I can retire---and my doctor can't?!?

[Rich_in_Tampa]

Originally Posted by sailaway

As a physician that has retired early at 55, I actually agree with most everything that has been stated. Interesting and few other forums of people would understand what this one knows. My wife and I were lucky enough to recognize early on the importance of saving rather than spending but it was hard just as it has been for everyone on this board.

Maybe you'd agree with me that another problem faced by many of our colleagues is a deficient sense of "life outside of practice." That can make the prospect of retirement a little scarey even if you have the finances in place.

[cute fuzzy bunny]

The millionaire next door covered this syndrome.

High end white collar professionals often come from well to do families with higher end lifestyles. They spend a long time in school fraternizing and becoming lifetime friends with other kids that are well to do that also enjoy higher end lifestyles.

Competition ensues, and the spending escalates.

You're conditioned to earn and spend and keep up with the Jones's.

Certainly not the case with all or maybe even most, but their observation was that the average "millionaire" profile was a blue or slightly white collar worker who started their own business after receiving little or no higher education past high school, drove a pickup truck and lived in a middle class neighborhood.

I get this from the "helpers" at the Dentist I go to. He hires "unretired" dentists all the time to pick up his slack. One guy keeps coming back. First thing he says when I sit in the chair is a question designed to setup a one hour monologue on his multiple airplanes, his surgeon sons multiple exotic cars and huge house in southern california, and the mid five figure family vacations in exotic locales.

Sounds like a nice life. Except for the part where he's in his mid 70's and still has to take on part time work.

He actually asked me once what I did. Told him I had been retired for 5 years on my investments. "Whadda ya invest in?". "A variety of mutual funds at Vanguard". "Huh. So my sons looking at getting rid of his porsche and ferrari he's had for two years and getting a..."

[sailaway]

Originally Posted by Rich_in_Tampa

Maybe you'd agree with me that another problem faced by many of our colleagues is a deficient sense of "life outside of practice." That can make the prospect of retirement a little scarey even if you have the finances in place.

That was the major problem I anticipated, realized, and am somewhat successfully working through.* This forum helped in all the above three.* It helped that I live in a small community where I was just somewhat another fellow friend.* It helped that I had few ego problems, a successful marriage, and kids with only the "usual" problems.* This goes the same for others on the board.* I think more people on this board have problems than they want to readily admit or discuss.* But personlly I have found general truths.* It has not been easy but the benefits of having my own life far outway the drawbacks and I have no regrets to my decision.

Headed to Pamplona, Spain on Friday.* Wish me luck on staying ahead of the bulls.

Sailaway

[Nords]

Originally Posted by sailaway

Headed to Pamplona, Spain on Friday.* Wish me luck on staying ahead of the bulls.

I've seen what happens to the Pamplona "man in the street" during that event... Physician, heal thyself!

[Meadbh]

Rich is correct; physicians in general miss out on a key advantage of people who enter the workforce early: the time value of money. In addition, particularly in North America, physicians tend to begin their careers with enormous debt loads. The mean is over $100K.

Also true is the perceived need of (some) physicians to keep up with the Joneses and maintain conspicuous consumption. Not mentioned so far is the fact that most physicians are, in fact, small business owners, and many have high overheads that may amount to 50% of their gross revenues.

I recently met an 81 year old doctor who told me he couldn't afford to retire* because he needed the income to pay for his wife's personal care home expenses (she has Alzheimers). What a terrible way to end a career! Of course I also know another MD who is in his eighties and works full time because he loves it.

I'm a physician too, but my situation is different. I grew up an only child in Europe where people save more. My parents paid my tuition. As an intern I was saving for a deposit on my first home. I didn't really get into tax efficient retirement savings till I became an attending physician at 33, having lived and worked in 3 countries and settled in Canada. I definitely live a more conservative lifestyle than most of my colleagues.

My total annual income is <$200K, most of which flows through my medical corporation, allowing me to defer a significant amount of tax. I save ~$60K a year, mostly in the corporation. My net worth doubled last year due to an inheritance and is now ~$2m. My assets are allocated approximately 30:60:10 apart from my home, vacation property, pension fund and some VC. Ialso have a significant global focus. By the time I am 55 I expect my NW to be $3m assuming I have an average ROI of at least 7%, and my corporation to be worth $1m of that. If it is, I will take ER. If not, I will wait till it is. I plan to live on corporate dividends until I can access my retirement funds at 69.

I did take a sabbatical some years ago and used it to do an MBA. After that I completed the Canadian Securities Course (www.csi.ca) as I my MBA sparked an interest in finance. Anyone can take this course and it's well worth the effort if you want to learn how to invest more intelligently. Provided, of course, that you don't have a problem with Canadian content.

[macdaddy]

As someone headed to medical school, it scares me how some of my classmates shrug off the debt burdens they will graduate with. I have friends who chose a private school over a state school and will graduate with 200k-250k or more of total debt. The worst thing is that the medical schools and loan companies even grant generous loans for living expenses, meaning poverty no longer forces someone to LBYM. To me that borders on criminal behavior, enslaving someone who doesn't know any better in debt for the next 20 years of their life. They think that they will be able to consolidate their loans at the 2%-3% rates of the past few years. And besides that, even at 60k/year for 4 years, "student loan debt is good debt"... what a misunderstood black hole blank check concept. They really believe that they will all have cushy 200k per year jobs in primary care in the city of their choosing. I think they will be in for a rude awakening, having been scewed by the system.

[Meadbh]

Macdaddy, you may want to check out this link, as well as some previous issues:

http://mdm.ca/md/Strategy/index.asp?...asp&language=E

[jclarksnakes]

....Last week I talked to a very frustrated and very tired first year resident who said she had $300,000 in student loan debt. I was thinking that she will have to work hard to pay off the debt and then save very aggressively to retire as young as many of us.
jc

[Meadbh]

That financial pressure is one (but not the only) reason why suicide is much commoner in physicians than in the population in general. See

http://ajp.psychiatryonline.org/cgi/...ct/161/12/2295

[kcowan]

Another problem for GPs is that they are not trained to run a small consulting business such as their practice. Nor do they get any training on investing. These are both problems for many of them. Bad investment choices then lead to financial pressures later in life.

[macdaddy]

Originally Posted by Meadbh

Macdaddy, you may want to check out this link, as well as some previous issues:

http://mdm.ca/md/Strategy/index.asp?...asp&language=E

Thanks for that link Meadbh. I would really like to open a boutique financial management company exclusively for physicians, sort of like the one there. Many friends and family who are physicians have invested poorly on bad advice and just plain been ripped off by people who think it won't matter. It makes me mad and some day I'd like to be in a position to do something about it.

[sailaway]

Made it back from Pamplona and caught up on this thread.
Ran three days (the last three), great time, great experience.

Sailaway

[eridanus]

Originally Posted by roadkill

Well, I don't know what level of income a typical pulmonologist generates, but this guy is 57 and only has $336,000 in financial assets? geeez..................

The good doctor and his wife gave 40,000 to charity, spent 35,000 on home improvement, and saved only 20,000 last year (10% of income). There is also the son's law school and daughter's grad school. Even with 200k/yr, I don't foresee an early retirement for this couple.

A close friend of mine that I've known since high school is making the equivalent salary. He paid off his $100k student loans in 2 years and is now maxing out his savings for ER.

Oh yeah, he drives a used Chevy and lives in an apartment.

A doctor couple I know (both GPs) has only one car, a Civic. They have a nice house with nice furnishings but are definitely practicing LBYM.

[cute fuzzy bunny]

Originally Posted by sailaway

Ran three days (the last three), great time, great experience.

Wow...bet you're going to sleep for a week after running three straight days. I can only imagine the blisters!