore wrote: Fri Jul 10, 2020 11:58 am I'm always impressed with Bogleheads' ability to spin an entire thread out of a cryptic post or two. :P
..or drive it off a cliff with a locked tread. Just give it some time.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
smitcat
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Re: 51 year old physician

Post by smitcat »

smitcat wrote: Fri Jul 10, 2020 12:55 pm
unclescrooge wrote: Fri Jul 10, 2020 12:53 pm
smitcat wrote: Fri Jul 10, 2020 12:50 pm
unclescrooge wrote: Fri Jul 10, 2020 12:47 pm
RocketShipTech wrote: Fri Jul 10, 2020 11:42 am

Nope.

Image

(Assumes $26k 403b contribution and standard deduction)
I guess it's state dependent. In California you would be paying over 10%. Plus there is property taxes. I pay $16.8k on an assessed value of $1.3 million.
Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
Is that one working spouse or both?
The income does not matter if its one or both the ability to get pretax savings would be affected by one or both working.
$500K income - one spouse only with $19K in 401K - 2 kids is about $166K in taxes total.
No HSA, no DECAP, no 529, no extra 401K.
I could see it being easy to lower taxes under $150K per year in Calif. with all of these available tools.
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

smitcat wrote: Fri Jul 10, 2020 12:50 pm Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
+1

People in general but even Bogleheads (who should know better) way overestimate the taxes they pay.
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beernutz
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Re: 51 year old physician

Post by beernutz »

I haven't seen it mentioned as advice yet but since the OP wrote about overspending as a problem then a budgeting tool would likely help.

My family are big fans of youneedabudget (YNAB) because of the low overhead but OP should seriously consider some kind of budgeting software. We use it primarily for tracking spending but that was merely the first step in the lowering expenses decision-making process for us.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. --Will Rogers
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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

RocketShipTech wrote: Fri Jul 10, 2020 1:01 pm
smitcat wrote: Fri Jul 10, 2020 12:50 pm Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
+1

People in general but even Bogleheads (who should know better) way overestimate the taxes they pay.
My physician wife doesn't have an HSA. We don't contribute to her 401k because the cost of the plan is 1.8% and it's a pooled account where the fund lineup is bottom decile of performance year over year and it's 50% bonds.

I don't see why our property taxes should not be added to our tax burden?

And then our consumption is taxed another 10%.

Even if we spend only $50k per year, that's another $5k in taxes.
smitcat
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Re: 51 year old physician

Post by smitcat »

unclescrooge wrote: Fri Jul 10, 2020 1:08 pm
RocketShipTech wrote: Fri Jul 10, 2020 1:01 pm
smitcat wrote: Fri Jul 10, 2020 12:50 pm Taxes in California for $500K income with $40K to 410K and/or HSA and 2 kids is about $157K year.
+1

People in general but even Bogleheads (who should know better) way overestimate the taxes they pay.
My physician wife doesn't have an HSA. We don't contribute to her 401k because the cost of the plan is 1.8% and it's a pooled account where the fund lineup is bottom decile of performance year over year and it's 50% bonds.

I don't see why our property taxes should not be added to our tax burden?

And then our consumption is taxed another 10%.

Even if we spend only $50k per year, that's another $5k in taxes.
"I don't see why our property taxes should not be added to our tax burden?"
That is fine but most folks account for property tax in expenses since you could also rent.
And no one I know can track total taxes - that is all tax associated with all sales and use taxes in ones are rather they are 'collected' in that expenses hopper.
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unclescrooge
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Re: 51 year old physician

Post by unclescrooge »

smitcat wrote: Fri Jul 10, 2020 1:12 pm

"I don't see why our property taxes should not be added to our tax burden?"
That is fine but most folks account for property tax in expenses since you could also rent.
And no one I know can track total taxes - that is all tax associated with all sales and use taxes in ones are rather they are 'collected' in that expenses hopper.
Yeah, that makes sense. I will adjust my mental accounting accordingly. :mrgreen:
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goodenyou
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Re: 51 year old physician

Post by goodenyou »

willthrill81 wrote: Fri Jul 10, 2020 12:35 pm
unclescrooge wrote: Fri Jul 10, 2020 12:25 pm
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

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
I wasn't disagreeing with you, just adding to the list of expenses. I'm still amazed at how many people (not you) think that a high income means that wealth will be an inevitable outcome.

At any rate, unless/until the OP returns with more information, this thread isn't likely to be productive for anyone.
High income for many does not lead to wealth. It leads to consumption. Physicians have a high rate of burnout. The rate of burnout is only made worse with golden handcuffs and now with the threat to one's life and the lives of loved ones by having to take care of patients with a highly communicable disease. I live in a place where it is catastrophic and it is overwhelming the healthcare community. Physicians would be well advised to save as much as they can, because, by the time they are in their 50s, many of them have had only 20 years in the workforce and they are burned out. Just spend some time in the surgeon's lounge like I did this morning and you will hear burned out doctors and COVID horror stories. The OP will be well-served to save and not overspend.

Revealing detailed information on finances will likely lead to detailed criticism. The OP acknowledges that they have an overspending issue no matter their salary. Creative ways to save can only be accomplished by moving more to the saving side. The $2500 per month may best be used to extinguish debt. There is not enough information.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
Sweetbriar
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Re: 51 year old physician

Post by Sweetbriar »

chipperd wrote: Fri Jul 10, 2020 12:33 pm Anyone wondering, as I am, why, in face of several requests, the OP doesn't provide more info?
He's probably in surgery!
SevenBridgesRoad
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Re: 51 year old physician

Post by SevenBridgesRoad »

02nz wrote: Fri Jul 10, 2020 12:26 pm
caffeperfavore wrote: Fri Jul 10, 2020 11:58 am I'm always impressed with Bogleheads' ability to spin an entire thread out of a cryptic post or two. :P
It's also a good demonstration of what happens if you don't come back to your own thread to provide basic info. We've already covered the usual suspects - cars, Dave Ramsey. Surely international vs domestic is next? :happy
Don't forget annuities.
MathIsMyWayr
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Re: 51 year old physician

Post by MathIsMyWayr »

willthrill81 wrote: Fri Jul 10, 2020 12:35 pm
unclescrooge wrote: Fri Jul 10, 2020 12:25 pm
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

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'
For sure. I totally agree. I know first hand the physicians parking lot is full of leased Maseratis, Teslas, BMWs and a smattering of Hondas. And I know 40 year old single physicians renting penthouses for $6,500 per month with a zero networth.

The only part of the post I disagreed with was how much taxes "rich" people pay.
I wasn't disagreeing with you, just adding to the list of expenses. I'm still amazed at how many people (not you) think that a high income means that wealth will be an inevitable outcome.

At any rate, unless/until the OP returns with more information, this thread isn't likely to be productive for anyone.
I worry more about low income people than high income people. "Can't save" is different from "don't save."
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willthrill81
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Re: 51 year old physician

Post by willthrill81 »

MathIsMyWayr wrote: Fri Jul 10, 2020 6:48 pm
willthrill81 wrote: Fri Jul 10, 2020 12:35 pm I wasn't disagreeing with you, just adding to the list of expenses. I'm still amazed at how many people (not you) think that a high income means that wealth will be an inevitable outcome.

At any rate, unless/until the OP returns with more information, this thread isn't likely to be productive for anyone.
I worry more about low income people than high income people. "Can't save" is different from "don't save."
Certainly. But the forum appears to attract few earning below the U.S. median household income. So we help who we can.
“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
Rudedog
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Re: 51 year old physician

Post by Rudedog »

Hard for me to have much sympathy for someone with a physician's earning ability.
jayk238
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Re: 51 year old physician

Post by jayk238 »

I love the schadenfreud here. It seems specifically reserved for doctors. I suspect this is due to the vast majority here not making a physician income and physicians being the ‘wealthiest,” people-here and elsewhere are most likely to meet.

Its sad because over the years its gotten worse. Its also hard for doctors to post here.

More and more i see comments like-pcps are useless and theres no need and so forth. Its unhelpful.

You want to talk about burnout-its forums like this that are purportedly apolitical but have a clear anti physician bias. Its hard for someone like me who wants to even get advice here. Its why I visit here less and less. Its why docs like me want to get in and get out because we feel this bias everywhere we go.


I do not see doctors where I work all driving “leased maseratis and teslas.” I just dont. Maybe in a few places this is common but where Im at And the 12 yes TWELVE other hospitals not to mention many more clinics Ive rotated and trained at over the 7 years of med school and residency I did not see this.

Its simply uncommon.

Now if you are driving by a plastics surgery office in beverly hills Im sure thats all you will see.

For what its worth. Docs in europe average 100k or so. Do you know what the 1% in europe make? 100k.

The average doc in usa makes about 300. The 1% make 450.

That said posts here should stick to helping doc get his finances in order.

I have seen so many other posts where someone lands a windfall in an inheritance or business sale w 5 million or more and there is NO insults.

No comments like- ohh i wish I gave advice to those in need, not like this doc who spends so much!
No comments like -hard for me to give sympathy!
Nope, just straight up good advice given w none of the insults.

Schadenfreude indeed.
Last edited by jayk238 on Fri Jul 10, 2020 8:56 pm, edited 1 time in total.
Jags4186
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Re: 51 year old physician

Post by Jags4186 »

willthrill81 wrote: Fri Jul 10, 2020 11:53 am
Who is getting a 2.5% 30 year mortgage these days? BankRate.com says that 3.25% is average for a 30 year mortgage.
I just closed on Thursday on a 2.875% 300k 30yr with $6k in credits. That means I could have gotten a no cost 2.5% mortgage if I chose to take a $1500 credit and use $4500 of the credit to buy down the rate.
RocketShipTech
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Re: 51 year old physician

Post by RocketShipTech »

Jags4186 wrote: Fri Jul 10, 2020 8:54 pm
willthrill81 wrote: Fri Jul 10, 2020 11:53 am
Who is getting a 2.5% 30 year mortgage these days? BankRate.com says that 3.25% is average for a 30 year mortgage.
I just closed on Thursday on a 2.875% 300k 30yr with $6k in credits. That means I could have gotten a no cost 2.5% mortgage if I chose to take a $1500 credit and use $4500 of the credit to buy down the rate.
Not to mention relationship mortgages.
DownToThis
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Re: 51 year old physician

Post by DownToThis »

jayk238 wrote: Fri Jul 10, 2020 8:50 pm I love the schadenfreud here. It seems specifically reserved for doctors. I suspect this is due to the vast majority here not making a physician income and physicians being the ‘wealthiest,” people-here and elsewhere are most likely to meet.

Its sad because over the years its gotten worse. Its also hard for doctors to post here.

More and more i see comments like-pcps are useless and theres no need and so forth. Its unhelpful.

I do not see doctors where I work all driving “leased maseratis and teslas.” I just dont. Maybe in a few places this is common but where Im at And the 12 yes TWELVE other hospitals not to mention many more clinics Ive rotated and trained at over the 7 years of med school and residency I did not see this.

Its simply uncommon.

Now if you are driving by a plastics surgery office in beverly hills Im sure thats all you will see.

For what its worth. Docs in europe average 100k or so. Do you know what the 1% in europe make? 100k.

The average doc in usa makes about 300. The 1% make 450.
I agree with the above regarding doctor cars, at least in the hospital I work at the attending physician spots have a few bmw's and such but the majority are 10-15 year old Hondas and Toyotas. Not sure if the fancy doctor car is something from an older generation of physicians (or maybe locality) but it has not been my experience either.
jayk238
Posts: 663
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Re: 51 year old physician

Post by jayk238 »

RocketShipTech wrote: Fri Jul 10, 2020 11:48 am
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.
I agree with you except for the interest rate.

I just refinanced to 2.6% from 4.2 with only 3% down AND switched from a 20 year mortgage to 15 years!!
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White Coat Investor
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Re: 51 year old physician

Post by White Coat Investor »

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.
The good news is that no doctor is ever more than 10 years away from retirement. Combining frugal living with a physician paycheck and you can do just about anything.

I've spent most of the last decade producing content to specifically help you succeed. You can do this.

Step # 1 is to figure out how to make that $2,500 a month number higher. If you can both boost your income and cut your spending I bet you can double that number without too much pain.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: 51 year old physician

Post by Flyer24 »

Thread is paused because it has drifted off track. The OP is welcome to send me a private message to add new information to the post. I will unlock it as needed.
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