Seeking Advice for Early Retirement

[Rambler]

Originally Posted by Milton

...I do believe that significant sacrifices - or very good luck - are required by anyone wishing to become financially independent.

...Or both...or LBYM. If you never had the boat in the driveway, then you don't feel deprived because you don't have it. We grew up relatively poor, but dad refused government handouts of any sort, and we did fine anyway. And, we kids never realized were were poor. We had a family that loved us, we did things together, we went to the lake every day in the summer to swim and cool off, but we didn't need a boat to do that. We didn't have a color TV when everyone else did...we got by just fine with a 19" B&W.

Now, DW and I have lived pretty frugal lifestyles all of our married life and have just loosened up a bit in the last few years, though still well within the LBYM point. Yes, we sacrificed didn't buy things like RVs/boats/etc, that we constantly wanted. But we didn't really feel deprived. Luck (created by a lot of hard work prior to that) hit my career in the late 90s and we have been able to prepare for FIRE on the back of both LBYM/sacrifice lifelstyle, and some additional luck or good fortune in the career.

RheumDoc, go for it, work hard save hard, and perhaps some of your hard work and effort will turn into a case of good luck for you to. Just keep planning, executing, checking to see the plan is working, and make adjustments along the way as needed, and you'll get there.

R

[torres9]

rheum doc,

welcome on board. im a md as well.
i agree with you that the amts requd to ER are sobering! But it can be done!

Apart from other good advise that others have given, i would add 2 things:

1. Make sure your wife is on board with the plan, it will require some sacrifice to LBYM.

2. You may want to think about Health Insurance, this may be the biggest hindrance to funding ER. On other threads people have mentioned getting your own insurance now when you have no personal health issues.


I am hoping to follow rich's advice and consider locum work after i hit basic fi levels
and allow for my portfolio to grow untouched for more time. That may be an option for you as well.

torres9

[FIREdreamer]

Yes, achieving FIRE is not easy. If it was more people would be doing it! Our goal is also to retire early after only 20 years of work. We started a bit earlier than you (at age 27) and over the past 7 years we have saved on average 30% of our gross income (a bit less in the early years, a bit more recently). After only 7 years, we have accumulated about 3 times our current gross income (or about six times our expected annual expenses in retirement).

So we have done much better than what the math would have suggested, 7 x 30% of gross = 2.1 times current gross income.

We have done, in fact, a lot better once you consider that during the first half of those 7 years we used to make about half our current gross income (and therefore we could not save nearly as much as what we are saving now).

So I think you shouldn't worry too much about the math right now. Save as much as you can. Invest wisely. Be patient. And I think it is very very important to keep a lid on your expenses even as your income increases.

[Texarkandy]

Originally Posted by haha

Have you ever considered taking a federal job? For a Doc the pay should be high; and you will certainly make your retirement goal on time, and without a lot of uncomfortable scrimping along the way.

I may set up an advice bureau- no matter what you do other than hedge fund manager, stop it and go to work for the Feds!

Ha

Working as an MD for the Feds is something to consider - as a Federal LEO (different retirement rules than regular Fed) I can retire with 25 years service & add my military time on top of that for pension calculations.

I punched the numbers into some annuity calculators & figured out that retiring at 49 my fed pension alone would cost about 1 to 1.2 million if purchased as an annuity. Not to mention TSP (like a 401K) & Social Security on top of that.

I have a close relative who is a psychiatrist - just dumped her part-time private practice to work part-time for the State & have more time with her kids - her DH is a family practice guy & his net last year was about the same as mine - his hours worked on the other hand are incredible.

The military might be a consideration for an MD also - travel, adventure, & free medical for life! Personally I couldn't put up with active duty for more than four years, but that's just my personality.

[jclarksnakes]

Originally Posted by torres9

rheum doc,

1. Make sure your wife is on board with the plan, it will require some sacrifice to LBYM.

torres9

That is VERY important advice. A spouse who decides he/she just has to keep up with the Joneses, or even worse one who is unhappy with your LBYM lifestyle and eventually divorces you can totally spoil your plan to RE. I have several friends who seemed to be on track to FIRE and are still working in their 60s or 70s. Divorce seems to be the nearly universal "key" to their need to continue working later than they wanted.

[Rich_in_Tampa]

"Working for the feds" in medicine is not a straight-forward decision. While there are undoubtedly some very rewarding positions, many are in highly bureaucratic settings, understaffed facilities, military bases or VA facilities. It is true that if you hang tough for 20 or 30 years you'll have a nice pension to show for it, but it's not for everyone. I couldn't have done it, but that's me.

[bongo2]

Originally Posted by rheumdoc1977

One thing that I did not consider is only increasing my spending by the rate of inflation, and saving my raises. Assuming my raises outpace inflation, that could make a substaintial difference.

I'm surprised no one pointed this out. Inflating your spending, but not your savings is a pretty big mismatch. If you just inflate your savings at the same 3.5% rate, then your required return goes down to 9.7% - still pretty big.

The big benefit will come if your income goes up faster than inflation, and you don't increase spending along with it. The italics are important, because the trap most people fall into is increasing their spending, and then you are actually falling behind your "base case" assumptions. For example, if your income goes up 5% faster than inflation, and you are able to save 1/2 of that (the other half going to taxes), then you can hit your number in 15 years with 7% investment returns.

Small changes change the numbers a lot. If you work 25 instead of 20 years, if you save 25% instead of 20%, if you can save your raises or if you end up including them in your lifestyle, if you make 6% or 10% investment returns - all these make a huge difference. Even the path of investment returns matters (high returns later is much better than high returns early in your plan). Who knows what the future will bring? Your life will change a lot over the next 20 years, and things may turn out much better or worse than you have assumed. As FIREdreamer said earlier, don't worry too much about the math. Just do what you can, keep moving in the right direction, and stay flexible.

The lesson I would take is that a 20 year working life is difficult, but not impossible, and significant savings will be necessary to make it happen.