A Tale of 4 Physicians: The Impact of Lifestyle

Let’s consider 4 physicians who live decidedly different lifestyles in terms of spending. I like to crunch numbers, and the best way to truly evaluate the effect of lifestyle is to do just that.

We’ll establish a baseline that is identical for the 4 physicians in question. Each of them is now debt free, but has not started saving for retirement. Each has purchased a home that suits them. Each has a household income of $300,000 and files taxes as married, jointly. They’ve each got a couple kids and contribute a total of $10,000 to 529 accounts each year.

Dr. Anderson discovered this site in medical school, and has educated herself in personal finance. She has made financial independence a goal and knows how to achieve it. She contributes the max to retirement accounts, and puts the remainder in a taxable account. She lives in a low cost-of-living city and drives a reliable used Honda.  Her annual expenses after income taxes are about $80,000 a year.

Dr. Benson discovered this site in residency. He doesn’t want to work forever, but he enjoys some of the “finer things” in life now that he’s making $300,000 a year. Like Dr. Anderson, he contributes the max to retirement accounts, and puts the remainder in a taxable account. He lives in a moderate cost-of-living city and drives a new BMW 3-Series. His annual expenses after income taxes are about $120,000 a year.

Dr. Carlson discovered this site last week, but she’s been reading The White Coat Investor for several years. Her favorite post is the one about loosening the purse strings. Like the others, she contributes the max to retirement accounts, and puts the remainder in a taxable account. She lives in a high cost-of-living city and drives a leased BMW 7-Series. Her annual expenses after income taxes are about $160,000 a year.

Dr. Dahlgren has not discovered this site and hasn’t found the time to pay much attention to his finances. Like the others, he receives a profit sharing contribution to his 401(k) from his employer. He also contributes a little from his paychecks to the 401(k) to receive a partial match. He has no debt, but lives pretty much paycheck to paycheck. The Ferrari doesn’t pay for itself, you know. His annual expenses after income taxes are about $200,000 a year.


Dr. D lives well.*


Here is a sample budget for these 4 physicians. Most expenses are scalable, but some, like healthcare costs and donations, I kept constant. I didn’t include line items for country club dues, second homes, stable fees, etc… but I do have a travel & miscellaneous category as a catch-all. Let’s have a look.





Now, let’s see how all this spending relates to the focus of this blog, which is Financial Independence and the ability to Retire Early.

Note that Dr. Benson and Dr. Carlson pay a bit less in income tax because of their increased deduction on property tax and mortgage interest.  Dr. Dahlgren pays quite a bit more because he doesn’t come close to maxing out his tax deferred space in his employer sponsored 401(k), 457(b), or HSA.

The real substance of this post, and the reason I created it, is in the turquoise shaded numbers at the bottom.  You’ll see that Dr. Anderson is in position to be financially independent in about 10 years with her annual spending of $80,000.

Dr. Benson is in pretty good shape, with a cushier lifestyle, reaching financial independence in 16 to 21 years, perhaps in his late forties or early fifties.

Dr. Carlson, spending twice as much as Dr. Anderson annually, won’t be financially independent for 24 to 36 years, depending on market returns.

Dr. Dahlgren will be working well into his seventies, even in a best case scenario.  This is a good time to ask yourself a simple question, what do you value more, Your Money or Your Life?  I hear that’s a good book, by the way.

What do you think?  Would you rather live a pretty good lifestyle and achieve financial independence in 10 years?  Or live for today until you’ve got great-grandchildren?

Perhaps Dr. Benson or Carlson are more your style.  As you might have guessed, my finances these days more closely mirror Dr. Anderson’s.  Now that we are debt-free, we have a net savings rate around 75%.  It does take some discipline, but it makes me happy and helps me sleep well at night (as long as the pager is quiet).

*Bonus points if you can name the movie set in Dr. D’s home.

Follow this link for the rest of the 4 Physicians series.


  • I think living like Dr. Benson is quite fine too for the FIRE crowd. Not MMM extreme (not even Anderson is that extreme). But with Benson you can live the good life (better than average) and save a good chunk, still retiring early, maybe around 50 y.o.

    Heck you could even drop to part time at maybe 45 and semi retire with the income of an anesthesiologist.

    I have read through all your posts (except for today’s) and I didn’t see if you had student loans to pay off. That also would be a great starting point.

    You’re doing a great job planning for FIRE considering your career and salary. You don’t see too many MD’s who want to retire early either due to money problems, wanting to keep the high salary coming in, the prestige of being a Dr. or even the fact that they have put in XX years of school so they don’t want to ‘waste’ it by retiring early.

    I enjoy the posts, got the website from ER.org. While it looks like you took down the link in ‘milestones’ I believe you can post it on your profile page with no conflicts with the TOS

    • Thanks for the comments and for reading through the site, ed69. I hope to add a lot more content over the coming weeks, months, and years.

      I agree that Dr. Benson’s savings rate (44% net, 34% gross) puts him in an enviable position as well, without much sacrifice. $120k is a comfortable, upper-middle class lifestyle in most places.

      I will post more about my financial situation in an upcoming post, but yes, I did have student loans. They were in the upper 5 figures and I paid them off a couple years ago with one massive tug on the bandaid which stung a little bit, but I had been gnawing away at them for years, and had a goal of being debt-free by 40.

      Glad you found the post on E-R.org. I was admonished for posting a link to the blog and using the blog’s name as my username (my bad, I hadn’t read the rules). So now I’m PoF on that site.

      Mentally, I do grapple with the idea of retiring very early from a high-paying job. I think the only way to justify walking away from millions is to already have millions. Once I’ve met all my financial goals, I think I’ll learn quickly how I really feel about my day job.

  • DrS

    Excellent post! Especially at the end when the long term reality of it all is revealed. I must admit that our numbers are so much like one of these doctors that it is uncanny. I called my wife to show her how the numbers line up exactly like one of these doctors. I read the book, Your money or your life, a while ago. My guesstimate is that poor money management leads to most of the Physician Burnout – it leads to having to work too much, and that alone will cause a lot of stress no matter how good your work situation is.

    • Thanks DrS. I did my best to make the numbers somewhat realistic, without getting too complex.

      I agree that poor money management and physician burnout are intertwined. There are many other factors on the causative side; I see better money management as one of the few solutions to burnout that we as physicians can individually control.

  • Hatton1

    I found your site on the WCI site. My numbers line up with Doctor A but I am still working at 58 because I want to. FI gives you options.

    • Welcome, Hatton1! Look for a guest post from me on WCI in a couple months. In the meantime, I hope you find some worthwhile nuggets here. FI does indeed give you options. That was my #1 reason in today’s post, the Top 5 reasons to achieve FI. I write about early retirement, but I reserve the right to keep working. But I’m in better position to do so on my own terms.

  • amphora

    Nice post! I think the effect of exorbitant lifestyles is instructive. As a fan of WCI, I’m curious why you named Dr. Dahlgren in homage to WCI himself. Do you find him overly spendthrift or is it just an inside joke?

    • Thanks, and great question! Dr. Dahle a.k.a. the White Coat Investor has a great site and an excellent approach towards money. Look for a guest post from me on WCI in a couple months.

      To answer your question, he is definitely not a spendthrift in my book, but chooses to spend in ways that bring him happiness, i.e. experiences or equipment that will help him create experiences (boat, canyoneering equipment, etc…). The Dahlgren name is a coincidence. I gave all 4 physicians Scandinavian names.

  • LAJ

    Love the site and the post. I made a number of lifestyle and philosophical changes since reading Your Money or Your Life about 5 years ago and have been reading MMM, WCI, bogleheads, and other FIRE blogs for years as well. One thing that has been holding back my path to FI has been spending on children’s education (private school, camps, classes, sports) and living in a high cost of real estate area (mortgage and property tax are higher than Dr.D’s, even though the rest of our expenses are closer to Dr. A). I think physicians also find it hard to live in a low cost-of-housing neighborhood in an expensive city, because you don’t feel like you fit in with the neighbors and your kids aren’t spending time with others of similar background/goals/education. We know we could be FI if we moved to a lower cost of real estate area, but enjoy where we are and are close to family. Would love to see a post discussing a Dr. E, who lives like Dr. A or B but in a high cost-of-housing area.

    • You discovered those sites about 4 years before me, good for you LAJ! Thankfully, I discovered them because many of my values aligned well with what they are preaching, so I was already living in a way consistent with a path to FI.

      Your hypothetical Dr. E could really be Dr. B or C (spending $120,000 or $160,000 a year). The individual budget numbers would be different, but the overall spending and savings the same. The main difference would be that Dr. E could see his costs drop dramatically as an empty nester, particularly if they moved to a lower cost of living area.

      I am fortunate to live in a low cost of living area with good public schools. That geographic arbitrage can make a huge difference as I touched upon in the Guide to Retiring at 45.

    • First, I’m not a Dr. I doubt FI will come early for us, but part of that is decisions to spend on things that allowed for memories to be created. We live in a small town near a big city to the east and medium sized towns to the west. Our housing costs are about $75K less than those areas. We live in a court with a good neighbors. Our 4 younger kids (we have 6) went to a private school through junior high and are going/have went through a small Charter high school. My wife drive a 15-passenager van for a number of years and then we splurged on her car a Toy Sequoia. I think the character of the neighbors is more important than their job title and have enjoyed the diversity of opinions and walks of life of our neighbors. cd :O)

  • JS

    I think your numbers related to mortgage and property taxes are wholly unrealistic. I have mortgage payments of $2500/month, and our property taxes are $21,000 a year. If you live anywhere in the NYC metro area, or Boston metro area, you are in a similar boat. The benefit of those taxes are an absence of private school tuition for kids. If you live in California, taxes are lower, but the schools stink on ice.

    • I feel for you, JS. Property taxes vary widely from state to state, and city to city. My numbers are unrealistic for you, no doubt. I’ve paid property taxes on 5 different properties over the years (owned all 5 for a few months a few years ago). The ratio of annual tax: monthly mortgage payment has been in the range of 2:1 to 3:1. Yours exceeds 8:1. Makes it tougher to get ahead.

      I’ve mentioned geographic arbitrage as a way to earn more in a lower cost-of-living area. Middle America in particular tends to have higher salaries and cost less. I didn’t realize how big a factor property tax could be. There tends to be a loose inverse relationship between state income tax and property tax, but even that doesn’t always hold true.

  • RadWife

    This is a great article! I love how you broke it all down. My husband is finishing his fellowship this June and starting his first job in July. I hope we will be able to live similarly to Dr. A; we are moving to a low cost of living area so that’s something. Even Dr. B’s lifestyle seems pretty luxurious to me, so it helps to see that even if we live like that, we should still be in pretty good shape. Thanks again, I’m excited to read more.

    • Thank you for your interest and kind words! And congratulations to your husband for finishing what’s been a long, long road, and to you for sticking with him throughout. I’m going to go out on a limb and guess he’ll earn a radiologist’s salary, which will likely be higher than any of these docs. Live like Dr. A or Dr. B and FI should be easily attainable in 10 years or less.


  • jk

    Great post. Where do you find the FICA taxes to include in your table? I know 1040, line 63 shows you the federal tax but how about the FICA taxes. Doesn’t 7k on 300k salary seem low. I thought it was 6.25% (SS) up to 118.5k and then 1.45 (Medicare) up to 250k and then 0.9 additional on top. To me, those numbers seem much higher than the 7k reported. Did I miss something?

    • Thanks, jk. I’m going to go back and look at my returns, W-2 and Intuit’s Taxcaster, but I think you’re right. The $7000 is for social security only ($7347 rounded down), but I’m guessing the Medicare tax is not figured in when you using Taxcaster. The extra 0.9% shouldn’t kick in for Drs. A, B, and C, as their deductions will bring their taxable income below $250,000. But Dr. D would have to deal with the surcharge. When I have a chance to take a closer look, I’ll get back to you on that. Then I’ll probably have to redo a whole bunch of charts. Good pickup!

  • Heart Surgeon

    That is “MERCER HOUSE”. From Midnight in the Garden of Good and Evil.

  • DrBob

    I am very embarrassed to say that I must be terrible at frugality, and not for any reason I can figure. I have spent a year with quicken to see where it all goes. It’s expenses of 22k to 35k per month. A big chunk is home car life disability insurance. Its like 50k per year. I had to have high coverage for cars (keep safe my nest egg) and high life(leave my kids something) etc. I’ve got 2 still in college, that’s some of it, but I’m not going out to dinner a lot or feeding race horses or anything like that. I net about 45k per month after taxes (my wife works too), so I still save, but even if I halve the expenses at retirement to 15k, I would still need 5-6 million and I’m only 1/3 the way there with 7 years to go. I think I need therapy.

  • Anonymous

    How are you calculating Years to Goal at xx% real return?

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