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4 Physicians 2021: Dr. A & the Impact of Working After FI


In the updated Tale of 4 Physicians 2021, we analyzed the impact of different spending budgets on wealth creation.  Each of our 4 physicians was married with 2 kids and had a total household income of $340,000. 

We’ll revisit one of these physicians to explore what might happen to her nest egg if she were to continue working by choice after achieving financial independence (FI).

I try to stress the FI part of FIRE, and I fully realize that not everyone who achieves financial independence will be ready to retire as soon as they’re financially able.

I’ve previously explored the power of working one more year. In this exercise, the good doctor will work another 5, 10, or 20 years and we’ll see that impacts her financial future.


4 Physicians 2021: Dr. A & the Impact of Working After FI




Dr. Anderson was the most frugal of our 4 physicians. Dr. A had household spending of $120,000 a year.  She had a net savings rate of 53% and was on track to be FI in about 15 years, give or take a couple of years. 

Let’s have another look at her numbers.




15 Years Later


OK, fast forward 15 years to 2036. Dr. Anderson has stayed the course, her index funds have given her market returns, which haven’t been stellar, but have outpaced inflation by 4%. 

She’s got a nest egg with the purchasing power of about $3 million in 2021 dollars (it would be closer to $4 million in nominal dollars in 2036, but inflation will have eroded her nest egg’s purchasing power*). 

She doesn’t love every aspect of her workday, but finds fulfillment in providing care to her patients. She knows that she could retire today, and likely have enough money to support her and her family for decades with a 4% withdrawal rate. 

However, there are many uncertainties. She won’t be eligible for medicare for more than 20 years and she has no idea how our health care system might change in the meantime. She and her husband may live another 50 years or more. 

From her reading, she knows that the 4% withdrawal rate was considered safe for a 30-year retirement, but she’s only in her mid-to-late 40s. She realizes that a withdrawal rate closer to 3% might be wise for her.

She can’t imagine retiring at this age after all the sacrifices she has made to practice medicine, a rewarding career that she still feels is her calling. She’s simply not ready to hang up the stethoscope and she wonders how her financial picture might change if she chooses to work another 5 or 10 years or more. 

Allow me to channel my inner mathlete and work some numbers for Dr. A.  To keep things simple, we’ll use real (inflation adjusted) returns, rather than nominal returns. That will keep us looking at dollar amounts in terms of their purchasing power today. 

We’ll also assume that she’ll maintain a budget equal to $120,000 in 2021 dollars, even after the mortgage is paid off and her children’s  529 plans are fully funded. Perhaps she’ll use that money to travel more or for charitable causes.


We’ll look at her future nest egg balance if she were to retire now, in 5 years, in 10 years, and in 20 years with 0%, 2%, 4%, and 6% real return rates.


Dr. A Retires Now






If Dr. A retires now and maintains her current level of spending, the equivalent of $120,000 today (and rising with inflation), she’s got a good shot at making her money last.  If she earns 4% real, her nest egg will remain steady.  A better return will allow her nest egg to slowly grow while she lives out a long, comfortable retirement. 

If her baseline spending exceeds her returns, she will watch that nest egg shrink over time.  If her returns only match the rate of inflation, giving her a 0% real return, she will run out of money in 25 years. Things start to look really bad if we look 50 years out when she’ll be in her mid-to-late 90s if she doesn’t manage to beat inflation with her investments.

Can Dr. A avoid catastrophe in the case of a long-term sluggish market? 

Sure.  She should expect to have a social security check coming her way eventually, having contributed the max for 15 years.  She will also be able to cut back on expenses in lean years, more easily after the mortgage debt is gone. 

What are the odds of 25 years of 0% real return?  If she has a diversified portfolio, I would say it’s quite slim.  Even the best-case scenario offered, a 6% real return, is just below what the U.S. stock market has given in the modern era. It doesn’t hurt to be conservative when retirement planning, though.

What if she does get those 6% real returns, representing 8% to 9% returnds inflation of 2% to 3%? 30 years later, she’s got a nest egg equal to $8 Million in 2021 dollars. That jumps to nearly $22 Million at the 50-year mark!


Dr. A Works 5 More Years




In this scenario, Dr. Anderson achieved FI in her mid-to-late 40s, but chooses to work until after her 50th birthday.

Doing so nets her an extra $700,000 to $1,900,000 depending on market returns. Those extra dollars go a long way toward providing future financial security and potentially substantial wealth.


Again, she could run out of money and be deeply in debt 50 years from now if several very bad and avoidable things happen. As in her investments only match inflation, she makes no adjustments in spending, and picks up no additional sources of income (like Social Security or a side gig).

On the plus side, returns besting inflation by only 2% give her more than $1 Million in 2021 dollars after half-a-century.

Real returns of 4% to 6% will allow her nest egg to grow into the 8-figure range, with as much as about $45 Million if she lives another 50 years and keeps spending at that level of $120,000 in today’s dollars. That may not be the most realistic; I think most of us would find ways to spend more if we were sitting on a portfolio that size.

What a difference 5 years makes!


Dr. A Works 10 More Years




At the 10 year mark from her original FI / potential retirement date, she’ll have anywhere from 50% to 250% more money earning investment returns of 0% to 6% real.

With the big cushion that working another 10 years gives her, there is little fear of that nest egg running out, even in the bleakest scenario we’ve laid out. With 0% real returns and zero adjustment in spending, she’s got over 47 years worth of spending money.

In fact, in every realistic scenario, she can expect to be a multimillionaire the rest of her life, and she can now focus her energies on how to best utilize her oversized nest egg. She could have a strong future in philanthropy if she earns 4% to 6% above inflation, ending up with about $20 Million to $60 Million in 2021 dollars as her age approaches the century mark.


Dr. A Doesn’t Retire Early… Instead, Works 20 More Years





Holy Schnikes! Time to contact the alma mater to look into getting her name on a building or two.  The Anderson Center for Financial Awesomeness sounds about right. 

By spending more than most Americans, but less than most of her physician colleagues, Dr. Anderson can expect to have more than $5 Million in her portfolio indefinitely. If her investments return a little more than the best-case 6% real, she could be looking at a 9-figure portfolio in the distant future!

One thing that’s worth noting here is that the 20-year net worth numbers are not massively different than those of the version of Dr. A that retired 10 years earlier. The extra 10 years nets her $1.6 Million to $2.2 Million more, but when we’re talking about portfolios in the $5 Million to $15 Million range, is that delta clinically significant?

Will it impact how she lives out the rest of her life? I would argue that it does not, but the freedom to live her life as she pleases from her late 50s to late 60s (rather than working another 10 years) would have a more profound impact on the life she leads. Now, if her best life includes full-time work for those years, more power to her.



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What Would You Do?


I think a dozen people could look at the data and come up with 13 opinions.  Some will wonder why she doesn’t retire in her 40s when she achieved FI, since she’d have a very good chance of making her money last with a comfortable retirement.

Others will pick their jaw up off the floor after seeing a potential net worth north of $84 million and wonder why anyone in their right mind wouldn’t strive for that. 

Let’s look at all of the data in one place.




Any time I run a scenario like this, what strikes me is the fact that the biggest factor in determining her future wealth is not how hard she works but how hard her money works.

For example, if she retires now and earns 6% real on her investments, in 25 years, she could have more money than if she were to work 20 of the next 25 years but earn a 0% real return.

When you look far out to 30 and 50 years from now, it’s the investment returns that make the biggest difference. 2% may not sound like much, but it’s the difference between $3 Million (a 4% return) and $22 Million (a 6% return) if Dr. A retires now. It’s the difference between $30 Million and $84 Million if she were to work another 20 years.

You don’t need amazing investment returns to become quite wealthy. Every scenario presented assumes single-digit nominal (non-inflation-adjusted) returns.

Keep your fees low, invest in a diversified mix of stocks, bonds, and perhaps real estate, and let compound interest do the heavy lifting.


*Accounting for inflation can be complex and I’m striving for simplicity here.  For example, a 4% real return could represent a 5% return with 1% inflation or a 7% return with 3% inflation.  The final values in absolute dollars will be a bit different with different scenarios, but using an inflation-adjusted return allows us to think of future values in terms of what that money would buy today. 

**Another factor that will skew the numbers is the sequence of returns.  My simulation assumes a steady growth rate that doesn’t vary, which is not how the markets work.  Negative returns late in one’s career are more detrimental than negative returns at the end of one’s career when the nest egg has grown quite large.  Again, I’m trying to keep it simple here. Please understand that returns will vary.



How about you?  What would you do in Dr. Anderson’s situation?  Retire now?  Work indefinitely?  Learn how to spend more and retire somewhere in between?



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25 thoughts on “4 Physicians 2021: Dr. A & the Impact of Working After FI”

  1. Pingback: Journal Club 3-05-21 – My Blog
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. DDS here in Canada, found your site and the info has been great. I am very fortunate that my degree in Canada cost a fraction of the examples you’ve indicated for US student loans. I know many DDS in Canada who studied in the US who are paying off DDS degrees that cost them USD $200K+, I was able to pay off my degree in my first year of working so that really helped with the saving and wealth building. I am also fortunate that my husband’s business earns substantially more than I do, it’s allowed me at 42 to be more selective with my practice and devote most of my time over the last 7 years to raising our 2 young boys. His business side has always advocated for a level of frugality that I agree to, we are like Dr. A in our spending, less than $60K/year (no debts/mortgage). It’s important to have a partner who is on the same page for our financial future. Seeing numbers crunched like this helps me visualize that we are FI, we don’t want to completely RE, we love our careers, perhaps just continue to scale back.

    Good luck to everyone on their FIRE journey.

    • That’s amazing. The financials behind dental school in the US don’t look great, especially if you’re looking at becoming employed by a large corporate entity — you know, the place next to Chipotle and Five Guys. My father and grandfather were dentists and practice owners. The economics can be more favorable as a business owner, but that’s not without risk, either.

      I just wrote a post (to be published soon) called “Spend Less. Live More.” I think you’ll agree with the premise.


  4. Pingback: Journal Club 3-05-21 | Passive Income M.D.
  5. I love seeing this in action, since this is close to the situation that I am in now at or near FI. It is pretty amazing what working another 5 years can do. I am going for the middle of the road option. Semi-retire and work on my own terms. We shall see how it plays out. I’ll let you know in 15 years.

  6. It’s posts like this that make me actually appreciate and conceptualize just how impactful working an extra 1 – 2 years really is versus retiring now. Not just in investment gains but in the amount of money that you earn in your day job is just insane and can’t be ignored.

    On the other hand though, working more years will net you more money than you’ll know what to do with so there’s that aspect as well.

    Great post conceptualizing and visualizing the two alternative choices.

  7. Hey PoF,

    Just found your site after your guest post on locums, nice!

    I too am closing in on possibility of FI (but at 52, can’t say it’s RE … nothing like a bad biz divorce aka screwed by partner to knock things off track) – the option I’m considering you didn’t discuss for Dr. A is the middle ground. If you’re working past FI, no need to continue massive contributions to the retirement funds, I personally have no desire for $20M in the bank when I pass, and the retirement answer doesn’t have to be all or nothing – the book “Work Less Live More: the Way to Semi-Retirement” by Clyatt goes into this in detail. Besides I think my patients still working some past the age of 65 are the ones that look and seem younger. I’m looking forward to working no more than 1/2 time, with plenty of extended vacations, more time for meetings I want to go to (Wilderness Medical Society anyone?) etc.

    I’d be curious what Dr. A’s picture would be if earning only half as much but redirecting retirement savings into more spending (for travel adventures etc). Perhaps a future blog post ?


    • Glad you found your way here, Rich!

      I would say you are in an enviable position, although I’m sorry to hear about the lousy business partner giving you the shaft. A semi-retirement can indeed give you the best of both worlds. I’ve read Bob Clyatt’s book recently, and quoted it in my Enough post. He’s a sculptor now, enjoying his semi-retirement and pursuing a passion.

      The picture for Dr. A would be pretty easy to calculate using a compound interest calculator. Assuming ongoing living expenses are covered by work, and no money is going into or out of the retirement accounts, we can just plug in the number of years of part-time work, an interest rate, and a starting balance. I plugged in a starting point of $2.5 million, with 10 years of 6% interest with low fees (0.1%) and no monthly contributions. After 10 years, the nest egg is about $4.4 million. Pretty sweet!


    • Your guess is as good as mine and it will depend on the year. Some years 100% bond or 100% stock, and everything in between, will exceed the projections. Other years are losers for one or the other, or both. I use a range (2% to 6%) that is on the conservative end of what has been typical over roughly the last century, where stocks have delivered 7% real.

        • It depends on personal risk tolerance, but it is generally accepted that the closer you are to FI / RE, the less aggressive you need to be. Increasing the bond ratio tends to lower both volatility and total return over the long haul. It’s not unreasonable to expect a 4% real return with a 70 / 30 stock / bond ratio, but nothing is guaranteed but death and (some) taxes.

  8. Hi! I just discovered your blog and it’s awesome. Great to hear from another anesthesiologist. I’ve been more like Dr.C and it’s inspiring me to strive to at least get to Dr.B level spending wise. I’m in the Bay Area though so high salary but high costs especially housing. Keep up the great work and I look forward to more posts!

    • Welcome, and thank you! I’m actively writing about the bay area at this very minute. We loved it out there! I wish you luck on your quest to live like the fictional Dr. Benson; it can’t be easy in the bay area.

  9. Work five more year. Can’t tell where medical costs are going in the US. We’re 2 phds and my DH quit a lucrative job and we moved cross country with our 2 kids (6 and 3) and he hasn’t worked since 9/2015. He’s starting to look now in a new career field he feels happier with. Did i mention he has an mba too? So we moved somewhere closer to family, cheaper, and he’s had almost a year with the kids, I’ve stayed at home since the first. We’re 36 and 38. Will this delay our FIRE? Yes we’ve got a 7 figure cash/investment portfolio right now, and we spend $60k/year, and yes we could FIRE if we wanted to live like MMM or even curbed our spending a little.

    But my DH doesn’t and we aren’t so we’ll probably need to work until he’s 45 and we could FIRE but he won’t. He just likes the fact he can now pick and job when he wants to work, where, and how long. He’s not even applying to positions that aren’t interesting or companies that aren’t nice to their employees. So sometimes it’s not about just FIRE but it’s the journey. Our journey he’s enjoyed being with the kids and now the opportunity to “downshift”. He’s just not into retiring the kids drive him nuts but he wants to enjoy his work and said he’ll quit whenever he feels or isn’t the right fit.

  10. I’m well on my way a to FI as well. I’m 45, married with 3.kids. I’m a pharmacist and not a physician, so my discretionary income is nowhere close to those in your example. However, we live below our means. We drive our calls until the wheels fall off. Contribute the max to our retirement accounts and only take expensive vacations every 4 or 5 years. House will be paid off in 4 years just in time for the oldest to start college. I’ll l probably work until I’m dead, but just not much..

    • Sound like you’re doing awesome! It’s great to have a career that lends itself well to part time work. If you enjoy it and can work on your terms, continuing to bring in some income after reaching FI can help you achieve serious wealth.

  11. This blog is very timely for me, thanks for posting! My situation is very much like Dr. A. Have been planning on RE for years. Recent changes in medicine and increased feeling of burnout have made me think about pulling the trigger earlier than I had originally planned. Even though I think i’m FI or close to it, I find it difficult to stop working. I know for sure I only have a few years left in me if even that.

    • I hear you, RFwannabe. Dr. A can set herself up quite well by persisting even a few years past FI. Myself, I’m pretty new to the RE concept, but I think it will suit me nicely eventually. In the meantime, I focus on the positives of the job I have. Even simple stuff. My workspace is climate controlled, people look up to me, and being FI, I can walk away if that’s my best option. You’re in a great position; don’t forget that.

    • I came up with $50k by plugging in the numbers into Intuit’s Taxcaster.

      Lots of deductions help Dr. Anderson in this scenario: 2 kids, large mortgage, $36,000 in tax deferred retirement accounts, 457(b) and 401(k), HSA and charitable giving deductions. I was surprised how low it was myself. State tax was additional $10,000, and FICA was listed separately as a $7000 line item. The original “Tale of 4 physicians” Post has Dr. A’s $80,000 budget.

  12. Really excited about your blog. Quick question from the chart above. How did you calculate the 158,000 (total savings) and 248,000 (pay + contributions) numbers from above. It’s not adding up when I do it myself. Thanks.

    • Thanks jk! The calculations are:
      All contributions = Match & Profit Share + HSA + 401(k) + 457(b) + Roth + Taxable = $20k + $5k + $18k + $18k + $11k + $86k = $158k
      I didn’t count the 529 funding in the equation.
      For Pay + Contributions, I used take-home pay (paycheck total for the year) of $187k and added back in the pre-check contributions (Match & Profit Share + HSA + 401(k) + 457(b)). $187k + $20k + +$5k + $18k + $18K = $248k.
      My thinking is that we want to measure how much is being saved for retirement versus how much is earned. There are different ways to calculate that percentage, but this makes sense to me. After tax investments (Roth & taxable) go in the numerator, pre-tax go in both numerator and denominator. Taxes create the difference between net & gross.

  13. I know you’re just starting out and there’s not many other Doctor finance blogs out there (other than WCI), but I’ve found this blog to be a gem. Hope you keep up the awesome work. I look forward to reading your blog every few days! – An ER doc

    • Thank you for the words of encouragement, Shah. I’ll do my best to keep you and other readers interested with useful, original content. Stay tuned to see what happens to Doctors B, C, and D!


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