What's your "walk away" number?

Started by deleted641888
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anbuitachi said:
I dont get why you would think this would happen less in medicine... we start working for real at a later age, and have fewer years of compounding and savings. Many people in corporate get as much as us after a few promotions especially selecting for individuals with comparable achievements in hs/college years as med students. Im willing to bet most of my corporate friends will retire much earlier than i will.

I agree with part time. It's also what i plan on doing, but i dont know if my work place will allow it,
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I was specifically referring to someone being penny wise and pound foolish about delaying retirement due to health insurance mentioned previously when I said I was surprised. Physicians usually don't refrain from retiring because of that reason but I have heard it brought up in business many times.
 
Neopolymath said:
I was specifically referring to someone being penny wise and pound foolish about delaying retirement due to health insurance mentioned previously when I said I was surprised. Physicians usually don't refrain from retiring because of that reason but I have heard it brought up in business many times.
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I don’t think anyone here is delaying retirement due to health insurance.
 
The thing is: in anesthesia if you are in good physical condition you can very realistically work a very light schedule into your seventies : 1-2 days/ week or 1 week/ month, and if you are not capable of that... well you won't be doing a lot of the stuff you might have thought you would be doing in retirement. I'm done forfeiting my years of physical capacity for retirement money. Time is now!
I'm in my forties now and have cut back working every other week even though i'm no where near the numbers being put up here. And i plan on doing just that : 1 week per month as long as capable, so in effect i don't really have to "think" about retirement money.
10mil is 400k/year at 4% !! do you really need all that with the house paid off and kids out of the house??
 
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BLADEMDA said:
Inflation is coming soon. Many of you are just too young to remember real inflation. Biden is flooding the economy with cash. Jay Powell openly said he will let the economy run hot and make sure inflation is above 3 percent before raising interest rates.

many experts know this is highly likely later this year or in 2022. They are preparing for it. You should too.
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The Fed’s official position is that inflation will spike temporarily, then return to under 2% which is their long term target. I recently spent $90 for a tank of gas and $15 at McDonald’s just for myself so I don’t believe them. It feels like inflation is already here.
 
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dhb said:
The thing is: in anesthesia if you are in good physical condition you can very realistically work a very light schedule into your seventies : 1-2 days/ week or 1 week/ month, and if you are not capable of that... well you won't be doing a lot of the stuff you might have thought you would be doing in retirement. I'm done forfeiting my years of physical capacity for retirement money. Time is now!
I'm in my forties now and have cut back working every other week even though i'm no were near the numbers being put up here. And i plan on doing just that : 1 week per month as long as capable, so in effect i don't really have to "think" about retirement money.
10mil is 400k/year at 4% !! do you really need all that with the house paid off and kids out of the house??
Click to expand...
How easy is it to find these very part time jobs though ?
 
nimbus said:
The Fed’s official position is that inflation will spike temporarily, then return to under 2% which is their long term target. I recently spent $90 for a tank of gas and $15 at McDonald’s just for myself so I don’t believe them. It feels like inflation is already here.
Click to expand...
Inflation is here and has been. Ignore the manipulated CPI numbers etc. They will always undercall inflation relative to the real numbers to keep interest rates artificially low. This stimulates more productivity out of the working class (you and I) while also allowing the real value of our national debts to be eroded at a faster rate than the interest we pay. Bond/treasury holders, foreign governments, etc are left holding the bag. Welcome to the game.
 
ERRES2288 said:
Lol you guys are gonna have some insanely rich kids if you’re retiring with 10m and 3% withdrawal rate.
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Thats part of the plan honestly, I'm guessing becoming a doctor won't be worth it for our children and don't really know of any other job that isn't going down the ****ter even faster. Hopefully the constant inflow of money gives them time/circumstances to monetize their true passions and creativity. I want them to create their own success. However, if no such success pans out for them, it will at least make sure they don't starve when I'm gone.
 
1618403265091.png
 
anaesthetic said:
So what’s the next step for people who are invested? Decrease positions in overvalued tech stocks and shift to value stocks and commodities? Legitimate question.

Also, another question for everybody: say you do get a sudden windfall of your “walk away” number. What then? 75/25 diversified stocks/bonds? 60/40? Obviously depends on your age and risk tolerance, but I’m having a tough time deciding the best route to take should I hit that number sooner than expected. My personal goals would be to not have to work for income and to maintain the 4% withdrawal rate without touching the principal except during extreme drawdowns.
Click to expand...

bestinterest.blog

Updated Trinity Study and the 4% Rule - 2024 and Beyond - The Best Interest

Using Wade Pfau's data and "predictions" of the future, we're creating an updated Trinity Study to use for our retirement planning.
bestinterest.blog bestinterest.blog
 
BioChemDork said:
Many people are:
  1. Overestimating how much they need in retirement (unless everyone is taking fabulous $25k vacations multiple times a year, or living in very high cost of living areas), and underestimating the diminishing returns on happiness from the extra spend.
  2. Not taking into account that our societal policies work against you when your spend is excessively higher than the mean (e.g. increased tax rates, losing ACA subsidies, kids not getting college financial aid.)
  3. Underestimating the risk from yield-chasing to get to the higher financial independence # in a reasonable amount of time. (This is how people get into scammy investment schemes.) Lower FI number, less need to chase yield. VTSAX and chill.
  4. Underestimating their safe withdraw rate. 3.5-4% is fine if you either have a bond tent, or better yet continue to work part time for a few years to negate sequence of returns risk and allow the pot to grow. Continuing to work part time maintains your career viability if a catastrophic expense emerges (eg multiple family members require full time nursing care for decades, or becomes a disabled adult dependent). EarlyRetirementNow has a now 44 part series on safe withdraw rates. It's a slog but if you get through it, you probably know more than many financial planners.
  5. Underestimating the value of your most precious and finite resource: Time. What's more impactful for your children? 20 more hours a week with you from ages 0-10? Or an extra $2 million inheritance when you pass away in your 80 and they are in their 50-60s?

As for me, as soon as I hit $2.5 mil + amount needed to pay off house in full, I'm dropping down to 0.5 FTE. I will continue to work until the juice isn't worth the squeeze anymore. The 0.5 FTE income will cover 100% of my expenses and then some.

The kids get:
  1. taught financial literacy and conscientious spending habits from a young age. (Difficult to do if you are at work all the time and outsourcing your childrearing.)
  2. top 5% K-12 education
  3. 60% of their college/graduate education paid for ($75k a kid if you lump sum it into a 529 when they are born). They need skin in the game, incentivizing them to pick something that has an effective ROI
  4. "mom and dad matching" for their Roth IRA/401k when they are starting out until 30 years old. Thanks to compounding, this effectively funds half of a middle class retirement at age 67. They will need to work to get things beyond that, or if they want early retirement like their parents.
  5. Financial safety net against catastrophic failure, health insurance until age 26.
  6. If there is money left over, 529 for grandchildren, and possibly an accelerated gift in their 40s (after they've established their spending patterns), if our nest egg is doing well.
  7. Whatever is left over when my spouse and I kick the bucket.
Grinding for generational wealth is not an effective use of your time; it just leads to messed up entitled kids more often than not. And it's usually squandered by the 3rd or 4th generation anyway.
Click to expand...

Great post! It seems the younger generation is a little more focused on work/life balance. I've seen plenty of older partners, who made a killing during anesthesia's golden age, got a huge lump sum buyout from AMC, who are still miserable and working 60+ hrs a week, likely divorced, and often with bad relationships with their kids because they were never home/always on call or late.

My point is that time is the most valuable asset you have. We are all trading our time for money initially. Hopefully, at some point we can save up enough to diversify and invest in passive revenue streams then cut back our workload. The sooner the better. I'm 37 and enjoy all the quality time I'm able to spend with my friends, family, and especially my kids.

I don't necessarily buy into busting our butts in this life, to provide for them in their lives. I'll teach them everything I know, give them a great education and a leg up on life. The rest is up to them. I've seen too many people squander their opportunities, and really the biggest driving factor for determining how successful one will become is their motivation. Knowing daddy has millions saved up in a trust fund for you the day he passes, makes people complacent.

But to each their own. I can only speak for myself and say that I definitely value being able to spend time with loved ones and be active now while I'm still of able mind and body.
 
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anaesthetic said:
So what’s the next step for people who are invested? Decrease positions in overvalued tech stocks and shift to value stocks and commodities? Legitimate question.

Also, another question for everybody: say you do get a sudden windfall of your “walk away” number. What then? 75/25 diversified stocks/bonds? 60/40? Obviously depends on your age and risk tolerance, but I’m having a tough time deciding the best route to take should I hit that number sooner than expected. My personal goals would be to not have to work for income and to maintain the 4% withdrawal rate without touching the principal except during extreme drawdowns.
Click to expand...
I think 2021 will be a huge year for stocks. The economy is awash with cash and the buying spree of equities has not peaked... yet. The question is when do you get more conservative with equities?

The recommended SWR (sustainable withdrawal rate) is 3% or 3.5% not 4%. But, if you need to take out 4% then by all means do so recognizing you run a slightly higher risk of running out of money before death.
 
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What is the Safe Withdrawal Rate in Early Retirement?​

So, given lower assumed future returns than historical averages, the Safe Withdrawal Rate depends on your initial asset allocation. You can see from the above examples that a 3.25% is ok regardless of the asset allocation. Compare that to a 4% Safe Withdrawal Rate that just barely squeaks by if you go aggressive—90/10 asset allocation.

What is the downside of going aggressive with your asset allocation? Hello, Sequence of Return Risk.



www.fiphysician.com

What is the Safe Withdrawal Rate for a Early Retirement?

Safe Withdrawal Rate and Prolonged Retirement. How does Sequence Risk and a Rising Equity Glidepath affect the Safe Withdrawal Rate?
www.fiphysician.com www.fiphysician.com
 
9-10 mill @ 3.25% W/D sounds about right... or working longer at 1/2 time or less for some time before hitting that number (safest option). If I keep working at 1/2 time or less my asset allocation will be heavy on the equity side I think. Once I have a check out date I’ll likely rebalance towards bonds. Doubt I’ll ever be 50/50, but admittedly, I need a lot more study on the subject.

Also: Past performance does not guarantee future performance.
 
k12balla said:
Great post! It seems the younger generation is a little more focused on work/life balance. I've seen plenty of older partners, who made a killing during anesthesia's golden age, got a huge lump sum buyout from AMC, who are still miserable and working 60+ hrs a week, likely divorced, and often with bad relationships with their kids because they were never home/always on call or late.

My point is that time is the most valuable asset you have. We are all trading our time for money initially. Hopefully, at some point we can save up enough to diversify and invest in passive revenue streams then cut back our workload. The sooner the better. I'm 37 and enjoy all the quality time I'm able to spend with my friends, family, and especially my kids.

I don't necessarily buy into busting our butts in this life, to provide for them in their lives. I'll teach them everything I know, give them a great education and a leg up on life. The rest is up to them. I've seen too many people squander their opportunities, and really the biggest driving factor for determining how successful one will become is their motivation. Knowing daddy has millions saved up in a trust fund for you the day he passes, makes people complacent.

But to each their own. I can only speak for myself and say that I definitely value being able to spend time with loved ones and be active now while I'm still of able mind and body.
Click to expand...

Oh, I’m all for work life balance (I don’t really work at all when kids are not in school hours).

And I’m definitely not telling my kids they may have an inheritance until they are well-established and responsible.

That being said, life is unpredictable. I want to have enough that if one of my kids became disabled or unable to work they can still have the same stuff money can buy them now (nice house, nice vacations, not worry about future finances). Second, if one of them decides to enter a low-paying career they love — I want to help them. Believe it or not, some professions are important, work quite hard and don’t earn near what we do. Plus, it’s very likely if our kids become physicians 20+ years from now they will work hard AND earn very little.

Each to their own but that last paragraph is why my number is 10M+.
 
doctalaughs said:
Oh, I’m all for work life balance (I don’t really work at all when kids are not in school hours).

And I’m definitely not telling my kids they may have an inheritance until they are well-established and responsible.

That being said, life is unpredictable. I want to have enough that if one of my kids became disabled or unable to work they can still have the same stuff money can buy them now (nice house, nice vacations, not worry about future finances). Second, if one of them decides to enter a low-paying career they love — I want to help them. Believe it or not, some professions are important, work quite hard and don’t earn near what we do. Plus, it’s very likely if our kids become physicians 20+ years from now they will work hard AND earn very little.

Each to their own but that last paragraph is why my number is 10M+.
Click to expand...
Ok, I have to ask. What do you consider "very little" twenty years from now for a physician salary?
Just curious.
 
BioChemDork said:
Many people are:
  1. Overestimating how much they need in retirement (unless everyone is taking fabulous $25k vacations multiple times a year, or living in very high cost of living areas), and underestimating the diminishing returns on happiness from the extra spend.
  2. Not taking into account that our societal policies work against you when your spend is excessively higher than the mean (e.g. increased tax rates, losing ACA subsidies, kids not getting college financial aid.)
  3. Underestimating the risk from yield-chasing to get to the higher financial independence # in a reasonable amount of time. (This is how people get into scammy investment schemes.) Lower FI number, less need to chase yield. VTSAX and chill.
  4. Underestimating their safe withdraw rate. 3.5-4% is fine if you either have a bond tent, or better yet continue to work part time for a few years to negate sequence of returns risk and allow the pot to grow. Continuing to work part time maintains your career viability if a catastrophic expense emerges (eg multiple family members require full time nursing care for decades, or becomes a disabled adult dependent). EarlyRetirementNow has a now 44 part series on safe withdraw rates. It's a slog but if you get through it, you probably know more than many financial planners.
  5. Underestimating the value of your most precious and finite resource: Time. What's more impactful for your children? 20 more hours a week with you from ages 0-10? Or an extra $2 million inheritance when you pass away in your 80 and they are in their 50-60s?

As for me, as soon as I hit $2.5 mil + amount needed to pay off house in full, I'm dropping down to 0.5 FTE. I will continue to work until the juice isn't worth the squeeze anymore. The 0.5 FTE income will cover 100% of my expenses and then some.

The kids get:
  1. taught financial literacy and conscientious spending habits from a young age. (Difficult to do if you are at work all the time and outsourcing your childrearing.)
  2. top 5% K-12 education
  3. 60% of their college/graduate education paid for ($75k a kid if you lump sum it into a 529 when they are born). They need skin in the game, incentivizing them to pick something that has an effective ROI
  4. "mom and dad matching" for their Roth IRA/401k when they are starting out until 30 years old. Thanks to compounding, this effectively funds half of a middle class retirement at age 67. They will need to work to get things beyond that, or if they want early retirement like their parents.
  5. Financial safety net against catastrophic failure, health insurance until age 26.
  6. If there is money left over, 529 for grandchildren, and possibly an accelerated gift in their 40s (after they've established their spending patterns), if our nest egg is doing well.
  7. Whatever is left over when my spouse and I kick the bucket.
Grinding for generational wealth is not an effective use of your time; it just leads to messed up entitled kids more often than not. And it's usually squandered by the 3rd or 4th generation anyway.
Click to expand...
That Roth IRA/401k matching until 30 years old is such a good idea. I've never heard of that but will definitely keep it in mind. It's like the ultimate move to support financial literacy and skin in the game for your kids while also helping increase their quality of life once you're gone. It feels protective from them becoming complacent or squandering what you give them because they are incentivized to earn and they need a career before they can access everything.
 
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Assuming we return to a more normal stock market in 2022-2023 then a SWR of 3-2.25% would be reasonable. But, if we get lower returns then the SWR drops to around 2.75%.

Those assuming a SWR of 4% or 4.5% are counting on the same type of stock market we had from 2007 until now. That's a bit risky in my opinion.
 
Given the way our current administration is printing and handing out money, my assumption is that bonds and other types of income investments are going to have nominal yields for years to come so the draw down will be having to sell stocks and bonds to generate income. I have hit my number but as insurance I am thinking of doing enough work to generate the income that I would normally have anticipated if interest rates actually existed.
 
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chocomorsel said:
Ok, I have to ask. What do you consider "very little" twenty years from now for a physician salary?
Just curious.
Click to expand...

Very little is obviously relative but if physicians end up making 120k-150k in today’s dollars I would consider the career similar in overall financial payoff to police/firefighter/teacher/military route when you factor in the extra years of lost income and debt. So noble professions that work hard and serve the public — but with a very solid true “middle class” lifestyle. Way less lucrative than those that make 120-150k after just a few years (sales, finance, engineer, programmer, pharma rep etc). Honestly it’s already approaching that for many specialties.
 
BLADEMDA said:
View attachment 334801
Click to expand...
An interesting website, but I imagine most anesthesiologists aren’t retiring 50 years before their death. I imagine most people that have a good chunk of change but aren’t sure if they should retire are around 55 (average age of retirement for anesthesiologists is apparently 63.3). In that case 30 years is more appropriate.


It’s easy to get hung up on the 2% rate of money “running out” but there are two significant factors here:

1st is it’s not going to catch us by surprise. Say we reach our last 1M at 80. Well, there’s social security (40k) and downsizing our primary residence (which for most of us will be worth 1M). Combined we should be able to spend ~120k a year for next 20+ years. A life of grandeur? Maybe not, but better than ~80% of Americans.

2nd is that we are >5x more likely to die from 55 to 65 (~11%) than we are to run out of money over 30 years, even with a 4% withdrawal rate .

The worst case scenario isn’t having to cut back to only 120k income in your 90s because of a bad market when you retired, it’s dying before 65, never having retired at all. The latter is far more likely than the former.

Just for fun if someone did retire early at 45 with a 4% withdraw rate, it seems they would have an ~8% chance of running out of money in the next 40 years, and a ~63% chance of dying in the next 40 years.
 
I think even 5% is reasonable for someone who can cut their expenses a lot when market tanks. Like someone said this doesn’t just sneak up on you. The studies assume someone is just going to blindly withdrawal a certain amount all the way to zero. Not realistic in real life, especially for those whose spending is on the luxuries in life that can easily be cut back if run into problems. Very different than someone who’s majority of spending makes up basic living expenses. In that case I would be more conservative because less flexibility.
 
nimbus said:
The Fed’s official position is that inflation will spike temporarily, then return to under 2% which is their long term target. I recently spent $90 for a tank of gas and $15 at McDonald’s just for myself so I don’t believe them. It feels like inflation is already here.
Click to expand...
Ok, I know you live in California were gas starts at $4. However what the hell do you drive? A dually?
 
chocomorsel said:
Ok, I have to ask. What do you consider "very little" twenty years from now for a physician salary?
Just curious.
Click to expand...
What's we may consider "little" while it may seem outrageous to some, they can easily forget the cost of education. I would 100% consider 200k/yr as a physician (especially an anesthesiologist) "little" if they're also carrying 100-200k in education debt.
 
Cath Up said:
That Roth IRA/401k matching until 30 years old is such a good idea. I've never heard of that but will definitely keep it in mind. It's like the ultimate move to support financial literacy and skin in the game for your kids while also helping increase their quality of life once you're gone. It feels protective from them becoming complacent or squandering what you give them because they are incentivized to earn and they need a career before they can access everything.
Click to expand...
I have funded my kids' Roths to the limit of the law since they were making lawn-cutting and babysitting money, and will continue doing so for at least a few years. It's an amount that's lost in the noise for me, but will have extraordinary benefits for them 50 years from now. Better that they learn something about stocks, bonds, asset allocation, SWR, sequence of return, etc etc from me, and not some subreddit gaggling on about stonks.

At least one of them is unlikely to enter a high-paying field (he's a musician) and I don't mind subsidizing him for a while longer.
 
pgg said:
I have funded my kids' Roths to the limit of the law since they were making lawn-cutting and babysitting money, and will continue doing so for at least a few years. It's an amount that's lost in the noise for me, but will have extraordinary benefits for them 50 years from now. Better that they learn something about stocks, bonds, asset allocation, SWR, sequence of return, etc etc from me, and not some subreddit gaggling on about stonks.

At least one of them is unlikely to enter a high-paying field (he's a musician) and I don't mind subsidizing him for a while longer.
Click to expand...

Same. I just chuck it into Vanguard 2060 target. Considered getting fancy with value tilting, but decided to keep it simple.
 
pgg said:
I have funded my kids' Roths to the limit of the law since they were making lawn-cutting and babysitting money, and will continue doing so for at least a few years. It's an amount that's lost in the noise for me, but will have extraordinary benefits for them 50 years from now. Better that they learn something about stocks, bonds, asset allocation, SWR, sequence of return, etc etc from me, and not some subreddit gaggling on about stonks.

At least one of them is unlikely to enter a high-paying field (he's a musician) and I don't mind subsidizing him for a while longer.
Click to expand...
That's wonderful. It's really one of the best things you can do for your children. My grandfather did this for me and made me put some skin in the game at a very early age. It set me up for success.
 
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sevoflurane said:
vti/vgt my exposure to international is still limited
Click to expand...
It may be more than you think. This isn’t the days of railroad companies or Sears. Top 5 holdings of VTI:


1Apple Inc.
2Microsoft Corp.
3Amazon.com Inc.
4Alphabet Inc.
5Facebook Inc.

I am pretty optimistic about India over the next 40 years for example, but don’t own stock in any Indian companies currently, and I won’t need to in order to benefit from the rise of consumer class in India.

Ex. Facebook has 346 million Indian users, Apple is building phones locally in India (3.2M sales, but a 60% growth YoY), Microsoft is everywhere (cloud services and windows). Amazon is making inroads in retail and also is a major player globally with AWS. Google of course dominates in India.

So on a surface level you own 5 American companies, but in reality you have ample exposure internationally with maybe slightly less exposure to China alone.
 
<(^_^)> said:
It may be more than you think. This isn’t the days of railroad companies or Sears. Top 5 holdings of VTI:


1Apple Inc.
2Microsoft Corp.
3Amazon.com Inc.
4Alphabet Inc.
5Facebook Inc.

I am pretty optimistic about India over the next 40 years for example, but don’t own stock in any Indian companies currently, and I won’t need to in order to benefit from the rise of consumer class in India.

Ex. Facebook has 346 million Indian users, Apple is building phones locally in India (3.2M sales, but a 60% growth YoY), Microsoft is everywhere (cloud services and windows). Amazon is making inroads in retail and also is a major player globally with AWS. Google of course dominates in India.

So on a surface level you own 5 American companies, but in reality you have ample exposure internationally with maybe slightly less exposure to China alone.
Click to expand...

That is probably how i like it tbh. I still own VXUS and some others, but it just isn’t a huge part of my portfolio.
 
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