how long does it take the average doctor to hit the 25x fat fire numbers?

finalpsychyear

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Fat fire = 100k x 25 = 2.5 mill

By average I am considering what 2019 medscape rated all physician salaries around 300k average of course that counts specialists with pcps.

Do people hit this 10,15,20 years into their attending life if we define the numbers above?
 

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Fat fire = 100k x 25 = 2.5 mill

By average I am considering what 2019 medscape rated all physician salaries around 300k average of course that counts specialists with pcps.

Do people hit this 10,15,20 years into their attending life if we define the numbers above?
How fast CAN they, or how fast do they actually? Because physicians in general are notorious under accumulators of wealth.
 
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finalpsychyear

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How fast CAN they, or how fast do they actually? Because physicians in general are notorious under accumulators of wealth.

1. Can: 300k for single male after taxes in a state tax would leave about 190. My guess is 6k monthly expenses counting loans and all leaving about 118-120k a year for investing. If they had 0 investments at the start of attending life and they got a 7% return I think it takes 14 years to hit 2.5mill which actually sucks because that's actually taking about 30% inflation so the buying power of that would be only 1.75 mill adjusted for inflation.

Damn its not easy to get there so if attending at 31-32 including fellowships and all they are hitting non inflation 25x near 45 ish.
 
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Mman

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1. Can: 300k for single male after taxes in a state tax would leave about 190. My guess is 6k monthly expenses counting loans and all leaving about 118-120k a year for investing. If they had 0 investments at the start of attending life and they got a 7% return I think it takes 14 years to hit 2.5mill which actually sucks because that's actually taking about 30% inflation so the buying power of that would be only 1.75 mill adjusted for inflation.

Damn its not easy to get there so if attending at 31-32 including fellowships and all they are hitting non inflation 25x near 45 ish.
For most physicians earning $300K per year, I'm guessing their monthly expenses including loans are >>>> $6K per month. I mean student loans are probably $1K a month if not more. I'll assume something in the neighborhood of $2500-3000 per month for housing costs (mortgage + tax +insurance + upkeep) if not more. Throw in transportation, food, clothing, cable, cell phone, internet, entertainment, occasional vacation, etc. and it adds up quick.


Also I find it humorous when you note it is not easy to get $2.5M in the bank. No kidding. It isn't supposed to be. A very low percentage of college graduates will ever get there in their life.
 
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This depends a lot on how much you're saving and how your investments do. It will vary considerably based on the cost of living in your area, your spending habits, and your investing policy. Living like a resident in some aspects of your spending can be helpful to get there faster.
 
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finalpsychyear

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This depends a lot on how much you're saving and how your investments do. It will vary considerably based on the cost of living in your area, your spending habits, and your investing policy. Living like a resident in some aspects of your spending can be helpful to get there faster.
Well in the example above the "attending" was living on 6k a month which i am sure is on the low end and almost similar to live like a resident and after post tax money was left with about 120k which he invested 100% getting 7% returns on. It still takes 14 years and this doesn't consider many other expenses such as wife, kids, etc. So for someone in the 300k range with 7% average returns on anything left post tax being invested 14 years seems
like a long time.

I am trying very hard to stick to live like a resident in about to be year 4 next year as an attending and i was told to do it at least first 5 years if possible. Also, since i'll be married in 2021 lawyer told me in passing make as much $$ before then as possible as all assets aquired prior to marriage are solely yours even without prenups.

My personal budget right now is 3500/month which includes housing, car, credit card. Business expenses obviously are separate but my overhead is insanely low as I do a lot of admin work but other than wanting to lease a used bmw from leaseswap websites i haven't in the least deprived myself.
 
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finalpsychyear

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For most physicians earning $300K per year, I'm guessing their monthly expenses including loans are >>>> $6K per month. I mean student loans are probably $1K a month if not more. I'll assume something in the neighborhood of $2500-3000 per month for housing costs (mortgage + tax +insurance + upkeep) if not more. Throw in transportation, food, clothing, cable, cell phone, internet, entertainment, occasional vacation, etc. and it adds up quick.


Also I find it humorous when you note it is not easy to get $2.5M in the bank. No kidding. It isn't supposed to be. A very low percentage of college graduates will ever get there in their life.
It's not just that it's so damn difficult to get there. Even when you do it won't be the buying power of 2.5m in 2019 if you achieve it in 2032 it would only be worth 1.7m equivalent. In the above example that 300k doctor would have to work 18 years amassing 4 mill which after subtracting 36% for inflation then would achieve 2.5 mill. So in reality its going to take 20-25 years.

Just eye opening for me that is all. I really don't want to be working nearing 60 and 7% gains is no guarantee. We really need a massive stock market correction so the dow gets back to 14-15000.
 

dpmd

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1. Can: 300k for single male after taxes in a state tax would leave about 190. My guess is 6k monthly expenses counting loans and all leaving about 118-120k a year for investing. If they had 0 investments at the start of attending life and they got a 7% return I think it takes 14 years to hit 2.5mill which actually sucks because that's actually taking about 30% inflation so the buying power of that would be only 1.75 mill adjusted for inflation.

Damn its not easy to get there so if attending at 31-32 including fellowships and all they are hitting non inflation 25x near 45 ish.
Dual income no kids gets you there quicker (as does being able to put more away tax free like self employed people can do)
 

Mman

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It's not just that it's so damn difficult to get there. Even when you do it won't be the buying power of 2.5m in 2019 if you achieve it in 2032 it would only be worth 1.7m equivalent. In the above example that 300k doctor would have to work 18 years amassing 4 mill which after subtracting 36% for inflation then would achieve 2.5 mill. So in reality its going to take 20-25 years.

Just eye opening for me that is all. I really don't want to be working nearing 60 and 7% gains is no guarantee. We really need a massive stock market correction so the dow gets back to 14-15000.
you are focusing on returns in nominal terms, not real terms. If you simply focus on real returns of your investments (after inflation), it's easier to mentally do the math IMHO. Personally I would not expect any real returns above maybe 4-5% over the next 20 years for planning purposes.
 
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finalpsychyear

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Dual income no kids gets you there quicker (as does being able to put more away tax free like self employed people can do)
dual income physicians sure or IT/dentist/pharmacist making 100k but my guess is most doc partners are 50k or under.
 

dpmd

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dual income physicians sure or IT/dentist/pharmacist making 100k but my guess is most doc partners are 50k or under.
You forget the time value of money. Between getting lucky with a job in undergrad that included me in their profit sharing plan and my husband working a job with a 403b while I was in med school and residency we ended up with a decent chunk in retirement accounts even when our net worth was negative. But even without that, if your partner is earning 50k and your combined expenses don't increase unduly (that is the bigger concern and why I mentioned no kids) you have most of their take home (plus whatever retirement benefits they might have) to put towards your number.
 
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finalpsychyear

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Because two people shouldn't have double the expenses.
Sure there is the tax bracket story so that single 300k doc after tax getting close to 190k if he is married with a non working spouse its 215k in my state for the same income. If partner makes 50k you net 30k of that post tax. Of course there's 401k being a solo prop so if doc does 55k 401k and partner is part of staff thats nother 20k for them so 75 tax deferred. So even from that 300k you theoretically take home 165 plus 75k tax differed.

Too bad most people don't know all these nuances of the tax code.
 
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finalpsychyear

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For most physicians earning $300K per year, I'm guessing their monthly expenses including loans are >>>> $6K per month. I mean student loans are probably $1K a month if not more. I'll assume something in the neighborhood of $2500-3000 per month for housing costs (mortgage + tax +insurance + upkeep) if not more. Throw in transportation, food, clothing, cable, cell phone, internet, entertainment, occasional vacation, etc. and it adds up quick.


Also I find it humorous when you note it is not easy to get $2.5M in the bank. No kidding. It isn't supposed to be. A very low percentage of college graduates will ever get there in their life.
I have been told by several retirement plan advisers that a cash balance and solo 401k combo will get most except those who are under 35 very close to 2 mill tax deferred in more or less 10 years given they are maxing it out every year. I get it that it may not be practical to tax defer 150k per year plus the costs aren't cheap for having those plans so another expense but it sounds very simple. I feel most docs don't even know about it or they aren't in a position to have one. Seems like the easiest way to hit FIRE and if you can somehow do some HSA,roth you have hit that magical 2.5m number in 10 ish years then its game over.

Personally, I'm too conservative and risk averse. I'd rather try to get to 5m and use a 1.5-2% withdrawal rule.
 
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Mman

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Personally, I'm too conservative and risk averse. I'd rather try to get to 5m and use a 1.5-2% withdrawal rule.
A 1.5% withdrawal rate isn't conservative, it's foolishly low. You'd end up having to accumulate double the wealth compared to a 3% withdrawal rate that is already insanely conservative and likely to last for 50+ years in even very bad scenarios.
 
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finalpsychyear

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A 1.5% withdrawal rate isn't conservative, it's foolishly low. You'd end up having to accumulate double the wealth compared to a 3% withdrawal rate that is already insanely conservative and likely to last for 50+ years in even very bad scenarios.
Fair Point. If one was only going to ever use 75k-100k per year for the next 50 years and of course we are assuming no social security here,
the cash balance/401k gets to that 2.5m in 10 years all by itself and 3% of that is 75k. There's no reason to save anymore then if you were
never going to spend more than 75-100k. Makes things very simple.
 
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finalpsychyear

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A 1.5% withdrawal rate isn't conservative, it's foolishly low. You'd end up having to accumulate double the wealth compared to a 3% withdrawal rate that is already insanely conservative and likely to last for 50+ years in even very bad scenarios.

So say I'm being conservative and realize 3.5% withdrawal is safe enough for me which gives me 88k/yr on 2.5m nest egg. Lets even say i somehow attain this number in 5 years from now. Is there any type of extra safety margin suggested once this is attained or is that already calculated in the 3.5% withdrawal which is already lower than the 4% standard in the research studies? I am assuming my MAXIMUM spending would never pass 88k which is 3.5%

I mentioned this to my colleague and they stated they would work an additional 5 more years even after attaining these numbers just to see what the market did but i tried to explain it doesn't really matter and that 2.5m would just become closer to 3.5m and spending based on new nest egg 3.5% rule would be about 120k/yr
 
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