Young Physician Looking for Advice

[jaerco]

Hello,

I am recently finished with training, age 32,  and already looking to retire early. My current plan is to work normal for about 10 years and invest 25% of my pay into my sep/new roth401k/and extra mutual funds. Then at about age 42-45 cut back to 8-10 days a month(down from 16-18 basically a pre-retire) until maybe age 50 max.  Anybody else in similar situation/have advice.  I have tried to calculate maxing out my SEP for 10-12 years and then letting it grow for another 15-20 years and then live on seperate mutual funds/smaller amount of shifts.  Calculators are hard to figure in using above.

jaerco

 

[Craig]

I'd recommend you build a small spreadsheet, using annual projections of income, factor in inflation (start with 4% or so), include a SWAG on income taxes, also on living expenses and so on.  You won't likely find canned software to help.

After you estimate your annual free cash flow, you can then build up the estimated portfolio growth.  If this is all greek, consider hiring a college accounting student to build your model, or find a fee-only financial planner [as I duck ...   ].

 

[dumpster56]

Hello,

I am recently finished with training, age 32,  and already looking to retire early. My current plan is to work normal for about 10 years and invest 25% of my pay into my sep/new roth401k/and extra mutual funds. Then at about age 42-45 cut back to 8-10 days a month(down from 16-18 basically a pre-retire) until maybe age 50 max.  Anybody else in similar situation/have advice.  I have tried to calculate maxing out my SEP for 10-12 years and then letting it grow for another 15-20 years and then live on seperate mutual funds/smaller amount of shifts.  Calculators are hard to figure in using above.

jaerco

jaerco

You spent so much time learning to be a physician like my daughter and son in law. and you want to work only 10 years at it??

Look if you are as GOOD a physician as both my kids are, young adults are then BE THAT GREAT PHYSICIAN FOR as long as you can stand it!!

We need the best and brightest minds taking care of us old farts!!!

 

[Nords]

Welcome to the board, Jaerco!

I am recently finished with training, age 32,  and already looking to retire early.

I hope that's a reflection of your interests and not a commentary on today's medical field.

Calculators are hard to figure in using above.

FIRECalc lets you set up variable streams of income in retirement to reflect when your spending & pensions change.

Financial Engines will also let you model extremely detailed scenarios (although their Monte Carlo software is much more conservative). It's not free to individual users but you may be able to avoid fees through Vanguard and some custodial account providers.

You might want to read a library copy of ESRBob's book on part-time work while approaching full-time ER.

Raddr is also an early-retiree physician; his board is at http://www.raddr-pages.com/forums/ .

jaercoYou spent so much time learning to be a physician like my daughter and son in law. and you want to work only 10 years at it??
Look if you are as GOOD a physician as both my kids are, young adults are then BE THAT GREAT PHYSICIAN FOR as long as you can stand it!!
We need the best and brightest minds taking care of us old farts!!!

Maybe we should cut the guy some slack. Most physicians are happiest when they're financially independent and providing free healthcare instead of having to deal with the HMO. It was a recurring theme in the book "Prime Time".

Besides, maybe Jaerco's the next Bernstein. We never would have read those books if Bernstein was happily cutting away on crania for the rest of his life...

 

[jaerco]

I do Emergency Medicine, which is pretty fast pace.  It tends to have a high burn out rate as you switch from nights to days and back.  I'm not sure I could keep up this pace until 50-55.  I'd consider part time/day-shifts only to supplement income like I mentioned in original post in a (pre-retirement kind of phase). I do love what I do, don't get me wrong. My desire to retire early is part my desire to travel/enjoy family etc...and part the realization of the commercial side of medicine:malpractice's sky rocketing rates/HMO/ETC. I'd love to RE, and volunteer at a clinic with out having to worry about all that other stuff.

jaerco

 

[Martha]

Maybe more people would want to be doctors if they could live reasonably paced lives. The idea of burnout training and short burnout careers doesn't make any sense economically or personally.

Jaerco, I knew an ER doctor in my town. Our city is about 80,000 people and the ER in this particular hospital generally ran at a fairly slow pace. He made good money and had a lot of down time. He always worked nights. His problem was that he would get goofy investment ideas so he ended up losing a bunch of money. He eventually left town for a job elsewhere.

(Martha, former bankruptcy lawyer).

 

[BUM]

All of my excustomers (now that I'm happily ER'd) were doctors. The stereotype in my experience was:

overworked
unhappy
horribly mismanaged protfolios
nosebleed insurance rates
lots of time consuming legal problems
expensive toy lifestyles
hypertensive
never retire early


Clinic work can be very rewarding


Break the mold...go for it doc!

 

[bssc]

Welcome

Based on the doctors I knew at Texas Children's / St. Luke's, the happiest were the ones who, in addition to seeing patients, either taught a lot or did research because they felt that they had control over their lives, rather than the ambulance.

The really type-As would go off and find projects for themselves, like mobile cath labs or a flying eye care center.

And doctors are usually horrible judges of non-standard (not stocks, bonds or mutual funds) investments so you are right in staying with the items in your IRA and mutual funds.

 

[jaerco]

Thanks for the input. Lot's of great info around here. My only plan is save a lot now so I can really coast in a few years. I agree, I am not into the stock stuff. I can handle the risk and am looking long term. My only problem is that I am currently with merrill lynch, using a financial advisor. I sort of got roped into using my friend/classmate's brother. I am starting to learn more about the fees of mutual funds and now learning about the crazy fees at ML. When you add those two together it can go past thee percent or more. The hard part is getting out with out costing friendships. Yikes.

 

[Brat]

BEWARE of friendships when it comes to financial folks. Surely you can come up with a lame excuse such as "my wife/parents/other important family member" insisted...

 

[LOL!]

I have family that are physicians.  One only works one or two days a week in an outpatient surgery clinic.   Doesn't seem to be a bad life at all.  The other does some kind of locum/temp stuff but is very picky where they work: must be nice locations where you would want to take a vacation anyways. 

Oh, I wanted to say: Cut the rope of Merrill Lynch.  If it is a real friendship, it won't matter. And you don't need a lame excuse. You can simply say, ML is a rip-off ... they have high fees and provide nothing that I can't get elsewhere for much less cost.

 

[TiogaRV]

Dear Jaerco,

It has been my experience, that putting a price on reaching dreams may be a fruitless pursuit.  We are terminal people, and each day that goes by is one day closer to the end.  We could spend tons of years saving up dough for retirement.  Or, we could live our dreams right now, and figure out how to pay for it as we go along.

One day several years ago, I got very sick.  Each week I went to my cancer support group, and watched my group members wither away into nothing.  If I could ever get rid of this thing, and be healthy again, I would never look back.  I promised myself, that I would rush at life, take nothing for granted ever again.

On February 25, 2003, the cancer doctor told me that I was in remission, and MsTioga my fantastic RV came into my life.  I did not have the money saved to do all the things that I wanted to do with MsTioga.  But I went for it anyway.  I had no choice, now was the time to live my dreams!

Next month will be the third anniversary of my fulltime life in MsTiogaRV.  I am in Mexico for the winter.  MsTioga is camped in the Pueblo of Santa Rosalia in Baja California Sur.  We are on a high hill overlooking the Sea of Cortez.  A zillion dollar view! 

I've built a small writing and publishing business on the internet to augment my Social Security income.  There have been great challenges.  I have had to beat off fear with faith that no matter what fate brings me, I shall overcome.

Bye for now,
George 

 

[Dawg52]

Dear Jaerco,

One day several years ago, I got very sick.  Each week I went to my cancer support group, and watched my group members wither away into nothing.  If I could ever get rid of this thing, and be healthy again, I would never look back.  I promised myself, that I would rush at life, take nothing for granted ever again.

On February 25, 2003, the cancer doctor told me that I was in remission, and MsTioga my fantastic RV came into my life.  I did not have the money saved to do all the things that I wanted to do with MsTioga.  But I went for it anyway.  I had no choice, now was the time to live my dreams!

Next month will be the third anniversary of my fulltime life in MsTiogaRV.  I am in Mexico for the winter.  MsTioga is camped in the Pueblo of Santa Rosalia in Baja California Sur.  We are on a high hill overlooking the Sea of Cortez.  A zillion dollar view! 

Bye for now,
George 

Great story George. I have been reading your blog and really enjoy following your adventure. You are living the dream that many would like to live. One more year for me and I will be as well. Maybe not in an RV, but I plan to travel.

Oh yes, what are your travel plans for the future? Good luck! 

 

[kat]

It has been my experience, that putting a price on reaching dreams may be a fruitless pursuit. We are terminal people, and each day that goes by is one day closer to the end. We could spend tons of years saving up dough for retirement. Or, we could live our dreams right now, and figure out how to pay for it as we go along......

George, thank you so much for sharing your thoughts. You expressed the views that I have found myself coming to realize and hoping to put into practice. I have no mechanical skills so I doubt I will take up the same lifestyle, but I have hope of finding my way. And congratulations on your upcoming third anniversary with MsTioga. I wish you many more happy years together!

kate

 

[jaerco]

George,
I have seen plenty of patients like you describe. I do plan to enjoy life now, as I have seen how quickly it all can end. I have squeezed in months of travel to Europe while in training, vacation a lot now, and am looking forward to the time when I don't have to worry about finances any more. That is why I plan to save so much now. I also agree with the other person whose family member only works one or two days a week. I could do that and cover all of my expenses and still allow for 20+days off a month(so I need to build up a nest egg and "let it ride" for a few more years until I decide to stop working all together.

jaerco

 

[dusk_to_dawn]

My only problem is that I am currently with merrill lynch, using a financial advisor. I sort of got roped into using my friend/classmate's brother. I am starting to learn more about the fees of mutual funds and now learning about the crazy fees at ML. When you add those two together it can go past thee percent or more. The hard part is getting out with out costing friendships. Yikes.

It's you against the stockbroker and the firm (ML). As they say, the broker makes money, the firm makes money, and two out of three ain't bad.

 

[P.S.]

Hi jaerco; welcome to the board.

I'm also a physician, and am also looking to RE, hopefully within a few years. Switched from neurosurg to primary care/FP for better family hours, but after a few years am looking to even more part time it. On M.D. pay, it is totally doable within a much shorter framework than the average joe, just have to LBYM.
This board is great. Have you read Bernstein's "Four Pillars", which seems to be the bible of this board? I personally enjoy finance stuff and don't think that M.D. and financially incompetent are co-traits. It's just that the former takes time and thought. Also, we're exposed to alot of great products by great companies. IM experience, the key to doing your own finance is read, read, read, ponder, and talk with people, including financial advisors if you want. Just use your head to discern the wheat from the chaff.
we subscribe to the Economist- it gives you a good gestalt.

 

[raddr]

Hey Guys,

I'm an early retired doc and can tell you that, as opposed to the usual stereotype, not all docs are inept with their finances and destined to work the rest of their lives. The most important thing is to start planning early and then to control spending and investment expenses. I started out with Merrill Lynch like one of you did but I really prospered when I went to a discount broker and managed my own investments. This is a great place to get some ideas. Feel free to visit my forum too.

-raddr
raddr-pages.com

 

[jaerco]

Raddr,

Thanks for the input. I will check out your forum. I am the one leaving Merrill Lynch. I was beginning to set up more mutual funds, beyond my maxed out pretax stuff. That is when I started to see the fees in "Management fees", and the fees of running the mutual funds. It just doesn't seem worth it to me. Now I have only myself to blame or thank in the future.

jaerco

 

[Rich_by_the_Bay]

Well, as long as you are looking for advice...

As a physician of 36 years, I can tell you that it is still more than possible to find a uniquely rewarding and meaningful career in our beleagured profession. I admire your awareness of how important it is to save vigorously (I was worrying about paying off my loans at that age) early in your career.

But if you ask me, I would concentrate on finding a job you can really love. The money you save will bring FIRE soon enough, but your top priority now is to practice well, find a rewarding position, and take good care of your patients.

The beauty of financial independence is that you might find that you love your work so much you don't want to retire even though you can. In fact, without having to worry about your "productivity" since you will be financially independent, you may even love it more.

You are way ahead of the game just by starting to save now. Don't let the honor of practicing your noble profession get overshadowed by pressure to earn/save/retire.

 

[mark500]

Hey Jaerco. I was in your situation at your age. I am a physician, aged 48, and had planned to ER at age 46. It is definitely a reachable goal. You gotta save a lot.

I have not ER'd yet even though I could. Have not been able to pull the trigger. May soon though.

I love my specialty, but dislike the practice of medicine. Liability, business politics, call, nights, weekends take their toll.

 

[jaerco]

Wow. Six years later and I find myself back on the forums. Weird to read what I wrote and see where I am today. So a little update.

Now turning 39 and in similar situation with a few hiccups along the way.

Married in 2008, lasted 6 months, but didn't cost me anything. Thank goodness.

Remarried to a wonderful lady with the same goals as I have. Everything good now.

Lost a lot on my first house and moved in with current wife. But given the real estate market if I'd waited and not dropped the price it would have been much worse.

Two years ago after meeting my current wife I cut back to 14 shifts a month. Then to 12 shifts in 2010 and 10 shifts last year. I learned a hard lesson the first time around. Now focusing on life, my wife and then work. It is nice to already have cut back so much. There has been a group change at our hospital and have agreed to work 12 shifts / month this year, but will be back to 10 next year. I consider myself semi-retired

Still hope to be able to walk away at 50 if I want, but likely work longer since I've already cut back my shifts. (which is helping my sanity greatly) I hope to be to 8 shifts by 45

I have managed to max out my SEP every year and got my wife to max out her 401k as soon as we met.

The after tax savings have not gone so well. I spent way too much on the first wedding, drained the savings shortly after to sell the first house and get the cars paid off.

We are finally getting back on our feet and that is why I was searching around and found the forums again. We have finally started to build up a true emergency fund and then need to figure out how to invest our after tax dollars. Need to refinance our house (wife's house) to a ten year loan. I need to do some more searching around and talking with vanguard and will post some questions soon

jaerco