How am I doing? (dual physician household)

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beezquimby
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How am I doing? (dual physician household)

Post by beezquimby »

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Re: How am I doing? (dual physician household)

Post by Grt2bOutdoors »

[Posts removed --admin LadyGeek]
I see your point, the 529 plan is severely underfunded with two children and only 256 in the account. Ivy league caliber schools are running at 260K today and with the doc's income they can expect no financial aid once the schools view the CSS Profile and the FAFSA. Especially, if any of those kids have aspirations of entering medical school, why med school alone will run them at least $150-$260K each. OP should look into lump summing 5 years of contributions upfront for each child - that's an additional $140K each. If finding money to do so is a problem, they can reduce their deferred comp and redirect it to the 529 plans.
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Kenkat
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Re: How am I doing? (dual physician household)

Post by Kenkat »

You could retire now at that expense level and with your assets. You are in the top 5% in net worth in the US, closing in on top 1%. You are doing more than fine.
aqan
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Re: How am I doing? (dual physician household)

Post by aqan »

Gross Income: 550
it has to be per head
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Re: How am I doing? (dual physician household)

Post by deltaneutral83 »

The game is over even if you were 100% equities (which I wouldn't be but it is irrelevant). Grab a young guy (or two) out of med school who has $300k debt and tell them exactly what you did to have what you have at age 40.
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Re: How am I doing? (dual physician household)

Post by Grt2bOutdoors »

Kenkat wrote:You could retire now at that expense level and with your assets. You are in the top 5% in net worth in the US, closing in on top 1%. You are doing more than fine.
That depends on if the OP wants to leave a large estate to kids and if the OP wants to expand lifestyle - big difference between a Camry and buying/driving a Lambo, plus with all that free time on his/her hands there will be more opportunities to spend money. Reminds me of a Ben Franklin quote in Poor Richards Almanac - Beware of little expenses, a small leak will sink a great ship!
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sambb
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Re: How am I doing? (dual physician household)

Post by sambb »

I think you are fine, but I want to offer some advice

1. Invest for moderate growth - 60/40 or 50/50 and avoid timing
2. Increase liability coverage to guard against bad things - car accident, other personal lawsuits
3. Keep practicing and enjoy it, if you do enjoy it.
4. Fund the 529s
5. Do not invest in crazy things that are "get rich quick" investments if you get bored
6. Stay conservative in personal habits
7. DO not drive a 1999 camry - lease safe cars that will keep you protected in accidents
8. Avoid divorce and marital problems
9. Focus on your children
10. Again ,keep working as you enjoy it.
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Re: How am I doing? (dual physician household)

Post by celia »

Although I fell out of my chair reading the early responses, I will behave better than my "colleagues" here and offer a suggestion.

Since your current assets are:
Taxable: 1781 (and adding 30 per year)

Tax-deferred: 1866 (and adding 56 +170 per year)

Roth: 111 (and adding 10 per year),

I think you need to think ahead to your retirement years. I realize you are tax-deferring as much as you can because of your tax bracket, but you are likely to also be in a similar tax bracket in retirement due to your Required Minimum Distributions from the tax-deferred accounts. They are likely to reach over $10M by the time RMDs are required. (After all, every 4 years you are contributing another 1M to them and you already have 2M.) RMDs on a 10M tax-deferred account will leave you with a beginning RMD of 365K, and it will continue growing every year after that, as long as the growth in the account is more than what is withdrawn. This doesn't give you much tax flexibility in your later years. And after one of you dies, the survivor will still have to take the same RMD while having less space in each tax bracket, since he/she will have to then file as Single.

Some things to consider:
Stuff more into the Roth instead. It can grow tax-free during your lifetime and there are no RMDs.
Spend some of your taxable money on Roth conversion taxes. Yes, it will be painful, but at least it will be a one-time tax for each lump you can convert.
Put all your bonds into the tax-deferred to slow down the growth of the account.
Save all your receipts, if you don't already do it to increase your itemized deductions.
You might be interested in Health Saving Accounts that can grow tax-free as long as the withdrawals are used for qualified health expenses.

Any other suggestions, my fellow Bogleheads?
staythecourse
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Re: How am I doing? (dual physician household)

Post by staythecourse »

Just curious how do you have 1.2million in 401k as a dual physician couple? You would have graduated at youngest 30 so you both have less then 10 years each in working where the 401k max would have been 16,500-18,000/ person. So that is around: 1/3 million in contributions. So how can it have grown so fast in only 10 years?

Are one of you a solo 401k? Is one an inherited 401k?

Good luck.

p.s. I am pretty sure you know you are doing well. :D
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Re: How am I doing? (dual physician household)

Post by Grt2bOutdoors »

celia wrote:Although I fell out of my chair reading the early responses, I will behave better than my "colleagues" here and offer a suggestion.


I think you need to think ahead to your retirement years. I realize you are tax-deferring as much as you can because of your tax bracket, but you are likely to also be in a similar tax bracket in retirement due to your Required Minimum Distributions from the tax-deferred accounts. They are likely to reach over $10M by the time RMDs are required. (After all, every 4 years you are contributing another 1M to them and you already have 2M.) RMDs on a 10M tax-deferred account will leave you with a beginning RMD of 365K, and it will continue growing every year after that, as long as the growth in the account is more than what is withdrawn. This doesn't give you much tax flexibility in your later years. And after one of you dies, the survivor will still have to take the same RMD while having less space in each tax bracket, since he/she will have to then file as Single.

Some things to consider:
Stuff more into the Roth instead. It can grow tax-free during your lifetime and there are no RMDs. They are limited in the amount they can contribute - if employer offers a Roth 401k, they can contribute $36K (18k x 2), but by doing so, they will pay the highest taxes upfront and depending on state they reside can find themselves paying 40%+ for each dollar after-tax they contribute. Further, employer contributions always are not tax-free, even if they elect ROTH, those contributions will be made on a tax deferred basis (employer gets to take upfront tax deduction for employee compensation expenses).
Spend some of your taxable money on Roth conversion taxes. Yes, it will be painful, but at least it will be a one-time tax for each lump you can convert. Painful my be an understatement, but given their ages it could be a useful estate planning vehicle.


Any other suggestions, my fellow Bogleheads?
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lernd
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Re: How am I doing? (dual physician household)

Post by lernd »

Personal assets look more than fine. Here's what you could be doing better: more charitable contributions.
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Re: How am I doing? (dual physician household)

Post by LadyGeek »

I removed a number of posts challenging the OP's financial status. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

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beezquimby
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Re: How am I doing? (dual physician household)

Post by beezquimby »

No that's total for 2 docs.
aqan wrote:
Gross Income: 550
it has to be per head
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beezquimby
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Re: How am I doing? (dual physician household)

Post by beezquimby »

I'm including matching funds, my employer kicks in about 20 a year. Also I have been working for about 12 yrs now.
staythecourse wrote:Just curious how do you have 1.2million in 401k as a dual physician couple? You would have graduated at youngest 30 so you both have less then 10 years each in working where the 401k max would have been 16,500-18,000/ person. So that is around: 1/3 million in contributions. So how can it have grown so fast in only 10 years?

Are one of you a solo 401k? Is one an inherited 401k?

Good luck.

p.s. I am pretty sure you know you are doing well. :D
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beezquimby
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Re: How am I doing? (dual physician household)

Post by beezquimby »

Thanks I will be giving this post some thought.
celia wrote:Although I fell out of my chair reading the early responses, I will behave better than my "colleagues" here and offer a suggestion.

Since your current assets are:
Taxable: 1781 (and adding 30 per year)

Tax-deferred: 1866 (and adding 56 +170 per year)

Roth: 111 (and adding 10 per year),

I think you need to think ahead to your retirement years. I realize you are tax-deferring as much as you can because of your tax bracket, but you are likely to also be in a similar tax bracket in retirement due to your Required Minimum Distributions from the tax-deferred accounts. They are likely to reach over $10M by the time RMDs are required. (After all, every 4 years you are contributing another 1M to them and you already have 2M.) RMDs on a 10M tax-deferred account will leave you with a beginning RMD of 365K, and it will continue growing every year after that, as long as the growth in the account is more than what is withdrawn. This doesn't give you much tax flexibility in your later years. And after one of you dies, the survivor will still have to take the same RMD while having less space in each tax bracket, since he/she will have to then file as Single.

Some things to consider:
Stuff more into the Roth instead. It can grow tax-free during your lifetime and there are no RMDs.
Spend some of your taxable money on Roth conversion taxes. Yes, it will be painful, but at least it will be a one-time tax for each lump you can convert.
Put all your bonds into the tax-deferred to slow down the growth of the account.
Save all your receipts, if you don't already do it to increase your itemized deductions.
You might be interested in Health Saving Accounts that can grow tax-free as long as the withdrawals are used for qualified health expenses.

Any other suggestions, my fellow Bogleheads?
HopeToGolf
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Re: How am I doing? (dual physician household)

Post by HopeToGolf »

Spend more, give more to charity or quit work unless you both love what you do. At this point and these spending levels you are making your offspring richer (which may be OK).
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Re: How am I doing? (dual physician household)

Post by Ron Scott »

Lots of assumptions here but you should retire with $9m or so in today's $$ at your current rate and, to answer your question, you're on a good path to retirement. You're in that interesting world many professionals occupy in being very comfortable but never really rich. You've done a remarkable job at growing W2-based income.

The only concerns I see are a) heavy taxes looming on that deferred bucket and the 401, and b) a seeming imbalance between your frugal spending habits today and how you can spend when you're old. In short, you oversave.

You didn't ask for suggestions but I have one anyway: Defer less and spend more while you and your kids are young. There is far less fun-value in spending on luxuries when you're old.
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

Whether or not you are on track for retirement is based on how much you want to have (or live off of), when you plan to retire / stop working, your AA, and contributions.
You mentioned the last one but not the initial 3.

I agree with above poster about Roth conversions.
If you feel you already have enough safety net for your lifestyle and retirement, I'd try to mitigate the RMD tax bomb that such an estate. If you still want to have *more* net worth, then investing pretax with the difference in taxable gives you a bigger safety net since you can withhold those taxes and potentially pay less if you have a drop in income in future years (e.g between retirement and RMD's).

What are your plans for your estate?

Do you have or have you thought about a DAF?

Have you considered or made trusts? Irrevocable and revocable?

Would you consider overfunding the 529's as a legacy?
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Re: How am I doing? (dual physician household)

Post by Strayshot »

If you are getting snarky replies it is probably because the post looks very "humblebrag" in nature. Even with $4M in assets excluding the house you have far more than the $80K a year you say you spend using a 4% safe withdrawal rate and could retire now.

Why is new Roth contributions 10 and not 11? 5500x2 = 11K

Look at your 401k plan governing document. Do you have access to Roth contributions? If so do you have access to after-tax contributions and in-plan conversions or in-service rollovers? The federal limit is 56K and it sounds like you are only using 28K each between your and the employer contributions. If you have the ability to mega-backdoor-Roth within your 401k you could save an additional 28k x 2 = 56k a year in Roth form funds that way.

Good work! Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
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Re: How am I doing? (dual physician household)

Post by an_asker »

mac808 wrote:[...]"Top 1%" sounds like a lot on a percentage basis, but there are about 120 million households in the US. "You are among the 1.2 million wealthiest households" doesn't feel quite as exclusive.

"$10 million dollars" has a great ring to it. But for an early retiree in their 40s or 50s (or perhaps anyone anticipating an extended lifespan) following a SWR of 3%-minus-fees, the resulting $250k/year in income (pre-tax!) doesn't sound quite so abundant.
I will frame this quote and show to DW every time she calls me a miser ;-)
No doubt that OP has a tremendous amount of money in a world where hundreds of millions go hungry and without very basic necessities. But I can still relate to the statement you quoted, and I think others on the forum can as well.

UHNW at $30 million still feels indisputably "rich" to me: a $5 million dollar home and about $700k/year for life at a conservative SWR.
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Re: How am I doing? (dual physician household)

Post by staythecourse »

Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

The biggest question I have for the OP is NOT about $$ as I am sure him and his wife are intelligent enough to do the math that they have won the game of finances. The biggest question I have is what is their future plans? Do they love work so much to want to work when they essentially will never spend all the remaining money they will be saving going forward? Do they want to cut down to spend time doing other interests? Do they have kids they would like to spend more time with?

As a small piece of advice I know SEVERAL docs worth 10+ million who are in their 60's who are not very happy. When I ask them why it is because they have no relationship with their kids and thus their grandkids. They admit to spending so much time working to accumulate their wealth their relationships with their kids suffered. My wife and I have personally adapted our lives as not to end up in the same situation. What do they same about wisdom... "learning from other people's mistakes". Money is great, but not so great if it doesn't provide happiness.

Good luck.
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Re: How am I doing? (dual physician household)

Post by climber2020 »

beezquimby wrote:Age 40, 39

Am I on Track for Retirement?
Retire now and enjoy your life. Why risk getting pulled into some bogus lawsuit and losing it all?

If I were in your position, I'd quit in the middle of typing this sentence.
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Re: How am I doing? (dual physician household)

Post by celia »

I've been thinking about this thread since I first saw it. OP, you are basically "set" on finances. You appear to live a middle class lifestyle ($80K a year) to keep your family grounded, and I applaud you for that. But have you considered how else you might contribute to society? Since you put so much time and money into getting to where you are today and had many years of training, if I was you, it would not feel "right" to me to just retire and sail off into the sunset on my boat.

Have you considered volunteering for Doctors Without Borders? I'm on their mailing list since we donate to them, but the stories from doctors there are touching. Most of us do not realize how lucky we are that even though we are sick, we can walk into a doctor's office and be seen the same day, if need be. There are parts of the world, on the other hand, that rarely get to ever see a doctor. Their health issues are not diagnosed, monitored, corrected. Even if DWB sounds too extreme for you, there are parts of the US that do not have access to health care. I've read of traveling "health fairs" that come to these communities with large teams of doctors, dentists, opthamologists, and nurses ready to treat patients.

So maybe you would be interested in turning some of your future income into "life experiences" instead, while helping others. Just something to consider.
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Re: How am I doing? (dual physician household)

Post by beezquimby »

Ok folks here are some more details I didn't mention.
I'm actually will have a pension available to me, based on years of service. Also I am saving more than I listed in the post (after tax 401K contributions and cash savings)

It may be impressive but actually it was Not hard. Living on 70-80K is not difficult. I started to invest starting with my first paycheck.

What surprises me is not how well I have done but that my situation is not more common especially for dual physician families. I have tried to get colleagues to think about these matters like investing, controlling expenses but why would anyone listen to me (I don't blame them, I wouldn't take financial advice from a colleague either)
staythecourse wrote:
Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

The biggest question I have for the OP is NOT about $$ as I am sure him and his wife are intelligent enough to do the math that they have won the game of finances. The biggest question I have is what is their future plans? Do they love work so much to want to work when they essentially will never spend all the remaining money they will be saving going forward? Do they want to cut down to spend time doing other interests? Do they have kids they would like to spend more time with?

As a small piece of advice I know SEVERAL docs worth 10+ million who are in their 60's who are not very happy. When I ask them why it is because they have no relationship with their kids and thus their grandkids. They admit to spending so much time working to accumulate their wealth their relationships with their kids suffered. My wife and I have personally adapted our lives as not to end up in the same situation. What do they same about wisdom... "learning from other people's mistakes". Money is great, but not so great if it doesn't provide happiness.

Good luck.
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

Your OP ends with a question: "Am I on track for retirement?"

Apparently there were some very rude posts I missed.

But what is your actual intent in your post and your question?

I asked a number of questions above regarding your question but didn't get a response.
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Re: How am I doing? (dual physician household)

Post by staythecourse »

Just noticed or maybe I missed it, but it looks like the 5M in in addition to paying off all student loans (college and med school) for 2 people?

Also, any inheritance or windfalls included? If not, I still think that is way impressive.

Good luck.
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Re: How am I doing? (dual physician household)

Post by HomerJ »

Finance-MD wrote:Your OP ends with a question: "Am I on track for retirement?"

Apparently there were some very rude posts I missed.

But what is your actual intent in your post and your question?
The OP obviously knows he's on track for retirement, so I am also curious if he has any other questions. Maybe he's asking if he could retire today? The answer there would also be yes, but at least it's debatable with unknown health care costs and retiring so early.

Or maybe he's asking if he can loosen up the purse strings and spend a little more?

He has 50x expenses. Plus a paid-off million dollar house. At 40. So yes, he's in very good shape.
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Re: How am I doing? (dual physician household)

Post by White Coat Investor »

Uh....$5 Million at 40? Yes, you're doing just fine. You don't seem to have any sense of where the average doc's finances lie though. I mean, $5M at 40 has got to be top 1% of docs, not just the general public.
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Re: How am I doing? (dual physician household)

Post by afan »

staythecourse wrote: As a small piece of advice I know SEVERAL docs worth 10+ million who are in their 60's who are not very happy.

Good luck.

Just one person's opinion, but I don't consider my goal in life to be happy.

I want to be professionally and materially successful, make a positive contribution to society, avoid being a burden to my family in my later years, minimize the number of years I am alive but out of the workforce and leave a financial legacy to my heirs. I can accomplish all that without being particularly happy. Which is a fair trade-off.

For the OP, I suppose maximizing the 529 plan makes sense. Since you will be well able to pay for college and whatever post college education your kids pursue, you may want to consider whether the limitations on these plans are worth the tax savings. It is entirely possible your kids will not use the education funds. If they do go to med school, you can pay for it. No knock against 529, but that tax savings will not amount to all that much and you do sacrifice some flexibility.
$5M at 40 has got to be top 1% of docs, not just the general public.
I agree the OP is doing well, but top 1%? For a dual doc family? I don't know about that.

Two people in high income fields- a dermatologist and a neurosurgeon, say, could accumulate a lot of assets if they were careful with their spending.
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

afan wrote:
staythecourse wrote: As a small piece of advice I know SEVERAL docs worth 10+ million who are in their 60's who are not very happy.

Good luck.

Just one person's opinion, but I don't consider my goal in life to be happy.

I want to be professionally and materially successful, make a positive contribution to society, avoid being a burden to my family in my later years, minimize the number of years I am alive but out of the workforce and leave a financial legacy to my heirs. I can accomplish all that without being particularly happy. Which is a fair trade-off.

For the OP, I suppose maximizing the 529 plan makes sense. Since you will be well able to pay for college and whatever post college education your kids pursue, you may want to consider whether the limitations on these plans are worth the tax savings. It is entirely possible your kids will not use the education funds. If they do go to med school, you can pay for it. No knock against 529, but that tax savings will not amount to all that much and you do sacrifice some flexibility.
$5M at 40 has got to be top 1% of docs, not just the general public.
I agree the OP is doing well, but top 1%? For a dual doc family? I don't know about that.

Two people in high income fields- a dermatologist and a neurosurgeon, say, could accumulate a lot of assets if they were careful with their spending.
$5M at 40 is still a lot for a dual physician family. Not sure if top 1% but definitely high.

If 2 doctors both go straight through school and do 4 years of residency/fellowship and have 400k in debt and are 30 years old then earning ~$300k each pretax, they need to gain 5.4m in 10 years. This would require a very very high savings rate. 10 years is not a lot of time for compound interest (but the past 10 years has been a good decade to be investing). I don't think 5M by age 40 would be anything expected for any dual physician couple statistically, even for those who save well.
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Re: How am I doing? (dual physician household)

Post by EventHorizon »

Now I'm contributing to hijacking this thread.

According to a Medscape survey,
http://www.medscape.com/features/slides ... rth#page=4
(these slides are worth a quick review for the physician forum members)

for physicians 41-44 (presumably single-physician households)
1% net worth over 5M
8% net worth 2-5M
21% net worth 1-2M
27% net worth 500K-1M
42% net worth <500K

So OP is in top 1% of single-physician households.
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

EventHorizon wrote:Now I'm contributing to hijacking this thread.

According to a Medscape survey,
http://www.medscape.com/features/slides ... rth#page=4
(these slides are worth a quick review for the physician forum members)

for physicians 41-44 (presumably single-physician households)
1% net worth over 5M
8% net worth 2-5M
21% net worth 1-2M
27% net worth 500K-1M
42% net worth <500K

So OP is in top 1% of single-physician households.
I had actually just looked this up and saw you posted.
Yes, these surveys of course have limitations, particularly of outliers. Would be interesting if similar data exists clearly selecting out dual physician families...
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Re: How am I doing? (dual physician household)

Post by LadyGeek »

Let's stay focused on helping the OP.
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Re: How am I doing? (dual physician household)

Post by WhiteMaxima »

What life style in your retirement? So it depends.
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Re: How am I doing? (dual physician household)

Post by beezquimby »

Finance-MD wrote:
Can you explain more about these topics?

What are your plans for your estate?

Do you have or have you thought about a DAF?

Have you considered or made trusts? Irrevocable and revocable?

Would you consider overfunding the 529's as a legacy?
wrongfunds
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Re: How am I doing? (dual physician household)

Post by wrongfunds »

LadyGeek wrote:Let's stay focused on helping the OP.
Exactly what kind of "help" is he asking here? I have seen many people have asked clarification. Some have been sarcastic because they did not believe the original question was asked in good faith. Leaving that part aside, can you elaborate on what are the expectation from this discussion? Does OP really need an answer to his question of how is he doing? Because later he actually does tell us that even he is surprised as to how well he has done. So the question itself was rhetorical in nature.
Strayshot
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Location: New Mexico

Re: How am I doing? (dual physician household)

Post by Strayshot »

staythecourse wrote:
Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

Good luck.
No, I meant exactly what I said. It has nothing to do with being impressive or not impressive, and I didn't say it was easy. The math is straightforward. A dual-physician couple making a half-mil gross starting at age 30 with minimal student loan debt and saving habits rather than spending habits and with 80K/year expenses can put away 200+K a year. 10 years of that with a bull market for the majority and some real estate luck and you have a nice estate by age 40 in the ballpark of the OP. Maybe not $5M, but certainly >$2.5M.

I think what is uncommon is finding a dual physician household who can keep their expenses to a quarter of their take home income, hence the "know how to save instead of spend".

Anyways, OP asked for advice not an ego-stroking. I offered up the items I would look at, finding more tax advantaged space and making sure the extra 1K of backdoor Roth is being used.
Topic Author
beezquimby
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Re: How am I doing? (dual physician household)

Post by beezquimby »

Some more details if people are interested.
Starting salary 12 years ago was quite a bit lower than it is now probably 120 less. Student loans were about 100 each. Loans were at low interest rate, paid off about 5 yrs ago. House paid off about 3 yrs ago.

Majority of money in indexes but do own significant amount of stocks.

I'm actually agreeing it's not impressive. Anyone with this type of income can and should be multimillionaires. Investing is the stock market basically entails going to fidelity or vanguard and clicking a mouse button.

The fact this is impressive speaks volumes as to physician financial spending habits and financial illiteracy.
Strayshot wrote:
staythecourse wrote:
Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

Good luck.
No, I meant exactly what I said. It has nothing to do with being impressive or not impressive, and I didn't say it was easy. The math is straightforward. A dual-physician couple making a half-mil gross starting at age 30 with minimal student loan debt and saving habits rather than spending habits and with 80K/year expenses can put away 200+K a year. 10 years of that with a bull market for the majority and some real estate luck and you have a nice estate by age 40 in the ballpark of the OP. Maybe not $5M, but certainly >$2.5M.

I think what is uncommon is finding a dual physician household who can keep their expenses to a quarter of their take home income, hence the "know how to save instead of spend".

Anyways, OP asked for advice not an ego-stroking. I offered up the items I would look at, finding more tax advantaged space and making sure the extra 1K of backdoor Roth is being used.
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randomizer
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Re: How am I doing? (dual physician household)

Post by randomizer »

Based on the title, I'd say pretty well.
87.5:12.5, EM tilt — HODL the course!
Finance-MD
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

Strayshot wrote:
staythecourse wrote:
Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

Good luck.
No, I meant exactly what I said. It has nothing to do with being impressive or not impressive, and I didn't say it was easy. The math is straightforward. A dual-physician couple making a half-mil gross starting at age 30 with minimal student loan debt and saving habits rather than spending habits and with 80K/year expenses can put away 200+K a year. 10 years of that with a bull market for the majority and some real estate luck and you have a nice estate by age 40 in the ballpark of the OP. Maybe not $5M, but certainly >$2.5M.

I think what is uncommon is finding a dual physician household who can keep their expenses to a quarter of their take home income, hence the "know how to save instead of spend".

Anyways, OP asked for advice not an ego-stroking. I offered up the items I would look at, finding more tax advantaged space and making sure the extra 1K of backdoor Roth is being used.
Yes the math is simple. 2.5M is very reasonable for 10 years of dual physician income. Dual physician families should be multimillionaires. 5M is twice as much as 2.5M though, and due to higher taxation, substantially more than twice as much. to get to a net worth twice as high in such a short period of time is not as surprising in a 9 year bull market, which serves as an outlier. To say such growth should be commonplace, even with a high savings rate, doesn't compute with average market returns. A factor of 2 is 7-10 years of equity growth at 7-10%.

OP - are your indexes 100% equities?
Finance-MD
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Re: How am I doing? (dual physician household)

Post by Finance-MD »

beezquimby wrote:
Finance-MD wrote:
Can you explain more about these topics?

What are your plans for your estate?

Do you have or have you thought about a DAF?

Have you considered or made trusts? Irrevocable and revocable?

Would you consider overfunding the 529's as a legacy?
It looks like you put your question inside my quote.
Was this a hypothetical question?
DAF = donor advised fund.
ks289
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Re: How am I doing? (dual physician household)

Post by ks289 »

beezquimby wrote:Some more details if people are interested.
Starting salary 12 years ago was quite a bit lower than it is now probably 120 less. Student loans were about 100 each. Loans were at low interest rate, paid off about 5 yrs ago. House paid off about 3 yrs ago.

Majority of money in indexes but do own significant amount of stocks.

I'm actually agreeing it's not impressive. Anyone with this type of income can and should be multimillionaires. Investing is the stock market basically entails going to fidelity or vanguard and clicking a mouse button.

The fact this is impressive speaks volumes as to physician financial spending habits and financial illiteracy.
Strayshot wrote:
staythecourse wrote:
Strayshot wrote:Your situation is not uncommon for a 2 doc family who knows how to save instead of spend.
Umm... No. Having 5 million net worth at age 40 is IMPRESSIVE for ANYONE. I am sure you didn't mean it that way, but you make it seem this is easily attainable by just being a 2 physician couple and not spending. No it isn't easy for ANYONE. Look up any available data out there. Quite impressive if this was all done with hard work and no inheritance. I am assuming the OP would have told us if an inheritance or other windfall was involved?

Good luck.
No, I meant exactly what I said. It has nothing to do with being impressive or not impressive, and I didn't say it was easy. The math is straightforward. A dual-physician couple making a half-mil gross starting at age 30 with minimal student loan debt and saving habits rather than spending habits and with 80K/year expenses can put away 200+K a year. 10 years of that with a bull market for the majority and some real estate luck and you have a nice estate by age 40 in the ballpark of the OP. Maybe not $5M, but certainly >$2.5M.

I think what is uncommon is finding a dual physician household who can keep their expenses to a quarter of their take home income, hence the "know how to save instead of spend".

Anyways, OP asked for advice not an ego-stroking. I offered up the items I would look at, finding more tax advantaged space and making sure the extra 1K of backdoor Roth is being used.
Great job. Make no mistake, most people including docs are not able to simultaneously pay off student loans and mortgage while accumulating that level of assets. Obviously, the $80,000/year in expenses with no mortgage seems not very onerous now, but you must have been pretty frugal earlier when you had the mortgage. I do think that we all have been helped by good investment returns over the last 8 years. How much of your current assets are investment gains?

Also, your ages did not suggest that you have been practicing for 12 years since most docs are not 28 and 27 upon completion of residency/training. My wife and I are physicians a couple of years older than you, but I've been in practice 10 years.
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wander
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Re: How am I doing? (dual physician household)

Post by wander »

According to financial experts, you should have around 3 times your annual salary saved for retirement to be on good path to a good retirement. So, it is around $1.65 M. You are more than fine.
Strayshot
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Re: How am I doing? (dual physician household)

Post by Strayshot »

OP, it looks like at least one of you is a shareholder in your practice. There aren't any specifics about your employment structure or specialty, but if your employers 401k's aren't structured to allow for the "mega backdoor Roth" I would strongly consider lobbying for a plan change because, as I mentioned earlier, it would allow for another $56K a year to go into tax advantaged space.

As this thread has pointed out, you should be fine for retirement. I would start looking at quality of life improvements, including cutting back on call (if you are able), taking more vacations, and planning for retirement living (perhaps buy some land or a vacation home where you can eventually move permanently or build a dream house). Having a second home in a dramatically different environment (secluded nature, on the beach, at a ski resort, etc) that is within a 3 hour drive and can be escaped to on weekends is wonderful for ones sanity (well, my opinion). Transcription suffered a cyberattack? Just spent 4 hours in worthless new EMR training? Finished being screamed at by a drug-seeking loony for 30 min? Just received that deposition notice? At least you know you can turn off the pager and go to the lake house!
JW-Retired
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Re: How am I doing? (dual physician household)

Post by JW-Retired »

beezquimby wrote: New annual Contributions
401K- 36 + Employee contrib- 20 = 56
Deferred comp- 170
Roth 10

Gross Income: 550
Annual expenses 80
beezquimby,
It appears your AGI has to be way more than the amount that allows direct Roth contributions ($194k MAGI). Can you confirm that you are making Roth contributions via the "backdoor" maneuver?

Folks are assuming you are but I'm wondering?
JW
Retired at Last
Topic Author
beezquimby
Posts: 83
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Re: How am I doing? (dual physician household)

Post by beezquimby »

Yes backdoor roth.
Just recently started additional after tax Roth contributions.
Asset allocation is approx 80-90 equities.
JW-Retired wrote:
beezquimby wrote: New annual Contributions
401K- 36 + Employee contrib- 20 = 56
Deferred comp- 170
Roth 10

Gross Income: 550
Annual expenses 80
beezquimby,
It appears your AGI has to be way more than the amount that allows direct Roth contributions ($194k MAGI). Can you confirm that you are making Roth contributions via the "backdoor" maneuver?

Folks are assuming you are but I'm wondering?
JW
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