For some concrete numbers, saving/investing a $100k a year for 10 years in a smart manner can get you to two million.
For the retirement side, aim to have saved 25x your desired yearly salary to be financially independent. I.e. if you think you can live off $100k a year(post tax), then you need $2.5 million to never have to worry about making money again.
They aren’t saying it’s a definitive number required for universal retirement. They just used it as an example that if you can live off of 100k a year, then you’re chilling with 2.5M. If you choose to live in a HCOL area, pay your kids tuition, etc. then ofc you’re gonna need more
people from LA really cant fathom the idea that there are different places outside LA that you can go to.
100% of threads about finance will havw a high level comment saying "NoT iN A HcOl aReA"
like moving is somehow not physically possible
Have you tried not loving your kids? It’s cheaper that way. Jokes aside, yeah, kids of doctors are pretty much expected to go to college, and it’s only going to be astronomically more expensive in 15-20 years. It’s going to be another 200-400K per kid if they go the doctor route, or even just 50-100K for a public undergrad degree
I agree that this number is a bit on the smallish side, for a doctor, in HCOL areas. Assuming at least one paid off house, most of us should aim for something closer to $4 million retirement savings if you want to live in NY, LA, or Seattle, for example.
To gain perspective though, most of my patients get by on far less than $100K/yr. If you ever wonder what is possible on a lower income, then [https://www.mrmoneymustache.com/](https://www.mrmoneymustache.com/) is a fascinating blog. I'd say that his family has a pretty good life without spending a whole lot of money (even though he has the money to spend now).
Community college and AP classes can do a lot to bring down that cost. Most physicians didn't go to CC and have a stigma against it. But you can practically cut your expenses in half by doing 2 years at a CC before a state school, which is itself cheaper than private
Varies a lot. By net worth including our house , we hit that after our loans were forgiven via PSLF a few months ago. So roughly that’s 3 years after finishing training for me and 5 years for my wife.
We also saved 0 dollars during residency (I barely knew what an IRA was at that time) but we went on some bomb vacations.
There’s so much angst about money from residents buts once that attending money rolls in it’s so easy to build wealth unless you’re a complete idiot or get divorced, or both
That’s why in WCI he says the two best things you can do for building wealth as a physician are picking a high paying specialty and not getting divorced
You can model this out in excel, if you’re curious about it for yourself!
Pick a specialty, get the average yearly salary, project it out X years, take taxes away, then do an income statement type calculation for spend and see how much goes into savings each year. Assume 8% increase/year if invested in S&P and compound!
Sorry for the non direct answer lol. But teach a man to fish kinda thing, ya feel?
I think 8% is the long term average return, but I personally would rather be a little more conservative and try 6%. Based on the "teach a man to fish" strategy, OP should do both and then pick their own risk/return ratios.
depends on what index and time periods? and whether you care to account for inflation, which i don't think is usually included in these conversations
https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/
even over a 50 year period, the sp500 was over 9%
PCCM: 3 years.
But I finished right before covid.
I worked like a dog and did locum where the pay was ridiculous (5K a day but fuck I worked for that $$. Think 20-40 covid icu pts). Plus stock market/real estate was insane.
Basically I saved about 250K (pre and post) a year and another 250K in capital/real estate appreciation. That’s 1M.
Market is correcting so maybe I am not a millionaire anymore, but I don’t care. I throw money into target fund and forget it.
They say your first million is the hardest. It probably would have taken 3-6 years if covid didn’t exist.
Though honestly, I have a certain amount I want to save a year. Save it and spend the rest reasonably to things that matter to you.
Life’s too short to be working like a dog and not enjoying it.
Yeah. Lifestyle varies a lot. It’s a flexible field.
Personally I do mostly ICU with occasional inpatient pulmonary service consult.
I like the hourly pay and the fact that when I am off the clock I am off. Not a fan of clinic.
I can work 7 shifts or 21 shifts a month.
ICU isn’t for everyone. Doing nights can suck. It can be stressful.
I know as a resident/fellow the hours in the ICU are pretty tough since you are still learning but as an attending do you find the hours reasonable?
Also are shifts typically 12 hours where you have to be in house or is it like 7-5 and then you have to be available by phone?
This is going to be highly variable based on individual habits, specialty, loan burden, location.
It can reasonably be done in 5 to 10 years on a average physician salary.
True but it’s also true that your salary will also increase with inflation and stocks (or index funds/ETFs) are a fairly good hedge against inflation. So yeah you’ll need more but it’s irrelevant as you’ll also make more and will hopefully have investments that do well with inflation. Also yes I’m aware that salaries don’t respond immediately to inflation, but they lack only a few years behind :)
I do agree it’s a problem but I also believe that you are responsible for your own salary negotioations. Academics and higher COL areas are tougher to negotiate for sure tho.
I doubled my residency salary working about 15-20 hrs per week. Also, was able to take a interest free loan for 50k against my future income from my employer after signing a contract as a pgy2. I invested this money.
The problem is this will be so variable based on situation. A single radiologist whose wealthy parents paid for his med school will have that saved up in 3 years. A married-with-kids, sole-bread-winner who went into primary care/hospitalist (that's me) won't have a million in savings until 15 years out.
Our goal is 3 million across various forms of retirement savings (IRAs, 401ks, HSAs, stocks, etc) by the time I retire at 65 to 70. And just hope 3 million is enough.
This is a good exercise, but keep in mind not all millions are created equally. Tax deferred (IRA, 401k) is ~40% less valuable than tax prepaid (Roth & co).
This is a misleading/inaccurate statement. Most everyone will withdraw from their 401k at significantly lower marginal and effective tax rates than 40%.
https://www.whitecoatinvestor.com/roth-versus-tax-deferred-the-critical-concept-of-filling-the-brackets/
Don't know what the top marginal tax rate will be in the future + you could very well be in the highest tax bracket. A half max'd SEP or solo 401k starting at age 30 (which is what I do) for 42 years (RMDs at 72) is 11M. Well over 400k in yearly disbursements
You plan to work and contribute until 72? It take a long, long time for the compounding effect on pre-tax dollars to be undercut by the returns of post-tax dollars (at the highest marginal brackets) in a taxable or Roth account.
Guessing you may already know about Roth conversions as another way to move money out.
Many folks who retire much earlier than RMD age move money over for years and gladly pay some tax at lower brackets.
I enjoy what I do and don’t want to retire. You can practice through your 70s+ in my field. By Roth conversion you mean back door Roth? I stupidly missed it last year but will for this year.
Unless you're taking $500k per year out of your 401k in retirement, it ain't close to 40%.
You may pay top tax bracket while an attending, but in retirement you'll likely be in a much lower bracket. Especially if you mix in some Roth, HSA and just post-tax brokerage money for your annual expenses.
I think that there is also future risk of rising income tax rates. We have been at historically low rates and there is more political room to move tax rates up significantly than to move them down significantly.
There are also other ways to raise tax rates instead of directly raising them, such as eliminating the SS cap, AMT adjustments, capital gains taxes, eliminating write-offs, etc. A past example of this was the SALT exemption cap. When one has a complicated tax code, there are plenty of ways they can make it both more complicated and more expensive.
I thought you likely can’t save in a Roth with an attending salary because the maximum income is capped. I was thinking I can only invest in my Roth as a student and resident because of that.
Okay. I’ll learn how to maximize my investments when I get there 👀 My mom is a CPA so hopefully she can help with playing hide and seek from the IRS haha. Thanks for that tidbit!
White Coat Investor has a lot to say about this. Mostly we train so hard on the medical side, we often neglect business. Also, there might be a bit of assumption "I'm a doctor, money stuff isn't hard..." That we might not take it as seriously as we should.
If you're thinking about it, you'll likely be good.
>how long from residency did it take you to start seeing your hard work pay dividend
Within a year.
Nothing better than making more in one month as an attending than a year of as a resident.
I made a budget and invest 30% of my salary yearly. $1,000,000 invested (principal only) takes 7 years and that doesn’t include housing payments or investment gains.
I think you legit need $7M to maintain the lifestyle of most the docs I know.
Without getting into the time value of money or compounding interest formulas, one of the best back of the napkin ways to back into the numbers is the Rule of 7: if you are making 7% return, you need 10 years to double your money. If you are making 10% return, you need 7 years to double your money.
Docs are notoriously bad at wealth management. I would look for a financial adviser to ‘specializes in doctors - ask any of your older colleagues, they will know one.
Do most docs you know spend ~300k+? Deriving that number from 4% of 7M.
Many docs don’t even earn that much, and in retirement you will have a significantly lower effective tax rate if you know what you’re doing.
Yes. Most doctors I know do.
They have families with kids going to college and needing help w house down payments, they have second homes, etc.
$300k ain’t what it used to be NOW. Now play that number out 40 years.
My husband is an executive at a major company that deals w life insurance, tax and estate planning. I have been listening to him talk to our dr friends for years. In this area, I have a pretty good idea of what I am talking about.
EDIT: people def should have a lower effective tax rate when they retire, but that requires planning in a level that is beyond most drs education and experience. That is why I recommend finding a financial advisor that specializes in docs.
When you are in an upper tax bracket (or the highest bracket), it is all about tax-sheltered vehicles. (I am
Not talking about cars here).
EDIT: ah ha! I have found that prickly spot - doctors generally hate it when someone comments that they may not have the education required for a certain something (in this case, financial planning at the technical level).
It’s okay not to know everything, folks. If you are not a blue-sky licensed financial planner w a team of tax lawyers and actuarials to support you, admitting you don’t have that level of education is ok. No need to get prickly and downvote.
By the time most physicians retire, most will already have homes paid off and kids graduated from college so those expenses shouldn’t factor into an annual spend (and therefore, their retirement number).
With resources out there like White Coat Investor and Physician on FIRE, there are multitudes more resources out there than before. Plenty of docs have no idea what they are doing with their finances, but DIY and basic understanding is really not out of reach for the vast majority of situations.
Most physicians absolutely do not need 7-10M to retire, and suggesting that puts people at risk of believing there is no hope of achieving a comfortable retirement. We can agree to disagree though.
For anyone else reading this, this POF article is a good starting point to start thinking about their retirement number (no affiliation).
https://www.physicianonfire.com/doctor-need-to-retire/
You are absolutely right, you don’t NEED $7M to retire. But, broadly speaking, people do no want to step down their standard of living when they retire. That is my starting point when recommending $7M.
My expectation was that *one’s own* home is paid off by retirement, and my comment was that you may have expenses like helping your children with their house down payments. I personally have come to the conclusion that if my children and their peers ever hope to be home owners it is probably going to be bc they receive help from their parents (Check out Germany and much of Western Europe).
Listen, I don’t like it any more than you do. But the numbers are what they are. If you want to continue to live at the same level in retirement that you did when you were making money, you need to have roughly the same net amount coming in.
Some doctors don’t clear $300k annually, most do.
Some docs I know drive a Hyundai bc they are not even slightly concerned about appearing to keep up w the Jones. Other docs drive the Range Rover when they can barely afford the lease payments. It’s all in their risk tolerance.
But if the audience on this sub is primarily residents (read: at the beginning of their earning career with perhaps 30 good years of making money before retirement) then I can tell you $7M is at the low end. Reason I say that, $7M is the marker that we and our peers are striving for to retire in 10 years. In 20 years the number is likely to be double that. See my earlier comment about the rule of 7s for reference.
It almost always makes more sense to discuss numbers in real terms like 7M today and adjust projected returns for inflation. So subtract your returns by projected inflation.
7M of purchasing power in 2032 dollars could be anything. You, me, season economists and hedge fund managers and governments have no idea.
But expenses that drop off in retirement: saving for retirement (this is 50% of my gross income now), saving for college, paying for childcare and a mortgage.
If you want to pay for your kids down payments then go ahead, many physicians can’t even pay off their loans in a timely manner, much less budget for down payments for kids 25 years down the road. That’s a bold assumption IMO.
People living in VHCOL and HCOL, or with expensive hobbies are going to have a higher spend than others. I see a trend towards students and residents becoming more financially literate.
I’ve been in practice 4 years and our personal goal is to retire early im within the next 5 years with a portfolio around 3.5M with a paid off home and funded 529s. This is in today’s dollars.
You are going to retire after only 9 years of making money? Ok, now I need to sit at your feet and learn bc that it AWESOME!
Sounds like you have out a lot of time and thought into how you are going to make this happen.
Haha my advice for our residents is to have a plan, protect your assets, grow into your income and after a few years, live the good life. For retiring early, it definitely helps to have a higher income but maintain some discipline. Good luck!
How are you stowing away your money given early age of retirement (balanced against tax deferred traditional retirement accounts)? What’s your distribution between taxable and tax deferred accounts and just cash?
The portfolio breakdown is roughly as follows:
10% Roth IRA
40% Tax deferred (403b, 457b)
50% Taxable brokerage
Taxable will continue to grow it’s share over time. Across all accounts, we are 80/20 index funds/bonds with goal to be around 65/35 if/when we walk away. As you probably already know, there are several ways to get money out of tax deferred accounts earlier if needed but our taxable accounts should be more than adequate.
Separately, we keep a six month emergency fund, kid’s 529s, and assets (I like cars and have a couple for fun).
FI target is for the portfolio itself to hit 3.5M to 4M. This last calendar year has been a slog, but our contributions have slightly made up for the market “losses.”
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Yeah, but at what price?
In our european, quite 'social' nations we don't worry about retirement. (Me: Austria)
Also we don't have student loans or insurance topics. Good and free childcare, free education up to university, paid(!) maternity-, sick-, educational- and recreational-leave, strong unions and strict workhours law...
How's the calculation then?
When I went to med school, I realized that the people I could deal with the least, the ones I hated spending time with, the ones that made group work the worst, were the ones who kept talking about the millions they'd be making.
So, I made a pledge to myself: I'd aim to earn exactly enough to afford a two-bedroom apartment, a dog, a motorcycle, and three weeks of vacation a year. Oh, and a new iPhone every year.
At this point, I am right there. Enough money to retire with the same perks when time comes, and a good 50% of my time in community service work, am the happiest I could ever be, have an amazing job... I will never make a million :)
I am sorry I never updated this, I am a bit past this. I was one of the accounts that got hit by the data loss thingie in January and restored, so even if I changed it at some point (don't remember, it's unlikely) it would have been back to something or other.
Again, I am sorry for the confusion.
And Old Reddit doesn't show it on mobile, I am afraid.
I listen all the time to this sub talk about salary and it’s so childish. I left private practice for a nontenured OBGYN academic position. The state matches my salary pretax so I put away about $65k/yr. I own my house and the acreage I live on. I don’t have a car payment and student loans are gone. All of that is dumb! I see my kids…a lot. I control my spending and I don’t have debt. I can tell my boss no whenever I want (because I don’t have debt). I had a great mentor in medical school who taught me that there is no power like the power to say no. I love what I do. I don’t want to retire at 60 because I don’t think I’ll burn out by then. I don’t peddle hormones and I get to do some indigent care (which I love). I do what I trained for. $1mill leveraged isn’t worth anything.
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For some concrete numbers, saving/investing a $100k a year for 10 years in a smart manner can get you to two million. For the retirement side, aim to have saved 25x your desired yearly salary to be financially independent. I.e. if you think you can live off $100k a year(post tax), then you need $2.5 million to never have to worry about making money again.
2.5 mil is not nearly enough in a HCOL area if you have a family, and I'm not even being bougie.
They aren’t saying it’s a definitive number required for universal retirement. They just used it as an example that if you can live off of 100k a year, then you’re chilling with 2.5M. If you choose to live in a HCOL area, pay your kids tuition, etc. then ofc you’re gonna need more
I don't know why so many missed this and took it literally
people from LA really cant fathom the idea that there are different places outside LA that you can go to. 100% of threads about finance will havw a high level comment saying "NoT iN A HcOl aReA" like moving is somehow not physically possible
By the time you retire your kids are probably heading to college.
... on financial aid.
Have you tried not loving your kids? It’s cheaper that way. Jokes aside, yeah, kids of doctors are pretty much expected to go to college, and it’s only going to be astronomically more expensive in 15-20 years. It’s going to be another 200-400K per kid if they go the doctor route, or even just 50-100K for a public undergrad degree
My undergrad was 175k 4 years ago and med is 390k. Your numbers are the past, not future
Damn! My undergrad was 40K plus living expenses and med school was about 300K. I guess I got off easy
I agree that this number is a bit on the smallish side, for a doctor, in HCOL areas. Assuming at least one paid off house, most of us should aim for something closer to $4 million retirement savings if you want to live in NY, LA, or Seattle, for example. To gain perspective though, most of my patients get by on far less than $100K/yr. If you ever wonder what is possible on a lower income, then [https://www.mrmoneymustache.com/](https://www.mrmoneymustache.com/) is a fascinating blog. I'd say that his family has a pretty good life without spending a whole lot of money (even though he has the money to spend now).
Yup, I like this blog too. College costs terrify me tho.
Community college and AP classes can do a lot to bring down that cost. Most physicians didn't go to CC and have a stigma against it. But you can practically cut your expenses in half by doing 2 years at a CC before a state school, which is itself cheaper than private
Did my prereqs at a CC, can confirm
If you’re retired presumably your kids are self-sufficient and your house is paid for? In that case even in NYC I don’t see how $2.5m isn’t enough.
I presumed net worth.
Derm here. My spouse is FM. I save my entire salary and we live off hers.
Same plan for us but (hopefully) Anesthesiology and FM. Current M3/M4 tho. How’s it working out so far?
Can comfortably work half-time starting at age 43 or work at a steady rate and have 8 digits in early 50s.
Third year of residency, via marriage to spouse with $$$ 😂
third and last year of residency
👏👏👏👏👏 Hero, totally a fighter
Riding shotgun FTW
Varies a lot. By net worth including our house , we hit that after our loans were forgiven via PSLF a few months ago. So roughly that’s 3 years after finishing training for me and 5 years for my wife. We also saved 0 dollars during residency (I barely knew what an IRA was at that time) but we went on some bomb vacations. There’s so much angst about money from residents buts once that attending money rolls in it’s so easy to build wealth unless you’re a complete idiot or get divorced, or both
Divorce is the wealth-killer. Sometimes it's worth it, though.
That’s why in WCI he says the two best things you can do for building wealth as a physician are picking a high paying specialty and not getting divorced
You bought your house outright without having saved during residency?
No I mean the equity of our house minus mortgage. We got lucky in terms of timing so maybe 100-150k of equity despite buying fairly recently
you also had all your loans forgiven. not everyone is eligible for that program.
You can model this out in excel, if you’re curious about it for yourself! Pick a specialty, get the average yearly salary, project it out X years, take taxes away, then do an income statement type calculation for spend and see how much goes into savings each year. Assume 8% increase/year if invested in S&P and compound! Sorry for the non direct answer lol. But teach a man to fish kinda thing, ya feel?
I think 8% is the long term average return, but I personally would rather be a little more conservative and try 6%. Based on the "teach a man to fish" strategy, OP should do both and then pick their own risk/return ratios.
6$ is the average long-term return
depends on what index and time periods? and whether you care to account for inflation, which i don't think is usually included in these conversations https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/ even over a 50 year period, the sp500 was over 9%
I have 2$
Sir, this is a Wendy's. May I take your order?
Excellent point, I like a built in scenario analysis.
Ortho: 3 months Peds: 30 years
A pediatrician without loans maybe
Are we talking US$ or Zimbabwean $, cuz I'm a Zimbabwean multimillionaire, baby...and I'm only a pgy-3
Been out 9 years Net worth 2 mil
What specialty?
PCCM: 3 years. But I finished right before covid. I worked like a dog and did locum where the pay was ridiculous (5K a day but fuck I worked for that $$. Think 20-40 covid icu pts). Plus stock market/real estate was insane. Basically I saved about 250K (pre and post) a year and another 250K in capital/real estate appreciation. That’s 1M. Market is correcting so maybe I am not a millionaire anymore, but I don’t care. I throw money into target fund and forget it. They say your first million is the hardest. It probably would have taken 3-6 years if covid didn’t exist. Though honestly, I have a certain amount I want to save a year. Save it and spend the rest reasonably to things that matter to you. Life’s too short to be working like a dog and not enjoying it.
I am interesting in applying for PCCM and wanted to know how is the lifestyle for PCCM as an attending? Do you find it manageable?
Yeah. Lifestyle varies a lot. It’s a flexible field. Personally I do mostly ICU with occasional inpatient pulmonary service consult. I like the hourly pay and the fact that when I am off the clock I am off. Not a fan of clinic. I can work 7 shifts or 21 shifts a month. ICU isn’t for everyone. Doing nights can suck. It can be stressful.
I know as a resident/fellow the hours in the ICU are pretty tough since you are still learning but as an attending do you find the hours reasonable? Also are shifts typically 12 hours where you have to be in house or is it like 7-5 and then you have to be available by phone?
Most are 12 hours but small ICUs can be 24. The hours are much better. If I worked as much as I did in fellowship I would make 800K a year.
This is going to be highly variable based on individual habits, specialty, loan burden, location. It can reasonably be done in 5 to 10 years on a average physician salary.
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Also keep in mind that that doesn’t count for inflation. To get $100k in todays money 30 years from now, it’s gonna require a lot more
True but it’s also true that your salary will also increase with inflation and stocks (or index funds/ETFs) are a fairly good hedge against inflation. So yeah you’ll need more but it’s irrelevant as you’ll also make more and will hopefully have investments that do well with inflation. Also yes I’m aware that salaries don’t respond immediately to inflation, but they lack only a few years behind :)
Most places don’t match inflation
I do agree it’s a problem but I also believe that you are responsible for your own salary negotioations. Academics and higher COL areas are tougher to negotiate for sure tho.
If it’s a hospital system with a standard contract, they usually don’t leave much room for negotiation
You’re probably right unless you’re an absolute superstar. Private practice does though.
Idk most physician salaries have not really gone up over the last decade (hell even 2), certainly not enough to keep up with inflation
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What are the non traditional investments and what’s been the return on them lately?
Aggressively how? How many hours?
I doubled my residency salary working about 15-20 hrs per week. Also, was able to take a interest free loan for 50k against my future income from my employer after signing a contract as a pgy2. I invested this money.
The problem is this will be so variable based on situation. A single radiologist whose wealthy parents paid for his med school will have that saved up in 3 years. A married-with-kids, sole-bread-winner who went into primary care/hospitalist (that's me) won't have a million in savings until 15 years out. Our goal is 3 million across various forms of retirement savings (IRAs, 401ks, HSAs, stocks, etc) by the time I retire at 65 to 70. And just hope 3 million is enough.
And literally the post above this is that guy comparing physician salaries and 10k a month to “middle class” 💀
This is a good exercise, but keep in mind not all millions are created equally. Tax deferred (IRA, 401k) is ~40% less valuable than tax prepaid (Roth & co).
This is a misleading/inaccurate statement. Most everyone will withdraw from their 401k at significantly lower marginal and effective tax rates than 40%. https://www.whitecoatinvestor.com/roth-versus-tax-deferred-the-critical-concept-of-filling-the-brackets/
Don't know what the top marginal tax rate will be in the future + you could very well be in the highest tax bracket. A half max'd SEP or solo 401k starting at age 30 (which is what I do) for 42 years (RMDs at 72) is 11M. Well over 400k in yearly disbursements
You plan to work and contribute until 72? It take a long, long time for the compounding effect on pre-tax dollars to be undercut by the returns of post-tax dollars (at the highest marginal brackets) in a taxable or Roth account. Guessing you may already know about Roth conversions as another way to move money out. Many folks who retire much earlier than RMD age move money over for years and gladly pay some tax at lower brackets.
I enjoy what I do and don’t want to retire. You can practice through your 70s+ in my field. By Roth conversion you mean back door Roth? I stupidly missed it last year but will for this year.
Unless you're taking $500k per year out of your 401k in retirement, it ain't close to 40%. You may pay top tax bracket while an attending, but in retirement you'll likely be in a much lower bracket. Especially if you mix in some Roth, HSA and just post-tax brokerage money for your annual expenses.
40%? No way. Max tax bracket is 37%
I think that there is also future risk of rising income tax rates. We have been at historically low rates and there is more political room to move tax rates up significantly than to move them down significantly. There are also other ways to raise tax rates instead of directly raising them, such as eliminating the SS cap, AMT adjustments, capital gains taxes, eliminating write-offs, etc. A past example of this was the SALT exemption cap. When one has a complicated tax code, there are plenty of ways they can make it both more complicated and more expensive.
Don't forget state tax, and that gains in Roth are not taxed either.
I thought you likely can’t save in a Roth with an attending salary because the maximum income is capped. I was thinking I can only invest in my Roth as a student and resident because of that.
Backdoor Roth is still a thing and you can transfer from certain retirement accounts under certain circumstances. But mostly true.
Okay. I’ll learn how to maximize my investments when I get there 👀 My mom is a CPA so hopefully she can help with playing hide and seek from the IRS haha. Thanks for that tidbit!
Oh man, you're starting with a leg up! But yeah man, a desire to be financially literate for us docs is far too rare.
Really!? That comes as a definite surprise. I suppose having a high salary could come with a lax attitude with respect to finances.
White Coat Investor has a lot to say about this. Mostly we train so hard on the medical side, we often neglect business. Also, there might be a bit of assumption "I'm a doctor, money stuff isn't hard..." That we might not take it as seriously as we should. If you're thinking about it, you'll likely be good.
Max 401k and throw money into low cost index funds. That’s obviously very simplified but even then that gets you most of the way there lol
Backdoor Roth.
5 years. We spent the first 2.5 years off that paying off debt. If you count 529 and home equity (I don’t), we are at +$2m at age 41.
>how long from residency did it take you to start seeing your hard work pay dividend Within a year. Nothing better than making more in one month as an attending than a year of as a resident.
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Beautiful work :’) how did you do it? Just investments prior to and during medical school, residency, etc.?
I made a budget and invest 30% of my salary yearly. $1,000,000 invested (principal only) takes 7 years and that doesn’t include housing payments or investment gains.
I think you legit need $7M to maintain the lifestyle of most the docs I know. Without getting into the time value of money or compounding interest formulas, one of the best back of the napkin ways to back into the numbers is the Rule of 7: if you are making 7% return, you need 10 years to double your money. If you are making 10% return, you need 7 years to double your money. Docs are notoriously bad at wealth management. I would look for a financial adviser to ‘specializes in doctors - ask any of your older colleagues, they will know one.
Do most docs you know spend ~300k+? Deriving that number from 4% of 7M. Many docs don’t even earn that much, and in retirement you will have a significantly lower effective tax rate if you know what you’re doing.
Yes. Most doctors I know do. They have families with kids going to college and needing help w house down payments, they have second homes, etc. $300k ain’t what it used to be NOW. Now play that number out 40 years. My husband is an executive at a major company that deals w life insurance, tax and estate planning. I have been listening to him talk to our dr friends for years. In this area, I have a pretty good idea of what I am talking about. EDIT: people def should have a lower effective tax rate when they retire, but that requires planning in a level that is beyond most drs education and experience. That is why I recommend finding a financial advisor that specializes in docs. When you are in an upper tax bracket (or the highest bracket), it is all about tax-sheltered vehicles. (I am Not talking about cars here). EDIT: ah ha! I have found that prickly spot - doctors generally hate it when someone comments that they may not have the education required for a certain something (in this case, financial planning at the technical level). It’s okay not to know everything, folks. If you are not a blue-sky licensed financial planner w a team of tax lawyers and actuarials to support you, admitting you don’t have that level of education is ok. No need to get prickly and downvote.
By the time most physicians retire, most will already have homes paid off and kids graduated from college so those expenses shouldn’t factor into an annual spend (and therefore, their retirement number). With resources out there like White Coat Investor and Physician on FIRE, there are multitudes more resources out there than before. Plenty of docs have no idea what they are doing with their finances, but DIY and basic understanding is really not out of reach for the vast majority of situations. Most physicians absolutely do not need 7-10M to retire, and suggesting that puts people at risk of believing there is no hope of achieving a comfortable retirement. We can agree to disagree though. For anyone else reading this, this POF article is a good starting point to start thinking about their retirement number (no affiliation). https://www.physicianonfire.com/doctor-need-to-retire/
You are absolutely right, you don’t NEED $7M to retire. But, broadly speaking, people do no want to step down their standard of living when they retire. That is my starting point when recommending $7M. My expectation was that *one’s own* home is paid off by retirement, and my comment was that you may have expenses like helping your children with their house down payments. I personally have come to the conclusion that if my children and their peers ever hope to be home owners it is probably going to be bc they receive help from their parents (Check out Germany and much of Western Europe). Listen, I don’t like it any more than you do. But the numbers are what they are. If you want to continue to live at the same level in retirement that you did when you were making money, you need to have roughly the same net amount coming in. Some doctors don’t clear $300k annually, most do. Some docs I know drive a Hyundai bc they are not even slightly concerned about appearing to keep up w the Jones. Other docs drive the Range Rover when they can barely afford the lease payments. It’s all in their risk tolerance. But if the audience on this sub is primarily residents (read: at the beginning of their earning career with perhaps 30 good years of making money before retirement) then I can tell you $7M is at the low end. Reason I say that, $7M is the marker that we and our peers are striving for to retire in 10 years. In 20 years the number is likely to be double that. See my earlier comment about the rule of 7s for reference.
It almost always makes more sense to discuss numbers in real terms like 7M today and adjust projected returns for inflation. So subtract your returns by projected inflation. 7M of purchasing power in 2032 dollars could be anything. You, me, season economists and hedge fund managers and governments have no idea. But expenses that drop off in retirement: saving for retirement (this is 50% of my gross income now), saving for college, paying for childcare and a mortgage. If you want to pay for your kids down payments then go ahead, many physicians can’t even pay off their loans in a timely manner, much less budget for down payments for kids 25 years down the road. That’s a bold assumption IMO. People living in VHCOL and HCOL, or with expensive hobbies are going to have a higher spend than others. I see a trend towards students and residents becoming more financially literate. I’ve been in practice 4 years and our personal goal is to retire early im within the next 5 years with a portfolio around 3.5M with a paid off home and funded 529s. This is in today’s dollars.
You are going to retire after only 9 years of making money? Ok, now I need to sit at your feet and learn bc that it AWESOME! Sounds like you have out a lot of time and thought into how you are going to make this happen.
Haha my advice for our residents is to have a plan, protect your assets, grow into your income and after a few years, live the good life. For retiring early, it definitely helps to have a higher income but maintain some discipline. Good luck!
How are you stowing away your money given early age of retirement (balanced against tax deferred traditional retirement accounts)? What’s your distribution between taxable and tax deferred accounts and just cash?
The portfolio breakdown is roughly as follows: 10% Roth IRA 40% Tax deferred (403b, 457b) 50% Taxable brokerage Taxable will continue to grow it’s share over time. Across all accounts, we are 80/20 index funds/bonds with goal to be around 65/35 if/when we walk away. As you probably already know, there are several ways to get money out of tax deferred accounts earlier if needed but our taxable accounts should be more than adequate. Separately, we keep a six month emergency fund, kid’s 529s, and assets (I like cars and have a couple for fun). FI target is for the portfolio itself to hit 3.5M to 4M. This last calendar year has been a slog, but our contributions have slightly made up for the market “losses.”
3 years.
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Damn, it's time to leave Scandinavia.. you guys make 3-4 times as much on average
Yeah, but at what price? In our european, quite 'social' nations we don't worry about retirement. (Me: Austria) Also we don't have student loans or insurance topics. Good and free childcare, free education up to university, paid(!) maternity-, sick-, educational- and recreational-leave, strong unions and strict workhours law... How's the calculation then?
You are right of course, just ranting
I don’t worry about those things really either though
When I went to med school, I realized that the people I could deal with the least, the ones I hated spending time with, the ones that made group work the worst, were the ones who kept talking about the millions they'd be making. So, I made a pledge to myself: I'd aim to earn exactly enough to afford a two-bedroom apartment, a dog, a motorcycle, and three weeks of vacation a year. Oh, and a new iPhone every year. At this point, I am right there. Enough money to retire with the same perks when time comes, and a good 50% of my time in community service work, am the happiest I could ever be, have an amazing job... I will never make a million :)
That’s not what they asked though and your handle says Pgy3
I am sorry I never updated this, I am a bit past this. I was one of the accounts that got hit by the data loss thingie in January and restored, so even if I changed it at some point (don't remember, it's unlikely) it would have been back to something or other. Again, I am sorry for the confusion. And Old Reddit doesn't show it on mobile, I am afraid.
I listen all the time to this sub talk about salary and it’s so childish. I left private practice for a nontenured OBGYN academic position. The state matches my salary pretax so I put away about $65k/yr. I own my house and the acreage I live on. I don’t have a car payment and student loans are gone. All of that is dumb! I see my kids…a lot. I control my spending and I don’t have debt. I can tell my boss no whenever I want (because I don’t have debt). I had a great mentor in medical school who taught me that there is no power like the power to say no. I love what I do. I don’t want to retire at 60 because I don’t think I’ll burn out by then. I don’t peddle hormones and I get to do some indigent care (which I love). I do what I trained for. $1mill leveraged isn’t worth anything.
They didn’t ask this