Physician Retirement Savings

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staythecourse
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Re: Physician Retirement Savings

Post by staythecourse » Tue Mar 07, 2017 4:34 pm

goodenyou wrote:Most physicians I know will agree that they are trying to achieve financial independence from a profession that is broken. The changes in healthcare, the costs of education and the overall attitude of the public about healthcare has soured many physicians on the profession. When you are financially independent, changes to the system may bother you less because you have the ability to quit anytime. Staring down $300-400k worth of loans as a young person just starting out in a system that is broken is an entirely different reality. Many older docs are running out the clock and taking pay cuts for not participating in many of the Medicare regs. They would rather take a pay cut than deal with the aggravation because they can afford to take a pay cut.
Not sure if I agree. If they really hated it that much they would just retire early/ find a nonclinical job IF they had so much stashed away working doesn't matter. Actually, I would say if that was true you would see A LOT more vocalization from physicians against the "system". What fear would there be then if one is FI already. You definetly don't see that. Or if you are set financially why not see more docs go on their own alone or with others to start practicing how they want. If it didn't work out the worst is you retire. No bid deal there.

SO (a big SO) if they are expecting to work for a LONG TIME no matter on their wealth accumulation or hitting their number then why don't they do a better job of achieving a better work/ life balance earlier in their career instead of just trying to bulldoze their way to an end result where they just keep working for the same system they complain about?

I am not a mental health expert, but assume one would probably advocate cutting down on hours and working less to spend more time on yourself if you are trully stressed at work. I can't see anyone saying it is healthy to just try to bulldoze through it.

All I can say on the matter is if doctors true goal of amassing hugh wealth is to get out of medicine then why don't we so more doing it. Even on this thread you have MANY who have the $$$, but openly admit, "Well I see cutting back to 50%" for example. Those 2 don't go together.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

J_Markov
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Re: Physician Retirement Savings

Post by J_Markov » Tue Mar 07, 2017 4:46 pm

bostondan wrote:Seeing all these posts about high salaries makes me want to leave Boston! I'll be a cardiologist in a few years. If I were to stay in the actual city of Boston, my colleagues are receiving job offers for full-time cardiology positions starting as low as $120k. I've heard you can negotiate up to $160k. They expect that you do some research. I think you can add to your salary that way, but I'm not a big researcher, so I actually don't know.

If you go out to the community, I've heard you can make more, but not a ton more. I've got a colleague who couldn't find an offer for more than $250k as an interventional cardiologist in the area surrounding Boston. He ultimately took a job out in Arizona making $600k first year out, expecting make more within a few years. One person got an offer for an insanely busy practice making $400k near Boston. It sounded like a horrendous job other than the salary.

I currently work in a major academic center (one of those institutions that I should feel "privileged" to work at :annoyed ). Most of my physician colleagues are not spending excessively and many have high debt burden still. If anything, most of my colleagues are frugal and drive 7+ year old cars. They often comment that my relatively new Honda Civic seems fancy.

I know if you go out to the community and find private practice doctors in procedural specialties that they are often driving fancy cars and spending a lot, but in practice that's not what I see.

Age: 31
NW: ~$750k without inheritance (I did freelance web development pre-residency and did reasonably well). $3.5 million with inheritance :(
I'd say the 'astronomical' salaries you're seeing on this board are not happening on large metro areas in the NE or west coast. There's such a broad range of salaries across the board. As you said, a cardiologist in Boston may earn 1/4th of what a cardiologist would earn in other areas such as a small city in the midwest. The same applies to many other specialties. I think someone posted a 400k salary for an internist. That's nowhere near what an internist would make in cities like NYC, Boston, etc... I feel those medscape surveys probably reflect more the salaries in the big cities.

goldendad
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Re: Physician Retirement Savings

Post by goldendad » Tue Mar 07, 2017 5:49 pm

I am not a MD but am in the income bracket mentioned. My wife and I are both savers and live on far less than I make. We plan to retire in a few months, have about 58x anticipated yearly expenses. We are in our early 60s and are debt free.

staythecourse
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Re: Physician Retirement Savings

Post by staythecourse » Tue Mar 07, 2017 5:49 pm

For the above poster,

The biggest parody of making money in medicine is the places that may a ton are the place having a ton of cash is not helpful. After you build/ buy a dream home and a couple fancy cars what else are you going to do with the extra wad of cash? To make that money no matter what you are working inflexible hours/ schedule so it isn't like you can just go, "Hey I have more then enough I just want to work 3 days a week so I can start spending my wad of cash". Your employer doesn't make money on you that way.

In contrast, the places that are desirable, i.e. major metro areas are the areas you could do infinite amount with tons of money, but these are areas that pay the least so you don't make that much.

In the end you will have to decide if you want to make A TON just to make it or make less and enjoy the ammenities of larger cities. Don't know other fields of life, but can say medicine and their jobs do NOT pay according to cost of living and actually is INVERSE. They pay based on simple supply/ demand economics.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Incendiary
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Re: Physician Retirement Savings

Post by Incendiary » Tue Mar 07, 2017 6:34 pm

I'm planning on working until I'm in my 70s because I feel an obligation to do so.

My goal is $200,000 annual withdrawals (pre-tax). At a 3% SWR, I want to have about $6,666,667 in my investment accounts in today's dollars.

I see people making more than I make and looking to have less than I want as an FI number. Interesting. :confused

beezquimby
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Re: Physician Retirement Savings

Post by beezquimby » Tue Mar 07, 2017 6:53 pm

Incendiary wrote:I'm planning on working until I'm in my 70s because I feel an obligation to do so.
:shock:

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JDCarpenter
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Re: Physician Retirement Savings

Post by JDCarpenter » Tue Mar 07, 2017 6:54 pm

Incendiary wrote:...

I see people making more than I make and looking to have less than I want as an FI number. Interesting. :confused
We undoubtedly make more than some people who have a lower FI number. Since we became empty nesters, taxes are more than 50% of our spending despite having no state income tax--and we save more than we pay in taxes. Thus, even with stepping spending up, our FI number is low compared to our AGI--and especially compared to what our true income is before tax-deferred accounts are funded.
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livesoft
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Re: Physician Retirement Savings

Post by livesoft » Tue Mar 07, 2017 7:13 pm

Incendiary wrote:I'm planning on working until I'm in my 70s because I feel an obligation to do so.

My goal is $200,000 annual withdrawals (pre-tax). At a 3% SWR, I want to have about $6,666,667 in my investment accounts in today's dollars.

I see people making more than I make and looking to have less than I want as an FI number. Interesting. :confused
OK, I see people making more than I ever made and looking to have less than what we have now in our accounts.
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staythecourse
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Re: Physician Retirement Savings

Post by staythecourse » Tue Mar 07, 2017 11:17 pm

Incendiary wrote:I'm planning on working until I'm in my 70s because I feel an obligation to do so.

My goal is $200,000 annual withdrawals (pre-tax). At a 3% SWR, I want to have about $6,666,667 in my investment accounts in today's dollars.

I see people making more than I make and looking to have less than I want as an FI number. Interesting. :confused
Okay right when I start understanding some folk mentality then a post like this comes up that makes NO sense. So you want to have 6+ millinon in your 70's for what reason? Do you think you are going to live to 100? That is unlikely to happen so you will be working into your 70's presumably to save money for someone or something else. I am assuming you have a plan for the left over money?

BTW, if you are not spending that much now (minus taxes, house payments, and child stuff) then do you really think you are going to ratchet up the buying in your 70's? Just curious if you or anyone else for that matter has EVER heard of someone doing that? My guess is no and its called neuroplasticity. Folks get set in their ways and new behaviors don't just start.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Incendiary
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Re: Physician Retirement Savings

Post by Incendiary » Tue Mar 07, 2017 11:22 pm

I expect to live until I'm 100, I expect I'll spend that much a year, and it would be nice to have money leftover to pass on.

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ram
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Re: Physician Retirement Savings

Post by ram » Wed Mar 08, 2017 1:12 am

I know a physician who is happy to work in California "after" she worked and saved for many years in a rural mid west practice. Her current salary does not support her current lifestyle. Her prior savings and current salary adequately support her lifestyle.
Ram

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Artsdoctor
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Re: Physician Retirement Savings

Post by Artsdoctor » Wed Mar 08, 2017 9:48 am

staythecourse wrote:For the above poster,

The biggest parody of making money in medicine is the places that may a ton are the place having a ton of cash is not helpful. After you build/ buy a dream home and a couple fancy cars what else are you going to do with the extra wad of cash? To make that money no matter what you are working inflexible hours/ schedule so it isn't like you can just go, "Hey I have more then enough I just want to work 3 days a week so I can start spending my wad of cash". Your employer doesn't make money on you that way.

In contrast, the places that are desirable, i.e. major metro areas are the areas you could do infinite amount with tons of money, but these are areas that pay the least so you don't make that much.

In the end you will have to decide if you want to make A TON just to make it or make less and enjoy the ammenities of larger cities. Don't know other fields of life, but can say medicine and their jobs do NOT pay according to cost of living and actually is INVERSE. They pay based on simple supply/ demand economics.

Good luck.
This is actually true. We've been in Southern California for over 20 years and have had no problem making a very good living and supporting a very enjoyable lifestyle. However, when you take a look at inflation-adjusted salaries, at least for us, we peaked over 10 years ago. For as long as we've lived out here, there have always been challenges recruiting doctors from lower cost of living areas. It's not at all unusual to have someone come out, look at real estate and school costs, and then go back to where they came. The only reasonable explanation I can think of is an old-fashioned supply and demand phenomenon. Furthermore, those finishing training here work for a few years and then move to those lower cost of living areas because they can't get ahead as easily they should.

This is the paradox that has been in play for as long as I can remember. At the end of the day, this paradox forces you to really prioritize what's most important to you, which is not necessarily a bad thing.

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goodenyou
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Re: Physician Retirement Savings

Post by goodenyou » Wed Mar 08, 2017 4:04 pm

ram wrote:I know a physician who is happy to work in California "after" she worked and saved for many years in a rural mid west practice. Her current salary does not support her current lifestyle. Her prior savings and current salary adequately support her lifestyle.
After working in Texas for many years, a close friend who is a cardiologist moved to Southern California and took a 60% pay cut. He is happy living in a beautiful place. However, he is finding it near impossible to recruit. The only interested cardiologists would be someone who has saved a lot of money to buy a house and is not in an accumulation phase of their life. Someone who has been in practice for years already. They are hard to find. He recently lost a potential candidate who would have had to take a 75% pay cut. They opted to work a few more years in Kansas and retire completely from medicine (in California) with a larger nest egg.
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PhysicianOnFIRE
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Re: Physician Retirement Savings

Post by PhysicianOnFIRE » Wed Mar 08, 2017 5:25 pm

staythecourse wrote:Don't know other fields of life, but can say medicine and their jobs do NOT pay according to cost of living and actually is INVERSE. They pay based on simple supply/ demand economics.

Good luck.
Indeed. It's called geographic arbitrage, and I'm taking full advantage. It helps a lot that I grew up in a small Midwestern town, and that's where I want to be. Unlike most fields, in medicine, the highest paying jobs are in the lowest cost of living areas.

Also, I've updated my goals since first responding to this post. These are my goals prior to retiring from clinical medicine (anesthesia):

$1,500,000 between a taxable account and 457(b)

$1,000,000 between Roth IRAs and 401(k)

$250,000 in our Donor Advised Fund

$200,000 between two 529 Plans


:beer
-PoF

ks289
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Re: Physician Retirement Savings

Post by ks289 » Thu Mar 09, 2017 4:43 am

PhysicianOnFIRE wrote:
staythecourse wrote:Don't know other fields of life, but can say medicine and their jobs do NOT pay according to cost of living and actually is INVERSE. They pay based on simple supply/ demand economics.

Good luck.
Indeed. It's called geographic arbitrage, and I'm taking full advantage. It helps a lot that I grew up in a small Midwestern town, and that's where I want to be. Unlike most fields, in medicine, the highest paying jobs are in the lowest cost of living areas.

Also, I've updated my goals since first responding to this post. These are my goals prior to retiring from clinical medicine (anesthesia):

$1,500,000 between a taxable account and 457(b)

$1,000,000 between Roth IRAs and 401(k)

$250,000 in our Donor Advised Fund

$200,000 between two 529 Plans


:beer
-PoF
Great blog and nice post.
Regarding geographic arbitrage, most salary comparisons between urban vs rural and between geographic regions do not break down the data to account for differences in distribution of practice types which exist. Particularly in procedural specialties where there is potentially a very large gap between pay in academic position vs single specialty private practice, you are seeing the salary numbers for urban and more urbanized geographic regions (northeast) skewed downward because of the higher percentage of academic jobs there.
I agree that other variables are putting downward pressure on salaries in urban and densely populated regions (higher costs for running practice, more competition/lower patient load, etc), but I haven't seen much data that nails down differences in payer mix or fee schedules/physician payments by geography, which determine the bulk of revenues for private practice.
My feeling is that geography clearly impacts your costs, but not (historically at least) necessarily your top line revenues if you have weak competition/sufficient patient load and good payer mix.

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PhysicianOnFIRE
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Re: Physician Retirement Savings

Post by PhysicianOnFIRE » Thu Mar 09, 2017 9:33 am

ks289 wrote:[quote="PhysicianOnFIRE]
Great blog and nice post.
Regarding geographic arbitrage, most salary comparisons between urban vs rural and between geographic regions do not break down the data to account for differences in distribution of practice types which exist. Particularly in procedural specialties where there is potentially a very large gap between pay in academic position vs single specialty private practice, you are seeing the salary numbers for urban and more urbanized geographic regions (northeast) skewed downward because of the higher percentage of academic jobs there.
I agree that other variables are putting downward pressure on salaries in urban and densely populated regions (higher costs for running practice, more competition/lower patient load, etc), but I haven't seen much data that nails down differences in payer mix or fee schedules/physician payments by geography, which determine the bulk of revenues for private practice.
My feeling is that geography clearly impacts your costs, but not (historically at least) necessarily your top line revenues if you have weak competition/sufficient patient load and good payer mix.
[/quote]

The cost of living differential can be huge, and I think there is something to the difference in average pay varying by location, with higher pay in the Heartland.

Within a region, state, or city, there can still be wide variation, of course. I'm an employed physician in a rural area. I'm paid well, but I know docs in the suburbs earning > 50% more than me. But I'm paid 50% more than some docs I know out west in similar jobs.

:beer
-PoF

J_Markov
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Re: Physician Retirement Savings

Post by J_Markov » Thu Mar 09, 2017 9:37 am

ks289 wrote:
PhysicianOnFIRE wrote:
staythecourse wrote:
:beer
-PoF
Great blog and nice post.
Regarding geographic arbitrage, most salary comparisons between urban vs rural and between geographic regions do not break down the data to account for differences in distribution of practice types which exist. Particularly in procedural specialties where there is potentially a very large gap between pay in academic position vs single specialty private practice, you are seeing the salary numbers for urban and more urbanized geographic regions (northeast) skewed downward because of the higher percentage of academic jobs there.
I agree that other variables are putting downward pressure on salaries in urban and densely populated regions (higher costs for running practice, more competition/lower patient load, etc), but I haven't seen much data that nails down differences in payer mix or fee schedules/physician payments by geography, which determine the bulk of revenues for private practice.
My feeling is that geography clearly impacts your costs, but not (historically at least) necessarily your top line revenues if you have weak competition/sufficient patient load and good payer mix.
The key is competition and supply and demand. Large metropolitan areas in desirable regions tend to be dominated by large academic centers and/or large hospital groups which tend to employ physicians. Add to this that there is usually high competition for these jobs given that many people want to live in these locales. All of these factors drive compensation down.

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gasdoc
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Re: Physician Retirement Savings

Post by gasdoc » Thu Mar 09, 2017 10:01 am

J_Markov wrote:
ks289 wrote:
PhysicianOnFIRE wrote:
staythecourse wrote:
:beer
-PoF
Great blog and nice post.
Regarding geographic arbitrage, most salary comparisons between urban vs rural and between geographic regions do not break down the data to account for differences in distribution of practice types which exist. Particularly in procedural specialties where there is potentially a very large gap between pay in academic position vs single specialty private practice, you are seeing the salary numbers for urban and more urbanized geographic regions (northeast) skewed downward because of the higher percentage of academic jobs there.
I agree that other variables are putting downward pressure on salaries in urban and densely populated regions (higher costs for running practice, more competition/lower patient load, etc), but I haven't seen much data that nails down differences in payer mix or fee schedules/physician payments by geography, which determine the bulk of revenues for private practice.
My feeling is that geography clearly impacts your costs, but not (historically at least) necessarily your top line revenues if you have weak competition/sufficient patient load and good payer mix.
The key is competition and supply and demand. Large metropolitan areas in desirable regions tend to be dominated by large academic centers and/or large hospital groups which tend to employ physicians. Add to this that there is usually high competition for these jobs given that many people want to live in these locales. All of these factors drive compensation down.
+1. Add further to this that those academic centers, besides employing physicians at lower wages, have residency programs that provide a "pipeline" of new, younger docs to the immediate area, because these new, younger docs tend to want to stay in the more urban environment. This also tends to push down the average salaries in the bigger cities. An exception to that might be in a partnership situation where the group partners tend to have higher salaries by taking advantage of the "pipeline" of new docs willing to work at lower than average wages.

gasdoc

kmurp
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Re: Physician Retirement Savings

Post by kmurp » Thu Mar 09, 2017 10:39 am

Honestly, when I started out, I had no idea of what my $ goal should be. I was unaware of any calculator that would figure that out based on my then income. As an aside I have never come close in inflation adjusted income to many of the people posting here and as my income is higher over the past five years than previous, wouldn't know which income level to base this calculation off of. My only "goal" was to be able to retire or cut back at 59 1/2. You can guess why I arbitrarily picked that figure many years ago. I'm exactly that age now and will not make it. Expenses just went way down as my last tuition payment was made yesterday. I'll spend the next year tracking expenses to try to figure out my yearly need and go from there.

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JDCarpenter
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Re: Physician Retirement Savings

Post by JDCarpenter » Thu Mar 09, 2017 11:44 am

kmurp wrote:... My only "goal" was to be able to retire or cut back at 59 1/2. You can guess why I arbitrarily picked that figure many years ago. I'm exactly that age now and will not make it. Expenses just went way down as my last tuition payment was made yesterday. I'll spend the next year tracking expenses to try to figure out my yearly need and go from there.
Kids exiting the nest was huge for us; all those payments going into after-tax savings will have an amazing impact. Good luck on getting handle on expenses--covering a multiple of that, rather than saving a certain multiple of income, is the key.
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goodenyou
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Re: Physician Retirement Savings

Post by goodenyou » Thu Mar 09, 2017 12:35 pm

PhysicianOnFIRE wrote:
ks289 wrote:[quote="PhysicianOnFIRE]
Great blog and nice post.
Regarding geographic arbitrage, most salary comparisons between urban vs rural and between geographic regions do not break down the data to account for differences in distribution of practice types which exist. Particularly in procedural specialties where there is potentially a very large gap between pay in academic position vs single specialty private practice, you are seeing the salary numbers for urban and more urbanized geographic regions (northeast) skewed downward because of the higher percentage of academic jobs there.
I agree that other variables are putting downward pressure on salaries in urban and densely populated regions (higher costs for running practice, more competition/lower patient load, etc), but I haven't seen much data that nails down differences in payer mix or fee schedules/physician payments by geography, which determine the bulk of revenues for private practice.
My feeling is that geography clearly impacts your costs, but not (historically at least) necessarily your top line revenues if you have weak competition/sufficient patient load and good payer mix.
The cost of living differential can be huge, and I think there is something to the difference in average pay varying by location, with higher pay in the Heartland.

Within a region, state, or city, there can still be wide variation, of course. I'm an employed physician in a rural area. I'm paid well, but I know docs in the suburbs earning > 50% more than me. But I'm paid 50% more than some docs I know out west in similar jobs.

:beer
-PoF[/quote][/quote][/quote][/quote][/quote][/quote][/quote][/quote][/quote]

The ability to earn more and amass more in LCOL (aka "undesirable") is multifaceted. The ratio of physicians to population is more favorable, so you get the opportunity to see more patients. The cost of living and the cost of doing business is less. The other is that the opportunity to spend more in a LCOL area is less. The jobs labeled "A Sportsman's Paradise" that need aggressive recruiters to fill are often a paradise for those who desire early retirement or early financial independence. Been there and done it.
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Re: Physician Retirement Savings

Post by lthenderson » Thu Mar 09, 2017 12:52 pm

gasdoc wrote:Add further to this that those academic centers, besides employing physicians at lower wages, have residency programs that provide a "pipeline" of new, younger docs to the immediate area, because these new, younger docs tend to want to stay in the more urban environment. This also tends to push down the average salaries in the bigger cities. An exception to that might be in a partnership situation where the group partners tend to have higher salaries by taking advantage of the "pipeline" of new docs willing to work at lower than average wages.

gasdoc
My wife experienced this with her residency class. All of them wanted to stay in urban areas and probably averaged earning around 25%/year less than my wife who chose to practice and live out in the boonies. My wife's classmates had to compete against others for available slots. My wife walked into the nearest four hospitals here in the boonies and all practically threw themselves at her feet trying to get her to choose their hospital. The one she accepted a position at still has another open position that they still haven't filled for the last decade. By the time they finally find someone who wants to work there, they have two others who are wanting to retire.

PhysDoc
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Re: Physician Retirement Savings

Post by PhysDoc » Sat Apr 29, 2017 6:35 am

Age 46
Current Retirement Savings $2.33M
Net worth $4.03M
Two rental properties in a major city plus primary residence

A soft goal of $8M in retirement accounts in addition to continuing to accrue rental properties.

Being productive, continuing to help utilizing the skills society has entrusted us with, maintaining vigor are all reasons I could never imagine retiring. One of the great things about EM as a speciality, is, that despite reaching the one percent, we continue to care for people from all walks of life. Touching the feet of a homeless person is not beneath us and we hopefully treat all with respect and dignity.

We have a family friend in his 90's. He used to run a private practice 6.5 days-a-week. He "retired" at age 75 to a full time job at the VA. He got an award his first year for most productive physician. Now he really did retire and is volunteering caring for the underserved. He's the most youthful person I know.

His family set up a foundation. They meet every summer to discuss how best to disperse the foundation's funds. There are plenty of productive things to do once retirement goals are met.

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Re: Physician Retirement Savings

Post by llessac15 » Fri May 05, 2017 11:18 pm

OP here. The post has turned out to be more than I would have ever thought. I have enjoyed reading most of the posts.

People have asked a few times now if I will change anything based on the answers I have received. I will say that this post has made me realize that my income is very high, but my current savings aren't up to snuff compared to other Bogle-docs. I personally find NW to be meaningless. Factoring my mortgage into my retirement readiness equation just screws things up. I care more about cash flow which I view as 3% of my total savings. Until this 3% represents my annual needs, I'm going to continue slaving away. Thinking in terms of NW doesn't really give me any kind of financial picture that I find helpful. If I have a paid off $5 million dollar home that I'm not willing to sell because it's sentimental to my wife, well it will surely jack up my net worth significantly. However, it doesn't help me one bit with covering my retirement expenses.

I have about 13 more years (will be 50 y/o) of busting my rear until I plan to cut back to part time. I'll then plan to cut back to part time to make just enough to cover expenses and let my retire accounts grow without worrying with contributions. I'll likely call it quits completely when my final kid is done with college (like 57 y/o). My goal is to have about $5-$8 million in he bank. NOT net worth!

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Re: Physician Retirement Savings

Post by PhysDoc » Thu May 11, 2017 7:18 pm

llessac15 wrote:OP here. The post has turned out to be more than I would have ever thought. I have enjoyed reading most of the posts.

People have asked a few times now if I will change anything based on the answers I have received. I will say that this post has made me realize that my income is very high, but my current savings aren't up to snuff compared to other Bogle-docs. I personally find NW to be meaningless. Factoring my mortgage into my retirement readiness equation just screws things up. I care more about cash flow which I view as 3% of my total savings. Until this 3% represents my annual needs, I'm going to continue slaving away. Thinking in terms of NW doesn't really give me any kind of financial picture that I find helpful. If I have a paid off $5 million dollar home that I'm not willing to sell because it's sentimental to my wife, well it will surely jack up my net worth significantly. However, it doesn't help me one bit with covering my retirement expenses.

I have about 13 more years (will be 50 y/o) of busting my rear until I plan to cut back to part time. I'll then plan to cut back to part time to make just enough to cover expenses and let my retire accounts grow without worrying with contributions. I'll likely call it quits completely when my final kid is done with college (like 57 y/o). My goal is to have about $5-$8 million in he bank. NOT net worth!
Exactly. Though the $5M residence is always sellable if needed.

Better to have a more modest $1M house and $4M in rentable property with an 8-12% cap rate. This provides diversification from the stock-based retirement accounts.

If your spouse is willing to manage that real estate and can document more than 750 hours per year at it, now they are a real estate professional and any losses - including all
that mortgage interest, depreciation on the structures, and other expenses - are directly deductible against your active income as a physician.

Thanks for prompting this column. It's been extremely interesting.

Ella
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Joined: Sat Jul 21, 2007 7:52 pm

Re: Physician Retirement Savings

Post by Ella » Sun May 14, 2017 3:27 pm

Three days late and XX dollars short, but...

Age: 43
Salary: Lower-middle range of 400-800K
Savings rate: 50% of gross income
Amount saved: 2.7M
Goal: was 4M, now in flux

I did not get to 50% savings rate until 2 years ago, despite being a more intentional saver than most of the people I know. Quicken has done wonders to help me truly see my income and expenses, adjust my spending, and maximize my savings.

My COL tradeoffs are in the realms of housing, car, and kids. Tiny home, crappy old car, no kids. Totally OK with all 3. I do spend quite a bit on travel and giving.

My job has become tremendously more stressful in the past 2 years, with significant health and QOL effects. I haven't been able to re-jigger to a better balance. My goal now is to quit in 1.5 years, which will likely require part time locums and/or cutting expenses further. This is 2-3 years earlier than I had previously planned. Hence my goal savings is in flux.

Ella

Mrxyz
Posts: 578
Joined: Wed Feb 29, 2012 6:12 am

Re: Physician Retirement Savings

Post by Mrxyz » Sun May 14, 2017 9:42 pm

Ella wrote:Three days late and XX dollars short, but...

Age: 43
Salary: Lower-middle range of 400-800K
Savings rate: 50% of gross income
Amount saved: 2.7M
Goal: was 4M, now in flux

I did not get to 50% savings rate until 2 years ago, despite being a more intentional saver than most of the people I know. Quicken has done wonders to help me truly see my income and expenses, adjust my spending, and maximize my savings.

My COL tradeoffs are in the realms of housing, car, and kids. Tiny home, crappy old car, no kids. Totally OK with all 3. I do spend quite a bit on travel and giving.

My job has become tremendously more stressful in the past 2 years, with significant health and QOL effects. I haven't been able to re-jigger to a better balance. My goal now is to quit in 1.5 years, which will likely require part time locums and/or cutting expenses further. This is 2-3 years earlier than I had previously planned. Hence my goal savings is in flux.

Ella
May I ask a few questions?

Thanks for the detailed post.
How did you decide a target amount? I have 3 kids, average home and car and do not have that target goal at all- its lower!
I guess, it boils down to perhaps, what are your anticipated expenses on retirement. But how easy is that to define?
Thanks

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Yesterdaysnews
Posts: 424
Joined: Sun Sep 14, 2014 1:25 pm

Re: Physician Retirement Savings

Post by Yesterdaysnews » Sun May 14, 2017 11:19 pm

I am interventional radiologist in private going on almost 10 yrs now, currently age 40. I actually enjoy my work a lot at the moment so not really thinking about part-time. NW is prob about $4m between paid off primary house and investment accounts. Debt free. Recently decided to loosen the purse string a bit and enjoy some of the fruits of all those years of labor, mostly in the form of experiences, as material junk doesn't give me much long lasting pleasure.

E5797
Posts: 17
Joined: Wed Feb 17, 2016 7:23 am

Re: Physician Retirement Savings

Post by E5797 » Fri Nov 17, 2017 9:48 pm

Age 40
Current Retirement Savings $3.6M
Net worth $4.0M
No inheritance.

Was lucky after fellowship about 10 years ago to find a great job with a private practice group. LCOL area, relatively high salary, and bull market over the last decade have helped increase my savings dramatically. There has been some major hospital mergers in the area over the last few years, driving many private practice groups out of town. Eventually we'll be given the ultimatum to join the health system or leave. Maybe a year or two left as things are.

Originally, I'd planned on at least working to 55 or 60, but depending on how things go, maybe I'd just hang on at half time to get health insurance and begin to spend more time on hobbies/traveling. Or hope another private practice job opens up somewhere.

Goal would be savings of 5 million which would have 200k at a safe 4% withdrawal rate. That's way more than I spend now, but I'd like to travel more and I would have more free time. Also leary since we've been in a bull market since I've been investing--one big drop and FI/RE may not be so easy.

Indydoc
Posts: 1
Joined: Mon Dec 11, 2017 8:02 pm

Re: Physician Retirement Savings

Post by Indydoc » Mon Dec 11, 2017 9:24 pm

Age 48
NW 5.0 M
No inheritance

Dual physician family- High paying speciality / primary care
3 Kids private school / 529 with 600K ( not counted in NW)
Doctor house - no other debt

I want to aim for a work/life balance - at current saving of 250K /year will hopefully reach >10 M by 60.
Agree with some of the opinions - spend it on the way

Bulldog79
Posts: 2
Joined: Sun Feb 11, 2018 9:28 pm

Re: Physician Retirement Savings

Post by Bulldog79 » Sun Feb 11, 2018 10:34 pm

I just found Bogleheads and I'm sorry I've missed out on this gem!

I'm a 57yo frugal specialist with an MBA and 25 years of private practice experience in a low-cost Midwest City. My annual income has fluctuated between $600-850K over the past 20 years in a specialty practice that I started with another senior physician when I completed my fellowship. While money has been an important goal, I view it as a means of independence rather than conspicuous consumption. I have three daughters with the last finishing her senior year at a public college. All college costs were covered by brokerage funds that I supplied nearly 20 years ago with $30K of "seed money" in each...each growing to $100K+ and easily covering the costs of a PUBLIC college education. I've been married to the same terrific woman for 35 years and we share similar financial goals and views. (I can't emphasize enough how important this is with regards to reaching your personal and financial goals...a trustworthy mate.) Our living expenses are relatively modest at ~$80-100K (after tax) per year, allowing us to save a large portion of our annual income. We live in a $600K home and have been mortgage free for 23 years. I drive a 10 year-old Lexus LS460 (bought 9 years ago at 65% original sticker price) and my wife drives a 12 year-old minivan. During our 35 years of marriage we've owned eight vehicles, most of them purchased used (with low mileage). We infrequently dine out (my wife's a terrific cook and "stay at home" mother) and take at least 1-2 vacations annually. I mow my own lawn, and my wife does the majority of the housework herself. Part of this is to save money, but the other is to model for our children as it is unlikely that they will have the same income levels that I've been so fortunate to have. In a nutshell, we live well below our means, yet live meaningful and fulfilling lives that are not dominated by money concerns or material objects.

I track my finances closely and my NW by age:
40yo: $2.2M
45yo: $4.1M
50yo: $7.0M
55yo: $9.6M
57yo: $11.5M (compounding is truly amazing)

Most of my assets are in financial instruments, namely, securities, bonds and index funds. I anticipate retiring in another 4-5 years and readily admit that I could probably retire today. However, on MOST days, I enjoy my work, colleagues and, particulary, my patients. In a low interest rate - low return environment, I would suspect that one would want 30-40X one's after-tax annual living expenses. I suspect that health care costs will take a large portion of this, particularly for individuals in their early sixties and not yet Medicare eligible. Thus, if you anticipate spending $12,000 per month in retirement (not an unlikely scenario for many physicians), then you'd want $4.5-6.0M in retirment funds. Personally, my idea is to set aside a given amount of "cash equivalent" money (say $1.0M) and use this for living expenses while allowing the remainder of my investments to remain "at risk" in the market. To paraphrase Buffett, "we wouldn't mind if the stock market closed for ten years." Yes, it's true that I'll probably never spend all my money, but the funds do provide a sense of security. Moreover, hopefully i'll be able to distribute much of these funds to deserving charities.

Much of my success I readily attribute to LUCK. Yes, I was lucky to be born to parents who valued education and hard work. I was lucky to have above average intelligence, and I was lucky to have terrific mentors through my training years. I was lucky marrying a life-long mate and I'm lucky to have three terrific daughters.

Bam911
Posts: 4
Joined: Mon Mar 12, 2018 8:58 pm

Re: Physician Retirement Savings

Post by Bam911 » Mon Mar 12, 2018 9:32 pm

I stumbled upon this page after doing a search to look at how much I need to retire. Specifically, I seek knowledge from people who have actually retired.
As a 44 year old Orthopedic Surgeon with a pretty general practice, I have some knowledge of human capabilities and physical possibilities during each phase of life. I have studied these very intently in my own practice (especially during the past 5 years). I slow down and talk to people who travel and who are retired. I typically see 100 patients/week 50 weeks a year. I do about 500 surgeries per year on all decades of life.
Here are the realities.
40s - awesome. Have money, vigor, and health. Don't need doctors unless they get hurt.
50s- pretty good. Still able to do most things as 40s
60-63 - same as 50s
64-68 - divide 40s in 1/2. The other half act and look old. They need family help and medical care frequently.
70-73 - 1/3 of this group can still do fun and physical things. 1/3 get along pretty well but needs to be close to family and medical care. 1/3 not so good
75+ - 1/10 of this group can still do physical things. 3/10 of this group needs to be close to family and medical care. the rest not too good
80+ - 1/50 of this group does some things I would consider fun. 40/50 need to be close to family and medical care. the rest are terrible

My profile
44 year old surgeon
NW - irrelevant
401k - $1.1MM
Other investments - $1.5MM
Out of debt - under 10 years

Strategy (based on the the physical capacity as listed above)
45-61 - Contribute 50k/year to 401k - anticipated amount at 65 - $5-7MM
55-60 - go to 3 days work/week and take 12 weeks off a year. Anticipate being able to save $200k/year during this debt free time. Spend every penny I make over $250k traveling and living life.
61 - retire. I took an oath and have dedicated my life to this profession for things far greater than money. I feel that 30 years of service to my community is fair for the incredible (beyond belief) life they have and will continue to provide for me (again far beyond money).
At 61 - my practice will be worth be $1.5MM (or more). I anticipate using this money to fund years 61-65 in addition to earning whatever gap I feel I have through part time or locums work. I will not contribute any more to my 401k at this point but also won't touch it until I'm 65.
65+ - have more money than I can spend. No desire to leave a huge amount to my kids. I have no doubts (as some retired partners have confirmed) that I will not run out of money. In fact, all of my retired partners have ended up with more money 5 years into retirement than they started with because 1) their tax rate is nominal 2) they are tired of travel and don't require much to "have fun".

I am NOT a saver but a real spender. I do get new cars every year or 2. Have a big house with a gym (like a basketball court). Have 3 boats. Have debt. But.....I have a plan. The plan is to do as above but to also live a full life. I have made many spending mistakes buying all this crap because I grew up poor. I will continue to spend and live life full throttle but my money will be spent on experiences and not stuff. There are so many things I want to do before I can't. I want to hike the Colorado trail, spend a month in Hawaii surfing, climb 14ers in Colorado, take my boat from Miami to the BVIs, immerse myself in another culture, and live like a local in places I only dream of being. I'm not waiting until I have a $10MM portfolio to start. I'm pretty sure I could lose all of it and be happy on 1/10 of my income.

User avatar
goodenyou
Posts: 1175
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Physician Retirement Savings

Post by goodenyou » Tue Mar 13, 2018 10:28 am

Just make sure you have a lot of life and disability insurance. I have seen my high-flying colleagues end up in disaster with disability and/or their families in a world of hurt after unexpected death. It really does happen.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

DC3509
Posts: 156
Joined: Wed Jul 12, 2017 7:25 am

Re: Physician Retirement Savings

Post by DC3509 » Tue Mar 13, 2018 10:56 am

Bam911 wrote:
Mon Mar 12, 2018 9:32 pm
I stumbled upon this page after doing a search to look at how much I need to retire. Specifically, I seek knowledge from people who have actually retired.
As a 44 year old Orthopedic Surgeon with a pretty general practice, I have some knowledge of human capabilities and physical possibilities during each phase of life. I have studied these very intently in my own practice (especially during the past 5 years). I slow down and talk to people who travel and who are retired. I typically see 100 patients/week 50 weeks a year. I do about 500 surgeries per year on all decades of life.
Here are the realities.
40s - awesome. Have money, vigor, and health. Don't need doctors unless they get hurt.
50s- pretty good. Still able to do most things as 40s
60-63 - same as 50s
64-68 - divide 40s in 1/2. The other half act and look old. They need family help and medical care frequently.
70-73 - 1/3 of this group can still do fun and physical things. 1/3 get along pretty well but needs to be close to family and medical care. 1/3 not so good
75+ - 1/10 of this group can still do physical things. 3/10 of this group needs to be close to family and medical care. the rest not too good
80+ - 1/50 of this group does some things I would consider fun. 40/50 need to be close to family and medical care. the rest are terrible

My profile
44 year old surgeon
NW - irrelevant
401k - $1.1MM
Other investments - $1.5MM
Out of debt - under 10 years

Strategy (based on the the physical capacity as listed above)
45-61 - Contribute 50k/year to 401k - anticipated amount at 65 - $5-7MM
55-60 - go to 3 days work/week and take 12 weeks off a year. Anticipate being able to save $200k/year during this debt free time. Spend every penny I make over $250k traveling and living life.
61 - retire. I took an oath and have dedicated my life to this profession for things far greater than money. I feel that 30 years of service to my community is fair for the incredible (beyond belief) life they have and will continue to provide for me (again far beyond money).
At 61 - my practice will be worth be $1.5MM (or more). I anticipate using this money to fund years 61-65 in addition to earning whatever gap I feel I have through part time or locums work. I will not contribute any more to my 401k at this point but also won't touch it until I'm 65.
65+ - have more money than I can spend. No desire to leave a huge amount to my kids. I have no doubts (as some retired partners have confirmed) that I will not run out of money. In fact, all of my retired partners have ended up with more money 5 years into retirement than they started with because 1) their tax rate is nominal 2) they are tired of travel and don't require much to "have fun".

I am NOT a saver but a real spender. I do get new cars every year or 2. Have a big house with a gym (like a basketball court). Have 3 boats. Have debt. But.....I have a plan. The plan is to do as above but to also live a full life. I have made many spending mistakes buying all this crap because I grew up poor. I will continue to spend and live life full throttle but my money will be spent on experiences and not stuff. There are so many things I want to do before I can't. I want to hike the Colorado trail, spend a month in Hawaii surfing, climb 14ers in Colorado, take my boat from Miami to the BVIs, immerse myself in another culture, and live like a local in places I only dream of being. I'm not waiting until I have a $10MM portfolio to start. I'm pretty sure I could lose all of it and be happy on 1/10 of my income.
I am not a doctor, but I feel like this age breakdown is accurate.

User avatar
PhysicianOnFIRE
Posts: 377
Joined: Fri Jan 08, 2016 3:46 pm
Location: Up North
Contact:

Re: Physician Retirement Savings

Post by PhysicianOnFIRE » Tue Mar 13, 2018 11:21 am

Bam911 wrote:
Mon Mar 12, 2018 9:32 pm
I stumbled upon this page after doing a search to look at how much I need to retire. Specifically, I seek knowledge from people who have actually retired.
As a 44 year old Orthopedic Surgeon with a pretty general practice, I have some knowledge of human capabilities and physical possibilities during each phase of life. I have studied these very intently in my own practice (especially during the past 5 years). I slow down and talk to people who travel and who are retired. I typically see 100 patients/week 50 weeks a year. I do about 500 surgeries per year on all decades of life.
Here are the realities.
40s - awesome. Have money, vigor, and health. Don't need doctors unless they get hurt.
50s- pretty good. Still able to do most things as 40s
60-63 - same as 50s
64-68 - divide 40s in 1/2. The other half act and look old. They need family help and medical care frequently.
70-73 - 1/3 of this group can still do fun and physical things. 1/3 get along pretty well but needs to be close to family and medical care. 1/3 not so good
75+ - 1/10 of this group can still do physical things. 3/10 of this group needs to be close to family and medical care. the rest not too good
80+ - 1/50 of this group does some things I would consider fun. 40/50 need to be close to family and medical care. the rest are terrible

My profile
44 year old surgeon
NW - irrelevant
401k - $1.1MM
Other investments - $1.5MM
Out of debt - under 10 years

Strategy (based on the the physical capacity as listed above)
45-61 - Contribute 50k/year to 401k - anticipated amount at 65 - $5-7MM
55-60 - go to 3 days work/week and take 12 weeks off a year. Anticipate being able to save $200k/year during this debt free time. Spend every penny I make over $250k traveling and living life.
61 - retire. I took an oath and have dedicated my life to this profession for things far greater than money. I feel that 30 years of service to my community is fair for the incredible (beyond belief) life they have and will continue to provide for me (again far beyond money).
At 61 - my practice will be worth be $1.5MM (or more). I anticipate using this money to fund years 61-65 in addition to earning whatever gap I feel I have through part time or locums work. I will not contribute any more to my 401k at this point but also won't touch it until I'm 65.
65+ - have more money than I can spend. No desire to leave a huge amount to my kids. I have no doubts (as some retired partners have confirmed) that I will not run out of money. In fact, all of my retired partners have ended up with more money 5 years into retirement than they started with because 1) their tax rate is nominal 2) they are tired of travel and don't require much to "have fun".

I am NOT a saver but a real spender. I do get new cars every year or 2. Have a big house with a gym (like a basketball court). Have 3 boats. Have debt. But.....I have a plan. The plan is to do as above but to also live a full life. I have made many spending mistakes buying all this crap because I grew up poor. I will continue to spend and live life full throttle but my money will be spent on experiences and not stuff. There are so many things I want to do before I can't. I want to hike the Colorado trail, spend a month in Hawaii surfing, climb 14ers in Colorado, take my boat from Miami to the BVIs, immerse myself in another culture, and live like a local in places I only dream of being. I'm not waiting until I have a $10MM portfolio to start. I'm pretty sure I could lose all of it and be happy on 1/10 of my income.
I respect your dedication to the practice of medicine beyond what is necessary for your portfolio. I'm 42 with a similar investment portfolio, but only one boat, no gym, and I consider us (my family and I) to be bigger savers than spenders.

I don't think you have to wait until you're 55 to start working less. You could probably do that now, particularly if you truly believe that last line in which you could be happy with a lot less. I cut back to part-time last fall (in anesthesia). We spent most of November in Mexico, and pretty much all of February in Hawaii. We went surfing, and even our boys (7 & 9) got up on boards.

I'm not retired yet, but there's a decent chance I will be in 18 months or so. Until then, I'm working enough to keep my skills up and continue adding to our portfolio, but also enjoying these extended breaks from work. I don't love my job. Don't hate it, either. It's just not my favorite thing to do, and as you say, life and vitality can be cut short.

:beer
-PoF

Bam911
Posts: 4
Joined: Mon Mar 12, 2018 8:58 pm

Re: Physician Retirement Savings

Post by Bam911 » Tue Mar 13, 2018 6:48 pm

goodenyou wrote:
Tue Mar 13, 2018 10:28 am
Just make sure you have a lot of life and disability insurance. I have seen my high-flying colleagues end up in disaster with disability and/or their families in a world of hurt after unexpected death. It really does happen.
$3MM in term life insurance (I think it expires when I'm 62). $1MM plus equity in practice that triggers an automatic buy-sell if I'm disabled or dead. That leaves my family more than well enough off. Have enough in the kids 529 plans to cover state college tuition (which they are going to attend).

I also have a monster own occupation disability policy that I started in residency. It's a policy that you can't get now. If I am unable to perform my duties as an orthopedic surgeon then I get the full disability policy. I can still retrain to do something less physically demanding, work as much as I want and get all the disability income.

This actually happened to a guy nearly identical to me in age and practice. Got hit by a kid with frost on his window as he was walking his dog before leaving for work. Paraplegic. Very sad......but he had his stuff in order and his family is fine.

Bam911
Posts: 4
Joined: Mon Mar 12, 2018 8:58 pm

Re: Physician Retirement Savings

Post by Bam911 » Tue Mar 13, 2018 6:57 pm

PhysicianOnFIRE wrote:
Tue Mar 13, 2018 11:21 am

I respect your dedication to the practice of medicine beyond what is necessary for your portfolio. I'm 42 with a similar investment portfolio, but only one boat, no gym, and I consider us (my family and I) to be bigger savers than spenders.

I don't think you have to wait until you're 55 to start working less. You could probably do that now, particularly if you truly believe that last line in which you could be happy with a lot less. I cut back to part-time last fall (in anesthesia). We spent most of November in Mexico, and pretty much all of February in Hawaii. We went surfing, and even our boys (7 & 9) got up on boards.

I'm not retired yet, but there's a decent chance I will be in 18 months or so. Until then, I'm working enough to keep my skills up and continue adding to our portfolio, but also enjoying these extended breaks from work. I don't love my job. Don't hate it, either. It's just not my favorite thing to do, and as you say, life and vitality can be cut short.

:beer
-PoF
We will be empty nesters in 3 years. We plan to travel 12 weeks a year then. I have already cut way back from 5 years ago. The thing that is killing me is call. It's a necessary evil of my profession and there is nowhere to run from it. If it wasn't for call, I'd never retire.

Interestingly, most all of my anesthesia friends and colleagues do exactly as you are. My son is going into medicine and I'm steering him towards anesthesia or ER. Not having the burden of maintaining a practice would be pretty great right now. My overhead runs about $400k/year.....that's a real motivator to do some work in our group.

User avatar
wshang
Posts: 1051
Joined: Sun Feb 03, 2008 11:40 am

Re: Physician Retirement Savings

Post by wshang » Tue Mar 13, 2018 9:15 pm

Bam911 wrote:
Mon Mar 12, 2018 9:32 pm
Here are the realities.
40s - awesome. Have money, vigor, and health. Don't need doctors unless they get hurt.
50s- pretty good. Still able to do most things as 40s
60-63 - same as 50s
64-68 - divide 40s in 1/2. The other half act and look old. They need family help and medical care frequently.
70-73 - 1/3 of this group can still do fun and physical things. 1/3 get along pretty well but needs to be close to family and medical care. 1/3 not so good
75+ - 1/10 of this group can still do physical things. 3/10 of this group needs to be close to family and medical care. the rest not too good
80+ - 1/50 of this group does some things I would consider fun. 40/50 need to be close to family and medical care. the rest are terrible
Most physicians posting on this thread seem to implicitly know this; hence most are shooting for 55-60 y/o. Kudos to those who still can't retire or are enjoying practice, I need someone to take care of me when I fall off my carbon fiber road bike. Hit the eject button or more accurately, cut back to my terms when reaching the magic number. The younger fellows ought to remember your target number needs to be inflation adjusted. Keep your net worth as high as possible when it comes to health. Cheers!
“. . . extraordinary wealth can be made by knowing the future" - Harry Dent

Bam911
Posts: 4
Joined: Mon Mar 12, 2018 8:58 pm

Re: Physician Retirement Savings

Post by Bam911 » Thu Mar 15, 2018 7:41 am

wshang wrote:
Tue Mar 13, 2018 9:15 pm
Bam911 wrote:
Mon Mar 12, 2018 9:32 pm
Here are the realities.
40s - awesome. Have money, vigor, and health. Don't need doctors unless they get hurt.
50s- pretty good. Still able to do most things as 40s
60-63 - same as 50s
64-68 - divide 40s in 1/2. The other half act and look old. They need family help and medical care frequently.
70-73 - 1/3 of this group can still do fun and physical things. 1/3 get along pretty well but needs to be close to family and medical care. 1/3 not so good
75+ - 1/10 of this group can still do physical things. 3/10 of this group needs to be close to family and medical care. the rest not too good
80+ - 1/50 of this group does some things I would consider fun. 40/50 need to be close to family and medical care. the rest are terrible
Most physicians posting on this thread seem to implicitly know this; hence most are shooting for 55-60 y/o. Kudos to those who still can't retire or are enjoying practice, I need someone to take care of me when I fall off my carbon fiber road bike. Hit the eject button or more accurately, cut back to my terms when reaching the magic number. The younger fellows ought to remember your target number needs to be inflation adjusted. Keep your net worth as high as possible when it comes to health. Cheers!

Speaking of inflation adjusted.....I pretty much make what I made 10 years ago. I can't say that I feel like my money buys less today. Do you think this will be the case in the next 10 years?

darrvao777
Posts: 168
Joined: Wed Sep 10, 2014 1:34 pm

Re: Physician Retirement Savings

Post by darrvao777 » Thu Mar 15, 2018 9:56 am

llessac15 wrote:
Wed May 11, 2016 10:24 pm
It's hard to find reliable information on physician's average retirement savings. The quoted average salary I see on surveys such as Medscape is much less than what I see in my region of the US (Southeast), particularly for specialists. Given that, I do not trust the quoted average retirement savings for physicians that I come across. I'm looking for some real world info from individual docs. I don't think a random survey in my current hospital's doctor's lounge would go over so well.

My request here is if any physicians on this blog would be willing to list their retirement savings? Also, if you wanna take it one step further, what is or was your goal amount for retirement? I would like to use it as a barometer for my own personal savings goals. Honestly, it would be helpful if anyone who is a high-income earner (i.e. $400,000-$800,000/yr) that started their career in their early 30's wanted to reply.

I'll start with my own:

Age: 36
Current Total Retirement Savings: $630,000
Goal: $5,000,000 and no mortgage.

Thanks.
Age: early 30s
Current: $1.5M
Goal: $10M

Cramerica
Posts: 207
Joined: Sat Oct 03, 2015 5:30 pm

Re: Physician Retirement Savings

Post by Cramerica » Thu Mar 15, 2018 10:10 am

darrvao777 wrote:
Thu Mar 15, 2018 9:56 am

Age: early 30s
Current: $1.5M
Goal: $10M
Impressive NW for early 30s. Any inheritance? If not, what specialty and how long have you been practicing?

darrvao777
Posts: 168
Joined: Wed Sep 10, 2014 1:34 pm

Re: Physician Retirement Savings

Post by darrvao777 » Thu Mar 15, 2018 12:13 pm

Cramerica wrote:
Thu Mar 15, 2018 10:10 am
darrvao777 wrote:
Thu Mar 15, 2018 9:56 am

Age: early 30s
Current: $1.5M
Goal: $10M
Impressive NW for early 30s. Any inheritance? If not, what specialty and how long have you been practicing?
Thanks, no inheritance but was lucky enough to have some parental assistance and scholarship money so I graduated with <$50K in student loans and eliminated it within a year of practice

I'm in a surgical subspecialty, headed into year 5 of practice (started med school early), and have taken advantage of both geographic arbitrage (LCOL, very high pay) and living like a resident (trying to save 50% gross)

Also lucky to marry someone significantly wealthier than me with a similar mindset on money. Most of her wealth is in real estate (probably also around $1.5M in rental properties) so I don't count it as part of our liquid retirement funds.

Cramerica
Posts: 207
Joined: Sat Oct 03, 2015 5:30 pm

Re: Physician Retirement Savings

Post by Cramerica » Thu Mar 15, 2018 1:38 pm

darrvao777 wrote:
Thu Mar 15, 2018 12:13 pm
Cramerica wrote:
Thu Mar 15, 2018 10:10 am
darrvao777 wrote:
Thu Mar 15, 2018 9:56 am

Age: early 30s
Current: $1.5M
Goal: $10M
Impressive NW for early 30s. Any inheritance? If not, what specialty and how long have you been practicing?
Thanks, no inheritance but was lucky enough to have some parental assistance and scholarship money so I graduated with <$50K in student loans and eliminated it within a year of practice

I'm in a surgical subspecialty, headed into year 5 of practice (started med school early), and have taken advantage of both geographic arbitrage (LCOL, very high pay) and living like a resident (trying to save 50% gross)

Also lucky to marry someone significantly wealthier than me with a similar mindset on money. Most of her wealth is in real estate (probably also around $1.5M in rental properties) so I don't count it as part of our liquid retirement funds.
Very nicely done. I am surprised you chose a LCOL area and saving 50% gross given your collective net worth and ability to live comfortably anywhere.

darrvao777
Posts: 168
Joined: Wed Sep 10, 2014 1:34 pm

Re: Physician Retirement Savings

Post by darrvao777 » Thu Mar 15, 2018 2:26 pm

Cramerica wrote:
Thu Mar 15, 2018 1:38 pm
darrvao777 wrote:
Thu Mar 15, 2018 12:13 pm
Cramerica wrote:
Thu Mar 15, 2018 10:10 am
darrvao777 wrote:
Thu Mar 15, 2018 9:56 am

Age: early 30s
Current: $1.5M
Goal: $10M
Impressive NW for early 30s. Any inheritance? If not, what specialty and how long have you been practicing?
Thanks, no inheritance but was lucky enough to have some parental assistance and scholarship money so I graduated with <$50K in student loans and eliminated it within a year of practice

I'm in a surgical subspecialty, headed into year 5 of practice (started med school early), and have taken advantage of both geographic arbitrage (LCOL, very high pay) and living like a resident (trying to save 50% gross)

Also lucky to marry someone significantly wealthier than me with a similar mindset on money. Most of her wealth is in real estate (probably also around $1.5M in rental properties) so I don't count it as part of our liquid retirement funds.
Very nicely done. I am surprised you chose a LCOL area and saving 50% gross given your collective net worth and ability to live comfortably anywhere.
Thanks, we chose the LCOL area more because of how the job paid. I'm not sure I would have gotten an offer anywhere close to what I make in a more desirable or HCOL area. We save 50% gross because we just don't have anything else to splurge on (my wife and I both like fancy cars but beyond that, spending more on other items probably wouldn't increase our happiness)

A funny thing happened along the way, we found we loved living in our new neighborhood. Between an increasingly busy schedule, increased charting (yay EMR and MIPS), and the responsibilities gained with kids, we find we don't have the time to tear up the town like we used to do. Suddenly, a nice, quiet neighborhood was just the place we wanted to be :)

I'm also a pessimist by nature. While I would love to continue making what I make, I'm not sure if it's sustainable. So I figure I'll save now, let compounding work its magic, and leave myself plenty of flexibility down the road should circumstances change.

Really thankful both to this website and WCI for all the helpful pointers and tips!

User avatar
unclescrooge
Posts: 2076
Joined: Thu Jun 07, 2012 7:00 pm

Re: Physician Retirement Savings

Post by unclescrooge » Thu Mar 15, 2018 2:27 pm

beezquimby wrote:
Thu May 12, 2016 8:56 pm
I believe kayli, I think we are in a similar situation. NW about 3.8 m (includes paid off house)
Although physicians are notoriously financially illiterate It always surprises me to see the high spending and overall ignorance amongst my peers. (I have a lot of stories of anyone is interested)
I'm interested in your stories! :mrgreen:

md&pharmacist
Posts: 149
Joined: Fri Mar 23, 2018 7:05 pm

Re: Physician Retirement Savings

Post by md&pharmacist » Fri Mar 23, 2018 9:41 pm

Please read this very carefully, especially if you are a younger physician.

Family physician and wife is pharmD, ages 45 and 44, respectively. 2 children, early teens.

Current annual take home pretax income $1,250,000 plus $150,000/year commercial real estate rental. We both started practice about 17 years ago at a combined income of about $350,000. Has been growing ever since. Broke the $1,000,000 mark 3 years ago.

Net worth currently $1,800,000 in retirement accounts, $1,700,000 in cash/non-retirement investments, $2,600,000 in commercial real estate ($4,200,000 value-$1,600,000 loans), $1,300,000 in primary residence ($1,700,000-$400,000 loans), $190,000 current value of four automobiles, $3,000,000 (current value of owned medical practice).

Anticipated net worth upon retirement $20,000,000-$30,000,000 depending on business growth rates and investment returns.

Most would say that at our ages, over $10,000,000 in net worth is great. Congratulations to those who have done better, for those looking to get here, some good advice that may be difficult to find elsewhere...but first read the following paragraph.

Are we happy - generally yes. Regrets - PLENTY!!! The most important point I want to make is: think about what you want in life very hard and keep in mind that what you want will probably change dramatically with each stage of your life. As the more senior doctors will likely tell you, your most valuable asset is your time and at least in the past, I feel my wife and I totally blew that. Now I use hospitalists for weekend and evenings, and am in the process of hiring other providers to ideally cut back to a 3 day work week even at the cost of take home income. Our financial success came on the back of back breaking hours - including 18 hours work days plus on call hours for years, missing functions with children, etc. - so you need to understand there are significant sacrifices necessary to get here - at the time it seemed worth it but now not so much. The truth is many doctors, like myself, are lured into excessive hours just because the work and income is there. At this point we have a 7500 sq ft home we had built 10 years ago. My daily driver is a BMW M6 convertible, my weekend treat is a ferrari F430 spider. My wife has a BMW 750Li and a Toyota Sienna XLE Limited. Do I enjoy what we have? - yes. Would I give it up in a heartbeat? - absolutely but for several practical reasons I don't. For example, I have a $500,000 HELOC on the house (in addition to the mortgage) that serves as a cushion as our expenses as business owners are huge - so I keep the property for low cost borrowing against my equity. I have borrowed against the cars at 2% or below - so everything we've done has been to optimize our finances. The downside of owning sports cars - very regular maintenance even if not driven - remember the most valuable asset is time, the cost of the repairs or depreciation is not the main issue. One day I won't need the financial prowess to support the business and at that point will definitely be happier with old beaters. We've also taken short vacations, but I wish we had taken longer and more regular vacations to create more family memories. I spend some time doing homework with the kids and being involved with their school activities - but I wish I had spent more time. TIME. TIME. TIME. Loss of this is often a doctor's biggest mistake, so try not to make it. Neglecting time with a spouse leads to resentment and, often, divorce.

Now let's say you still want the financial prosperity, here's how we did it and some realities doctor's (I feel) still don't understand based on their comments.

1- Society supports you far more for being a job creator than a physician. Think about CEO's of big business and athletes - are their personal efforts really worth $10,000,000, $100,000,000+/year. No, it's because they support and create thousands of jobs. So employed physicians will not create the wealth of self-employed physicians as the profits go to the employer. Just as the CEO makes lots of money on the efforts of the employees, so too does the physician employer enjoy passive income from the work of his employees (employed physicians, ARNP's, imaging technicians (ie ultrasound), in house pharmacy, ANS testing, allergy testing, Holters, etc. This how a successful business owner can continue to increase income while having more time by growing a business - more passive and less active revenue. Your own business is always best and IRA investment options are much better than 401(k)'s and over the decades that can mean tremendous differences in net worth due to compounding and the very fact that you can contribute much more to an IRA than a 401 (k) ($54,000 vs $18,000).

2- Working crazy hours as I did in the beginning does not make you wealthy, even with good income. You can only earn so much, that is another reason the passive revenue of business ownership and investments is very important. As corporate executive compensation packages are more worthwhile as stock options, so too should the young physician consider becoming more aggressive with compounding investments after he/she has an emergency fund for security and basic needs are covered. I started with excessively conservative investments such as bond funds and lost nothing in the 2008-2009 stock market disaster. However, after that I started investing aggressively after having paid off my house within 5 years. I know I'm not smart enough to pick individual stocks so I research and buy mutual fund holdings in my investment portfolio (never paid any advisor). Current holdings in relatively equal amounts are VFIAX, VQNPX, VWNDX, DXQLX, FBIOX, FSPHX, FSELX, OPGIX, UNPIX, UGPIX, TFFYX and currently 20% in cash. Some of these funds have returned in excess of 80-100% in a year. As the market reaches newer highs and as concerns of a bubble increase, sell into new highs to increase cash positions so when the next correction or bear market you will have a strong cash position to invest into the next bull market. The power of compounding is hard to see when you start with smaller amounts to invest, but as you get older and your portfolio ages, this passive income can be tremendous. I have had months where our IRA was up over $100,000 in one month. Imagine how much more that will be after retirement in my 60's after all the upcoming years of contributions and returns adding to the base amount. Maximum allowed contributions in 2017 for IRA for a couple was $108,000 and of course we put in the maximum. Also maximizing an HSA investment account ($6,750 for 2017)
but not using the funds for healthcare so the investments continue to grow.

3- Surround yourself with positive, more accomplished people than you. For me, those who have the smarts are not doctors. Do not be self-defeating - your attitude will become your reality. I hear doctors complaining about insurance companies all the time. You know the old expression - if you can't beat them, join them. If they are doing a good job, then invest in healthcare stocks like United Health care and prosper from them too - you'll be less resentful.

4- Pay attention to taxes. Primary residence and office building depreciation great for tax purposes. HSA funds go in and come out tax free if used for healthcare purposes. Maximize IRA contributions. Unfortunately I will be taxed at a personal income tax rate in retirement with RMD's, including appreciation of the IRA accounts. Non-IRA long term capital gains only taxed at about 20%, so don't be afraid to also use taxable accounts - for the high net worth individual they can be as good as or better than an IRA/401K.

5- Networking is critical. For example, we have networked very heavily with local chiropractors and attorneys to manage motor vehicle accident patients - something most primary care providers have not even thought of as a referral stream. We network with local surgeons for pre-operative clearances.

6- Buy everything on sale, personal use or office use. Buy the oldest cars you like car with the lowest mileage possible. I purchased my M6 from cars.com with about 6,000 miles for $54,000 as it was 4 years old (sticker price $130,000). Someone took a $76,000 hit over 6,000 miles. Do you want to be the one that does that? The guy that sold me the Ferrari put about $75,000 in options, I only paid about $10,000 above the cost of a base Ferrari of the same year and mileage. Let someone else take the hit because for reasons I don't understand, there are always people willing to do that.

7- Don't be fooled by people that offer too good to be true investments and even be suspicious of average investments. Never invest with someone who comes to you or calls you. Doctors are fooled all too often and lose hundreds of thousands in bad investments and outright theft. The story of the turtle and the hare, or the expression slow and steady comes to mind. Not interested in things like Bitcoin or the latest investing advice from a colleague over dinner.

8- The internet is very powerful with a wealth of information - medical, investment, life coaching, otherwise. Use it, and it's free.

9- Never buy anything as soon as you see it. Decide if a big ticket item is really worth it, and buy smaller items online for big discounts. Always negotiate on big items. Get over any shyness or you will be eaten alive as you are a target as a physician. No not overpay for home or auto repair services and do not be convinced you need more of what you are buying or the service you're getting.

10- Very few friends are really friends. Figure out who they are and if they see you are doing something incorrectly, don't be offended. Be thankful a real friend had the courage to speak up. Do not be stubborn, always be willing to change course. Persisting stubbornly with a bad decision can be extremely costly. That is not to say give up easily any undertaking when it is difficult - just the wrong efforts.

11- Your health can change on a dime. Do not believe it can't happen to you despite having seen it so many times with patients. Live every day as if it is your last.

12- Without depending on God, we personally do not believe we could have accomplished a fraction of this. We tithe and I donate time every month to a volunteer clinic. Keep your soul clean so when you approach the end of your life, you are happy with the life you lived.

Lot's of important lessons in life hidden in these blogs. Seek them out, avoid the critics. Someone will always find a reason to criticize you, me, this blog, etc. Criticism is of course not all bad - great when it's constructive, not so good when it's the result of jealousy and/or laziness.

Not an expert by any means, but I'm happy to answer questions if you think I may have anything to offer.
Last edited by md&pharmacist on Sun Mar 25, 2018 8:36 pm, edited 1 time in total.

darrvao777
Posts: 168
Joined: Wed Sep 10, 2014 1:34 pm

Re: Physician Retirement Savings

Post by darrvao777 » Sat Mar 24, 2018 8:04 pm

md&pharmacist wrote:
Fri Mar 23, 2018 9:41 pm
Please read this very carefully, especially if you are a younger physician.

Family physician and wife is pharmD, ages 45 and 44, respectively. 2 children, early teens.

Current annual take home pretax income $1,250,000 plus $150,000/year commercial real estate rental. We both started practice about 17 years ago at a combined income of about $350,000. Has been growing ever since. Broke the $1,000,000 mark 3 years ago.

Net worth currently $1,800,000 in retirement accounts, $1,700,000 in cash/non-retirement investments, $2,600,000 in commercial real estate ($4,200,000 value-$1,600,000 loans), $1,300,000 in primary residence ($1,700,000-$400,000 loans), $190,000 current value of four automobiles, $3,000,000 (current value of owned medical practice).

Anticipated net worth upon retirement $20,000,000-$30,000,000 depending on business growth rates and investment returns.

Most would say that at our ages, over $10,000,000 in net worth is great. Congratulations to those who have done better, for those looking to get here, some good advice that may be difficult to find elsewhere...but first read the following paragraph.

Are we happy - generally yes. Regrets - PLENTY!!! The most important point I want to make is: think about what you want in life very hard and keep in mind that what you want will probably change dramatically with each stage of your life. As the more senior doctors will likely tell you, your most valuable asset is your time and at least in the past, I feel my wife and I totally blew that. Now I use hospitalists for weekend and evenings, and am in the process of hiring other providers to ideally cut back to a 3 day work week even at the cost of take home income. Our financial success came on the back of back breaking hours - including 18 hours work days plus on call hours for years, missing functions with children, etc. - so you need to understand there are significant sacrifices necessary to get here - at the time it seemed worth it but now not so much. The truth is many doctors, like myself, are lured into excessive hours just because the work and income is there. At this point we have a 7500 sq ft home we had built 10 years ago. My daily driver is a BMW M6 convertible, my weekend treat is a ferrari F430 spider. My wife has a BMW 750Li and a Toyota Sienna XLE Limited. Do I enjoy what we have? - yes. Would I give it up in a heartbeat? - absolutely but for several practical reasons I don't. For example, I have a $500,000 HELOC on the house (in addition to the mortgage) that serves as a cushion as our expenses as business owners are huge - so I keep the property for low cost borrowing against my equity. I have borrowed against the cars at 2% or below - so everything we've done has been to optimize our finances. The downside of owning sports cars - very regular maintenance even if not driven - remember the most valuable asset is time, the cost of the repairs or depreciation is not the main issue. One day I won't need the financial prowess to support the business and at that point will definitely be happier with old beaters. We've also taken short vacations, but I wish we had taken longer and more regular vacations to create more family memories. I spend some time doing homework with the kids and being involved with their school activities - but I wish I had spent more time. TIME. TIME. TIME. Loss of this is often a doctor's biggest mistake, so try not to make it. Neglecting time with a spouse leads to resentment and, often, divorce.

Now let's say you still want the financial prosperity, here's how we did it and some realities doctor's (I feel) still don't understand based on their comments.

1- Society supports you far more for being a job creator than a physician. Think about CEO's of big business and athletes - are their personal efforts really worth $10,000,000, $100,000,000+/year. No, it's because they support and create thousands of jobs. So employed physicians will not create the wealth of self-employed physicians as the profits go to the employer. Just as the CEO makes lots of money on the efforts of the employees, so too does the physician employer enjoy passive income from the work of his employees (employed physicians, ARNP's, imaging technicians (ie ultrasound), in house pharmacy, ANS testing, allergy testing, Holters, etc. This how a successful business owner can continue to increase income while having more time by growing a business - more passive and less active revenue. Your own business is always best and IRA investment options are much better than 401(k)'s and over the decades that can mean tremendous differences in net worth due to compounding and the very fact that you can contribute much more to an IRA than a 401 (k) ($54,000 vs $18,000).

2- Working crazy hours as I did in the beginning does not make you wealthy, even with good income. You can only earn so much, that is another reason the passive revenue of business ownership and investments is very important. As corporate executive compensation packages are more worthwhile as stock options, so too should the young physician consider becoming more aggressive with compounding investments after he/she has an emergency fund for security and basic needs are covered. I started with excessively conservative investments such as bond funds and lost nothing in the 2008-2009 stock market disaster. However, after that I started investing aggressively after having paid off my house within 5 years. I know I'm not smart enough to pick individual stocks so I research and buy mutual fund holdings in my investment portfolio (never paid any advisor). Current holdings in relatively equal amounts are VFIAX, VQNPX, VWNDX, DXQLX, FBIOX, FSPHX, FSELX, OPGIX, UNPIX, UGPIX, TFFYX and currently 20% in cash. Some of these funds have returned in excess of 80-100% in a year. As the market reaches newer highs and as concerns of a bubble increase, sell into new highs to increase cash positions so when the next correction or bear market you will have a strong cash position to invest into the next bull market. The power of compounding is hard to see when you start with smaller amounts to invest, but as you get older and your portfolio ages, this passive income can be tremendous. I have had months where our IRA was over $100,000 in one month. Imagine how much more that will be after retirement in my 60's after all the upcoming years of contributions and returns adding to the base amount. Maximum allowed in 2017 for IRA for a couple was $108,000 and of course we put in the maximum. Also maximizing an HSA investment account ($6,750 for 2017)
but not using the funds for healthcare so the investments continue to grow.

3- Surround yourself with positive, more accomplished people than you. For me, those who have the smarts are not doctors. Do not be self-defeating - your attitude will become your reality. I hear doctors complaining about insurance companies all the time. You know the old expression - if you can't beat them, join them. If they are doing a good job, then invest in healthcare stocks like United Health care and prosper from them too - you'll be less resentful.

4- Pay attention to taxes. Primary residence and office building depreciation great for tax purposes. HSA funds go in and come out tax free if used for healthcare purposes. Maximize IRA contributions. Unfortunately I will be taxed at a personal income tax rate in retirement with RMD's, including appreciation of the IRA accounts. Non-IRA long term capital gains only taxed at about 20%, so don't be afraid to also use taxable accounts - for the high net worth individual they can be as good as or better than an IRA/401K.

5- Networking is critical. For example, we have networked very heavily with local chiropractors and attorneys to manage motor vehicle accident patients - something most primary care providers have not even thought of as a referral stream. We network with local surgeons for pre-operative clearances.

6- Buy everything on sale, personal use or office use. Buy the oldest cars you like car with the lowest mileage possible. I purchased my M6 from cars.com with about 6,000 miles for $54,000 as it was 4 years old (sticker price $130,000). Someone took a $76,000 hit over 6,000 miles. Do you want to be the one that does that? The guy that sold me the Ferrari put about $75,000 in options, I only paid about $10,000 above the cost of a base Ferrari of the same year and mileage. Let someone else take the hit because for reasons I don't understand, there are always people willing to do that.

7- Don't be fooled by people that offer too good to be true investments and even be suspicious of average investments. Never invest with someone who comes to you or calls you. Doctors are fooled all too often and lose hundreds of thousands in bad investments and outright theft. The story of the turtle and the hare, or the expression slow and steady comes to mind. Not interested in things like Bitcoin or the latest investing advice from a colleague over dinner.

8- The internet is very powerful with a wealth of information - medical, investment, life coaching, otherwise. Use it, and it's free.

9- Never buy anything as soon as you see it. Decide if a big ticket item is really worth it, and buy smaller items online for big discounts. Always negotiate on big items. Get over any shyness or you will be eaten alive as you are a target as a physician. No not overpay for home or auto repair services and do not be convinced you need more of what you are buying or the service you're getting.

10- Very few friends are really friends. Figure out who they are and if they see you are doing something incorrectly, don't be offended. Be thankful a real friend had the courage to speak up. Do not be stubborn, always be willing to change course. Persisting stubbornly with a bad decision can be extremely costly. That is not to say give up easily any undertaking when it is difficult - just the wrong efforts.

11- Your health can change on a dime. Do not believe it can't happen to you despite having seen it so many times with patients. Live every day as if it is your last.

12- Without depending on God, we personally do not believe we could have accomplished a fraction of this. We tithe and I donate time every month to a volunteer clinic. Keep your soul clean so when you approach the end of your life, you are happy with the life you lived.

Lot's of important lessons in life hidden in these blogs. Seek them out, avoid the critics. Someone will always find a reason to criticize you, me, this blog, etc. Criticism is of course not all bad - great when it's constructive, not so good when it's the result of jealousy and/or laziness.

Not an expert by any means, but I'm happy to answer questions if you think I may have anything to offer.
Congrats on all your success!

I've started to see some of what you describe in my own behavior over the last few years. I am fortunate to be in a lucrative yet cushy field. I don't make as much as you do but I'm putting in <40 hours/week with no weekends, no holidays, minimal call, etc. So from an hours perspective, I don't think I am anywhere close to overworking. That being said, I am an employed physician with 7 weeks of vacation and I have noticed that I'm needing to force myself to take this vacation time. I'm starting to look at vacation time as lost revenue and I know that is not a healthy way to view things with a young family at home too.

One question about real estate:

It seems like you have been very successful with commercial real estate. Is this something you recommend? I have been very hesitant to get into real estate because of the time and hassle factor. I make a lot at work, I save a lot, I invest a lot (albeit in a more conservative buy and hold 3 fund portfolio). I'm not sure I want to get into real estate and its possible accompanying hassles just to squeeze out a few (or even lots of) extra dollars that I probably will end up leaving behind to my children instead of spending. What are your thoughts on this?

genefl
Posts: 24
Joined: Wed Feb 05, 2014 10:32 am

Re: Physician Retirement Savings

Post by genefl » Sat Mar 24, 2018 11:43 pm

staythecourse wrote:
Fri May 13, 2016 10:18 am
OP you are off to a good start. Just keep at it.

I will pose (as a physician) a question more IMPORTANT then hitting your number and that is what will you do when you hit the number at such an early age? Your kids will be in school full time and young enough you can't just leave them at home and fly with spouse around the world, your friends of same age or likely still working full time, you have been working really hard all these years so do you have enough interests already cultivated to keep you busy the next 40+ yrs., You are a go getter to get to this point so are you fine just being John next door having no responsibilities and lounging around all day, how does not working affect your self image/ self worth, etc... All the above makes me more concerned attaining ER then actually making the money to get to ER.

Good luck.
Stay the course,

You hit it on the head. All of your points are exactly what I am pondering as I have hit my number. I truly enjoy being a physician in terms of helping others. Just not sure how long I want to put up with the increasing amount of nonsense that comes along with being a physician.

OP, your question is fair in terms of getting a gauge of where you stand. Within the past month, physician on fire has linked in one of his “Sunday bests” a very nice article that helps answer your question, citing multiple surveys and sources of data. It was eye opening for me, in a good way, where I stand based on the data presented!

User avatar
goodenyou
Posts: 1175
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Physician Retirement Savings

Post by goodenyou » Sun Mar 25, 2018 9:24 am

genefl wrote:
Sat Mar 24, 2018 11:43 pm
staythecourse wrote:
Fri May 13, 2016 10:18 am
OP you are off to a good start. Just keep at it.

I will pose (as a physician) a question more IMPORTANT then hitting your number and that is what will you do when you hit the number at such an early age? Your kids will be in school full time and young enough you can't just leave them at home and fly with spouse around the world, your friends of same age or likely still working full time, you have been working really hard all these years so do you have enough interests already cultivated to keep you busy the next 40+ yrs., You are a go getter to get to this point so are you fine just being John next door having no responsibilities and lounging around all day, how does not working affect your self image/ self worth, etc... All the above makes me more concerned attaining ER then actually making the money to get to ER.

Good luck.
Stay the course,

You hit it on the head. All of your points are exactly what I am pondering as I have hit my number. I truly enjoy being a physician in terms of helping others. Just not sure how long I want to put up with the increasing amount of nonsense that comes along with being a physician.

OP, your question is fair in terms of getting a gauge of where you stand. Within the past month, physician on fire has linked in one of his “Sunday bests” a very nice article that helps answer your question, citing multiple surveys and sources of data. It was eye opening for me, in a good way, where I stand based on the data presented!
Hitting your number while still an actively practicing physician can pose a dilemma. I believe I have hit my number, but I have 2 kids in college and one more to go in a few years. Besides having something meaningful and useful to do, continuing to practice allows more discretionary spending at a time of intense cash burn. I don't feel pressure to accumulate, but with both my wife and I working, at a minimum we can max out nearly $84k per year in tax-privileged savings without it affecting cash flow needs. Since she re-entered the work force in her 40s after being a SAHM, she wants no part of hearing about me retiring :D. I think a major contributing factor to staying an active member of the medical community is access to medical care. It is nice to make a call to a colleague to get in or have a family member get in to see a specialist whenever it is needed. It is especially true in today's crazy healthcare world. I never thought professional courtesy, access and medical knowledge would rival earning potential in medicine, but as I get older I really can see the benefit.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

md&pharmacist
Posts: 149
Joined: Fri Mar 23, 2018 7:05 pm

Re: Physician Retirement Savings

Post by md&pharmacist » Sun Mar 25, 2018 10:20 pm

darrvao777 wrote:
Sat Mar 24, 2018 8:04 pm
md&pharmacist wrote:
Fri Mar 23, 2018 9:41 pm
Please read this very carefully, especially if you are a younger physician.

Family physician and wife is pharmD, ages 45 and 44, respectively. 2 children, early teens.

Current annual take home pretax income $1,250,000 plus $150,000/year commercial real estate rental. We both started practice about 17 years ago at a combined income of about $350,000. Has been growing ever since. Broke the $1,000,000 mark 3 years ago.

Net worth currently $1,800,000 in retirement accounts, $1,700,000 in cash/non-retirement investments, $2,600,000 in commercial real estate ($4,200,000 value-$1,600,000 loans), $1,300,000 in primary residence ($1,700,000-$400,000 loans), $190,000 current value of four automobiles, $3,000,000 (current value of owned medical practice).

Anticipated net worth upon retirement $20,000,000-$30,000,000 depending on business growth rates and investment returns.

Most would say that at our ages, over $10,000,000 in net worth is great. Congratulations to those who have done better, for those looking to get here, some good advice that may be difficult to find elsewhere...but first read the following paragraph.

Are we happy - generally yes. Regrets - PLENTY!!! The most important point I want to make is: think about what you want in life very hard and keep in mind that what you want will probably change dramatically with each stage of your life. As the more senior doctors will likely tell you, your most valuable asset is your time and at least in the past, I feel my wife and I totally blew that. Now I use hospitalists for weekend and evenings, and am in the process of hiring other providers to ideally cut back to a 3 day work week even at the cost of take home income. Our financial success came on the back of back breaking hours - including 18 hours work days plus on call hours for years, missing functions with children, etc. - so you need to understand there are significant sacrifices necessary to get here - at the time it seemed worth it but now not so much. The truth is many doctors, like myself, are lured into excessive hours just because the work and income is there. At this point we have a 7500 sq ft home we had built 10 years ago. My daily driver is a BMW M6 convertible, my weekend treat is a ferrari F430 spider. My wife has a BMW 750Li and a Toyota Sienna XLE Limited. Do I enjoy what we have? - yes. Would I give it up in a heartbeat? - absolutely but for several practical reasons I don't. For example, I have a $500,000 HELOC on the house (in addition to the mortgage) that serves as a cushion as our expenses as business owners are huge - so I keep the property for low cost borrowing against my equity. I have borrowed against the cars at 2% or below - so everything we've done has been to optimize our finances. The downside of owning sports cars - very regular maintenance even if not driven - remember the most valuable asset is time, the cost of the repairs or depreciation is not the main issue. One day I won't need the financial prowess to support the business and at that point will definitely be happier with old beaters. We've also taken short vacations, but I wish we had taken longer and more regular vacations to create more family memories. I spend some time doing homework with the kids and being involved with their school activities - but I wish I had spent more time. TIME. TIME. TIME. Loss of this is often a doctor's biggest mistake, so try not to make it. Neglecting time with a spouse leads to resentment and, often, divorce.

Now let's say you still want the financial prosperity, here's how we did it and some realities doctor's (I feel) still don't understand based on their comments.

1- Society supports you far more for being a job creator than a physician. Think about CEO's of big business and athletes - are their personal efforts really worth $10,000,000, $100,000,000+/year. No, it's because they support and create thousands of jobs. So employed physicians will not create the wealth of self-employed physicians as the profits go to the employer. Just as the CEO makes lots of money on the efforts of the employees, so too does the physician employer enjoy passive income from the work of his employees (employed physicians, ARNP's, imaging technicians (ie ultrasound), in house pharmacy, ANS testing, allergy testing, Holters, etc. This how a successful business owner can continue to increase income while having more time by growing a business - more passive and less active revenue. Your own business is always best and IRA investment options are much better than 401(k)'s and over the decades that can mean tremendous differences in net worth due to compounding and the very fact that you can contribute much more to an IRA than a 401 (k) ($54,000 vs $18,000).

2- Working crazy hours as I did in the beginning does not make you wealthy, even with good income. You can only earn so much, that is another reason the passive revenue of business ownership and investments is very important. As corporate executive compensation packages are more worthwhile as stock options, so too should the young physician consider becoming more aggressive with compounding investments after he/she has an emergency fund for security and basic needs are covered. I started with excessively conservative investments such as bond funds and lost nothing in the 2008-2009 stock market disaster. However, after that I started investing aggressively after having paid off my house within 5 years. I know I'm not smart enough to pick individual stocks so I research and buy mutual fund holdings in my investment portfolio (never paid any advisor). Current holdings in relatively equal amounts are VFIAX, VQNPX, VWNDX, DXQLX, FBIOX, FSPHX, FSELX, OPGIX, UNPIX, UGPIX, TFFYX and currently 20% in cash. Some of these funds have returned in excess of 80-100% in a year. As the market reaches newer highs and as concerns of a bubble increase, sell into new highs to increase cash positions so when the next correction or bear market you will have a strong cash position to invest into the next bull market. The power of compounding is hard to see when you start with smaller amounts to invest, but as you get older and your portfolio ages, this passive income can be tremendous. I have had months where our IRA was over $100,000 in one month. Imagine how much more that will be after retirement in my 60's after all the upcoming years of contributions and returns adding to the base amount. Maximum allowed in 2017 for IRA for a couple was $108,000 and of course we put in the maximum. Also maximizing an HSA investment account ($6,750 for 2017)
but not using the funds for healthcare so the investments continue to grow.

3- Surround yourself with positive, more accomplished people than you. For me, those who have the smarts are not doctors. Do not be self-defeating - your attitude will become your reality. I hear doctors complaining about insurance companies all the time. You know the old expression - if you can't beat them, join them. If they are doing a good job, then invest in healthcare stocks like United Health care and prosper from them too - you'll be less resentful.

4- Pay attention to taxes. Primary residence and office building depreciation great for tax purposes. HSA funds go in and come out tax free if used for healthcare purposes. Maximize IRA contributions. Unfortunately I will be taxed at a personal income tax rate in retirement with RMD's, including appreciation of the IRA accounts. Non-IRA long term capital gains only taxed at about 20%, so don't be afraid to also use taxable accounts - for the high net worth individual they can be as good as or better than an IRA/401K.

5- Networking is critical. For example, we have networked very heavily with local chiropractors and attorneys to manage motor vehicle accident patients - something most primary care providers have not even thought of as a referral stream. We network with local surgeons for pre-operative clearances.

6- Buy everything on sale, personal use or office use. Buy the oldest cars you like car with the lowest mileage possible. I purchased my M6 from cars.com with about 6,000 miles for $54,000 as it was 4 years old (sticker price $130,000). Someone took a $76,000 hit over 6,000 miles. Do you want to be the one that does that? The guy that sold me the Ferrari put about $75,000 in options, I only paid about $10,000 above the cost of a base Ferrari of the same year and mileage. Let someone else take the hit because for reasons I don't understand, there are always people willing to do that.

7- Don't be fooled by people that offer too good to be true investments and even be suspicious of average investments. Never invest with someone who comes to you or calls you. Doctors are fooled all too often and lose hundreds of thousands in bad investments and outright theft. The story of the turtle and the hare, or the expression slow and steady comes to mind. Not interested in things like Bitcoin or the latest investing advice from a colleague over dinner.

8- The internet is very powerful with a wealth of information - medical, investment, life coaching, otherwise. Use it, and it's free.

9- Never buy anything as soon as you see it. Decide if a big ticket item is really worth it, and buy smaller items online for big discounts. Always negotiate on big items. Get over any shyness or you will be eaten alive as you are a target as a physician. No not overpay for home or auto repair services and do not be convinced you need more of what you are buying or the service you're getting.

10- Very few friends are really friends. Figure out who they are and if they see you are doing something incorrectly, don't be offended. Be thankful a real friend had the courage to speak up. Do not be stubborn, always be willing to change course. Persisting stubbornly with a bad decision can be extremely costly. That is not to say give up easily any undertaking when it is difficult - just the wrong efforts.

11- Your health can change on a dime. Do not believe it can't happen to you despite having seen it so many times with patients. Live every day as if it is your last.

12- Without depending on God, we personally do not believe we could have accomplished a fraction of this. We tithe and I donate time every month to a volunteer clinic. Keep your soul clean so when you approach the end of your life, you are happy with the life you lived.

Lot's of important lessons in life hidden in these blogs. Seek them out, avoid the critics. Someone will always find a reason to criticize you, me, this blog, etc. Criticism is of course not all bad - great when it's constructive, not so good when it's the result of jealousy and/or laziness.

Not an expert by any means, but I'm happy to answer questions if you think I may have anything to offer.
Congrats on all your success!

I've started to see some of what you describe in my own behavior over the last few years. I am fortunate to be in a lucrative yet cushy field. I don't make as much as you do but I'm putting in <40 hours/week with no weekends, no holidays, minimal call, etc. So from an hours perspective, I don't think I am anywhere close to overworking. That being said, I am an employed physician with 7 weeks of vacation and I have noticed that I'm needing to force myself to take this vacation time. I'm starting to look at vacation time as lost revenue and I know that is not a healthy way to view things with a young family at home too.

One question about real estate:

It seems like you have been very successful with commercial real estate. Is this something you recommend? I have been very hesitant to get into real estate because of the time and hassle factor. I make a lot at work, I save a lot, I invest a lot (albeit in a more conservative buy and hold 3 fund portfolio). I'm not sure I want to get into real estate and its possible accompanying hassles just to squeeze out a few (or even lots of) extra dollars that I probably will end up leaving behind to my children instead of spending. What are your thoughts on this?
It's funny how life works. Some of our success comes from opportunities that present themselves without seeking them out, and are often hard to recognize as a worthwhile opportunity. This applies to our real estate holdings.

I left a big group to start my solo practice 11 years ago. I purchased a modest 2700 sq foot office building to start the practice. I just knew I didn't want to pay anyone rent. I lasted in that building about 10 years, at which time we grew out of the building. I saw this coming and started buying land to build a new office and, as property ownership is public record, was approached by a physician group, a salt room investor and a chiropractor about building larger and they would sign leases and design their own spaces. I purchased expensive land on a main road with 35,000 vehicle passes/day. That paid off as this drew the interest in the property and commands higher lease rates. I wound up having to buy the lot next door as well to accommodate all the tenants. Not many property owners have tenants ready and willing before breaking ground. All tenants, including myself moved into the new building September 2017. It is 15000 sq ft on 3.6 acres and cost about $1,000,000 for the land and $2,900,000 for the building. I take up about 6,000 sq ft and lease the rest (5-10 year leases) and also lease the old building. I also have the ability to expand the new building if needed.

I now like the diversity of the added commercial real estate portfolio to my investment profile. I however did not actively seek out this investment option - maybe the next opportunity will find me again.

I was initially against being a landlord. My father and father-in-law did residential real estate for decades very successfully, but at the expense of a lot of time, hassles and exhaustion. I figured commercial real estate was a little easier, but as you can see I haven't been doing it that long; so far so good. Planning to own the property for the next 20-25 years and hopefully eventually to sell the practice and building to a large group, hospital, etc. That's why I built high end. In over 30 years of building my builder won a first place builders award for this building that he won only three times before with scores of submissions. If a tenant moves out, I will decide if I want the space for an expanding practice or if I will pursue a new tenant - now at lease I won't grow out of my building.

So I would say don't force it, see if the opportunity falls into your lap. My neighbor is a residential realtor/property manager and is very successful at it, but residential is not for me.

If you take the plunge, negotiate on everything - from land and construction if you are building, to interest rates from the banks (you are very valuable to them). Be cost conscious but be wary of a less attractive area as I have seen colleagues pay for this mistake - unable to find tenants at much lower rents. Take care of any tenants and be fair to them.

Commercial real estate loans are an unattractive balloon loan, which means the rate locks for a few years (usually 5-10) but amortize over a longer period (ie 20-30) so after the 5-10 years are up, the balloon means you owe the remainder immediately as one lump sum! Better hope you can refinance then! Instead of doing this, I put a large down payment and negotiated a 10 year loan that amortizes over 10 years so there is no balloon. Therefore in 10 years I will have paid it all off (goal is prepayment of 5 years).

If you ultimately don't do real estate, I actually thing putting that money in the markets would do even better over the decades with the power of compounding. If you are going to introduce a lot of new money I would wait for the next bear market (Imagine $1,000,000 invested when the DOW was at 6500 in 2008-2009) or at least take small investment steps with market corrections, such as last week's - I am considering buying into some funds if the Chinese tariff threat eases, but at this point expect a continued downtrend over the coming weeks to months so I look for bottoms, not dollar cost averaging. Not buying just yet. If I miss the boat and the market reverses to new highs - then I sell out of current holdings in such a lofty market for some risk reduction and to ultimately buy more shares of a fund at lower cost during corrections/bear markets. Do not do what most do - buy high and sell low. Sounds obvious but people act on emotion, not principle and that usually leads to bad decisions.

I just like smart market investing a bit more than real estate. It's also a lot easier to get in and out if needed, but don't do it with large amounts unless you have a long term horizon. Major corrections take longer to recover. The last recession took 5 years to recover - that's why the say you should have a minimum 5 year horizon. Corrections under 10% historically recover in a few weeks-months.

By the way, if you have kids I believe the most important investment you can make is in their lives and education. My children always went to a private school and I almost always have a hired private teacher to give them an edge. Forget real estate or the markets if this is neglected. Reward kids for good deeds and good grades, but don't give them everything they ask.

Don't assume you and your spouse are on the same page regarding vacations - ask and communicate! Invest in this relationship as well. It's okay to take fewer vacations and work harder when the kids are too young to remember, but now mine are in their early teens and I find it very important as these are critical years to create memories and before I know it they'll be off to college. I prefer to make up the "lost vacation time income" the rest of the year or with my investments. As your net worth grows that "lost vacation time income" is a smaller issue and the value of your family time is put in perspective.

God bless!

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