What age do you plan to Retire from Practice?

[Mman]

Since January of 1986, the research firm DALBAR has been compiling data measuring how the average investor performs over time. The results are pretty harrowing, and they might surprise you.

I guess I didn't explicitly point out that I was referring to people that invest regularly in a low cost and efficient manner and don't bother trying to time anything. It's well known how poorly the average shmuck does compared to benchmarks of what they should be able to get. If people make bad investment decisions, no real guess at returns over time will be useful to them. But since I KISS for the most part I do find it useful and highlighting the math of compounding is a worthwhile exercise when seeing what savings rates can yield what return decades in the future.

I mean the post I replied to suggest saving $300K a year for 22 years would yield $7M. That's just nuts. You could invest in TIPS or 30 year treasuries and do better than that.

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[dhb]

it'd be hard to find someone that hasn't considering the massive run over the last 9 years. I mean it's closer to 15% for me personally. Now I know that won't last forever, but it'd also be foolish to assume 0% real return over 22 years. 6% is basically a historical long term average so it's worth using for calculations. You can be a bit more pessimistic and say maybe 4% or 5% or whatever you want if you care to dive into the details.

The question i haven't received a satisfactory answer for is as follows:
Everyone talks about the market and how the DJI or the S&P are up so many points, but when you look at the securities that compose those indexes they are very different especially on the long time frames people refer to.
Some companies go bust and are replaced in the index but if you own a share representative of the index you have lost money by losing your piece of ownership of the company that went bankrupt.
So aren't the point values of these indexes giving a false image of returns by swaping companies that compose them?

 

[Mman]

The question i haven't received a satisfactory answer for is as follows:
Everyone talks about the market and how the DJI or the S&P are up so many points, but when you look at the securities that compose those indexes they are very different especially on the long time frames people refer to.
Some companies go bust and are replaced in the index but if you own a share representative of the index you have lost money by losing your piece of ownership of the company that went bankrupt.
So aren't the point values of these indexes giving a false image of returns by swaping companies that compose them?

Most companies that leave an index (like the S&P) over time do not leave it because they go bankrupt all of a sudden, they leave it because their market cap shrinks in size. If you own an index, you are buying into a fund that owns shares of all the companies in an index. When a company leaves it, that fund sells those shares and buys new shares of the new companies in the index.

So buying shares in an S&P 500 index fund tomorrow doesn't lock you into owning those 500 companies for the next 50 years (if that's how long you held the index fund). The fund composition will change every year to account for moves in and out of the S&P 500 so over time your returns from that holding will track vary closely with the underlying index. For example, here's the Vanguard 500 tracking fund (VFIAX) since 2007 (in blue) vs S&P (in green) and morningstar's baseline of large cap funds in orange. If you squint really close you might be able to see a difference between VFIAX and the S&P over time but not really. $10K in VFIAX turned into $20,012.58 since 2007 whereas the S&P turned it into $20,024.50. You lost $11.92 per $10,000 due to tracking error/fees over the course of 11 years. Not bad.

 

[AdmiralChz]

Even those of us at the top of our earnings potentials probably won't be able to put away $300K a year, maybe if you have dual (procedural) physician income but otherwise no chance without living in squalor.

I enjoy vacations/trips with the fam, retirement is important but so is the here and now. Impressive to whomever can pull that off, though, and manage to enjoy today. I don't think I know of anyone personally who could, including physician couples.

 

[Mman]

Even those of us at the top of our earnings potentials probably won't be able to put away $300K a year, maybe if you have dual (procedural) physician income but otherwise no chance without living in squalor.

That simply depends on income and expenses. I know quite a few physicians that have the income to save that or more while not living in squalor. Not all choose to do so, but some do.

 

[okayplayer]

We put away 100k/yr in tax advantaged accounts: corp profit sharing 401(k), her 401(k), backdoor Roths for each, HSA, 529 to limit of state tax deduction, etc.

We earmark 150k/yr in after tax dollars for stud loan repayment. When those are paid off shortly, that same 12-13k/mo will go to our brokerage account and front loading the 529s.

We still live a very reasonable lifestyle. I don’t think we deprive ourselves much. When I read Physician on Fire or a few of the other FIRE blogs, the extreme frugality does not appeal to me (these guys are living on 50k/yr or something).

I do feel lucky to have found a spouse who values saving and wants to be able to walk away from medicine on her terms, just like I plan on.

 

[AdmiralChz]

That simply depends on income and expenses. I know quite a few physicians that have the income to save that or more while not living in squalor. Not all choose to do so, but some do.

I mean good for them, but many of us will be lucky to have that much post-tax. So this conversation gets a bit of an eye-roll from me.

 

[IlDestriero]

Current plan.
80% at 52.
60% at 60
0% at 63.
I’ll make it work with whatever I have. I’ll be fine. Though a supercar of some kind and a uber fancy retirement watch will both be involved.

The only thing that might tweak the plan is if we decide to retire to a super expensive area (NYC, Monaco, etc.) or keep 2 luxury homes. Then push back 2 years.
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Il Destriero

 

[Psai]

Current plan.
80% at 52.
60% at 60
0% at 63.
I’ll make it work with whatever I have. I’ll be fine. Though a supercar of some kind and a uber fancy retirement watch will both be involved.

The only thing that might tweak the plan is if we decide to retire to a super expensive area (NYC, Monaco, etc.) or keep 2 luxury homes. Then push back 2 years.
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Il Destriero

Why not retire to a super cheap place like the phillipines and ball out

 

[IlDestriero]

Why not retire to a super cheap place like the phillipines and ball out

Huge white dude in a Ferrari might stand out a little too much in the Philippines. I’d probably be better off in India.


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Il Destriero

 

[parcus]

I am not even started with residency in the US yet, but my plan is to work some amount to allow me to homeschool kids. Retire only when I can no longer work or am sick of work; right now I really enjoy anesthesia, so can't even see that hapening in the future. Maybe I would even dump money some self funded research in anesthesia if I turn out rich. I have no debt, so could probably make it all work nicely and still have solid retirement funds.

 

[Wiscoblue]

Huge white dude in a Ferrari might stand out a little too much in the Philippines. I’d probably be better off in India.


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Il Destriero

Nix the India retirement. You won’t enjoy driving 30 km/hr in a car that can do 200 mph. The roads suck, the traffic is impossible and nobody follows the rules. Plus there’s cows on the road.

 

[IlDestriero]

Can you put a bull bar on a Ferrari?


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Il Destriero

 

[DocVapor]

Nix the India retirement. You won’t enjoy driving 30 km/hr in a car that can do 200 mph. The roads suck, the traffic is impossible and nobody follows the rules. Plus there’s cows on the road.

Yeah but he'd look like a boss doing it.

 

[dhb]

Can you put a bull bar on a Ferrari?


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Il Destriero

Just get a Lamborghini

 

[Twiggidy]

Even those of us at the top of our earnings potentials probably won't be able to put away $300K a year, maybe if you have dual (procedural) physician income but otherwise no chance without living in squalor.

I enjoy vacations/trips with the fam, retirement is important but so is the here and now. Impressive to whomever can pull that off, though, and manage to enjoy today. I don't think I know of anyone personally who could, including physician couples.

Quite literally

"You only live once, that's the motto *beep*"

 

[Twiggidy]

Current plan.
80% at 52.
60% at 60
0% at 63.
I’ll make it work with whatever I have. I’ll be fine. Though a supercar of some kind and a uber fancy retirement watch will both be involved.

The only thing that might tweak the plan is if we decide to retire to a super expensive area (NYC, Monaco, etc.) or keep 2 luxury homes. Then push back 2 years.
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Il Destriero

The Cote d'Azur is so damn nice....If only I could figure out some Powerball numbers, I'd be on a plane like Rajneesh so fast lol

 

[IlDestriero]

Just get a Lamborghini

I’m not sure the Bull badge is so good at pushing cows off the road. I’ll ask at the dealership. They’ll probably try to sell me the dumb Urus SUV they have now.


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Il Destriero