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.

Who Are The 4 Physicians?


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.*

Budgets of the 4 Physicians


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.





Time to Financial Independence for the 4 Physicians


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.


Track your investments for free with Personal Capital. That's how I track the PoF portfolio.  


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. In 2018, we are on pace to spend right around $80,000.

*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.

      • I know this post is way late compared to when this was originally posted, but I agree with the Dr. Benson assessment.

        Dr. Benson is actually a lot like the concept of my site. Moderately Frugal. Can attain wealth while also attaining wellness. I think there is a lot to be said about people who can take frugality a bit too far and put undo stress on themselves and their partner.

        I recognize the reason that strong financial advice bashes physician over the heads with the extreme frugality mantra (because we are terrible about spending money we have, and often times money we don’t have yet). However, I think if we can keep a level head about it, we can attain wealth (and even FIRE) without breaking wellness and our mental stability.

        Moderation is key, IMO.

        • Thanks, TPP [ya down wit TPP, yeah, you know me!]

          There’s no need for extreme frugality when you make a physician’s salary. We may spend a bit less than these physicians, but our lifestyle is actually somewhere in between Dr. A & Dr. B since we have no mortgage anymore (despite owning a second home and an additional large lakefront property.)

          Live well below your means, which can still be an awfully good life, and FI is only a matter of time.


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  • 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?

  • 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.

    • JustADoc

      It is the health care cost that seems unrealistic to me.
      If you don’t have an employer paying part of the premium for you, the typical physician(who gets no subsiday) is paying $1000/month or more for fairly crappy insurance for a family of 4. I pay $1700/month($20,400/yr) This is substantially more than $5000/yr.

      If you can find something cheaper on the open market these days, I’d be exceedingly interested.

      • I based these scenarios off of my situation as an employed physician, and yes, the employer pays most of the premium.

        The future is quite obviously in flux, as a healthcare bill (or is it a budget bill?) is being bandied about in Congress.

        When I am FI and early retired, all I really care to have is catastrophic insurance in the form of a HDHP. I’ll have some HSA money saved up, and I can cashflow $10,000 or $20,000 is costs if we consume a lot of health care in any given year. What I want is to be insured against $100,000 or $1,000,000 in healthcare costs.

        Healthcare sharing ministries may be an option worth exploring once the dust settles. So many unknowns.


        • JustADoc


          That $20,400 is a HDHP. Catastrophic plans are not available if you are over age 30 unless you meet hardship criteria(most physicians will not).

          It is really expensive on the open market for individuals and small businesses these days. My premium has gone from an expensive $1100/month in 2011 to a ridiculous $1770/month now. Thanks ACA!??!

          Once one is retired and can keep income below the subsidy lines than the ACA is not a bad deal financially(however bad it may be o/w but this is not the forum for it) but it is crushing if one pays full freight during the accumulation years.

        • Joe

          Totally in agreement with JustADoc’s comments. Unsubsidized ACA premiums make or break a FIRE plan. I just received notice on my 2018 premiums, they are rising from $1481/mo to $1975/mo for a family of 3 on Silver 70 PPO. I have seen 30+% increases every year. I used to have Platinum 90 PPO, I’m guessing it may be $4000+/mo for 2018.

  • 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.

    • This is kind of “classic” doctor situation. Tons of insurance, plenty of income, saved some early on but not tons, wondering if you can ever retire. Something has to give. It’s just a math equation. You either save more now, spend less later, work longer, or earn a higher return.

  • Anonymous

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

  • RAMblings

    I stumbled upon this site with zero knowledge on investing and zero dollars invested. Its a great eye opener for us trainees, who are always dreaming of “better days ahead” banking on larger pay checks.
    Looking through the spreadsheet and other posts, it seems monthly cash deposits in savings accounts have gone passé.. However, the thought of investing a major bulk of one’s lifetime earnings on an unpredictable market is un-nerving. Any thoughts on cash savings (beyond the typical 6-9 month emergency fund) or should it be abandoned?

    • Glad you found me, RAMblings. Not a Rams, fan, I hope. If so, I’m sorry.

      Cash in a savings account is unlikely to keep up with inflation, let alone help you get ahead. Diversify, and accept the fact that a winning strategy is to ride the ups and downs of the markets. I’ve seen a couple 40% to 50% drops and Mr. Market has more than rebounded each time, and gave us a great buying opportunity in those troughs.


  • Kieran Nicholson

    Easiest retirement tip:Buy 1/2 as much house as the realtor says you can afford. That is how I was able to give my partners my notice at age 49.

  • Kieran Nicholson

    No. I left Pulmonary and Critical Care 60hrs/wk for being a hospice medical director 20 hrs/wk and an added benefit is having Social Worker/Chaplain between me and the bitter enders/clingers who want a tube in every one of Grandma’s orifices:both natural and 2 unnatural.

  • Kieran Nicholson


  • DrApnea

    Can you post up your file to allow us all to plug in numbers and play with the calculations you placed above?

  • Elizabeth

    Looking at the budget, there doesn’t seem to be enough to cover insurance. $1000 for Dr. A isn’t nearly enough to cover home , auto, life, disability, and umbrella insurance.

    • That’s a fair criticism, Elizabeth. I meant that line as home insurance specifically and was basing the budgets off of my own family’s actual spending.

      Auto insurance I bundled into our auto costs, and bundled life and umbrella insurance under miscellaneous at a few hundred dollars per year apiece.

      Disability is the one that deserves its own line, and you don’t see it because I no longer carry it now that I consider myself to be self-insured (the same is true of term life).

      So our doctors could find a way to earn a little bit more, spend a little bit less in other areas, or work a few more months to truly reach FI.

      The fact is that where you live (state tax on a $300,000 salary varies from $0 to about $20,000) will have a far greater impact than every line item except housing. Don’t miss the forest for the trees!


  • sanmit

    great post! how did you do the tax calculations in each of the separate situations? it’s all dependent on pre-tax deductions & the such, correct?

  • Helpmemath

    Trying to figure out the math. Under the Savings Calculation header, is “All Contributions.” Each doctor seems to have an extra $10k contributed to their total contributions. Where did this $10k come from?

    • It’s all retirement / investment contributions. I don’t include the 529 investments (since that’s earmarked for children’s education), but does include the $20,000 match & profit sharing from the second line. That should explain the $10,000 shortfall when running the numbers.

      If you’d like a copy of the calculator (and several others) in one file that you can edit and play with, you can subscribe and download a copy.


  • Dr. M

    Great post. You mention that state taxes can range from 0 to 20K depending on which state you live in. Along those lines, what are the best states for doctors to live and practice in (assuming you could live anywhere and are not limited by family etc)? Do you have any posts on this topic? I’ve seen some online lists but I’m not sure what goes into those. I think an accurate assessment would have to include the impact of state taxes, property taxes, and the malpractice environment. Thanks for the site!

    • That would make a great post — I’ll drop it in the ideas folder. It wouldn’t be too difficult to come up with a rank list based on other lists that different people have put together. I might add a “livability index”, healthiest states or something similar.

      Ultimately, though, for many of us, the best place to live and work is where your family and friends are.


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  • Dr E

    Got directed here from a SERMO post. I read the WCI site and will now add yours. Excellent work.

    I am happy to be a physician on FIRE, trying to retire “early”. We have purchased our retirement home and our 23 year old daughter is living in it. It was about half as much as our current McMansion, yet it is on 21 acres on top of a mountain and the property taxes are $2700 a year.

    It has a good well, septic, and I can take it off grid if I add a solar array. It’s barely worth the effort as the monthly energy costs are $200 instead of the ~ $550 of our big house.

    I just took a higher paying job and will max out the 457 at my old job and then the 401K at the new job. I gave up some vesting money in a pension, but the new employer has an immediate vesting match that makes up for this. I also max out the SEP-IRA on my moonlighting. The last few years I have been putting a lot of money away.

    Hopefully, in about two years, we will sell the McMansion, pay off the the retirement home, and drop our total expenses from $180,000 a year to about $80,000 a year. No mortgage, lower taxes, no water and sewer bill, lower utilities, much lower property taxes, more land and a beautiful view of the mountains from 2900 feet.

    I will get $40,000 for covering “phone only” call three days a week and another perhaps $50, 000 for covering two 10-day vacations and a few holidays for the main doctor where I moonlight. I will be “almost retired”.

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  • I love how, when the math is laid out, it can be brutally honest (which is a good thing). Math never lies (as long as the data entered is truthful and accurate). I really enjoyed this post. Seeing the numbers laid out side by side really helps to see what is actually happening. Thanks for putting in the work for this great post!

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  • GoldeyeMD

    Can you explain how you perform the years to goal at 2, 4, 6% real calculation in excel? It’s not in the provided spreadsheet. Thank you.

  • Mo P MD

    Well, I don’t make 300k, so I guess none of the doctors apply. I also don’t view retirement as a point where I stop working and sit around. There is a fine line where the mind can no longer effectively function, but I know someone that passed on his retirement day. What good was all that saving if you aren’t around to spend it?

    Fortunately for me, my wife is also a physician, and our families are well off. So much so, that our kids are already set for their lives and they are 6 and 4 years old.

    I’ll retire when I expire. Because frankly, what I do, I don’t consider as “work”.

    • Interesting take, Mo P MD.

      Based on your response, I think you could learn a lot by sticking around and reading a few more posts. Dying on your retirement day is the exact thing we’re trying to avoid. Obviously, the earlier one retires, the more likely he or she is to have time to enjoy the money saved and invested. Sitting around? I’ve got different ideas, as does everyone aspiring to achieve financial independence.

      That’s great that you enjoy your job, but are you sure you want to do that until your dying day? Are you sure you’ll feel the same way in 10, 20, or 30 years? For the most part, I enjoy much of the work that I do, but being in a position where work is optional from a financial standpoint, I’ve realized that it’s not how I want to spend the next couple decades. That’s just me. Personal finance is personal. But financial independence gives you options, and I think it’s important what it takes to get there.


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  • DrDoc

    Question – how are these docs able to contribute to a 401k and 457b? I thought we could contribute to one or the other.

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  • I was just moseying along minding my own beeswax when I came across this post. I love this! How you break-down all the numbers like that.

    It is great to not just hear what type of taxes people pay, but to see it. And its no joke. The higher the salary; the more of it you pay in taxes. Doctors are paying $60-$90k?! That is enough in taxes to pay a full-time employee. An MD is like a mini corporation. Seriously, this is a good post.

    It took me years to start saving over 40% of my income. To think to have to pay that percentage in taxes! Good grief.


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