What is your magic retirement number?

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How much money do you think you will need to accumulate before feeling comfortable enough to retire?

At what age do you plan on retiring? Do you plan on slowing down and working part time at a certain age?

I absolutely will not retire until I have $2 million. My goal is $4 million. I would like to slow down to part time at age 50 and retire completely at 60.

Originally Posted by curious cat

How much money do you think you will need to accumulate before feeling comfortable enough to retire?

At what age do you plan on retiring? Do you plan on slowing down and working part time at a certain age?

This is America. We don't retire. We work and then we whine for Obama to give us money.

The elephant in the "magic number room" is how much to put aside for personal healthcare. Revolutionary changes in healthcare economics continue, but what they are, how they affect one are just not knowable numbers. If I were 60 and knew that my healthcare was "covered" for life, I would go part time with $2 million. Walk completely @ $3 million.

I'll never retire completely. I don't know what I would do with all of the time. I enjoy my work, so I'll keep doing it until I die.

All of this depends greatly on inflation, whether your home is paid for, and other types of payments. The rule of thumb is that you can begin to withdraw 4% per year from a diversified portfolio largely comprised of bonds. I would feel more comfortable at 3%.

Originally Posted by DrRobert

I absolutely will not retire until I have $2 million. My goal is $4 million. I would like to slow down to part time at age 50 and retire completely at 60.

Agree with this. 4 million is the number I have in mind. But, with the inflation I have a feeling is coming this could change drastically in the next decade.

Originally Posted by dynx

Agree with this. 4 million is the number I have in mind. But, with the inflation I have a feeling is coming this could change drastically in the next decade.

Haha...are we talking 4 million personally or 4 million combined with my spouse? I think 8 million between my future doc wife and I is quite reasonable

If I decide to have a large family (>4 kids), I would have to adjust that number to closer to 10.

I don't know. I figure I need 28% of my income to live on. I can produce that with something between $1 and $2 million. I put about 25% into retirement savings, about 10% to charity, and about 25% to taxes. My mortgage accounts for maybe another 12%. That leaves me about 28% as what I would actually need to live on if you take all that other stuff away. Social security will probably provide a big chunk of that. Truthfully, $1 Million is probably enough. $2 Million is my number though.

$8 Million? Just what kind of a lifestyle are you planning on having in retirement?

Originally Posted by ActiveDutyMD

I don't know. I figure I need 28% of my income to live on. I can produce that with something between $1 and $2 million. I put about 25% into retirement savings, about 10% to charity, and about 25% to taxes. My mortgage accounts for maybe another 12%. That leaves me about 28% as what I would actually need to live on if you take all that other stuff away. Social security will probably provide a big chunk of that. Truthfully, $1 Million is probably enough. $2 Million is my number though.

$8 Million? Just what kind of a lifestyle are you planning on having in retirement?

This question is always entertaining for me because I have come to the realization that the "number" required to retire is completely dependent on lifestyle, an aspect which can be changed drastically. The eight million figure may seem excessive to some, but it is not difficult to have a lifestyle that requires this amount of generated income. I wonder though, what is the added benefit of quadrupling one's expenses in terms of QoL? Even if the QoL is directly proportional with expenditure, how much QoL was given up to obtain this income?

Personally, I have been extensively studying a concept called, retirement in the mind, which would be akin to financial independence. I have no desire to cease all tasks which would afford payment, however the knowledge that I am free to do so is priceless. For specific numbers, my goal is 1m in today's dollars above the value of my home so that I can walk away from my current career. This amount (actually about half) would allow me to lead a reasonable lifestyle in perpetuity, however, I enjoy investment/business and thus having a pool of capital is desirable.

Originally Posted by Dr Wario

Even if the QoL is directly proportional with expenditure, how much QoL was given up to obtain this income?

Haha, not much in radiology. These days, just on average, rads gross $8 mill in 20 years. Many do this in 8 years

For specific numbers, my goal is 1m in today's dollars above the value of my home so that I can walk away from my current career. This amount (actually about half) would allow me to lead a reasonable lifestyle in perpetuity, however, I enjoy investment/business and thus having a pool of capital is desirable.

I am not sure how anyone could think that 1M is enough. If you are a pharmacist, that would only be about 10 years worth of pay. 500 K is just absurd...If you retire in your sixties, how is it that 5 years of compensation is going to last 20-30 years? If you were a radiologist, 500K would be about 1 year of pay. Even with lifestyle changes, that would not even be close to enough.

Originally Posted by curious cat

How much money do you think you will need to accumulate before feeling comfortable enough to retire?

At what age do you plan on retiring? Do you plan on slowing down and working part time at a certain age?

I graduated with an MD in 1983-- thirty years in Internal Medicine will be enough enough for me. I'm out next year at the age of 55; though, I will consult when asked.

I started investing and saving when I turned 18 in 1975. I'm worth ~5 million now with no debt; living in Austin, Texas:

~2 million in property (two suburban houses, and a 15 acre farm with cabin and pond)
~1 million in personal property (household, cars, art, antiques, professional equipment, etc.)
~1.5 million in cash
~500k in gold and silver bullion

Originally Posted by Danbo1957

I graduated with an MD in 1983-- thirty years in Internal Medicine will be enough enough for me. I'm out next year at the age of 55; though, I will consult when asked.

I started investing and saving when I turned 18 in 1975. I'm worth ~5 million now with no debt; living in Austin, Texas:

~2 million in property (two suburban houses, and a 15 acre farm with cabin and pond)
~1 million in personal property (household, cars, art, antiques, professional equipment, etc.)
~1.5 million in cash
~500k in gold and silver bullion

I hope you don't mind me asking on an anon forum...
But where did the rest of your wealth go? Even assuming a modest IM 200K salary x 30 years = $6M
This discounts investing savvy, especially beginning as early as 18. Also, why do you have such a large portion of your net worth in cash rather than invested in, for example, mutual funds or more real estate? Am I just interpreting this wrong?
Not badgering...just curious. $5M is a great number regardless and congrats on your anticipated retirement!

Originally Posted by Dumb

I hope you don't mind me asking on an anon forum...
But where did the rest of your wealth go? Even assuming a modest IM 200K salary x 30 years = $6M

Well, I spent a lot of money over the years, I gave a full 10% of every paycheck to charities, and I have been financially responsible for the wellfare of my parents for the last 15 years.

Most of the cash I have now is due to liquidating investment assets over the last five years. I want the cash in hand for a number of reasons. I plan to set up monied trusts for my grandchildren, continue to care for my parents, and I'd like to travel internationally.

Also, I plan to sell one of my houses now worth $1.4 million. I never thought of my house as an investment when I bought it. I did want to to own it, make it a nice a place to live, and hope that the value of the selling price increased. (Be very careful about using real estate as investment and tax saving strategies, it's not 1999 anymore.)

The point for me, is that I have enough money to allow for my professional retirement and for what I plan to do in the future.

Originally Posted by Danbo1957

(Be very careful about using real estate as investment and tax saving strategies, it's not 1999 anymore.)

If my parents have a few rental properties, are there any disadvantages to them changing the name on the title of a home to my name? This would be mainly a tax-saving strategy.

Originally Posted by Dumb

If my parents have a few rental properties, are there any disadvantages to them changing the name on the title of a home to my name? This would be mainly a tax-saving strategy.

yes big ones.
1. Gift tax on transfer and loss of lifetime cap on tax exemption.
2. no step up in basis when the property is passed on. If your parents are goint to die in the next 5 years probably not a big deal. If they're going to be around another 20 then you're going to lose more on this than a well planned out estate.

This is where lawyers earn their money. You need to talk to someone about estate planning if your parents are worth a reasonably large amount (>10 million or so). They pay for themselves and will keep you from doing something silly like transfer properties (not that its always a bad idea you've just really got to do the math)

Also, if you're entering a high income period in your life and your parents are entering a lower income period which is the usual case you're going to pay more taxes on the rental income. They could pay less taxes and transfer 12k of the income to you (and another 12k to your wife, and another to any kids you have (for college etc) all tax free to dispose the income. You now get the income, the property when they die (with the step-up) and, depending on the state, the same property tax. You lose all of this if they just put it in your name.

And further, if you get sued and the decision goes over your malpractice coverage that house is fair game for the lawyers if its in your name. I know thats a low low likelihood but what are the odds of that happening to a practicing doc vs. your parents?

Originally Posted by Danbo1957

I graduated with an MD in 1983-- thirty years in Internal Medicine will be enough enough for me. I'm out next year at the age of 55; though, I will consult when asked.

I started investing and saving when I turned 18 in 1975. I'm worth ~5 million now with no debt; living in Austin, Texas:

~2 million in property (two suburban houses, and a 15 acre farm with cabin and pond)
~1 million in personal property (household, cars, art, antiques, professional equipment, etc.)
~1.5 million in cash
~500k in gold and silver bullion

Any 401k, IRA, db plan accounts in the background? I realize that if you do you would be too young to tap into it, but aren't we supposed to count the amount that we have put away pretax into our net worth, even more so than cars, furniture, etc?

Or does the 1.5m in cash include retirement fund account?

Originally Posted by dynx

yes big ones.
1. Gift tax on transfer and loss of lifetime cap on tax exemption.
2. no step up in basis when the property is passed on. If your parents are goint to die in the next 5 years probably not a big deal. If they're going to be around another 20 then you're going to lose more on this than a well planned out estate.

So upon reading my prior post, I realize I was not very clear. Here is what I was planning: my parents add me to the title of the home (without removing their own names) and I pay the remaining mortgage payments on that home, while they collect the renters' payments. Effectively, on my resident salary of ~45K, I will have little to no taxable income because of the mortgage payment deductions. Does what you said above still apply if there is not an actual property "transfer" but more of a "sharing" that is occurring? If not, what are the disadvantages to this approach?

Also, if you're entering a high income period in your life and your parents are entering a lower income period which is the usual case you're going to pay more taxes on the rental income.

This is an enlightening discussion, but for me it'll be the opposite for now. I will be entering a low income period (residency, max salary of 55K/yr) whereas my rents will be in a high income period.

They could pay less taxes and transfer 12k of the income to you (and another 12k to your wife, and another to any kids you have (for college etc) all tax free to dispose the income.

This is essentially what I wanted to do with my income. Have myself added to one of their homes titles and transfer my income to their mortgage payments on rental properties to dispose my income.

Originally Posted by Dumb

So upon reading my prior post, I realize I was not very clear. Here is what I was planning: my parents add me to the title of the home (without removing their own names) and I pay the remaining mortgage payments on that home, while they collect the renters' payments. Effectively, on my resident salary of ~45K, I will have little to no taxable income because of the mortgage payment deductions. Does what you said above still apply if there is not an actual property "transfer" but more of a "sharing" that is occurring? If not, what are the disadvantages to this approach?

So if they put your name on the house (we're talking about the deed here, not the mortgage, we'll get to that later) you'll in essence own half the house (or 1/3 if they are both on it now). They will need to pay tax (its considered a gift) on half (or 1/3) the value of the house the year they add your name - that would be money you would have inherited in the future.

Also when they die, you just own the house. The estate will be less the amount of the house so this may save you estate tax over the exemption BUT you'll lose the step up in basis. In other words. They bought the house in 1999 for 400k. They die and now you're the only one on the deed now its worth 800k. You sell it...you owe capital gains on 400k (no exception since its not your primary residence). You could do a 1081 exchange but otherwise there's no way to get rid of that property tax free. What would happen if you had inherited it instead is you'd get the house valued at 800k at their death and that 800k would be your future basis for capital gains tax on a sale. In other words you could sell it for 800k and not owe ANY taxes.

Even if you know you're NOT going to sell it....depreciation on rental properties starts over on inheritance. If you have your name on the property like you want to do you're depreciating 400k-minus land over whatever is left in the 27 and a half years since they bought it. If you inherit it you get to depreciate 800k (just sticking with the same numbers) minus land for ANOTHER 27 1/2 years. This is HUGE for rental properties by the way.

Total that all up and you're likely over the amount you would have paid in estate tax on the additional value of the house in the estate.

In summary, It COULD make sense but the numbers almost always favor not doing this, thats why people don't do it.

Originally Posted by Dumb

This is an enlightening discussion, but for me it'll be the opposite for now. I will be entering a low income period (residency, max salary of 55K/yr) whereas my rents will be in a high income period.

Well then the income won't matter right now but maybe worth thinking about down the line depending on how long you're going to be intraining and how long you think they'll live. Not to be morbid but we had the "benefit" of a diagnosis and relatively accurate timeline for planning.

Originally Posted by Dumb

This is essentially what I wanted to do with my income. Have myself added to one of their homes titles and transfer my income to their mortgage payments on rental properties to dispose my income.

Now you're talking about something different here. Refinancing the mortgage (your name will have to be on it...the mortgage, not the deed to the house) is a different issue. You'll likely get a similar rate since rates are so low right now and I assume your parents have a good credit history but you're going to be paying out about a 5-8% fee to refinance with your name on it. If you don't refinance, your name cant be on the mortgage and the IRS isnt going to allow you to deduct the interest.

Also, you're talking about BIG red flags if you try to deduct interest on a huge mortgage with a small income esp if you take the depreciation on the property as well. The IRS is going to be wondering where that money is coming from.

If you have the benefit of a timeline. Get rid of cash by gifting, max amount every year 12k (might be 13 now, was 12 a few years ago) to as many people as you can...makes a nice christmass gift. Property in a trust with a pour over will if they are actively developing/turning over property (never a standard will). Take the step up in basis and start the deductions over. Anything you want to sell later do a 1031 exchange to a like property in an area you want to live in, rent it for a year. "Live" in it for 2 then sell it and save yourself any capital gains by claiming it as your primary residence.

If they're really worth a fair amount (again >10 million or so) then look into incorporating the family. This will save you a ton. You can gift and leave members of the "corporation" fractions of interest that you can really undervalue since nobody on the free market would be interested in buying a fractional value of your family trust. In other words. Whats really worth a 10k fraction of your company would only sell for 7k on the free market because it would be impossible for anyone outside the family to do anything with a 1% stake. To you, you just received 20k of family money, but to the gov you got an official 14k of value and only need to pay gift tax on 1k.

in conclusion. If your family has a lot of money get a lawyer, they're worth it.

Originally Posted by Dumb

Haha, not much in radiology. These days, just on average, rads gross $8 mill in 20 years. Many do this in 8 years

I am not sure how anyone could think that 1M is enough. If you are a pharmacist, that would only be about 10 years worth of pay. 500 K is just absurd...If you retire in your sixties, how is it that 5 years of compensation is going to last 20-30 years? If you were a radiologist, 500K would be about 1 year of pay. Even with lifestyle changes, that would not even be close to enough.

You're not expecting that money to grow? Also, it isn't about what you're paid, it's about what you spend.

Just because I make $200K, doesn't mean I need $200K every year in retirement. If I live off $50K, I only need about 25 times that amount in assets saved up.

Originally Posted by ActiveDutyMD

You're not expecting that money to grow? Also, it isn't about what you're paid, it's about what you spend.

Although it is reasonable to expect the money to grow at a low rate, I would not advise taking this growth into account when deciding on a retirement figure. While you're right it's about what you spend of course, your standard of living is proportional to what you're paid. If you want to maintain your pre-retirement standard of living, you need a reasonable percentage of your salary.

Just because I make $200K, doesn't mean I need $200K every year in retirement. If I live off $50K, I only need about 25 times that amount in assets saved up.

You may not need 200K, but adjusting to living off of 50K when you are accustomed to 4 times that amount will not be comfortable. Living off of 50K does not afford a reasonable lifestyle even without any unanticipated expenditure (which is certain to happen). Note that even living off a miserly 50K x 30 years = a whopping $1.5 M! Also, this is not $1.5 M in total assets, but $1.5 M in fluid or easily liquifiable assets.

Originally Posted by dynx

So if they put your name on the house (we're talking about the deed here, not the mortgage, we'll get to that later) you'll in essence own half the house (or 1/3 if they are both on it now). They will need to pay tax (its considered a gift) on half (or 1/3) the value of the house the year they add your name - that would be money you would have inherited in the future.

Also when they die, you just own the house. The estate will be less the amount of the house so this may save you estate tax over the exemption BUT you'll lose the step up in basis. In other words. They bought the house in 1999 for 400k. They die and now you're the only one on the deed now its worth 800k. You sell it...you owe capital gains on 400k (no exception since its not your primary residence). You could do a 1081 exchange but otherwise there's no way to get rid of that property tax free. What would happen if you had inherited it instead is you'd get the house valued at 800k at their death and that 800k would be your future basis for capital gains tax on a sale. In other words you could sell it for 800k and not owe ANY taxes.

Even if you know you're NOT going to sell it....depreciation on rental properties starts over on inheritance. If you have your name on the property like you want to do you're depreciating 400k-minus land over whatever is left in the 27 and a half years since they bought it. If you inherit it you get to depreciate 800k (just sticking with the same numbers) minus land for ANOTHER 27 1/2 years. This is HUGE for rental properties by the way.

Total that all up and you're likely over the amount you would have paid in estate tax on the additional value of the house in the estate.

In summary, It COULD make sense but the numbers almost always favor not doing this, thats why people don't do it.



Well then the income won't matter right now but maybe worth thinking about down the line depending on how long you're going to be intraining and how long you think they'll live. Not to be morbid but we had the "benefit" of a diagnosis and relatively accurate timeline for planning.




Now you're talking about something different here. Refinancing the mortgage (your name will have to be on it...the mortgage, not the deed to the house) is a different issue. You'll likely get a similar rate since rates are so low right now and I assume your parents have a good credit history but you're going to be paying out about a 5-8% fee to refinance with your name on it. If you don't refinance, your name cant be on the mortgage and the IRS isnt going to allow you to deduct the interest.

Also, you're talking about BIG red flags if you try to deduct interest on a huge mortgage with a small income esp if you take the depreciation on the property as well. The IRS is going to be wondering where that money is coming from.

If you have the benefit of a timeline. Get rid of cash by gifting, max amount every year 12k (might be 13 now, was 12 a few years ago) to as many people as you can...makes a nice christmass gift. Property in a trust with a pour over will if they are actively developing/turning over property (never a standard will). Take the step up in basis and start the deductions over. Anything you want to sell later do a 1031 exchange to a like property in an area you want to live in, rent it for a year. "Live" in it for 2 then sell it and save yourself any capital gains by claiming it as your primary residence.

If they're really worth a fair amount (again >10 million or so) then look into incorporating the family. This will save you a ton. You can gift and leave members of the "corporation" fractions of interest that you can really undervalue since nobody on the free market would be interested in buying a fractional value of your family trust. In other words. Whats really worth a 10k fraction of your company would only sell for 7k on the free market because it would be impossible for anyone outside the family to do anything with a 1% stake. To you, you just received 20k of family money, but to the gov you got an official 14k of value and only need to pay gift tax on 1k.

in conclusion. If your family has a lot of money get a lawyer, they're worth it.

Awesome post. Some of the stuff doesn't apply in my case, like the step up, as the house is a relatively new construction bought just before the bubble burst. I want to address this post comprehensively though so let me get back to you!

Originally Posted by Dumb

You may not need 200K, but adjusting to living off of 50K when you are accustomed to 4 times that amount will not be comfortable. Living off of 50K does not afford a reasonable lifestyle even without any unanticipated expenditure (which is certain to happen). Note that even living off a miserly 50K x 30 years = a whopping $1.5 M! Also, this is not $1.5 M in total assets, but $1.5 M in fluid or easily liquifiable assets.

$50k (after taxes which shouldn't be a large amount) will provide for a reasonable retirement given you've planned for retirement properly. If so, you won't have a mortgage, car payment, or any other kind of debt. You also probably won't have dependents or children at home. People who have an income of $200k and aggressively save for retirement are probably not living on much more than $50k after taxes, retirement, and other investments anyways.

Originally Posted by JacobMcCandles

$50k (after taxes which shouldn't be a large amount) will provide for a reasonable retirement given you've planned for retirement properly. If so, you won't have a mortgage, car payment, or any other kind of debt. You also probably won't have dependents or children at home. People who have an income of $200k and aggressively save for retirement are probably not living on much more than $50k after taxes, retirement, and other investments anyways.

Everyone is entitled to their opinion of course. I personally find that to be ridiculous. And I am not sure your assumptions are valid. Heck, just within this thread itself, we have someone who has been financially responsible for his parents for 15 years and will continue to be in retirement, as well as planning on setting up monied trusts for his grandkids. This may include very expensive nursing home care in the future. Remember that just because your kids live elsewhere doesn't mean you're not financially responsible for them. Who is going to pay for their college and/or med school? I had plenty of classmates in med school whose mother and/or father was already retired at 60. These students were not living with their parents, but the parents were still providing them with money for room and board, their car, insurance, cell phone, travel to and from home, and even tuition in some cases. Also, within a 30 year retirement period, you will need new cars. Assuming you want to continue living your pre-retirement lifestyle (both you and your wife have a separate car), even being conservative that would be about 8 new cars over a 30 year period. If you want to maintain your 200K lifestyle and buy a reasonable luxury car (say 40K/car), that's 320K (or almost 7 years of 50K) right there. Healthcare is another issue. Healthcare costs almost always skyrocket in the retirement period. What about leisure and travel? A single travel trip for two per year can easily cost $5K. Keep in mind that none of this is even extravagant. Where is all of this money going to come from?

Originally Posted by Dumb

Everyone is entitled to their opinion of course. I personally find that to be ridiculous. And I am not sure your assumptions are valid. Heck, just within this thread itself, we have someone who has been financially responsible for his parents for 15 years and will continue to be in retirement, as well as planning on setting up monied trusts for his grandkids. This may include very expensive nursing home care in the future. Remember that just because your kids live elsewhere doesn't mean you're not financially responsible for them. Who is going to pay for their college and/or med school? I had plenty of classmates in med school whose mother and/or father was already retired at 60. These students were not living with their parents, but the parents were still providing them with money for room and board, their car, insurance, cell phone, travel to and from home, and even tuition in some cases. Also, within a 30 year retirement period, you will need new cars. Assuming you want to continue living your pre-retirement lifestyle (both you and your wife have a separate car), even being conservative that would be about 8 new cars over a 30 year period. If you want to maintain your 200K lifestyle and buy a reasonable luxury car (say 40K/car), that's 320K (or almost 7 years of 50K) right there. Healthcare is another issue. Healthcare costs almost always skyrocket in the retirement period. What about leisure and travel? A single travel trip for two per year can easily cost $5K. Keep in mind that none of this is even extravagant. Where is all of this money going to come from?

It sounds like you'd better start saving for your retirement, you're going to need it.

You've made it clear that you can't live off of $50k during retirement. A lot of people can. Some have the choice and some don't. Many people in retirement don't lead the same lifestyle they did while they worked. Time and how it's spent becomes more important than money for many people.

Originally Posted by JacobMcCandles

It sounds like you'd better start saving for your retirement, you're going to need it.

You've made it clear that you can't live off of $50k during retirement. A lot of people can. Some have the choice and some don't. Many people in retirement don't lead the same lifestyle they did while they worked. Time and how it's spent becomes more important than money for many people.

Truer words were never spoken. It is very easy to go from living like a resident to living like an attending doc. Trying to downsize the lifestyle the other way in retirement is just impossible for some people. Those who can fill their time happily with activities that don't cost much are in a far better position for retirement.

15 million in the bank.

Originally Posted by Dumb

Although it is reasonable to expect the money to grow at a low rate, I would not advise taking this growth into account when deciding on a retirement figure. While you're right it's about what you spend of course, your standard of living is proportional to what you're paid. If you want to maintain your pre-retirement standard of living, you need a reasonable percentage of your salary.



You may not need 200K, but adjusting to living off of 50K when you are accustomed to 4 times that amount will not be comfortable. Living off of 50K does not afford a reasonable lifestyle even without any unanticipated expenditure (which is certain to happen). Note that even living off a miserly 50K x 30 years = a whopping $1.5 M! Also, this is not $1.5 M in total assets, but $1.5 M in fluid or easily liquifiable assets.

That's my point. I'm living on $50K now when you take away the expenses I won't have in retirement. And I agree it's $1.5 M in usable assets. But like I said, I'd like $2 Million. Need a cushion. and that's $2 Million in 2006 dollars. By 2030 that might be 3 or 4 million.

Here are my personal target numbers. $5m minimum cash equivalents and $2m in property. My wife will be looking at another $3m minimum. We're also expecting several $m in inheritance. I picked my target because it allows me to retire comfortably regardless of my spouse's retirement or the presence of any inheritance. If everything goes according to plan we will be living like kings, with far more than we need. If I get divorced and there is a financial catastrophe and my family squanders all of their assets, etc. I will still retire comfortably.
Most people seem to take a very optimistic approach to retirement, I take a very conservative approach with realistic targets for specific goals. That's the way to do it.
I knew that I had made it when I could quit by email and move to a lake view cottage somewhere in the south and afford a lifetime supply of fine single malt scotch whisky.
I aspire to a bit more, including leaving my children with significant wealth.
We will call that other one Plan C, or maybe D.
As for when, I'm on target to be able to retire before 60, but will probably work until 62 or 65. It depends on if I can stop taking call.

Yes 4M plus property is the min. requirement for retirement. As a med student today, I look forward to a long career and money should come naturally from the practice and investments. I imagine at 60 and beyond I will be in practice even if part time.

Originally Posted by ActiveDutyMD

That's my point. I'm living on $50K now when you take away the expenses I won't have in retirement. And I agree it's $1.5 M in usable assets. But like I said, I'd like $2 Million. Need a cushion. and that's $2 Million in 2006 dollars. By 2030 that might be 3 or 4 million.

I hope you realize that all of my statements are meant to be constructive. What tends to happen, as others have mentioned, is people take an idealistic view of retirement without considering all of the expenses that will pop up (cars, healthcare, education to name a few). You know those houses that are already paid off? Well, now 10 years later, sadly you have to pay $20K per house to replace the roof. This often leads to people needing to liquidate assets later that they never intended on doing during retirement planning. I see this all the time. Look at how much your statements have changed already...now $2 M seems like a bare minimum (500K/30 years is only a 16-17K cushion per year btw, which is nothing)...which will more likely need to be $3-4 M during your retirement period. And this is not even living anything close to an extravagant life. There are right and wrong answers to financial planning. What others said above...that $1M or 500K would be enough is clearly wrong. Unfortunately, $2M probably is, too.

Fun fact:
Since 1925, inflation has averaged 3.0% a year. If that average inflation rate continues in the future, a person who currently requires $50,000 to cover annual living expenses would need approximately
$90,000 in 20 years and $120,000 in 30 years just to maintain the same purchasing power.

Originally Posted by IlDestriero

Here are my personal target numbers. $4m minimum cash equivalents and $2m in property. My wife will be looking at another $3m minimum. We're also expecting several $m in inheritance. I picked my target because it allows me to retire comfortably regardless of my spouse's retirement or the presence of any inheritance. If everything goes according to plan we will be living like kings, with far more than we need. If I get divorced and there is a financial catastrophe and my family squanders all of their assets, etc. I will still retire comfortably.

Almost my plan exactly

Most people seem to take a very optimistic approach to retirement, I take a very conservative approach with realistic targets for specific goals. That's the way to do it.

Yup.

I aspire to a bit more, including leaving my children with significant wealth.
We will call that other one Plan C, or maybe D.

I'd very much like that as well, but I feel $4M may be a bit on the low side to significantly contribute to my children's private school education and provide them with monied trusts especially if I have a large family. Hopefully my wife will be able to help with that!

As for when, I'm on target to be able to retire before 60, but will probably work until 62 or 65. It depends on if I can stop taking call.

I imagine that even after I retire from my salaried job, I'll do some physician work, like giving talks, consulting for drug/device companies, going to paid travel conferences, and taking physician surveys for honoraria.

I'm planning on making ~600k/yr as an OMFS and work for 40 years living on 30k/yr (post tax). The rest, after taxes, will be invested for future children after I pass. To hedge from medical bills I've already established advanced directives that will prevent any costly hospital stays should I become too expensive.

Originally Posted by yappy

I'm planning on making ~600k/yr as an OMFS and work for 40 years living on 30k/yr (post tax). The rest, after taxes, will be invested for future children after I pass. To hedge from medical bills I've already established advanced directives that will prevent any costly hospital stays should I become too expensive.

I know your post is pure sarcasm, but I am not laughing.

Succesful careers and accumulating wealth are in large part about delaying gratification, something that everyone reading this post does to one degree or another: Study in high school get good grades, take the honors/AP courses, SAT prep courses so you get into a good college. Work hard in college, get good letters take extra courses blow off the killer party Sat night so you can get the A in OCHEM or PCHEM exam on Monday. Get into the good med school. Work harder than your classmates, yes P=MD but AOA gets you the residency you want in the specialty that you want. Work harder than your colleagues in residency, read more, make chief or at least A-list resident list so you get the good letter for the good fellowship or good job. Work hard to make sure that you make partner, get involved in med staff politics, leadership role in your group or on med staff, etc., etc, etc,

Spend less, save more, etc.

Originally Posted by dr doze

The elephant in the "magic number room" is how much to put aside for personal healthcare. Revolutionary changes in healthcare economics continue, but what they are, how they affect one are just not knowable numbers. If I were 60 and knew that my healthcare was "covered" for life, I would go part time with $2 million. Walk completely @ $3 million.

And the gorilla is inflation. In today's dollars, if I had healthcare covered and assuming no more inflation, I figure I spend about 150k/year and am in my early 30s with about a million and change of net worth, I think I would just mulitple that 150k*30 which gets me to about 5 million or so. But that 5 million today comes with a lot of assumptions. I am also assuming 4% return with no inflation.

A common approach to estimating your "number" is to take your required annual salary and multiply it by 25. That's how much money you'll need in the bank to create that salary, cost of living adjusted, in perpetuity. This is also known as the 4% rule: You can safely withdraw 4% of an invested portfolio forever and the withdrawals are likely to remain the same (in today's dollars) forever. So each additional investment of $1MM in today's dollars creates an additional $40K of annual income in today's dollars, forever.

It's relatively easy to create a kind of automatic financial engine once you have the money- stuff the money into an index fund at a well known low cost mutual fund company, reinvest all dividends / capital gains, and take automatic quarterly withdrawals of 1%. I did this myself and survived two financial boom/bust cycles with no permanent damage. Sometimes the markets are low and I get less, sometimes the markets are high and I collect more money than I'm willing to spend (boy, talk about first-world problems!). But I've had this kind of arrangement running since the 1900s and my spending power hasn't changed to any degree.

Some may argue that this approach is too conservative- when I die there will still be this financial machine kicking off my acceptable annual salary forever. It would might have made more sense to withdraw a little more so I could die with zero dollars at the end. I suppose this is true, but it is difficult to predict the timing of one's own demise, and I retired at an awfully tender age so a slightly conservative approach seemed best for me.

Kind of an ignorant question, but the nest egg y'all are citing, is that in today's dollars or is it adjusted for inflation.

The reason I ask is I am looking at my future and my professional vs. personal goals and trying to pick a path that will satisfy (specifically) the personal goals. So, say I say I need a 4m nest egg to retire. I'll be roughly 38yo when I am done, if I want to retire by 60-65 that equates to like 200k/yr in retirement savings. Thus, I need to find an extremely well paying job. Kinda makes me worried...

Originally Posted by ericL

Kind of an ignorant question, but the nest egg y'all are citing, is that in today's dollars or is it adjusted for inflation.

The reason I ask is I am looking at my future and my professional vs. personal goals and trying to pick a path that will satisfy (specifically) the personal goals. So, say I say I need a 4m nest egg to retire. I'll be roughly 38yo when I am done, if I want to retire by 60-65 that equates to like 200k/yr in retirement savings. Thus, I need to find an extremely well paying job. Kinda makes me worried...

I think you'll find that most people who meet their retirement goal don't necessarily have extremely well paying jobs but they save a large portion of their income. Having a high paying job helps but it isn't the most important parts of the equations. Personally, I'd say that time and percentage of income saved are the biggest factors.

Originally Posted by ericL

So, say I say I need a 4m nest egg to retire. I'll be roughly 38yo when I am done, if I want to retire by 60-65 that equates to like 200k/yr in retirement savings. Thus, I need to find an extremely well paying job. Kinda makes me worried...

If you need 4M in today's dollars, you'll need a nest egg of ~8M when accounting for inflation. And yes, of course you need an extremely well paying job (as in top 1%) to hit 8M conservatively.

Originally Posted by ericL

Kind of an ignorant question, but the nest egg y'all are citing, is that in today's dollars or is it adjusted for inflation.

The reason I ask is I am looking at my future and my professional vs. personal goals and trying to pick a path that will satisfy (specifically) the personal goals. So, say I say I need a 4m nest egg to retire. I'll be roughly 38yo when I am done, if I want to retire by 60-65 that equates to like 200k/yr in retirement savings. Thus, I need to find an extremely well paying job. Kinda makes me worried...

Today's dollars. Thus the 'number' needed to retire grows over time. Hopefully your savings grows at a faster rate than your number. When these lines cross, you can do something smart like quit your job and just live off of the investment returns.

And then ten years later you do something dumb like matriculate at a medical school, lol.

First post, but definitely wanted to contribute to the thread. I have just finished my first year in private practice as a neurosurgeon. I definitely agree that the key to building a respectable nest egg is living within or beneath your means and SAVING. Although it was extremely tempting to spend my new pay check, after being on resident salary for 7 years... I managed to save 300k. It was tough, but realizing how much this 300k will become after 30 years at 5% compound interest makes it all worth it

Originally Posted by xf3rn4nd3sx

First post, but definitely wanted to contribute to the thread. I have just finished my first year in private practice as a neurosurgeon. I definitely agree that the key to building a respectable nest egg is living within or beneath your means and SAVING. Although it was extremely tempting to spend my new pay check, after being on resident salary for 7 years... I managed to save 300k. It was tough, but realizing how much this 300k will become after 30 years at 5% compound interest makes it all worth it

Way to go. Although if you know anywhere to get a guarateed safe 5% compounded today please share. Keep saving. Financial markets are likely to be less rewarding over the next few decades than the last few.

Originally Posted by xf3rn4nd3sx

First post, but definitely wanted to contribute to the thread. I have just finished my first year in private practice as a neurosurgeon. I definitely agree that the key to building a respectable nest egg is living within or beneath your means and SAVING. Although it was extremely tempting to spend my new pay check, after being on resident salary for 7 years... I managed to save 300k. It was tough, but realizing how much this 300k will become after 30 years at 5% compound interest makes it all worth it

Congrats on finishing residency and saving this much your first year.
It may be tough to save, but just think of the peace of mind/freedom you will have if you keep this up for 10 years. The money you save now will be worth much more than money saved later due to the value of time.

Originally Posted by xf3rn4nd3sx

First post, but definitely wanted to contribute to the thread. I have just finished my first year in private practice as a neurosurgeon. I definitely agree that the key to building a respectable nest egg is living within or beneath your means and SAVING. Although it was extremely tempting to spend my new pay check, after being on resident salary for 7 years... I managed to save 300k. It was tough, but realizing how much this 300k will become after 30 years at 5% compound interest makes it all worth it

Wow! That is impressive! If you are able to answer, can you share how much of that is put away pretax versus post-tax? I'm not aware of savings vehicles that can enable someone to put away 300k pretax. So, is it safe to assume that a large part of that is from post tax income, which actually makes it even much more impressive. Thanks and great job!

The 300k was actually all post-tax income. I also maxed my 401k contribution in addition to this amount, and I think that was my only pretax savings. I think I was only able to save that amount because I'm in a unique situation. Although I became an attending, I lived on a very small amount of my income this past year. I guess you could say we were testing the waters and getting accustomed to the new city and lifestyle. Aside from financing a new car and my rent payment, I didn't have very many large monthly expenditures. Although, the wife is currently searching for homes (expensive ones at that...) so this could be the most I am able to save for a while . I'm hoping to save ~300k next year, but might not be doable, as wife is becoming a regular at several clothing stores

About the pretax vehicles, I'm not too knowledgeable on them either, but I did read somewhere that if you are a partner/owner at a private practice that you are able to use a self-employed vehicle (maybe a 401k or SEP I'm not sure) that allows you to save $60k pretax income. Would you know anything about this?

Originally Posted by xf3rn4nd3sx

The 300k was actually all post-tax income. I also maxed my 401k contribution in addition to this amount, and I think that was my only pretax savings. I think I was only able to save that amount because I'm in a unique situation. Although I became an attending, I lived on a very small amount of my income this past year. I guess you could say we were testing the waters and getting accustomed to the new city and lifestyle. Aside from financing a new car and my rent payment, I didn't have very many large monthly expenditures. Although, the wife is currently searching for homes (expensive ones at that...) so this could be the most I am able to save for a while . I'm hoping to save ~300k next year, but might not be doable, as wife is becoming a regular at several clothing stores

About the pretax vehicles, I'm not too knowledgeable on them either, but I did read somewhere that if you are a partner/owner at a private practice that you are able to use a self-employed vehicle (maybe a 401k or SEP I'm not sure) that allows you to save $60k pretax income. Would you know anything about this?

Saving 300k post tax is quite an accomplishment. Congratulations.

I have read about people setting up defined benefit plans. I'm not really sure how it works, but if you are able to save up that much, it would probably be worthwhile for you to look into it. From what I understand, with db plans, you can save much more than you could with SEP IRAs. Hopefully someone who knows more about this can chime in.

Originally Posted by xf3rn4nd3sx

First post, but definitely wanted to contribute to the thread. I have just finished my first year in private practice as a neurosurgeon. I definitely agree that the key to building a respectable nest egg is living within or beneath your means and SAVING. Although it was extremely tempting to spend my new pay check, after being on resident salary for 7 years... I managed to save 300k. It was tough, but realizing how much this 300k will become after 30 years at 5% compound interest makes it all worth it

My question is, where did you put the money currently to get that 5%? Are you in index funds, stocks, a CD, target retirement funds, etc?

I have way to much cash sitting in 0.00001% savings accounts and sitting in my SepIRA in Vanguards money market account. I am very game to invest, but I am probably too cautious and just afraid of taking much of any risks with monies for retirement...

I started a ROTH IRA over about 10 years, put in stocks, mutual funds, etc.. maybe it was bad luck, but its worth MUCH less than when it started. Looking back, I wish I would have taken some crazy vacation with that money.

Originally Posted by EM_Rebuilder

My question is, where did you put the money currently to get that 5%? Are you in index funds, stocks, a CD, target retirement funds, etc?

I have way to much cash sitting in 0.00001% savings accounts and sitting in my SepIRA in Vanguards money market account. I am very game to invest, but I am probably too cautious and just afraid of taking much of any risks with monies for retirement...

I started a ROTH IRA over about 10 years, put in stocks, mutual funds, etc.. maybe it was bad luck, but its worth MUCH less than when it started. Looking back, I wish I would have taken some crazy vacation with that money.

I am relatively young and have at least 25 years left in my career, so I am investing aggressively on my own. I have about 80% in stock and the rest in miscellaneous areas (gold [which I already sold], real estate, bonds, etc.) With inflation, I just felt as though I was losing money keeping any savings in a low interest account. If you are closer to retirement then I definitely would play it safer. Several physicians have told me to invest in index and large-cap stocks or funds, as they are easier to manage for people with little time and are far less unwieldy. There is definitely a certain degree of luck involved, as I had growth of about 5% (after inflation), but often went on "gut feeling."

Have you spoken with a financial adviser? They could probably best determine where to allocate money for your specific situation. I'm still a newbie and don't have much to lose right now, so I'm just experimenting and trying to find a market niche.

Edit: I should probably add that this was my first year investing as an attending. I have been investing small amounts of money and large amounts of play money for ~10 years. I found that investing through a virtual portfolio helped me to get over my fears of investing actual money and learn a lot about when to invest. If you are looking to invest on your own without the help of a professional (and more as a hobby, as I do) I definitely recommend looking into starting a virtual portfolio and practicing with that for a few months. It's free and gives great experience without any personal risk.

You should try Mint.coms retirement advisor.

It sets what you want your monthly income to be at retirement and lets you know how much to have saved up + invested.

I plan on retiring at 55 and look to have about 6 to 7 million saved up.

Fed chairman today was talking about a new recession starting at beginning of 2013, and although it hasn't happened in our country in a lifetime, it doesn't mean it can't happen that there could be 20 years of bad times ahead. What then? Take a look at what Kyle Bass has to say about what is coming. (hedge fund manager on youtube) He successfully made money during the last great recession, a lot of money, from derivatives that no one understands but a select few players. He doesn't even have confidence in the dollar except over the shorter term, so investing is not now for the faint of heart and the expectations of 5% returns with the IMF predicting 3% growth seems optimistic, especially if you have another profession to attend to. The question of where to put money you have earned is a significant one. As Warren B says, you don't find out who is swimming naked until the tide goes out. So many of our core institutions have shown unprecedented levels of corruption that the former FDIC chairman who so brilliantly steered us away from worldwide financial collapse in 09 is not optimistic it can or will be fixed. What IS an individual to do? Great question. I asked a former (retired) member of the fed reserve board what he had in his portfolio and his answer was a cryptic "I diversify."