When do you plan on retiring?

[PikminOC]

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Nicknaylor, I thought you were a surgeon. Did you switch fields?

 

[PikminOC]

I was just pointing out what you could accumulate in ten years. If you can do that in ten years, imagine what you can build up in twenty years.
But if you're single, why can't you retire on a seven figure net worth? On a 3% withdrawal rate, which is very conservative, that's $2750 a month. And that doesn't even count what we get from Social Security. Our patients get by on disability checks worth one third of that.
I'd prefer to work longer to enjoy a higher standard of living (and that probably goes for most of us), but if you hate practicing medicine enough to live like a resident forever, punching out with $1 million is very doable.

Patients on disability also get alot of other things to help them. Section 8 housing, snap, etc. I dont think i could live on 2750 a month without all those other things too.

 

[PikminOC]

I'm not talking about the "financial advisors" you hire to manage your money. I'm talking about pundits and authors, people like Jack Bogle or the guys behind Motley Fool or the White Coat Investor.

I just crunched some more numbers since I already had the historical annual S&P 500 returns in a spreadsheet. If you'd put $100k a year away into an S&P 500 index fund (a lot, but feasible if you took that $450k/year job) starting in 1987, at the end of 2016 you'd have over $15 million.

In 1987 they were paying 450 k per year?

 

[PikminOC]

30x annual expenses is probably enough, assuming you're in a reasonable investment allocation.

Probably enough? If you retire, dont you want to know for sure?

 

[cookymonster]

Probably enough? If you retire, dont you want to know for sure?

Have you heard of the Trinity Study? The chance of that plan failing is in the low single digits. But if that risk is too high for you, you can save 35x or 40x your annual expenses, but then you're taking on an entirely different risk, which is working and saving more than you really need. There's always a chance you could die of pancreatic cancer six months into your retirement. It's much easier just to decrease your level of spending if you find out your nest egg is decreasing faster than you'd hoped in order to catch up. So yes, as long as you have basic investment knowledge and a solid game plan for managing your retirement assets, you'll be fine.

 

[TexasPhysician]

I agree that most psychiatrists could retire by 50 if they save well.

I don't ever plan to fully retire because I enjoy the work. I have already cut back to under 35 clinical hours/week and I'm under 40. I'm well on track to make working optional within 10 years.

 

[Jules A]

But if that risk is too high for you, you can save 35x or 40x your annual expenses, but then you're taking on an entirely different risk, which is working and saving more than you really need.

This makes me far more anxious than outliving my money.

My target number is geared toward maintaining a similar lifestyle to what I have now which while not extravagant leaves plenty of room for belt tightening if necessary. Based on individual circumstances and genetic predisposition I'm guessing I'll live to mid 70s. I'm budgeting to 87 years old and whatever is leftover will go to charity. I'd prefer to cut it as close to the wire as possible and seriously doubt I will make it let alone live longer than social security's life expectancy calculator estimate for me which is between 85-88yo.

 

[NickNaylor]

Nicknaylor, I thought you were a surgeon. Did you switch fields?

Haha, maybe in another life. I've only been a psych resident.

 

[daru1]

I agree that most psychiatrists could retire by 50 if they save well.

I don't ever plan to fully retire because I enjoy the work. I have already cut back to under 35 clinical hours/week and I'm under 40. I'm well on track to make working optional within 10 years.

Ditto, I'm under 40, and already at about 20 hours per week. Private practice, some cash/some insurance. Metro area (pop >1.5million). I have not worked >30 hours in any week since residency, and don't have any plans to do so. I've done this as to not burn out and do it as long as I can because it's fun. Being my own boss, and never having someone tell me that I _have_ to do something was the selling point for me. Kudos to you all that run a full-time schedule, I'd have to retire within 15 years to do it.

 

[calvnandhobbs68]

Theres compound interest still? For a decade prime interest has been zero.
Stock market is unreliable.

What does that have to do with compound interest? The prime rate doesn't determine stock dividends at all.

 

[calvnandhobbs68]

I'm aiming for 25x to retire at 62. With only a spouse who can take care of himself I plan to hopefully spend it all. What I have seen even with those who were extremely active is that as we age our circle becomes notably smaller. Even people who loved traveling become more comfortable at home in later years. The snowbirds eventually sell their home up north and stay in FL etc. This will likely reduce annual expenses in the last decade.

I wish I could find and credit the poster who described rental properties as a part-time job because that is a perfect description. I'm not as knowledgeable or comfortable with the stock market, have about 25% of my assets there, and have always loved not only how concrete real estate is but the return on my investments. Unfortunately it does require time, although in my experience that hasn't been excessive and would be even less if I paid a management company. During the years when securing a tenant I'd estimate less than 40 actual hours of my actual time and maybe 10 hours in years when I have the same tenant. There are the expenses because the repairs and upkeep are never ending. My rental income per property right now averages $18,000 a year which goes toward mortgages and builds equity so not bad for the amount of time and money I have invested.

Has anyone tried the crowd funding real estate investing thing? Its interesting and I like that at least according to White Coat Investor the amount to buy in isn't huge so I can justify taking a loss if things don't work out.

You've got to be reallllly careful about checking to see what types of properties they're investing in. I looked at it once, looks like they're investing in a lot of speculative real estate **** that might not turn out. Fundrise (the big one you hear about) has a terrible website that basically doesn't explain anything. Look at their "eREIT portfolio builder" for a real laugh. You basically have these three little squares that say "Heartland", "East coast", "West coast" that you move around and fancy little graphs pop up that show you your distribution between these "eREITs" that are all basically the same thing. You get extra "diversification" if you put all three little boxes on the right side. They no joke have a graph that says "strategy" and then has a bar divided in half with a line. One side of the line says "equity" and the other side says "debt"....and it's just cut perfectly in half. Wat.

So basically they have a fancy website and a lot of possibly BS investments. If you look at their "Featured Assets" for the West Coast, it's all land loans for building houses. Possible pretty decent return (esp given strong housing market right now) but lots of risk in there. You also have to take a look at how much they're taking for fees. Here's a good Motley Fool article: Is Fundrise as Good as It Seems? -- The Motley Fool.

"When the fund managers find a deal to invest in, they carve out an origination fee of up to 3%. Management thus has an incentive to offer loans with higher origination fees (which flow to management), offset by lower interest rates (which would result in less income for fund investors)."
" managers collect ongoing management fees equal to 1% of the funds' net asset value on an annual basis, in addition to servicing and property management fees, which can add up to 0.50% of assets."
"Fund management also stands to collect every time Fundrise sells a property on behalf of its investors, collecting 0.50% of the gross proceeds after repayment of property-level debt. Notice that this fee rewards management for activity, not investment returns. Buying and selling a property at a loss would theoretically generate earnings for fund managers at the expense of capital losses for its investors."
"Tucked away on page 16 of a regulatory filing is the notice that a special servicing fee is assessed on non-performing investments at a rate of 2% of the asset's value annually. "- WTF

Looked pretty fishy to me in the past. Seems like a setup for a scam with a lot of possibly non-performing assets run buy people who stand to make a lot of money off of fees with little incentive for making investments in performing assets.

 

[Shikima]

I agree that most psychiatrists could retire by 50 if they save well.

I don't ever plan to fully retire because I enjoy the work. I have already cut back to under 35 clinical hours/week and I'm under 40. I'm well on track to make working optional within 10 years.

Unable to do this now with the current debt structure many are coming out of school with, especially if one already has a family. Go back 10-12 years ago, this was very plausible.

 

[PistolPete]

Ditto, I'm under 40, and already at about 20 hours per week. Private practice, some cash/some insurance. Metro area (pop >1.5million). I have not worked >30 hours in any week since residency, and don't have any plans to do so. I've done this as to not burn out and do it as long as I can because it's fun. Being my own boss, and never having someone tell me that I _have_ to do something was the selling point for me. Kudos to you all that run a full-time schedule, I'd have to retire within 15 years to do it.

Bold is my emphasis. OMG, I cannot wait for private practice for this reason!

 

[TexasPhysician]

Unable to do this now with the current debt structure many are coming out of school with, especially if one already has a family. Go back 10-12 years ago, this was very plausible.

Why is it not still plausible? I'm doing it. Even 300k in loans could be paid off in 2 additional years if you keep expenditures low. I didn't have that level of debt, but I was able to clear my debt through moonlighting in residency.

 

[Merely]

Ditto, I'm under 40, and already at about 20 hours per week. Private practice, some cash/some insurance. Metro area (pop >1.5million). I have not worked >30 hours in any week since residency, and don't have any plans to do so. I've done this as to not burn out and do it as long as I can because it's fun. Being my own boss, and never having someone tell me that I _have_ to do something was the selling point for me. Kudos to you all that run a full-time schedule, I'd have to retire within 15 years to do it.

20 hrs per week equates to how much money annually?

 

[Mad Jack]

I agree, but Bogle's predictions weren't just based on the most recent bull market. He believes we're never again going to see the kind of economic growth we had throughout the twentieth century. Other people have made similar predictions, based on the idea that such growth was driven by cheap energy, which is supposedly now coming to an end. Who knows whether that will turn out to be true or not, but if it does, it's depressing. I always wanted to attain true independent means--i.e., sufficient wealth to live indefinitely off of passive income like interest and rents--and it's sad to think that by a combination of being a nontrad, not going into a super-high-paying field, and changes in the economy, I'll never get there, and instead be like every other schmo, for whom retirement means spending down principal.

We're almost a fifth of they way into the 21st century and it's been pretty ****ing good so far. As to spending down, you could instead live below your means. One could theoretically live forever at 80k/year on 2 million of principle, which isn't even close to impossible to obtain as a physician. Given that capital gains are taxed at a lower rate, that 80k is the equivalent of earning far, far more in regular income. Want 120k? 3 million. 160k? 4 million. These are all attainable numbers for a physician.

 

[calvnandhobbs68]

We're almost a fifth of they way into the 21st century and it's been pretty ****ing good so far. As to spending down, you could instead live below your means. One could theoretically live forever at 80k/year on 2 million of principle, which isn't even close to impossible to obtain as a physician. Given that capital gains are taxed at a lower rate, that 80k is the equivalent of earning far, far more in regular income. Want 120k? 3 million. 160k? 4 million. These are all attainable numbers for a physician.

Capital gains taxes only apply to non-Roth non-retirement accounts (because it's after tax money). Hopefully most of that is in retirement accounts.

 

[chicagochildpsych]

Read white coat investor, working like a dog now, living off one physician salary (wife), paying off loans and investing heavily in retirement. The plan is to bail at 50.


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[Mad Jack]

Capital gains taxes only apply to non-Roth non-retirement accounts (because it's after tax money). Hopefully most of that is in retirement accounts.

If you want to retire early, there is zero way in hell you're taking withdrawals that big tax-free. It's just a statistical impossibility.

 

[calvnandhobbs68]

If you want to retire early, there is zero way in hell you're taking withdrawals that big tax-free. It's just a statistical impossibility.

Either way it won't be tax free. And you're right, if you retire early you have to be mindful that you won't be able to use your retirement accounts without a penalty. so if you're retiring early you'll have to be using money that gets taxed at capital gains rates (after already being taxed before you invested it).

 

[Shikima]

Why is it not still plausible? I'm doing it. Even 300k in loans could be paid off in 2 additional years if you keep expenditures low. I didn't have that level of debt, but I was able to clear my debt through moonlighting in residency.

Being foreign trained with tuition at a premium, I didn't have the opportunity to clear debt moonlighting and needed to defer which further exacerbated the expenses.

 

[SomeDoc]

Either way it won't be tax free. And you're right, if you retire early you have to be mindful that you won't be able to use your retirement accounts without a penalty. so if you're retiring early you'll have to be using money that gets taxed at capital gains rates (after already being taxed before you invested it).

Isn't it nice how uncle Sam likes to take a cut of everything, including double taxation? The silver lining is that capital gains on holdings over a year get taxed at 10%

 

[Mad Jack]

Either way it won't be tax free. And you're right, if you retire early you have to be mindful that you won't be able to use your retirement accounts without a penalty. so if you're retiring early you'll have to be using money that gets taxed at capital gains rates (after already being taxed before you invested it).

You can tap your tax-free accounts without penalty using a method of sustained equal withdrawals (I can't remember what the exact term is). There's no way your tax-advantages accounts would be worth doing that to though.

 

[milesed]

I plan to retire after working 27 years (age 57) from current job. My 2 kids will be in college, so may need to work a little longer depending on funding needs. I don't think I'll leave psyc, but may work here 10-20 hours a week for 9-10 months a year. I love my job, my patients and the constant use of my brain it requires.

 

[PistolPete]

Read white coat investor, working like a dog now, living off one physician salary (wife), paying off loans and investing heavily in retirement. The plan is to bail at 50.


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How many hours per week right now? Watcha planning on doing once you retire at 50? I love WCI.

 

[chicagochildpsych]

How many hours per week right now? Watcha planning on doing once you retire at 50? I love WCI.

I'm working between 60-80 hours, it's a grind.


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[PistolPete]

I'm working between 60-80 hours, it's a grind.


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Why so much?

 

[chicagochildpsych]

In terms of what to do in retirement, I would love to volunteer some time at a community clinic, play a lot of tennis, and travel.


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[Shikima]

Why so much?

Debt doesn't get any cheaper and the only way to make money is to see more people.
The assembly line never stops.

 

[PSYCHEVAL3]

I'm a self employed psychologist and own a clinic and employ several providers. I work about 65 hours a week 42 weeks a year. I spend 10 weeks vacationing all over. At 52 (around 10 years from now) I want to work a month, take off a month, work a month, take off a month. Essentially working 6 months a year. I primarily do evaluations so on going patient care is not really an issue. Not sure if I'll ever quit, I enjoy the work too much.

 

[nexus73]

Read white coat investor, working like a dog now, living off one physician salary (wife), paying off loans and investing heavily in retirement. The plan is to bail at 50.


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How long do you think you can maintain this pace?