How Much Money Does a Doctor Need to Retire?

Short answer: It depends.

Better answer: The number will vary from person to person depending on a wide variety of circumstances, but that shouldn’t stop us from coming up with an estimate for you.

Truthfully, the number doesn’t actually vary based on profession alone. A doctor has no inherently different retirement needs than anyone else. At the same time, it’s hard not to ignore the fact that most doctors and other high-income individuals tend to spend more money than most, and thus need more money to retire.

The variables that actually matter include current lifestyle, which influences your desired or anticipated spending in retirement, anticipated length of retirement, time to retirement, risk tolerance, ability or willingness to earn income in the future, and passive income streams including pensions and social security.


Will You need $10 Million to Retire?


A number I’ve seen several times, including in this forum thread at the Student Doctor Network and another on the White Coat Investor Forum is $10 Million.

$10 Million is a lot of money. Few physicians will ever be able to claim a net worth of $10 Million, let alone retirement savings of $10 Million. Yet, the vast majority of physicians will retire eventually with less than half of that.

True, some physicians will need that much or more, but don’t assume because you heard that number somewhere that you’ll never be able to retire. Thousands of people retire every day with less than one million dollars in retirement assets, and many physicians can retire quite comfortably with retirement assets in a range of $2 Million to $5 Million in today’s dollars.

What’s your number? Let’s examine the variables to come up with our best guesstimate.

How Much Money Does a Doctor Need to Retire?


Examine Your Current Lifestyle


What does your life look like today? What creature comforts have become customary? How much do you spend in a year? Are you determined to maintain your current lifestyle indefinitely or do you expect some current expenses to go away?

A good starting point is to track your spending. I use; others find You Need a Budget more useful. It’s difficult to come up with a target number if you have no idea how much money leaves your household each year.

Contract DiagnosticsWhen I first realized that I was financially independent, I wasn’t tracking our spending closely. However, I was keen on earning travel rewards in points and miles, so everything that could be paid by plastic was charged to one credit card or another (check out current top travel reward cards here).

Taking our average credit card bill and adding in the few checks that we write for property tax and piano lessons gave me an estimate of about $75,000 in annual spending.

The first twelve months of detailed expense tracking showed me that we spent $72,000 (without a mortgage — that was already paid off). You don’t necessarily need to track every dollar spent to get a decent idea of your annual spending. Spend a couple hours with your credit card and bank statements, and you should be able to come up with a good enough estimate.

If you are keen on retiring early, or at least having the ability to do so, decide if there are line items that you could live without. Perhaps you could do your own lawn or pool maintenance. Cleaning services can also be optional. Some crazy people (like me) live without cable or dish television. When you’ve pondered these ideas and perhaps come up with a few of your own, you’re ready to move to the next step.


Determine Your Anticipated Retirement Spending Needs


Once you’ve determined about how much your household spends right now and what expenditures you could live without if necessary, you can estimate what your future spending needs might be.

Retirement life will not be the same. Any kids may be grown and out of the house. You may choose to downsize your home or move to a lower cost of living area. You’ll be able to drop disability and term life insurance.

Some expenses in retirement will go down or disappear completely, including the cost of commuting, professional clothing, and you will no longer be contributing to retirement accounts. I don’t consider doing so to be “spending,” but a substantial portion of my paychecks go there, so it’s worth mentioning.

Bear in mind that other costs can rise in retirement, including travel costs, gifts, education of yourself or family, and perhaps gifts as your kids have kids or you choose to be more charitable.

The elephant in the room is the cost of healthcare. People are budgeting anywhere from $5,000 to $50,000 a year for healthcare coverage. Strategies to keep expenses in check may include having taxable income low enough to qualify for a subsidy, purchasing a catastrophic plan when available penalty-free in 2019, joining a healthcare sharing ministry, or even obtaining citizenship in a foreign country. I’m tentatively budgeting about $20,000 a year for our family of four, but the true number may actually quite a bit higher or lower.



How Long Will You Be Retired?


We’re going to need to know the year, and preferably the month, in which you plan to die. Cause of death is optional, but if you’d like to venture a guess, we’re all ears.

You don’t know? Well, then we’re going to have to consult an actuarial table, consider your habits, health, and family history, and make a wild guess.

It’s best to have a positive outlook and assume you’re going to live a long, healthy life. Not only does that attitude tend to be a self-fulfilling prophecy, but it’s also better to have your money outlast last you as opposed to you outliving your money.

I like to use estimates of living to 85 to 100 years of age. If you retire at 55, expect to be retired for 30 to 45 years. Retiring at 70? Expect another 15 to 30 years. Retiring exceptionally early at 43? Plan to fund the next 42 to 58 years!

Why does it matter? Studies on withdrawal rates, including William Bengen’s study and the Trinity study, looked at retirement horizons of 30 years. Early Retirement Now’s extensive series looks at timeframes up to 60 years. The longer the retirement, the more variability you can expect to see in possible outcomes, and the more damaging particularly poor returns early in retirement can be.

If you’re looking at a retirement of 30 years or less, I think it’s reasonable to plan on an initial annual spending of 4% of your retirement assets, and increase with inflation to maintain lifestyle thereafter.  A longer retirement may require a lower initial withdrawal rate or plans to either increase income or decrease spending if needed. And don’t ignore Social Security; it will be there in some form or another.


hawaii’s green sand beach


How Close Are You to Retirement?


If you plan to retire within the next five years, you can probably get by with less than a $10 Million dollar nest egg. Probably a lot less. But if you’re a medical student today, and you plan to retire in 35 to 40 years, $10 Million may not be enough.

The obvious reason is inflation, which has averaged roughly 3% in the United States over many years. Currently, it is lower than that, but early in my lifetime, inflation ran rampant at a double-digit pace.

You can use the Rule of 72 (how long it takes money to double) to roughly determine how inflation could affect your target number.

With inflation of 2% (about where it is now), you will need twice as much money in 36 years as you do now in today’s dollars. If you want $3 Million in today’s dollars, you’ll want $6 million in 36 years if you expect inflation to remain low at about 2%.

Using the more typical 3% inflation, it will only take 24 years for your purchasing power to drop by half. If $5 Million in today’s dollars is your requirement, expect to accumulate $10 million to retire in 24 years.

What if inflation is above average in your working years? With 4% inflation, you’ll need twice as much in 18 years, and four times as much money to have the same purchasing power 36 years from now.

We hardly notice inflation from year to year, but your grandmother might remember when a candy bar went for a nickel and gasoline was pumped by the friendly attendant for 25 cents a gallon.


What is Your Risk Tolerance When it Comes to Retirement?


Please note that I am not referring to your preference for more risky investments like stocks or safer investments like short-term bonds. The risk tolerance I am talking about is how important is it to be extremely safe from running out of money by maintaining a steady lifestyle throughout retirement.

If your risk tolerance is low, you’ll sleep best with a nearly 100% chance of having your money last a lifetime. You’re willing to give up potentially larger returns for lower volatility. If this sounds like you, you’re probably better off with an initial withdrawal rate of 3 to 3.33%. This requires a nest egg totaling 30 to 33 times your anticipated annual spending in retirement.

If your risk tolerance is high, you could be happy with a projected success rate of greater than 50%. You probably have the ability to cut back on expenses or start earning an income if your portfolio sustains substantial damage in the early years of retirement.

Someone with a higher risk tolerance (and / or shorter retirement) could be good to go with an initial withdrawal rate of 4% or even 5%, requiring 20 to 25 years of annual expenses. FIRECalc is a great calculator to help determine the likelihood of your money lasting and visualizing the possible outcomes of your portfolio at various withdrawal rates.

You can plug in any numbers you like, and FIRECalc will give you all possible results looking at historical data. Starting with $2,000,000 and an initial withdrawal of $100,000 (5%) and increasing with inflation, you could end up as far as $11 Million in the hole, or have as much as $29 Million at the end of 50 years, with 48 of the 97 possibilities showing a positive balance at the end. The average ending position is $1.85 Million.


Passive Income and Social Security


Your expenses can be covered by any combination of withdrawals from your nest egg, income from a pension or social security, or passive income from sources like ownership in rental properties, breweries, blogs, or other sources.

If your expenses are completely covered by steady and permanent income sources, any nest egg you’ve built up is pure gravy. With pensions becoming less common, and social security unlikely to cover 100% of your desired spending level, such a setup is most likely to come from ownership in small business and physical real estate.

Most retirees will have a portion of their expenses covered by a steady income source. Early retirees tend to ignore the contribution of social security, but for the more traditional retiree, it may very well cover a portion of your annual spending, and that can lower your required nest egg substantially.

For example, if Social Security pays a couple $35,000 a year, and they live on $70,000 a year, then they only need a multiple of the remaining $35,000 to pay for what Social Security doesn’t cover. With a 3.33% withdrawal rate, that would equal 30 x $35,000 or a $1.05 Million dollar nest egg to give the couple a very good likelihood of their money lasting the rest of their lives if they start taking Social Security at retirement.

You can make a similar calculation by determining how much will be covered by pensions or passive income streams. The less steady or guaranteed those income streams are, the less certain you can be about the viability, and the more you should plan on saving.


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How Safe are Safe Withdrawal Rates?


When it comes to the future, there’s no such thing as a sure thing, but the research on withdrawal rates is impressively thorough, and the bar of 3% to 4% per year is based on a very unfavorable set of circumstances.

In fact, based on data analyzed my Michael Kitces, a 5% or 6% rule would have worked in many prior years to make your money last 30 years or more. The median outcome, using an initial 4% withdrawal rate (and increasing withdrawals with inflation), is to have about 2.8 times as much money after 30 years compared to what you started with.

Is the very worst possible scenario factored in? Not exactly, but if we experience something far worse than the Great Recession or Great Depression, paper money or your Vanguard balance might not mean much, anyway.


Bringing It All Together to Determine How Much You Need to Retire


To come up with a ballpark figure, use your current rate of spending to guesstimate your future retirement spending needs, accounting for inflation, of course. Reduce your requirement by the value of future income streams.

Determine a safe withdrawal rate that will make you comfortable. I recommend a number in the 3% to 3.5% range (requiring about 28 to 33 years worth of expenses) if some of these apply to you:

  • You have little interest or ability to reduce expenses amidst a market downturn.
  • You anticipate a retirement exceeding 30 years.
  • You plan to hold a substantial portion of your portfolio in bonds (i.e. > 50%).
  • You have little or no expected passive income, including Social Security.


You could use an initial withdrawal rate of 4% to 5% (requiring 20 to 25 years of expenses) if you meet some of these criteria:

  • The ability and willingness to spend less or earn additional income if needed.
  • An anticipated retirement of fewer than 30 years
  • A portfolio with a significant  stock allocation (75% or more)
  • Income in the form of a pension, annuity, Social Security, or other passive income source


You should now have all the information you need to have a rough estimate of your financial independence target — the amount you should aim for to retire without much worry.

Simply multiply your anticipated retirement expenses by a number in the range of 20 to 33. You’ve got your number.


You're still not using Personal Capital? That's how I track the PoF portfolio.


What’s your number? At what age do you think you could achieve it?

Do you anticipate retiring then or will you continue to work to leave a legacy, for the benefit or charity, or simply because you love your job?



  • I’ve always said that my number is $3 million to fully FIRE, but at $2.4 million I would start cutting back to part time work that is only enough to give me benefits (403B access and health care for my family) to earn that last 0.6 million. I’d focus on the aspects of my job that I love and drop the aspects I am not so keen on. If my side hustles start generating significant money, then i’ll cut back even sooner.

    This $3 million number would assume a 3% withdrawal rate giving us $90,000 per year to spend assuming that we have no mortgage, car payment, etc.

    I really think its very important to determine what number you need, because then you can sit down and figure out how much you need to save each year to get there. Particularly for the FIRE community. You have to have an idea of your savings rate requirement to get there early. All of this requires knowing “your number.”

    Thanks for a good reminder on an important topic.

    • Your numbers closely mirror mine, TPP.

      We’re planning on a budget of about $80,000 a year, but we have the ability for that to fluctuate down or up as desired. When you set up a side gig or passive income independent of the “nest egg,” everything that comes from those sources is just an added bonus.


      • K-man

        Great article and very helpful math!

        Interesting comments and replies from everyone too.

        No one seems to mention income tax burden on these retirement budget numbers which I assume are take home income. How would you factor in Fed/State income taxes on the math formula for one’s savings goal and take home income budget?

        Also, it seems many financial advisors are planning a move to ~100% dividend paying investments at or near retirement whereby you live on dividends rather than your principle (and supposedly not affected by the market downturns if you don’t have to sell). They quote a dividend return of ~4% on the principle.

        Taking into account the above, here’s my math:

        $5,000,000 savings/pension x 4% dividend = $200,000 per year income minus 40% income taxes = $120,000 take home or $10,000 per month.

        The $5Million principle stays in the market to grow at 6%(?) minus 3%(?) inflation or 3% net per year which would double the $5M in 24 years while retired. After the first year of principle growth, one could still buy a Ferrari perhaps? Ok, ok, a nice used one. Or a lease!

        Where am I going wrong?

  • Nice job. Let’s dumb this down for me and my friends.
    $1M sounds great. Not enough.
    $2-3M ok with planning & frugally
    $4-5M in good shape
    $6-7M you are set
    $8-10M you are rich. Stop reading this.

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  • I am too old to FIRE but I have slowly faded. I think it is very useful fo young docs to figure out a ballpark number. Your early years spending will be much higher than when you are approaching a more normal retirement age. I have been surprised by how little I spend at 60 compared to my thirties. You initially spend lots of money saving for retirement, education, and mortgages. Eventually these all disappear. Usually big expenses like furniture and appliances decrease to occasional replacement. Some people call this the retirement smile and I believe it is true.

    • Well, it’s never to late to FIR!

      I feel like we’re starting to see our expenses drop as there isn’t much in the way of material goods we want to purchase lately. With our kids getting older, I expect expenses to rise, then drop when we’re empty nesters, then rise again as health care costs creep up.


  • If you own your home, saved for your children’s post secondary education and have no debt, likely 2-3 million would be enough. I used a 2% ROR or passive income method but that was because our living expenses were very low.

  • SG

    What creature comforts have become customary?

    POF if you are ever in Athens, GA be sure to check out this brewery. Great article, I have a good idea of a full fire number, what I struggle with is how to calculate when to go part time for me or my wife. I guess a main perk is it eliminates part of the healthcare expense unknown, and allows us to probably preserve the nest egg.

    • I like the way your brain works, SG!

      Athens seems like a great college town. I’ve been to Jacksonville for the World’s Largest Outdoor Cocktail Party, but never made it to Georgia for a game.


  • ken

    sequence of returns is paramount especially near or at retirement

    can we really depend on past results to determine a safe withdrawal rate with these hi valuations and very low interest rates
    dividends today are at 1.8% half of historical averages

  • “Many physicians can retire quite comfortably with retirement assets in a range of $2 Million to $5 Million in today’s dollars.”

    I’ll vouch for that. Even a Ph.D Doc can retire with a number right in the middle of that range…..

    With no mortgage and college expenses mostly covered, it is incredibly difficult for me to comprehend why anybody would need significantly more than that. The numbers being banded around in the comments by your readers are clearly not a joke but mind boggling and rather amusing none-the-less.

    It is still taking me a while to understand what it is about physicians that necessitates such very high “numbers” relative to other highly educated professionals such as engineers, scientists, economists, finance industry folks who may also have experienced very good salaries at points in their careers.


    Dr. PIE

    • My husband is a case in point. I could retire with “only” a million while he would not pull the trigger with 10 million. This is a case of “it’s not about the money”. He finds what he does extremely meaningful and I could not replace that for him with FI. I pulled my parachute over a decade ago and I am starting to see his point of maintaining my medical practice. I will never regret my FIRE but am looking to give back more to medicine now that my youngest is off to university.

    • So what you’re telling me is I don’t need 2 to 5 times 2 to 5 Million?!?

      It’s true that we’re nothing special, but a lot of us seem to have some special spending habits, for better or worse.

      Cheers to your upcoming FIRE — this summer, right?

      • My goodness, Doc, you absolutely don’t need that amount!

        If you do get to that level of the FIRE stratosphere, we’ll hit those top shelf whiskies for both of us and the bar patrons around us.

        Yes, I hand in my notice next week at work and hopefully wrap up by end of May. Mrs. PIE also. MA house goes on the market next week. Fun times indeed. Kid in a candy store excitement at times!!

    • ZC

      “it is incredibly difficult for me to comprehend why anybody would need significantly more than that (2-5M)”

      Really? You can’t comprehend all the fun, enjoyable things you could do with more money. I’m all for frugality, but nothing wrong with liking nice stuff and experiences.

      • i can think of an endless list of fun things and experiences in the dollar range I quoted.

        • ZC

          That’s great for you!

          And I’m very, very thankful that many, many people are motivated to acquire much greater wealth than you’re content with…people like Bezos, Bogle, and a host of other inventors, creators, and talented folks who make our world a better place by continuing to create, entertain, and do their thing even though they’re already wealthy.

          The ‘personal’ part of personal finance is what makes the world entertaining. The point stands. Your, “it is incredibly difficult for me to comprehend why anybody would need significantly more than that (2-5M)” speaks merely to a lack of imagination on your part. Sure, some people are content living in a tract home in suburbia, driving a Camry from the early 2000s, and building puzzles all day. Other people have fun entertaining friends at slopeside mountain homes that the reached in the comfort of a luxury SUV they drove from the airport after flying in on a private jet. Some people love box seats to sporting events where they can host their friends and enjoy their team. I’m glad there are all sorts of expensive things out there for people to strive to attain…if everyone FIRE’d at 35 on a million bucks, there wouldn’t be many investment opportunities for those nest eggs to grow or anyone to mow the lawn.

          • As an inventor on more than twenty granted global patents, I can certainly relate to creating value for an organization.

            The many charities that benefit from the likes of Gates et al also reflect where wealth can best be put. I’d also note the many charities that benefit from the kind donations of the PoF himself. Read his numerous posts on this and you will see what I mean.

            You are welcome to swing by our mountain side home in ski country. There is ample room for a few luxury SUV’s in the driveway. I do prefer a case of good craft ale to a case of Dom Perignon though.

    • @Mr. Pie-

      Two issues:

      # 1 It is POSSIBLE for docs to have $2-5M+ and still retire early. When something isn’t possible, we convince ourselves we don’t want it, even if maybe we do. If I was making $50K and wanted to retire early, I’d be doing everything I could to convince myself I don’t really want to spend >$100K a year, and it would probably be pretty easy since I had never actually done it.

      # 2 Something a lot of FIRE types don’t take into account is that sometimes we want to spend more now than later. For example, I have four kids at home now that I won’t later. Lots of expenses there. Maybe some home upgrades now. Maybe we want a nice SUV while the kids are here, but won’t need to replace it until well into retirement. A boat while the kids are young. That cut in spending is what facilitates retirement for many people. Three things coming together facilitate retirement for most- SS eligibility, decreased child/work related spending, and compounding of the retirement savings. It’s dramatically easier to retire in your mid 60s than your mid 40s. You need to save dramatically less, you can spend dramatically more, you can have dramatically less discipline, you can avoid tracking spending/budgeting etc.

      That’s not to lessen the impact of the hedonic treadmill, which is probably the biggest thing, but these two things do have an impact.

      • #1 fully agree – as I said in my initial comment

        #2 one can do a number of things you said and make retirement happen long before mid 60’s. I can vouch for that having spent a tad more on this treadmill (let’s call it a slower moving one than the warp speed hedonic one) in my 30’s and early 40’s before getting priorities straightened out. I suspect for many cutting back is the hardest thing if you are truly dependent on that spendy lifestyle. Our family realized we got as much pleasure, if not more, from the very simple things in life and that realization eludes many

        Thank you very much for your input on my comment.

  • Love this post. I’m not a physician, but this process is useful regardless of your profession.

    Thanks for sharing my YNAB review PoF! I completely agree with your sentiment: “It’s difficult to come up with a target number if you have no idea how much money leaves your household each year.” <– Preach dude. Preach.

  • This is a great place to start for both the young doc and established doc that are looking for an “exit” strategy.

    I think you hit the nail on the head when you mentioned having additional streams of income + the Social “Insecurity” would make everything we’ve saved up “gravy.”

    Great info!

  • John

    Great article. Really appreciate the info here. My friend and I were discussing this over dinner at the recent WCI conference in Park City. btw, it was great to meet you in person there. Keep up the great work!

  • Great post and summary of this model. It’s funny because I tend to think of the assets in my tax-deferred accounts as gravy (along with social security). My focus has been on creating reliable monthly cash flow outside of my day job and once that number exceeded my expenses, I knew I had the freedom to retire or do whatever else I want with my time. A little easier calculation for me to make and allows me to make work/life adjustments in real-time and gradually retire.

  • Lots of variables. When playing with my numbers I found it helpful to set a general age of retirement and keep returns low (5-6% with 2-3% inflation). After that I found that keeping my cost of living down had a huge part in determining the success rate.

    Some unknowns for full retirement vs part-time are:
    Do we want to fully fund 2 kids college and if not do we want to work part-time until they are done with school.
    Healthcare costs and how little I could work to keep health insurance.
    Do I actually want to fully retire

    I dont see us needing more than 120K. No mortgage, no debt, few luxuries, etc.
    Like you point out, most calculators have us with more money than we started with at death!

    • I think the closer you get to “the number,” the better a handle you’ll have on those variables. $120k should afford you a rather luxurious lifestyle, at least in today’s dollars.

      I think a key for us will be keeping our fixed expenses down so that we can be away from home traveling without increasing the costs of day to day living much in retirement.


  • Gasem

    One category completely missed is taxes. Another is RMD at age 70 on pretax IRA money. Another is tax consequence if a spouse dies. You need to follow consequences to EOL, not just early retirement. If you do that you can plan for expenses. Let’s say you want to Roth convert early in retirement, you will need to pay those taxes. It may be worth working another year or two to fulfill that cost without incurring a sequence of return risk. My own Roth conversion is going to cost$230k in taxes and the money is already there. I analyzed the conversion benefit and its about $300k over 30 years, definitely worthwhile for a variety of reasons. 3% is a starting point in planning. Does your house need a new roof? New AC? Make a plan. I just read a scary static 42% of Americans have less than 10k saved for retirement who is going to pay for them?

    • You make an excellent point, Gasem.

      I think people account for taxes in one of two ways. Either 1) plan on a very low-tax retirement with taxable income putting you in the 0% cap gains bracket and plenty of Roth / post-tax money, or 2) consider anticipated taxes as part of your annual spending.

      1 was our initial plan. It may be closer to 2 if I continue to earn income for years with this side gig.


    • mrhouseholdcfo

      Let’s start the chant now: Guest post by Gasem! Guest post by Gasem! Seriously, I’d love for Gasem to show us the detail on his modeling on Roth conversion outside of the ladder game, RMDs and EOL scenarios, etc. I think Gasem’s got something useful to say that is different than many in FIRE.

  • I think a physician can always make money one way or another. The bigger question is does working as a physician bring you happiness. If the answer is yes, you may not want to retire. If the answer is no, maybe the cord should be pulled earlier.

    • Words of wisdom, DocG.

      Those high-income professionals that worry about not necessarily having enough in retirement if they pull the cord too soon seem to forget that the MD or whatever letters they carry behind their name are still worth something. There are lots of ways to earn income that don’t involve practicing clinical medicine.


      • Eric

        I wish I could get or knew what some of those ways were. I would get out now. It seems they are very difficult to find and get.

        • CM

          When I worked as an equity analyst about 3 physicians per year contacted me to ask how I did it.

          We had about one MD per year interview for a job at my shop. (None were hired.) One of the physicians who contacted me (an anesthesiologist) did land a job as an equity analyst covering biotech.

          There are plenty of MDs working in the field. If you’d like a job then pass the CFA exams and/or earn an MBA with concentrations in finance and accounting (from a top tier school, especially Booth, Wharton, NYU, or Columbia).

  • The cost of healthcare in the future seems to be a huge concern among the FIRE community.

    By working at my job until I’m 58, I will have free healthcare for both my wife and I for life. And then there’s the defined benefit pension based on years of service…

    All of the above is so attractive that I’ll probably reach FI really fast, and never really RE. The fortunate this is I like my job. Maybe I’ll join camp FINER 🙂

  • DocNextDoor

    Great summary.
    My financial strategy has always been to save as much as possible with the hope to be able to direct my own destiny at some future date. At times I do not feel like I am really a doctor, I just play one at work.
    I’ve never had an exact number in mind but now at 50 yo and having reached >6M NW I think it’s enough. Calculating that to be >50X the highest anticipated yearly expenses I have my final date set. As I am now approaching T minus 6 months the 6 month follow-up appointments with patient’s are becoming bittersweet.

  • Martdoc

    Shooting for a minimum of 120k, between a military pension of 80k and 1 million investments drawn at 4%, will be there in 3 years. Goal is to have the house paid off before retiring, 100k at least in each of two kids 529s and post 911 GI bill that will cover some of college for each. Will be able to retire at 51, but will likely stay in the military beyond FI if I am still enjoying what I am doing, and family is not paying too big a price. The higher up you go, the more often you move in the military.

  • Xrayvsn

    Great article (and as usual I gain a lot from reading everyone’s comments to get even a larger sample of what everyone is targeting).

    For me when I first started thinking about my end number I said $5 million. Seemed like a large number but still attainable and with 3% withdrawal rate would support a $150k/yr lifestyle.

    As I began to pay off my debts (and now debt free) I have come to the realization that that number is far more than I would ever need.

    Thanks to your partner in WCI (Passive Income MD), I have sort of switched my focus and kind of created a hybrid of what I want to accomplish. My end goal is to have a bit of capital preservation that I could pass on to my daughter while still having a great lifestyle in retirement (I’m about to turn 47, had been shooting for age 53 to retire, now could push that up even more to 50 which would be a great milestone for me to accomplish). Thus I have sort of been focusing my attention on creating passive income streams that would hopefully continue in perpetuity. Still shooting for a lofty goal to support $125k/yr draw but could definitely see $100k/yr draw being more than adequate.

    As of right now, my non-retirement funds (dividends from taxable account, rental of my guest house, private placement syndications, and part ownership in our office building) provides almost $53k/yr.

    If I throw in the funds I have for retirement (401k, roth IRA, HSA, small pension plan which I qualified for as a resident and by staying 2 yrs more as attending, and social security (based on early retirement) I have calculated that would kick in an additional $54k.

    This would bring in a grand total of about $107k/yr when I hit the retirement age triggers for the retirement plans.

    If this indeed is the case I may not ever have to touch the principal investments (with the exception of RMDs) which would be the ultimate scenario to pass on a legacy to next generation.

    It is quite a turnaround from where I was in 2010 (after messy divorce basically had a negative net worth with mortgages, student loans, etc). It was only through finding blogs like this, WCI, and boggleheads that I turned my financial life around and really committed to the FIRE mindset (I have been having a >50% savings rate (typically 65%)for at least the past 3 years that allowed me to make the quick turnaround.

  • The net worth of the average physician at age 65, according to net worth surveys, is just over $2M. Perhaps $2.1M a year or two ago. Assuming a quarter of that is house and stuff, that would suggest a nest egg of about $1.5M, or about $60K worth of retirement spending. Add that to perhaps $40K of SS, and that would suggest that the average doc today is retiring on something around $100K, with wide variation around that figure.

    Three issues I run into:

    1) We spend more than $100K a year and are decades away from SS.
    2) The more we spend, the higher the tax bill required to get that sort of income. $4M today is probably enough, but that might be as much as $5M after tax.
    3) We’re not at $5M if you just include liquid/semi-liquid investments inside and outside retirement accounts.

    I wonder if anything will change when we are. Probably not. FI is less useful if you still want to work than if you want to retire ASAP.

  • GXA

    Great post and insightful comments!
    At the age of 42, with three kids at home and still enjoying my work, the plan is not to RE yet. However, I do plan to reduce my work hours over the next few years. As the kids leave we can downsize the home and really simplify things.
    I hope to have many years to convert my tax deferred savings to a Roth. @Gasem – I would enjoy an opportunity to see and tinker with your spreadsheet.

  • Jlo

    I love and hate this topic as it seems so simple and yet is so complex
    It really defines our true “risk tolerance.”
    There are models such as trinity and Monte Carlo as well as the never to discount sequence of returns . All are based on the past and we all hope they can be applied to the future. 3-4% withdraw rate seems pretty safe in most models.

    I am 51. My number is 5-10 million. I am close to the top end but again we are riding a crazy bull market with a crazy government right now. It is 5 million after a long weekend of call and 10 million when I think of what I can leave for my kids and future generations.

    • Gasem

      Monte Carlo is a statistically forward looking model. There is a historical Monte Carlo model which develops it’s statistics off some number of years of performance history for given assets,, which is what I prefer. Read correctly it gives you probabilities of failure which tends to answer the question “at least how much do I need to not die…” as opposed to “how much…”

  • Very thorough post, PoF! How much you need definitely varies from doctor to doctor, depending on their spending.

    Do a lot of doctors plan to retire completely though? I’ve heard from radiologists, there are specializations where the work is more mobile and they can choose to work part time in retirement. Having a small amount of income in retirement could significantly reduce the retirement portfolio required.

    • Gasem


      The problem is there is substantial cost to remaining in the medical business: licensing, board certification, malpractice, double SS, medicare , taxes, billing, contracts, legal, medical records, CME, over and above profit. Many of those costs are pretty fixed so if you work .25 time, half your dough may go to overhead. Working part time can be a bigger pain than it might seem. At some point all you are buying with your part time work is considerable risk without much reward. The last thing I would want to do is get sued in the last 20 minutes of my career.

  • The article and comments are so nice, and show the depth of knowledge people have here. I can assure you it feels like talking to elite athletes after talking to people who don’t exist in these circles. Most people in Medicine or Administration haven’t heard of FIRE – or even think of anything like it. PoF, you will not run out of people you can teach. That’s where the 4 Physicians Model needs to be developed more- it’s a great teaching tool.

  • Felonious Monk

    Do you count home equity and moneys in 529 as being available for retirement? Or just retirement accounts like 401k, taxable accounts , savings, etc.

  • Gasem

    The way I answered “how much is enough” was to go to and looked up my medicare wages which mirrored my actual AGI since medicare wages aren’t capped. I totaled up all my earnings and subtracted what I had in the bank/brokerage. It turned out over 49 years of W2’s, I had spent $3.5M on my life for an average of $71,000 per year. Out of that money I had purchased a house, paid for for school for myself and 2 kids, traveled all over the world, paid for a car whenever I wanted one, and lived a fine life with my sweet wife. I had way more than $3.5M in the bank so there is no reason I shouldn’t be able to afford another 49+ years of “fine life” at my accustomed standard of living. I was completely retired 2 months later. I decided every day I continued to work the only thing I was accruing was more risk and more stress. No future in that. So far this approach to retirement has worked out no problemo. Just a different kind of personal “proof based” way of thinking about how much is enough.

    • Xrayvsn

      That is definitely an interesting way to calculate annual burn rate and most likely overestimates your costs in retirement as most people don’t plan on buying an additional house or put kids through college a 2nd time. Although I guess substitute health costs with the house payment and may actually be closer to reality.

      I also assume you used values of actual deposits into these accounts rather than current values as they could underestimate how much you spend if values increased

  • DMoney

    Hi, PoF! Congrats on the Doximity hit!

    I’ve been in the FIRE community for a long time and something Idon’t understand, which you peripherally allude to but fail to give any concrete examples of is how to factor in inflation. Honestly I’ve always glossed over this when calculating my target number because I assume since we will be heavily in equities which will hedge against inflation.

    Here are our numbers, can someone tell me how to account for inflation? (I’m already accounting for taxes by grossing up 20% assuming an effective tax rate of 20%):

    Current after tax spending $175,000.
    Assume the same in retirement.
    Plan to retire in 9 years once eligible for military pension: $60,000 (adjusts for inflation). I’ll be 46 then, so long retirement expected!


    (Planning to do some locums for a while, but assume none to make the calculation easier)

    • Thanks, D$

      The 4% rule (of thumb) was calculated by taking 4% of the initial portfolio in the first year, then increasing the withdrawal with the rate of inflation. In this way, you always have the same purchasing power throughout life. Without that adjustment, the safe withdrawal rate would be much higher, but it wouldn’t make much sense because you’re going to want to have the same purchasing power throughout the years.

      Your military pension will also rise with inflation via a cost of living adjusment (COLA), just like Social Security does.

      Hope that clears things up.


  • Our number is ~ $6.75 million, largely driven by home costs in our city.

    If we move away from here, I could see it drop substantially.

    Will keep working for it and target sub-50, as long as I keep loving it.

  • Sean

    Are most of you docs in high income specialties and own your practices/are partners? You seem to have a lot more in net worth ($4M plus) than the average physician, let alone the average highly-educated doctorate level worker. I thought I was doing pretty well until I read these comments! Maybe your spouses work too.

    • I can’t speak for all of the commenters, but I’m an employed anesthesiologist in a one-income household. I’ve done my share of locums work in the past, so I’ve also been an independent contractor. I do know some anesthesiologists in private practice groups earning 50% to 100% more than I ever have in a year.

      We’re not at $4 Million, but not that far from it, either. I’ve done the math and figured out that I’ve every after-tax dollar I’ve earned in my 12 years and then some. A combination of geographic arbitrage, a high savings rate, and excellent market returns have been good to us.


      • Sevomd

        Thank you for the website and the resources..Like you,I am an anesthesiologist and FIRE is near and dear to my heart..
        My target is 8M…My idea is to have my retirement funds in equities that average 3-4% dividend..That itself nets 320K of dividends every year which are taxed at 20% and not ordinary income tax.. I’m 49 now and have no debt other than my house( supposedly good debt)..I would obviously love to pay off my house before I retire.
        My annual expenditure is about 120K…So my question is am I overestimating how much I need in retirement in 5 years…( When I am 54)..Also what do I do about health insurance since I am not medicare eligible?
        Love your work!

        • To answer the question, yes, I do believe you’re overestimating how much you’ll need. That’s a good thing. You’ve probably got enough to retire now.

          You may also be oversimplifying. The taxation on different types of income will be different. In a taxable account, you’ll be capital gains rates (and usually state income tax) on qualified dividends and long-term capital gains. IRA, 401(k), 403(b), and 457(b) withdrawals will be taxed at your marginal income tax rate. Roth money won’t be taxed at all.

          That being said, it is generally accepted based on rigorous studies that you can draw 3% to 4% of your portfolio per year with a very high likelihood of that money lasting many decades, and a decent chance of ending up with more money than you started with after those decades have passed.

          To cover $120,000 in annual spending, you would want between $3 Million and $4 Million. For health insurance, consider health care ministries or catastrophic plans, available without penalty next year.


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