Family med MD/DO : thoughts on retirement

[Cranjis McBasketball]

Without going too much down the rabbit hole, there are many benefits to marriage that extend outside of the tax code and religion.

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[deleted87716]

 

[Mad Jack]

Without going too much down the rabbit hole, there are many benefits to marriage that extend outside of the tax code and religion.

There are also many risks

 

[scharnhorst]

it depends with the right business partner ( or spouse if you will) you can have a very happy fulfilling productive life
but with the wrong partner it can be the worst business contract you ever signed in your life
I'm just too afraid I will end up with the latter as people only show their true colors after marriage

 

[betamale]

Lol, you do you, don't get married...or get married if you want...it's both fun to be single or married

 

[Ironheme]

I'm all for happily ever afters but the rate of divorce I've seen among physicians...

Alimony + child support isn't cheap...

 

[Mad Jack]

I'm all for happily ever afters but the rate of divorce I've seen among physicians...

Alimony + child support isn't cheap...

Physicians actually have some of the lowest divorce rates out there

 

[Mad Jack]

it depends with the right business partner ( or spouse if you will) you can have a very happy fulfilling productive life
but with the wrong partner it can be the worst business contract you ever signed in your life
I'm just too afraid I will end up with the latter as people only show their true colors after marriage

Eh, I'm married but we had shown our true colors long ago and accepted each other for who we are, faults and all. Relationship is 100% fine. The idea that people change post-marriage is kind of ridiculous, and tends to only happen with people who get married for the wrong reasons

 

[KeikoTanaka]

I think a lot of traditional couples only finally move in together after marriage, which is ridiculous, and perhaps an older generation thing. My generation, everyone lives together for a long time before you get married, probably because we're much poorer than older generations, so even if we wanted to, we cannot afford a wedding, so we do the next best thing: Live with each other like we're married. But for this reason, it's impossible to finally show your "true colors" after marriage.... and you're probably marrying for the right reason, or at least know you're compatible under the same roof.

 

[Ironheme]

Physicians actually have some of the lowest divorce rates out there

Fair enough. I did some googlefu and it's more heartening than I thought:

Divorce among physicians and other healthcare professionals in the United States: analysis of census survey data

The occupations with the highest and lowest divorce rates in the US

Bartenders and telemarketers much higher.

I'll rephrase to saying that divorce/alimony is expensive. One doc I know is working 3+ jobs/roles, making 400-500$k per year, but is still living paycheck to paycheck due to alimony + toys + 2nd mortgage, and has very little in retirement in his 60's.

 

[Mad Jack]

Fair enough. I did some googlefu and it's more heartening than I thought:

Divorce among physicians and other healthcare professionals in the United States: analysis of census survey data

The occupations with the highest and lowest divorce rates in the US

Bartenders and telemarketers much higher.

I'll rephrase to saying that divorce/alimony is expensive. One doc I know is working 3+ jobs/roles, making 400-500$k per year, but is still living paycheck to paycheck due to alimony + toys + 2nd mortgage, and has very little in retirement in his 60's.

It's a dangerous game, if you want to play it make sure you know what you're in for

 

[Keona]

I’m in my early 30s. My husband and I have been married for over 10 years. We got married on his 21st birthday. We did not live together before marriage but did live in the same dorm buildings. He’s been there through college, medical school, residency and two kids. I can’t imagine life without him now.

 

[scharnhorst]

Eh, I'm married but we had shown our true colors long ago and accepted each other for who we are, faults and all. Relationship is 100% fine. The idea that people change post-marriage is kind of ridiculous, and tends to only happen with people who get married for the wrong reasons

It worked for you congratulations but dont assume that is how everyone else thinks
Such things are very subjective and other peoples opinions cannot be just dismissed out of hand as " ridiculous "

 

[scharnhorst]

I’m in my early 30s. My husband and I have been married for over 10 years. We got married on his 21st birthday. We did not live together before marriage but did live in the same dorm buildings. He’s been there through college, medical school, residency and two kids. I can’t imagine life without him now.

Thats great , sharing ups and downs of life togather brings people closer
And marrying young also helps

 

[scharnhorst]

Fair enough. I did some googlefu and it's more heartening than I thought:

Divorce among physicians and other healthcare professionals in the United States: analysis of census survey data

The occupations with the highest and lowest divorce rates in the US

Bartenders and telemarketers much higher.

I'll rephrase to saying that divorce/alimony is expensive. One doc I know is working 3+ jobs/roles, making 400-500$k per year, but is still living paycheck to paycheck due to alimony + toys + 2nd mortgage, and has very little in retirement in his 60's.

Did they factor in " it's cheaper to keep her" ?
Several of my class mates have come to that conclusion

 

[ThoracicGuy]

Refinanced 6.8 -> 3.75% with autopay. Paid loans within 12 mos, about 250k. Had $50k cash savings (1 yr emergency fund). Liquidated my meager investments 8 mos ago (but kept my 403b because it was free money from my prior job) when the markets were flat and down, although it had good returns within past 24 most, thanks Pres Trump. Doesn't make sense to save if u have debt. Get rid of it (loans) ASAP

Selling off when the market is down is just locking in your losses.

Also, you can't time the market.

 

[Ericslv]

33, won't be done with residency until 37. Need to save 2.5 million to retire on a humble 100k drawdown per year on the 4% rule. Working my ass off until 50, I think I can pull it off, if not earlier

You will need more if you retire at 50. The 4% guideline (not rule) is based on studies on for a 30 year retirement.

 

[Ericslv]

I'm 39 have been in practice after residency for approx 7 + yrs

Just wanted to see what the thoughts are of other doctors on retirement

DO you want to retire early i.e before 60 ? if so what is your strategy ?

Do you plan to work part-time after 65 as long as you could and why ?

Any senior docs here who are working in their 60s and 70s what they think are limiting factors for them and major challenges?

Thanks

If you save 50% of your after tax income you could be out in about 15 years.

 

[jamaica jan sun princess]

You will need more if you retire at 50. The 4% guideline (not rule) is based on studies on for a 30 year retirement.

That $100,000 is purely interest, so they could live off of the principle $2,500,000 indefinitely. If you have access for a financial calculator(online or physical), type in

N=30
I/YR=4%
PV=2,500,000
FV2,500,000

After entering those variables, hit the PMT button. It will equal $100,000. Now change N to 5000 and hit PMT again. Same $100,000. I used the HP 10BII calculator, but any financial calculator should work.

 

[Ericslv]

That $100,000 is purely interest, so they could live off of the principle $2,500,000 indefinitely. If you have access for a financial calculator(online or physical), type in

N=30
I/YR=4%
PV=2,500,000
FV2,500,000

After entering those variables, hit the PMT button. It will equal $100,000. Now change N to 5000 and hit PMT again. Same $100,000. I used the HP 10BII calculator, but any financial calculator should work.

Yes the math is correct for a 4% SWR. However, the studies that came up with a 4% SWR were done for a 30 year period. If one retired at 50 and the real possibility of living 40 to 50 more years exists then 4% SWR would give them about a 70% chance of success. Therefore, a 2.8% to 3.0% SWR would be more realistic.
Financial calculators only spit out what you put into them. You have to look at historical studies and patterns to see what the odds of success would be based on historical patterns. Even history doesn't always repeat itself.

The best calculator for historical calculations is called firecalc. www.firecalc.com

 

[jl lin]

Eh, I'm married but we had shown our true colors long ago and accepted each other for who we are, faults and all. Relationship is 100% fine. The idea that people change post-marriage is kind of ridiculous, and tends to only happen with people who get married for the wrong reasons

The last part is a bit cynical Mad. I mean if grow doesn't mean change as well, maybe, but growth does mean change. We will be who we are, but hopefully we grow. Also, stuff that bothers a person when they were younger doesn't anymore. You've move beyond it and see things differently. Like you say, you accept each others pluses and minuses, but you do grow, well hopefully. God life would suck if you couldn't.

About the retirement thing. Mixed feelings. I like how a FP friend does it. This person takes off about every quarter or so. Plans and travels. Keeps this person happy and still loving the job. Get's the jobs done well and this person is good with people. Doesn't get stuck in negative--very positive person. This person is gonna keep going a while in FP.

Seen WAY too many people living for retirement only to have to fight hard to stay alive. I'm not a big believer in waiting for retirement. No guarantees about how close you will get to it or through it.

 

[scharnhorst]

I like how a FP friend does it. This person takes off about every quarter or so. Plans and travels. Keeps this person happy and still loving the job. Get's the jobs done well and this person is good with people. Doesn't get stuck in negative--very positive person. This person is gonna keep going a while in FP.

Seen WAY too many people living for retirement only to have to fight hard to stay alive. I'm not a big believer in waiting for retirement. No guarantees about how close you will get to it or through it.

I take 3 weeks off in august and september to do what I need to
I dont like to travel too much but atleast I get time for my hobbies

 

[NITRAS]

Yes the math is correct for a 4% SWR. However, the studies that came up with a 4% SWR were done for a 30 year period. If one retired at 50 and the real possibility of living 40 to 50 more years exists then 4% SWR would give them about a 70% chance of success. Therefore, a 2.8% to 3.0% SWR would be more realistic.
Financial calculators only spit out what you put into them. You have to look at historical studies and patterns to see what the odds of success would be based on historical patterns. Even history doesn't always repeat itself.

The best calculator for historical calculations is called firecalc. www.firecalc.com

I think the biggest deal is that 50 yo isn’t old. It’s basically middle age, and most people make the most money in that decade of life. Your $2.5M can turn into $5M easily in that decade. At which point, you go from healthy retirement to big blessing to kids and grandkids.

If I didn’t work, my wife would kill me. I have to be careful on my 2 weeks off as it is. I’m not “working for retirement”, but I have financial goals.

 

[Ericslv]

I think the biggest deal is that 50 yo isn’t old. It’s basically middle age, and most people make the most money in that decade of life. Your $2.5M can turn into $5M easily in that decade. At which point, you go from healthy retirement to big blessing to kids and grandkids.

If I didn’t work, my wife would kill me. I have to be careful on my 2 weeks off as it is. I’m not “working for retirement”, but I have financial goals.

I wouldn't say easily double you money in 10 years. Rule of 72 would say if you get 7% per year you could do it but that would be assuming a solid market next 10 years and a portfolio of 75% stocks/25% bonds. The original poster that I responded to was saying they can retire on 2.5 mil with a 4% withdraw rate for the next 50 years or so. The data does not support that at a greater than 80% success rate. As far as working or not its a personal choice. At some point one will get tired of trading time/life years for money and if they can retire they will. Another option is part time.

 

[NITRAS]

It might be $4M, it might be $7M. The point is that the OP would be a lot better off if he did something to keep his hands off retirement, especially considering how long he wants to live off it. @Ericslv

 

[Ericslv]

It might be $4M, it might be $7M. The point is that the OP would be a lot better off if he did something to keep his hands off retirement, especially considering how long he wants to live off it. @Ericslv

Why? If he has the money, why not retire if he chooses to do it? Working is overrated. Unless you like it. I know some who work into their 70's. I know others who retired at 50 and are very happy. As long as you can afford it I don't judge. Myself, I like part time work. Keeps my portfolio safer and protects against inflation by keeping my withdraw rate low. I can back up days of work and have a long stretch of time off to travel.

My wife wouldn't care either way if I work or not. You can turn 2.5mil to 5 mil. without ever adding to it again and just work for your expenses. So if you live a frugal life, you can have ton's of time off perhaps to spend with the grandkids so they get to know you better rather than just get your money.

 

[Hippocrates II]

You will need more if you retire at 50. The 4% guideline (not rule) is based on studies on for a 30 year retirement.

That study is also predicated on the idea that you withdraw money with equal distributions, which is probably not reflective of real life if you have an ounce of intelligence. If you continue to draw down at 4% while the market is in a temporary spiral down, you are just asking for the money to run out. Most people (I think) would be smart enough to be dynamic about their withdrawals relative to how their portfolio is doing.

 

[Ericslv]

That study is also predicated on the idea that you withdraw money with equal distributions, which is probably not reflective of real life if you have an ounce of intelligence. If you continue to draw down at 4% while the market is in a temporary spiral down, you are just asking for the money to run out. Most people (I think) would be smart enough to be dynamic about their withdrawals relative to how their portfolio is doing.

I would say that intelligence has little to do with it. Doctors are intelligent people. Yet, they are some of the worse business people around. Their egos and arrogance make them do and say things that don't make them very intelligent at all. So yeah, There are many intelligent people who go by the 4% guideline and keep spending. With that said being flexible in your spending needs and having a minimal and a maximal range would help you through those market downs. Your minimal may be 2.5% and you max perhaps 3.5%. One of the biggest mistakes people make is hiring a financial planner, paying him 1% to manage your money and then thinking they can withdraw 4% per year. They are really withdrawing 5%. A good rule of thumb is 30 to 33x you spending needs before taxes (taxes that would be less due to capital gains etc.).

 

[Horners]

DO you want to retire early i.e before 60 ? if so what is your strategy ?

Do you plan to work part-time after 65 as long as you could and why ?

I thought an ad was coming after this

 

[DOsoon_2Be]

Lurking premed here (applying this spring) but this thread very much intrigued me. This is going off the rails a bit from OPs concern but it seemed like the right audience to comment. What is the general position on financial advisors with physicians? It seems like people on here, more often than not, warn against them. I only ask because my fiance is an advisor and hoping to work with healthcare professionals.

 

[VA Hopeful Dr]

Lurking premed here (applying this spring) but this thread very much intrigued me. This is going off the rails a bit from OPs concern but it seemed like the right audience to comment. What is the general position on financial advisors with physicians? It seems like people on here, more often than not, warn against them. I only ask because my fiance is an advisor and hoping to work with healthcare professionals.

So you're getting a little bias here. The people advising against them are those who are learned enough to manage their own retirement finances reasonably well for the most part. That and there are a lot of predatory financial advisers out there.

I have little knowledge of finances beyond paying bills so I have one and have been very pleased with him. I know @Blue Dog also uses one and has been pretty pleased as well.

 

[Hippocrates II]

Lurking premed here (applying this spring) but this thread very much intrigued me. This is going off the rails a bit from OPs concern but it seemed like the right audience to comment. What is the general position on financial advisors with physicians? It seems like people on here, more often than not, warn against them. I only ask because my fiance is an advisor and hoping to work with healthcare professionals.

It depends on what her fee is, but in all honesty, the only times I can imagine a FA is anything more than an expensive middle(wo)man is if the client is fairly clueless on finances and would save less for retirement without the FA + their fee, or if they have some kind of niche financial situation going on. Even then, Vanguard will hold your hand and do everything for you at 0.3%, so it's still a hard sell. Even worse if she works for a place like EJ where they throw advisement fees, load fees, high E/R funds, etc. at a person simultaneously. There is a lot of competition for advisement in the market now and aside from what I would imagine being very niche cases, you would be remiss to pay someone 1% to do what so many places now charge .25-.5% to do. I dump all of my cash into 3 Vanguard index funds and likely earn more than just about any FA-driven portfolio out there while paying ~.05% in E/R fees to do so.

Edit - I should add that what I wrote above is only my opinion of %-driven FAs. There is an unethical conflict of interest when the cost of my investments correlates with your income IMO. Fee-for-service FAs with a fiduciary duty to their client is probably not a bad idea for a physician to speak with at least one time.

 

[septoplasty]

It depends on what her fee is, but in all honesty, the only times I can imagine a FA is anything more than an expensive middle(wo)man is if the client is fairly clueless on finances and would save less for retirement without the FA + their fee, or if they have some kind of niche financial situation going on. Even then, Vanguard will hold your hand and do everything for you at 0.3%, so it's still a hard sell. Even worse if she works for a place like EJ where they throw advisement fees, load fees, high E/R funds, etc. at a person simultaneously. There is a lot of competition for advisement in the market now and aside from what I would imagine being very niche cases, you would be remiss to pay someone 1% to do what so many places now charge .25-.5% to do. I dump all of my cash into 3 Vanguard index funds and likely earn more than just about any FA-driven portfolio out there while paying ~.05% in E/R fees to do so.

Edit - I should add that what I wrote above is only my opinion of %-driven FAs. There is an unethical conflict of interest when the cost of my investments correlates with your income IMO. Fee-for-service FAs with a fiduciary duty to their client is probably not a bad idea for a physician to speak with at least one time.

This, for starters Vanguard is pretty good for beginners. Starting out in residency, fortunately, our retirement contribution had gone through them and that's where I learned them. Been with them since than. Easy.

OP/PreMed Poster: As for FA's, again, if you read things out there that are catered to us i.e. high income, high debt population, there are a lot of good resources. The only thing that you may need now, is a good accountant who manages my taxes/leverages deductions so that I can "spend" while knowing that I can reduce my tax burden by a X amount. This I have read is very impactful. Once you "save" this money, you are to put into your retirement funding by maxing it out.

A great tool that I personally use is this flow chart:

Appologize for the post, it just inserts the image everytime I try and link to it.

 

[DOsoon_2Be]

Really appreciate the input from you guys! She also agrees that EJ, for the most part, is quite unethical for the reasons stated above among other things. She doesn't get paid by % of income luckily but instead, unfortunately, gets paid by commission. Obviously this still isn't ideal because the vast majority of other advisors will just sell you anything to make a quick buck and that's the issue she's running into now.

She's pretty passionate about holistic planning but unfortunately doesn't get reimbursed for that and it's driving her mad because she's putting in twice the effort of her colleagues to make a fraction of what they make because only certain clients she has right now need something like life insurance, supplemental DI, investments, etc. That being said, her company does require all of their licensed advisors to be fiduciaries. It's tough though, I hope to be supportive in any way I can entering the healthcare field and helping her network but I also would not want to burn any bridges with future colleagues in the process. Any ideas on how to mediate that in the future? I know people get can feel offended being a referral. Not only that, it would seem I also have a conflict of interest being her spouse and referring people to her. It feels like quite the conundrum

 

[DOsoon_2Be]

Btw, really appreciate the flowchart! I'll have to send that to my fiance, it seems very useful!

Edit: sorry again for the questions and unrelated posts to OP. I don't think I'd feel very comfortable asking the docs I'm currently shadowing about these things, and I know a lot of you guys financially savvy so your perspectives are very useful

 

[iqe2010]

It depends on what her fee is, but in all honesty, the only times I can imagine a FA is anything more than an expensive middle(wo)man is if the client is fairly clueless on finances and would save less for retirement without the FA + their fee, or if they have some kind of niche financial situation going on. Even then, Vanguard will hold your hand and do everything for you at 0.3%, so it's still a hard sell. Even worse if she works for a place like EJ where they throw advisement fees, load fees, high E/R funds, etc. at a person simultaneously. There is a lot of competition for advisement in the market now and aside from what I would imagine being very niche cases, you would be remiss to pay someone 1% to do what so many places now charge .25-.5% to do. I dump all of my cash into 3 Vanguard index funds and likely earn more than just about any FA-driven portfolio out there while paying ~.05% in E/R fees to do so.

Edit - I should add that what I wrote above is only my opinion of %-driven FAs. There is an unethical conflict of interest when the cost of my investments correlates with your income IMO. Fee-for-service FAs with a fiduciary duty to their client is probably not a bad idea for a physician to speak with at least one time.

Hope you don’t mind me asking, but those vanguard index funds you contribute to, is that in addition to maxing out your 401k and IRA?

 

[Hippocrates II]

Hope you don’t mind me asking, but those vanguard index funds you contribute to, is that in addition to maxing out your 401k and IRA?

I'm back in school now, but yeah, when I was working I maxed out my 401k, IRA, and put money into taxable investment accounts via Vanguard. However much you put in is a personal choice between how much spending money you want now vs. how secure you want to be in the future. On a physician's salary, you should definitely be able to max out all of those tax-sheltered accounts IMO.

 

[Ericslv]

Lurking premed here (applying this spring) but this thread very much intrigued me. This is going off the rails a bit from OPs concern but it seemed like the right audience to comment. What is the general position on financial advisors with physicians? It seems like people on here, more often than not, warn against them. I only ask because my fiance is an advisor and hoping to work with healthcare professionals.

You don't have to manage your own finances but you should actively read about and understand it so you can make an educated decision. A good place to start is whitecoatinvestor.com and the boglehead community. With that said the financial advisor community is filled with people charging high fees for poor quality and expensive products. There are many advisors who parade as advisors who simply sales men selling the products that pay them the most.

The best way to choose an advisor is to pick one who is independent and who charges not by % but perhaps a flat fee. There are several that charge between 2500 to 7500 per year to set up and mange your money. If someone is first starting out you may not even need them. You many need someone who charge perhaps a few thousand to get you started and put you on a path until you have saved enough to have someone take a close a look and adjust your finances accordingly.

If your fiance charges a percentage for her services I would not use her. Why would I pay someone 1% of a portfolio when I can do it for a tenth of that?

At your stage I would focus on not getting into too much debt. As in student loan debt. I would also take a deep, long look (if you havn't already) about entering medicine. I didn't say it's a bad idea, but something to really look at.