Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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- Joined: Sat Jul 28, 2018 1:37 pm
Sellery1031 wrote: ↑Fri Oct 16, 2020 2:20 pm
I am an early career physician transitioning from fellowship to attending level salary.
I have a question for high salary earners - most informative would be those peri-retirement.
Let's use an arbitrary cut-off of $500K+ annual household income (W2 salary alone).
Is there anything you wish you would have done sooner with respect to personal finances or investments?
Is there anything unique that high salary earners should consider in the personal finance space?
In particular, anything more than:
-Maxing out employer-sponsored tax-advantaged retirement account(s)
-Maxing out HSA
-Maxing out individual retirement account(s)
Thanks for the input in advance,
Besides "arguing" with Klangfool over data about doctors and lawyers, should answer your question.
Start 529 for kids since at 500k will run out of tax deferred space quickly---and you should as you state above!
Would put in enough to get state tax savings if applicable but likely don't go crazy overfunding
Use whatever your professional position is to get reimbursed for society memberships, trips, etc
If time look to small side gigs like consultation. Can take out tax deferred from your "consulting business" and some expenses
When you max out individual retirement accounts consider Roth conversion immediately for you and spouse each year
Will work pay for life and disability?
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- Joined: Sat Jun 13, 2020 2:35 pm
Fit the criteria listed here and pretty much have all of the tax advantaged items maxed out. The one item I see mentioned consistently that I haven't availed is an HSA account. At the maximum tax bracket, so is it always better off to utilize my employer's HDHP HSA plan regardless of situation? We have a newborn and are currently on a standard HMO plan and have needed a couple emergency room visits already. HDHP family deductible is $4,500 and out of pocket max is $9,000. My employer provides an annual contribution of $1,250. Each of the emergency room visit bills came in itemized well in excess of $10k.
Advice listed here for the HSA seems like it should always be a given, but having trouble seeing how it works out for any families with young kids. Would appreciate if anyone can help explain how the numbers work out here.
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- Joined: Mon May 13, 2013 5:42 pm
i had a few years at this comp level before i hit 7 figures. it was pretty straightforward, in order of priority:
- save like crazy until we hit retirement number
- save like crazy until we had another $750k for college budgets
- save like crazy until mortgage was paid off
- We did have small lifestyle creep: paid $40k for a car, and spent $40k per year on family vacations. no regrets on the vacations.
i don’t know what your ceiling looks like, obviously all this becomes easier > 7 figures. the key to saving was my belief that my comp could fall back into the $200k range at any moment.
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stoptothink wrote: ↑Sat Oct 17, 2020 7:23 pm
More than anything, it set me up to be happy with a simple life, which has brought my family and I security.
This is what "winning the game" is all about!
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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randomguy wrote: ↑Sat Oct 17, 2020 1:56 pm
bwalling wrote: ↑Fri Oct 16, 2020 2:30 pm
Saved more early on rather than enjoying finally having a high income. Both for the compounding, and for forcing the "base spend" up higher.
I would have spend much more money early on. The things I passed up on to save those extra 5k-10k/year just weren't worth now that I am saving 20x of that per year.
Present bias in action. I'm six years from fully retiring @ 50. My preference now is to have saved more and to have not inflated my spending level so much. Some earlier behavioral changes and I'd be done now.
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Thanks for all the responses and feedback.
The wisdom is much appreciated.
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- Joined: Mon Jun 10, 2019 7:14 pm
A little late here, although I fit the category. For us (non-physicians), the 500K+ household income level came later in our careers. Retirement is in 0 to 3 years.
To echo many comments -- max out tax-advantage investments structures early. Doing a better job of tax planning so a couple of 1M+ years weren't so painful in April. On a personal regret side, I should have capitalized more on the 2008 collapse in real estate -- we looked at super cheap properties but didn't pull the trigger. But that is a very personal decision to go down the rental income route. And hindsight with that type of stuff is always 20/20.
And to reiterate, while don't get caught up in spending to keep up pretenses or to fulfill your entire wishlist, don't overlook that some spending early on is best enjoyed and experienced at the right age, or when an opportunity is available and you have your health. A lot of the rest of it won't matter if you wait, but some things and experiences are best enjoyed earlier.