One Million in Retirement Funds, Can I go Part time now?

[Partimewannabe]

I work 80-120 hours a week, contemplating cutting back if possible. Am an MD age 45. Would like to keep contributing 50 K yearly to retirement fund for another 10 years or so (index funds Vanguard mostly) and then cut down even more at age 55. Have 4 years left on mortgage and 2 teens (14 and 16) to put through college in the next 10 years. 100k in 529s. These hours are horrible. Blech. Working for a Hospital Corp on productivity. Could absolutely live on less and cut back on vacations and drive my cars for a while. Its been 18 years of long hours and missed family dinners.

 

[Meadbh]

I hear you! Another doc here. Working those hours will kill you unless you stop soon. It's impossible to comment on your FIRE plan without more detail, particularly on expenses and debt. But if you can go part time, cut expenses and still save $50K per annum, there has to be a way. What does DH think?

 

[David1961]

I think there are many tings to consider, like what your expenses are, what your current salary is, how many hours would be considered part-time, and how much of a pay cut would you take by cutting back. Sounds like you are burned out.

 

[Sea Kayaker]

I'm 42 and am going to ER very soon. About 1 million in dividend paying stock right now, which could be bumped up another 400k if I sold a few properties. No mortgage. No kids. 1 reliable car (not cars plural). You didn't mention your annual living expenses, but I'm guessing their considerably above our 30k.

Part time work doesn't thrill me much, but I think it might fit for you because I don't think you can retire completely right now. Can't be sure since you don't mention any expense numbers. Feel free to share.

 

[Partimewannabe]

No debt except for 200K on mortgage. I could double pay my 3-4K monthly payments now.
I make 400K for a few years, 200-300 before that. Have been spendy on vacations. Private school for 2 kids is 35K Property tax is only 5K.
No second homes or time shares or anything like that.
We are in a cheap Midwestern city.
Could live on 200K and cover expenses.
Only need to arrange it with the corporation.
DH home taking care of kids but could go back to work and make 40-50K and then add to retirement funds as well.

 

[Sea Kayaker]

200k yearly living expenses?

No part time for you!

 

[David1961]

Have you played around with Firecalc? For someone your age, I think most folks would recommend a maximum withdrawal rate of about 3%. At that rate, $1 million will generate only about $30k a year. You can plug different scenarios in FireCalc to get a better idea of the probability for success for different withdrawal rates.

 

[Partimewannabe]

Well, that would be half my current income, and with subtracting 401K and 403b (well,
35 K of mine plus a match 17.5K
6K health insurance,
40 K federal, state and county taxes,
35K tuitions for the kids,
116K gone from 200K is left to live on. Estimated.
84K

 

[Partimewannabe]

David1961, I did the firecalc, and I should be good at 80K if I continue to add to the 1 million for another 10 years at the current 51K per year. Then let it sit for another 10 years.

 

[steelyman]

NIKE says "just do it!".

 

[Animorph]

The faster you can trim those expenses, the faster you'll save and the less you'll need to save for retirement. Though as long as you keep a good savings rate you should at least be able to cut back to a part time 40 hours! Take a good shot at what yearly expense level looks comfortable and what looks barely workable.

You still need to pay health insurance and taxes out of that 3%/$30k in retirement, so don't go subtracting those out so quickly. Any Social Security or pensions? And you can subtract out FICA/Medicare taxes if you have them.

 

[brewer12345]

Well, that would be half my current income, and with subtracting 401K and 403b (well,
35 K of mine plus a match 17.5K
6K health insurance,
40 K federal, state and county taxes,
35K tuitions for the kids,
116K gone from 200K is left to live on. Estimated.
84K

Uh, so where does the extra over this amount go today? Gold plated toilet paper?

Depending in where and how you live, it can be done. We expect to live in ER/ESR on about 60k including the mortgage for a family of 4 (plus 2 dogs, plus guinea pigs, plus fish, plus...). But you do have to spend time monitoring and managing expenses. Tough to do when you are working 80+ hours a week, but worth keeping in mind if you will downsize your job.

 

[Rambler]

Keep in mind that if you go "part time" enough to collect 200k in salary, that still means 40-60 hour weeks. If you are working hr weeks, what is there to keep you at 60 hours or less? The patients will still be there, no? How is mega hospital going to deal with half of your workload. If they say "fine, go part time. Your new salary is $200k" but the don't backfill, what will happen to those patients? I know the answer to that...you will care for them, at half price, and HospCorp big boss will smile all the way to the bank.

My advice would be different than others here: suck it up for another year or two or three, scheme and plan your exit in the meantime, then bail completely out of current situation. You can then take temp physician assignments, when and where you want to...or not at all, if you get your numbers right before you bail out.

R

 

[daylatedollarshort]

Sure, I would do it, like yesterday. If you haven't read it yet, you might find the book Your Money or Your Life helpful.

I think you will be fine since you can cover your expenses on half your income now, still save, you have $1M in savings, the 529s and your house will be paid off before too long. Many households would be able to live pretty well in a cheap Midwestern city for much less than $200K a year.

When DH wanted to leave the high stress megacorp job world, we cut tens of thousands in annual expenses from our budget and we still live in the same house and drive the same cars. One thing we did was compare our budget to the Consumer Expenditure Survey and make cuts in some places where it was out of line:

CE Expenditure Tables

We went over every budget item, line by line, and made cuts from changing insurance deductibles to swapping out all the light bulbs for LEDs to shopping at a less expensive grocery store.

I borrowed books on simple and sustainable living from the library, and the ideas from those books have helped to really lower some expenses. We cut our electric and grocery bills by at least half. Every $100 a month you can cut from from a 40 year retirement horizon reduces your required nest egg by $48K ($100 X 480 months of retirement).

 

[Fermion]

I borrowed books on simple and sustainable living from the library, and of ideas from those books have helped to really lower some expenses. We cut our electric and grocery bills by at least half. Every $100 a month you can cut from from a 40 year retirement horizon reduces your required nest egg by $48K ($100 X 480 months of retirement).

Really it is somewhat better than that. Every $100 a month you cut from expenses is worth $110 or $115 x 480 months because of taxes.

 

[daylatedollarshort]

Really it is somewhat better than that. Every $100 a month you cut from expenses is worth $110 or $115 x 480 months because of taxes.

Good point. The higher your tax bracket the more cutting that $100 a month is worth.

 

[heyyou]

Consider trying to find some balance in your life. Everyone you work with, other than doctors, lives on less than you do. Many of them are having better lives than yours. Can you become a partner in a business that supplies your services, drawing only the income that you earn for the partnership? All of your life, more is what was requested. Let someone else do more now because your family needs you home more often, than they need the money you are making.

When you jump off of the fast treadmill, you will fall down, but then you can get up and start living a better life both for yourself and for those you love.

Retirement has been the best years of my life. Sadly, my wife says that I am now a nicer person than during those last, unhappy years at work.

Best wishes to you on finding a better way to live.

 

[jerome len]

solutions is simple......match input with output when retired. You'll have to give up expenses most Doc's consider essential.....private schools for kids.....expensive vacations.....nice, new cars......items that families with $400,000 income take for granted. Some folks live on 40k a year.....others go broke with a million dollar per year income.....I had a friend, owned his own business.....wife cried when they had to give up their fractional jet......"1st class is so demeaning" ......you've put the golden handcuffs on yourself......only you can take them off.......you decide.....personally, I'd look for a practice where you could limit your work to your acceptable hours at a salary you can save for retirement at an acceptable age......no one here can really give you much advice.......you're smart.....you spent years proving it becoming a Doc...I'd sit down with DH and work out a joint plan......good luck.....you'll do fine.

 

[pb4uski]

$1 million of retirement savings is inadequate in relation to your living expenses/standard of living.

One suggestion is to do some analysis of your spending and what is essential and not essential and get realistic about what you need to live the lifestyle you want in retirement (or part-time work).

Quicken Lifetime Planner (part of Quicken Deluxe and higher) is an intuitive, easy-to-use tool that may be useful to you in planning your transition to part-time work or retirement.

Good luck.

 

[plex]

First thing, it is blatantly obvious you need to lower your hours, one way or another, and then choose your course from there. 100-120 hours/week is getting into the range where it isn't sustainable for anyone, even the high-powered workholic types, one way or another, even they hit a wall.

Second thing, based on the estimated expenses you want to cover, you are basically going to need to reach $5M to be at least near the finish line, that's where the 4% SWR mark is, from there other factors tweak the number somewhat higher, such as early retirement, or lower, such as late retirement.

So, you need to explore your options and switch to doing something sustainable (which is what you should be focusing your very limited free energy on now), but after that, it will be quite a while before you reach early retirement, at this rate, it will probably be your early 60's, at best.

However, as others have hinted, your early retirement date can be lowered by either getting a better grasp on what your actual expenses are, resulting in you finding out you are greatly overestimating your current or future expenses, or by actually cutting out expenses which really aren't something you consider worth working additional months/years of your life to fund.

 

[daylatedollarshort]

I would also recommend reading The Millionaire Next Door book. You are income statement affluent but not balance sheet affluent. A family able to live well on $40K with $500K has more freedom because they have 12.5 years of living expenses in savings.

You can get a summary of the main ideas of the book on Wikipedia -
The Millionaire Next Door - Wikipedia, the free encyclopedia

While there are many doctors who post here who are wealthy, in general doctors get picked on a lot in the book because even though they tend to have high incomes, they are expected by society to also live the part, which leads to high levels of conspicuous consumption and lower net worth than PAWs (prodigious accumulators of wealth).

A guy who owns a scrap metal business may have a doctor type income, but he is less likely to have any peer pressure to send his kids to private school or live in a gated community, which allows him to save and invest more of what he earns.

 

[Cassius King]

I'm less concerned with the FIRE concept than I am with the idea of working 80-100 hours a week and having a family at home that includes two teen age children.

These children will soon be grown up and gone in a couple of years. No amount of money will buy back their childhoods and the time you could have spent with them.

I would adjust my expenses by every means necessary to spend as much time with family as I could.

 

[Milton]

$1 million of retirement savings is inadequate in relation to your living expenses/standard of living.

Entirely correct.

One suggestion is to do some analysis of your spending and what is essential and not essential and get realistic about what you need to live the lifestyle you want in retirement (or part-time work).

Good advice.

If I would you, I'd think long and hard about whether the $35,000 p.a. spent on private school fees would not be better allocated towards retiring the $200,000 mortgage debt.

 

[Partimewannabe]

These are all very good points. I am accelerating the savings plan now and buckling down on the budget. Thanks for all your ideas. If we can demonstrate the ability to live on less, then that is the time to do it.

 

[daylatedollarshort]

Good luck, partimewannbe. Keep us posted. In my family I think our expenses just kind of crept over the years along with our income, without really buying a lot of extra happiness. When we really took a good look at our budget, there was a lot we could cut out, even without moving, downsizing or changing our basic lifestyle.