What do you need to retire

[Dave CX]

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I want to retire mid to late 50's. I'm thinking 2 million in a pre tax retirement, a million each in real estate and a taxable investment/savings account and no debt. Love to hear other versions.

 

[Pathbusiness]

How much money the one million in real estate will make for you yearly is a million dollar question. I got out at 45 but was lucky to have an extra zero in front of 2. Most of it is real estate.

 

[pathslides]

How much money the one million in real estate will make for you yearly is a million dollar question. I got out at 45 but was lucky to have an extra zero in front of 2. Most of it is real estate.

Wowzers. You peeps are quite impressive.

 

[mario2010]

I want to retire mid to late 50's. I'm thinking 2 million in a pre tax retirement, a million each in real estate and a taxable investment/savings account and no debt. Love to hear other versions.

Dave, I think the right number will depend on your yearly expenses with good cushion. With $1M cash in real estate investments you are looking at prob around $4 M in asset value. At 10% cash on cash you are looking at around $100K pre-tax annual. $1M cash in after tax brokerage accounts in well diversified index funds will likely let you draw 3.5 to 4% without touching the capital for next 25-30 years unless another 2008 happens. That will be around $35K to $40K pretax. So total around $140K pre-tax annual, if that's enough for you, than $2M would work.

 

[WEBB PINKERTON]

Just get a woman to live off of...

 

[icpshootyz]

How much money the one million in real estate will make for you yearly is a million dollar question. I got out at 45 but was lucky to have an extra zero in front of 2. Most of it is real estate.

I'm always curious about the real estate investments, because here in a North East city I can't fathom how I could buy real estate and really make much of a profit on it at all based on what it sells for and what it could rent for. Are your real estate investments all paid off or are they mortgaged? Did you get in at the right time and have significant appreciation to account for that much success in the market? Was it really better than stocks did over the same time period?

 

[Adrian Cocot]

You can't plan for retirement unless you know roughly how much you will be spending.

Having millions may not be enough if you've got a trophy spouse to support, spoiled kids who think they're too good for state school, and an astronomic deductible on your health plan.

Conversely, you might need a lot less if you engage in some geographic arbitrage. I could retire and move to Portugal today, if I wanted.

 

[octopusprime]

Jesus I was shooting for >10...no way 1 mil is gonna last, particularly with health care costs in this country.

 

[deleted314957]

So, so many variables. My desire was to replace 400k salary with dividends,
CG distributions, principal withdrawal ( as needed ) not to exceed 3.5% of
invested assets. All in various Vanguard products and one non-vanguard
REIT. Zero debt/divorce. I quit at age 61, had 7.5M, have lived on much less and have had 35% appreciation over these past great 4 yrs. Just started
SSI which is about 30K/yr.

 

[octopusprime]

So, so many variables. My desire was to replace 400k salary with dividends,
CG distributions, principal withdrawal ( as needed ) not to exceed 3.5% of
invested assets. All in various Vanguard products and one non-vanguard
REIT. Zero debt/divorce. I quit at age 61, had 7.5M, have lived on much less and have had 35% appreciation over these past great 4 yrs. Just started
SSI which is about 30K/yr.

I say i'm shooting for >10 but I realize that's not likely, and not practical for most grads.
Most grads won't make 400k/yr, and most grads have loads of debt far in excess of the debt previous generations experienced after medical education (with interest rates also far in excess of previous rates).
Avg med school debt now hovers around $200,000, and interest rates are 6-8%, and one can't defer all the interest accumulation during residency (all sub and unsub loans accrue interest) unless you enter "income based repayment", which is a.) difficult financially and b.) a moot point if you don't end up working for non-profits.

Ultimately, retirement nowadays is much more difficult than it used to be.

Which is why i would rather retrain in a field like derm than spend my life being a monkey in a corporate lab gig pulling in 225 and 6 weeks vaca.

 

[Pathbusiness]

I'm always curious about the real estate investments, because here in a North East city I can't fathom how I could buy real estate and really make much of a profit on it at all based on what it sells for and what it could rent for. Are your real estate investments all paid off or are they mortgaged? Did you get in at the right time and have significant appreciation to account for that much success in the market? Was it really better than stocks did over the same time period?

Real estate is a personal passion. Its not a passive investment. You have to carve your own niche. Of course getting in at the right time is important. Once you are good at it, one thing leads to another. It is not not for everyone.

 

[pathbot]

What you need all boils down to how much debt/recurring expenses you will have when no longer working. It really has nothing to do with your income while working (as some financial advisors might make you believe.)

1. Calculate what your yearly expenses will be (essential expenses + desired "fluff"). This is minimized if you have no mortgage or other debt. There is some guesswork, mostly in regards to healthcare costs.
2. Determine how much non-investment income you will get per year (i.e. rental income, pension, SS, etc.).
3. Take the difference of these 2 numbers.
4. Multiply by 25. This is how much investment income you will need per year to achieve a "4% safe withdrawal rate". If you want to quit early and have a long (30+ year) time period of not having earned income, some say aim for a 3.5% withdrawal rate.

Be sure to understand the tax implications for your investments. 1 million in 401k money will not be as much as 1 million in taxable which will not be as much as 1 million in Roth.

 

[icpshootyz]

Real estate is a personal passion. Its not a passive investment. You have to carve your own niche. Of course getting in at the right time is important. Once you are good at it, one thing leads to another. It is not not for everyone.

That makes sense. And other than owning real estate for myself I can't say I have that passion. I do plan to rent out our condo if/when we move out of the city, but that will probably be my only rental property. I have REIT's in my portfolio and 401k but I don't think I'd enjoy the hassle of dealing with renters, maintenance, etc on rental properties. Kudos to you.

 

[Pathbusiness]

Also there is a big difference between not working vs not making money.

 

[gungho]

What you need all boils down to how much debt/recurring expenses you will have when no longer working. It really has nothing to do with your income while working (as some financial advisors might make you believe.)

1. Calculate what your yearly expenses will be (essential expenses + desired "fluff"). This is minimized if you have no mortgage or other debt. There is some guesswork, mostly in regards to healthcare costs.
2. Determine how much non-investment income you will get per year (i.e. rental income, pension, SS, etc.).
3. Take the difference of these 2 numbers.
4. Multiply by 25. This is how much investment income you will need per year to achieve a "4% safe withdrawal rate". If you want to quit early and have a long (30+ year) time period of not having earned income, some say aim for a 3.5% withdrawal rate.

Be sure to understand the tax implications for your investments. 1 million in 401k money will not be as much as 1 million in taxable which will not be as much as 1 million in Roth.

If I understand your numbers correctly, they seem bit unrealistic. By way of example, $100K in expenses minus $80K in non-investment income (say $36K SS, $44K pension, etc), gives $20K, multiplied by 25 yields $500K PER YEAR in investment INCOME-who has a retirement account big enough to provide $500K/per year amounting to a 4% withdrawal rate-or are you considering a retirement account as "non-investment income"?

 

[pathbot]

If I understand your numbers correctly, they seem bit unrealistic. By way of example, $100K in expenses minus $80K in non-investment income (say $36K SS, $44K pension, etc), gives $20K, multiplied by 25 yields $500K PER YEAR in investment INCOME-who has a retirement account big enough to provide $500K/per year amounting to a 4% withdrawal rate-or are you considering a retirement account as "non-investment income"?

Sorry if the wording was a bit confusing,
Multiplying by 25 will give you the TOTAL amount of investment income you would need to fund your retirement.
In your example, if you needed 20k per year to cover your expenses after your income from SS and pension, then you would need a total stash of 500k, and would start pulling out 20k yearly.
Also, studies show that if you are withdrawing 4% per year, your net worth is likely to significantly increase over time rather than decrease. A lot depends though on how the market does your first 5 years of not working

 

[AZpath]

OK. If understand you correctly. I need about 2.5 mil in after tax cash to safely draw around 100K per year without expending the balance.

 

[Pathbusiness]

OK. If understand you correctly. I need about 2.5 mil in after tax cash to safely draw around 100K per year without expending the balance.

Depends on your age. If you are young and have $2.5M liquid, you can do much better. You can actually keep on increasing your net worth after expenses. The thing with financial planners is, they give advice which suits them. They want us to keep working till we die, so they can keep earning from investments.
Retiring early is a decision which is made from the heart not brain.

 

[LADoc00]

I want to retire mid to late 50's. I'm thinking 2 million in a pre tax retirement, a million each in real estate and a taxable investment/savings account and no debt. Love to hear other versions.

if the bar was only 2m in cash I would have been smoking up and sexually harassing girls in Central America since my mid 30s in retirement....

but to each his own. I would think around 8-10m net (total assets-total liabilities) but yah you could theoretically do it for much less depending on your time horizon and risk profile. Im shooting for:
5m debt free in RE+2m cash, its actually below my range above but I also plan on doing some income generating stuff in my early retirement (right now planned for 52ish).
My rental income should be about 25 net soon a month, which aint bad at all.

 

[deleted314957]

I say i'm shooting for >10 but I realize that's not likely, and not practical for most grads.
Most grads won't make 400k/yr, and most grads have loads of debt far in excess of the debt previous generations experienced after medical education (with interest rates also far in excess of previous rates).
Avg med school debt now hovers around $200,000, and interest rates are 6-8%, and one can't defer all the interest accumulation during residency (all sub and unsub loans accrue interest) unless you enter "income based repayment", which is a.) difficult financially and b.) a moot point if you don't end up working for non-profits.

Ultimately, retirement nowadays is much more difficult than it used to be.

Which is why i would rather retrain in a field like derm than spend my life being a monkey in a corporate lab gig pulling in 225 and 6 weeks vaca.

The debt is TERRIBLE that these kids have. Tuition, room and board seem to be PROPORTIONATELY much higher than a few decades ago. Tuition at my
state school in 1974 was DIRT CHEAP; I believe something in the area of
$500/semester. BUT, interest rates were NUTS. Paid 17 1/2% interest on
my first house in June '81.

 

[LADoc00]

I paid 300 bucks per quarter for public college. I paid 19,000 a year for medical school. My interest was around 4%, which was awesome.
Today's numbers are literally insane. Your chances of rising up the socioeconomic ladder are basically zero saddled with that debt.

 

[octopusprime]

I paid 300 bucks per quarter for public college. I paid 19,000 a year for medical school. My interest was around 4%, which was awesome.
Today's numbers are literally insane. Your chances of rising up the socioeconomic ladder are basically zero saddled with that debt.

They indeed are 0...unless you have some serious financial chastity.

 

[octopusprime]

The debt is TERRIBLE that these kids have. Tuition, room and board seem to be PROPORTIONATELY much higher than a few decades ago. Tuition at my
state school in 1974 was DIRT CHEAP; I believe something in the area of
$500/semester. BUT, interest rates were NUTS. Paid 17 1/2% interest on
my first house in June '81.

That's certainly true about mortgage rates, but the property values have gone up astronomically since then...your first house built in '81 probably cost & was appraised at a fraction of what it is now.

 

[SEpathguy]

Wow - this whole thread really bums me out. The amount of money you have will never make you happy. I have the feeling the pursuit of the money is more rewarding for many of you (over actually having the money). Hoarding gobs of money is a recipe for discontent. Live reasonably, value people (not things), make time to spend with your family and friends - these are the things that I believe will make you happy. I need to spend less time reading comments on this website - always bums me out. Now let the barrage of saying what a big loser I am for saying all of this begin...

 

[octopusprime]

Wow - this whole thread really bums me out. The amount of money you have will never make you happy. I have the feeling the pursuit of the money is more rewarding for many of you (over actually having the money). Hoarding gobs of money is a recipe for discontent. Live reasonably, value people (not things), make time to spend with your family and friends - these are the things that I believe will make you happy. I need to spend less time reading comments on this website - always bums me out. Now let the barrage of saying what a big loser I am for saying all of this begin...

That's great advice to live by, and to some degree it is true, but the overall point many are trying to make is that taking a passive approach to one's career equates making financial mistakes AND certainly being taken advantage of... Medicine is no longer a career that simply takes care of itself, rewards with big dividends & provides a secure retirement, and it's almost certainly overtaken by people (in the administrative, insurance and government fields) that DON'T adhere to those values.

 

[SEpathguy]

That's great advice to live by, and to some degree it is true, but the overall point many are trying to make is that taking a passive approach to one's career equates making financial mistakes AND certainly being taken advantage of... Medicine is no longer a career that simply takes care of itself, rewards with big dividends & provides a secure retirement, and it's almost certainly overtaken by people (in the administrative, insurance and government fields) that DON'T adhere to those values.

Those are good points, and I'm as guilty as many for worrying about money more than I should. But I also I feel pretty confident saying that everyone reading this post has more than enough money to provide a good life for themselves and their family. The trouble is we've bought into the lie that we need (and deserve) a ridiculously nice car, ginormous house, etc. etc. when we just really don't.

 

[octopusprime]

Those are good points, and I'm as guilty as many for worrying about money more than I should. But I also I feel pretty confident saying that everyone reading this post has more than enough money to provide a good life for themselves and their family. The trouble is we've bought into the lie that we need (and deserve) a ridiculously nice car, ginormous house, etc. etc. when we just really don't.

Your last point has less to do with how much people make and more to do with how people live...if you want to rail against materialism that's fine, I just don't equate less income/retirement with utilitarianism...if i make 500k/yr and put a disproportionate amount of it towards retirement, drive a 2008 Camry and live in a trailer, does that make me a better person or just less showy? I want to max my income so i can max my retirement and pass on as much as I can to my family...driving a Mercedes may be financially stupid but a.) it's fun and b.) that $300/mos I'd save driving a Toyota that I'd otherwise put towards retirement isn't going to be the deciding factor.

 

[LADoc00]

Wow - this whole thread really bums me out. The amount of money you have will never make you happy. I have the feeling the pursuit of the money is more rewarding for many of you (over actually having the money). Hoarding gobs of money is a recipe for discontent. Live reasonably, value people (not things), make time to spend with your family and friends - these are the things that I believe will make you happy. I need to spend less time reading comments on this website - always bums me out. Now let the barrage of saying what a big loser I am for saying all of this begin...

why would anyone call you a loser? We need to begin a general prohibition of self deprecation here.

 

[icpshootyz]

Your last point has less to do with how much people make and more to do with how people live...if you want to rail against materialism that's fine, I just don't equate less income/retirement with utilitarianism...if i make 500k/yr and put a disproportionate amount of it towards retirement, drive a 2008 Camry and live in a trailer, does that make me a better person or just less showy? I want to max my income so i can max my retirement and pass on as much as I can to my family...driving a Mercedes may be financially stupid but a.) it's fun and b.) that $300/mos I'd save driving a Toyota that I'd otherwise put towards retirement isn't going to be the deciding factor.

Ha ha, I think I got described in there with the 2000's Camry. Although my condo wasn't cheap, I invest for investment sake (not retirement), and I use the subway to get around rather than my car. But I do agree driving an expensive car is financially stupid 😉

 

[SEpathguy]

Your last point has less to do with how much people make and more to do with how people live...if you want to rail against materialism that's fine, I just don't equate less income/retirement with utilitarianism...if i make 500k/yr and put a disproportionate amount of it towards retirement, drive a 2008 Camry and live in a trailer, does that make me a better person or just less showy? I want to max my income so i can max my retirement and pass on as much as I can to my family...driving a Mercedes may be financially stupid but a.) it's fun and b.) that $300/mos I'd save driving a Toyota that I'd otherwise put towards retirement isn't going to be the deciding factor.

All fair. And to be honest I drive an infiniti and live in a 4000 sq foot house on 3+ acres. And from my other posts on different threads you can see I'm probably too worried about money just like everyone else. I just think this website always gives the people who don't make $500k+/yr the feeling they're constantly being screwed over (which we're probably not).

 

[Dave CX]

All fair. And to be honest I drive an infiniti and live in a 4000 sq foot house on 3+ acres. And from my other posts on different threads you can see I'm probably too worried about money just like everyone else. I just think this website always gives the people who don't make $500k+/yr the feeling they're constantly being screwed over (which we're probably not).

I agree with LA, those were refreshing thoughts. Except for being a pathologist, there is no other reason to think you might be a loser. You are correct that true happiness lies in family, friends and community (and faith for some). But financial freedom is a biggie. People who prize "stuff" over those other things, like Citizen Kane, are doomed to misery.

 

[octopusprime]

All good points, and certainly for me family matters most--everything else is second [which is why i wouldn't subject my family and its posterity to anything other than the most secure financial future I could attain]--though with pathology, i perceive the income disparity across the field to be MUCH greater than most if not all other specialties. Certainly there are pediatricians making mad crazy money and orthopods making peanuts, but aside from patent holders and coveted big-name academicians, the trenches of medicine adhere to a pretty clear income hierarchy. Pathology does not...you can literally go across town or across a state border and find an income gap that runs 100k to 1million. There's nothing wrong with humility and practicality, but that disparity should tell you something about the field, and if it doesn't, and you're simply "content" with [that LabCorps job that's giving you 5 weeks vaca and a paltry salary], you're not "ungreedy" or "utilitarian" or more "family minded", you're either blissfully ignorant, a prototypical passive personality pathologist, or bound by a sense of something other than self respect.

 

[SEpathguy]

Except for being a pathologist, there is no other reason to think you might be a loser.

HAHA!!! sad but true. when recruiting new residents I always used the "normal and nice" criteria. step scores, papers and the like were so much less important. It was always sad what a low percentage of future pathologists passed the "normal and nice" test.

 

[stickyshift]

HAHA!!! sad but true. when recruiting new residents I always used the "normal and nice" criteria. step scores, papers and the like were so much less important. It was always sad what a low percentage of future pathologists passed the "normal and nice" test.

So sad that what comes so easily to the vast majority of people should be so elusive for our peers.

 

[icpshootyz]

So sad that what comes so easily to the vast majority of people should be so elusive for our peers.

I do remember when I was a med student applying for path residency I was told by my adviser that because I was American, spoke English and came from an American med school I would basically have my pick of programs (which I did). Not exactly a glowing recommendation for our field :/

 

[SEpathguy]

All good points, and certainly for me family matters most--everything else is second [which is why i wouldn't subject my family and its posterity to anything other than the most secure financial future I could attain]--though with pathology, i perceive the income disparity across the field to be MUCH greater than most if not all other specialties. Certainly there are pediatricians making mad crazy money and orthopods making peanuts, but aside from patent holders and coveted big-name academicians, the trenches of medicine adhere to a pretty clear income hierarchy. Pathology does not...you can literally go across town or across a state border and find an income gap that runs 100k to 1million. There's nothing wrong with humility and practicality, but that disparity should tell you something about the field, and if it doesn't, and you're simply "content" with [that LabCorps job that's giving you 5 weeks vaca and a paltry salary], you're not "ungreedy" or "utilitarian" or more "family minded", you're either blissfully ignorant, a prototypical passive personality pathologist, or bound by a sense of something other than self respect.

I know I'm probably beating a dead horse, but this is all fresh on my mind as I've been weighing some career options lately. Some options offer potential for a lot more money but also likely a lot more hours of work as well. I'm just afraid people do themselves a disservice focusing solely (or mainly) on how much money they're making. After you get over ~$200-250/yr or so (depending on where you live, etc) in my mind time gets much more valuable than dollars (time not just being number of weeks vacation, but more importantly, what time you get home from work). Personally I'd rather get home by 4 or 4:30 and make a paltry ~225 than get home at 6:30 or 7 and make 500. Maybe that's crazy talk to many, and maybe I'll regret that decision later on (although I don't think I will). And maybe if I stopped posting on here so much I'd get home even earlier...

 

[octopusprime]

I know I'm probably beating a dead horse, but this is all fresh on my mind as I've been weighing some career options lately. Some options offer potential for a lot more money but also likely a lot more hours of work as well. I'm just afraid people do themselves a disservice focusing solely (or mainly) on how much money they're making. After you get over ~$200-250/yr or so (depending on where you live, etc) in my mind time gets much more valuable than dollars (time not just being number of weeks vacation, but more importantly, what time you get home from work). Personally I'd rather get home by 4 or 4:30 and make a paltry ~225 than get home at 6:30 or 7 and make 500. Maybe that's crazy talk to many, and maybe I'll regret that decision later on (although I don't think I will). And maybe if I stopped posting on here so much I'd get home even earlier...

I don't think there's a direct relationship between hours worked & happiness and income...I feel MORE than adequately compensated (>500) and i rarely break 40 hrs / week, usually 35. I'm happy as hell. Unless you're limiting yourself geographically to an area dominated by bad payers or corporate labs....or academic institutions.

 

[Dave CX]

Off the topic a bit but let me tell you my average day doing in office pathology at my busiest gi office....3 days a week 100 to 170 accessions a day. No distractions except when the pretty nurse with big boobs knocks on my door and offers me some food that a rep brought. I say no because it puts me to sleep, so she stays and flirts for a few minutes telling me what a jerk her boyfriend is and would I like to go out with her sometime. I say that I will think about it when I am less busy and she says 'Ill wait to hear from you" and I go back to my work with half wood. Better than a blood bank call. I earn 3 to 5 k during those hours and am usually home by 4

 

[deleted314957]

I know I'm probably beating a dead horse, but this is all fresh on my mind as I've been weighing some career options lately. Some options offer potential for a lot more money but also likely a lot more hours of work as well. I'm just afraid people do themselves a disservice focusing solely (or mainly) on how much money they're making. After you get over ~$200-250/yr or so (depending on where you live, etc) in my mind time gets much more valuable than dollars (time not just being number of weeks vacation, but more importantly, what time you get home from work). Personally I'd rather get home by 4 or 4:30 and make a paltry ~225 than get home at 6:30 or 7 and make 500. Maybe that's crazy talk to many, and maybe I'll regret that decision later on (although I don't think I will). And maybe if I stopped posting on here so much I'd get home even earlier...

You are right. Time is MUCH more valuable than money. As soon as you can
you need to take as much as you can! In my past PP situation we all took a very busy weekend call covering multiple hospitals. As soon as I was comfortable I “sold” my call, typically to a more junior associate who appreciated the money more than the time at that particular
stage of their life.

 

[SEpathguy]

I don't think there's a direct relationship between hours worked & happiness and income...I feel MORE than adequately compensated (>500) and i rarely break 40 hrs / week, usually 35. I'm happy as hell. Unless you're limiting yourself geographically to an area dominated by bad payers or corporate labs....or academic institutions.

Sounds great! You win! I've not been lucky enough to run across that nice of a gig. I am somewhat geographically restricted though. If you have something open up in your group - message me. Just kidding - kind of...