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How Much Money Does a Doctor Need to Retire?

Terms and Restrictions Apply
Physician on FIRE has partnered with CardRatings for our coverage of credit card products. Physician on FIRE and CardRatings may receive a commission from card issuers.
Some or all of the card offers that appear on the website are from advertisers. Compensation may impact on how and where card products appear on the site. POF does not include all card companies or all available card offers. Credit Card Providers determine the underwriting criteria necessary for approval, you should review each Provider's terms and conditions to determine which card works for you and your personal financial situation.
Editorial Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

How much money does a doctor need to retire and enjoy a typical “doctor retirement”?

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 notice the fact that most doctors and other high-income individuals tend to spend more money than the average person, and thus will 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. I once had the $10 Million Dream myself.

$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. 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.


I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.


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. When I tracked mine for a few years, I used Empower; 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.

When 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 rewards credit card or another.

Taking our average credit card bill and adding in the few checks that we wrote 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 short-term or 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 healthcare expenses for our family of four, a quarter of our anticipated retirement expenses, 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 as I did? 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 initially spending  4% of your retirement assets and increasing your budget with inflation to maintain your current 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.


doctor retirement
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. For the last decade or more, it was lower than that, but early in my lifetime, inflation ran rampant at a double-digit pace, and inflation seems to be ramping back up in 2021.

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, crowdfunded real estate, breweries, blogs, or other sources.

In the last few years, I’ve made quite a few real estate investments to increase my passive income in a very tax-efficient manner.

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.


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 how much money you’ll need for your anticipated retirement expenses by a number in the range of 20 to 33 after accounting for any portion covered by truly passive income.

You’ve got your number! Now, let’s see what you can do to get there.



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?

User-Generated Content Disclosure: Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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165 thoughts on “How Much Money Does a Doctor Need to Retire?”

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  8. Great post! We work with a number of Docs who want to retire, though are not in the position to do so in the next 5-10 years. And many have been practicing for a significant amount of time. These are great things to consider, I will reference this in my conversations with some of them that need ‘direction’! Thanks

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  13. Great article! 10 million sure seems like a lot unless you have an extravagant lifestyle. One thing I’ve always stresses, having lived many years abroad, is considering spending a portion of the year in a country that offers better weather and cheaper lifestyle from where your homebase is given the months you’ll be spending there. That is one way to reach FIRE earlier.

    • Geographic arbitrage can give you better prices and better weather! I imagine we’ll be international snowbirds for most winters once we have an empty nest, visiting different locations each year for a while.


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  20. Very real. I am not a doctor, but I can say that inflation is eating into everyone’s wealth. Maybe saving isn’t enough. We have to invest in aggressive assets that beat the inflation and at least create a nice surplus to live on.

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  22. Even with all the retire FIRE calcs that are out there that says I have a 90% chance of my money not running out for the next 60 years based on my current spending rate, it’s just hard to actually pull the trigger and make it happen.

    Better to be safe rather than sorry and it’s better to make that number be 100%! Finding the right number is important because you never know what kind of market returns we’ll have in the future.

  23. //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.// That hurts. BTW an ice cold bottle of Coke out of a vending machine was also a nickel in the early sixties. Wanted to comment on one more thing, inheritance. Difficult to count on but your G.M. might just have 10 million stashed away in a Fidelity account.

    • And I recall paying 87 cents a gallon for gasoline. Now, I pay $2.87. Inflation is very real, and all of the safe withdrawal rate studies account for it.

      I would definitely caution against counting on an inheritance. Save up your own money, and if you end up with extra, that’s a bonus. If you expect an inheritance, spending more and saving less based on that expectation, you could end up in a very bad position when that money instead goes to a new spouse late in life, charity, medical care, your sister instead of you, etc…


      • Very much enjoy your blog. I’m a securities fraud attorney and have represented man doctors, dentists, lawyers, and lots of widows who lost money in investments, usually because they were sold speculative stock or real estate deals. Two reasons my physician clients were victims 1. they were too busy to investigate or to hire a CPA to review sales docs and 2. They trusted a sales person recommended by other physicians.

        My advice: Beware of group investments, especially those sold on the internet or in free dinner meetings. Those real estate deals are high fee, high risk and you have no control. I’ve represented lot of high net worth people who lost money in syndicate deals, limited partnerships, REITs. Every real estate bubble has them.

        Secondly, one risk not considered is divorce, and second or third marriages.
        A few doctors experience these…..your thoughts?

        • Waqas,

          I didn’t anticipate that readers might need legal assistance. Not my intent at all, just sharing what I have seen and learned.

          You can find me or investorfraudsite.com

  24. And the doctor, and the plumber, and the teacher, and in general any person who works should have enough money so that after 40 years of work, he can calmly rest and not worry about the future. It seems to me that the profession is not important here. I know that in America and Europe, retired people do not live badly enough, but I also know countries where people have to work up to 80 in order to survive or live on extra small pensions. I am very glad that I live in America!

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  27. The majority of Americans are financially illiterate as studies have clearly shown and doctors fall in that group as they think they are smarter than the markets
    That being said very few achieve their goal at a reasonable age due to lack of knowledge, bad spending habits, and poor advisors

    • That’s why I’m here, Ken.

      Trying to improve the financial literacy of doctors and other high income professionals who are good at squandering money.


  28. How much do you need to retire? First figure out how much you will spend in retirement.
    How Much will you send in retirement? First determine how much you spend now.
    Then subtract those things (home mortgage, student loans, extra autos, kids etc.) that will not continue into retirement.
    Multiply that number by 25 (the 4% rule) and that is what you need.

    Not all of that is easily accountable savings (consider SS). But it gives you a start.

    • You are spot on, but don’t forget to factor in inflation in your calculations though. It has been discussed above, and in many other posts. If you don’t, you will undoubtedly be well short of your goal. Taxes are another aspect to consider of course, but those vary widely and can be easily accounted for in your spend rate or withdrawal rate calculations. For determining retirement needs though, either use gross or net for calculations, but make sure to account for them one way or another. Then take that number and plug it into an inflation calculator before using your multiplier. The further retirement is away, the more effect inflation will have, but also the more time investments will have time to grow to compensate of course.

      Here’s an illustration: The doctor is 42 years old and starting to get serious about retirement planning and hopes to retire at 60 But, how do they determine their FIR number? You mention figure out what you will spend, I’ll comment on that here and later in my post. There is an industry “rule of thumb” that says estimating 80% of pre-retirement income is a good place start. Essential needs may be significantly less, but how many of us hope to only spend our retirement only meeting essential needs? They have a household gross income of 400,000 annually. 400k adjusted for inflation will be significantly more than 400k 18 years from now. Using an annual inflation rate of 3%, which could be high or low, comes to 672, 000. So his 400k per year now will require 672k/year when it comes time to retire at age sixty. That is the number to multiply by whatever factor they wish to use. In your post, you use the 25 multiplier (corresponding to a 4% withdrawal). Doing the calculation:

      672,000 x 25= 16,800,000. That is the value of assets needed to support 25 years of retirement at their current equivalent earnings at approximately 4%. 80% of that is 13,440,000 (16.8M x 0.8). An initial withdrawal at age 60 of 4% would be 537,000, some or all of which could be taxable, depending on how those assets were invested. Chances are that the marginal tax rate on 537,000 then will not be less than their current marginal rate at 400k/yr, but is more likely to be more, which is where tax efficient planning comes to play. But that is another topic.

      The question that follows suit then is, will they still be making 400k, adjusted to inflation of course, when they are about to retire or will they have increased their income? By this I mean, will their earnings increase at a greater rate than inflation (i.e. more productivity, increased reimbursement, etc.), such that they are making more than 400k inflation adjusted annual income in their later years. If so, that increases the basis which the 80% would then be calculated. It may not be possible to estimate increase in earnings over time, unfortuantely. Perhaps a more accurate practice would be to just plan for 100% full income replacement at retirement, adjusted for inflation, and let the unknown variables be taken out of the 20% “surplus”. It might not be exact, but nothing can be that far in the future anyway. I think it is just as likely to underestimate the variables as it is to overestimate personally.

      I only mention all of this because there is a lot of chatter about 100k/yr being plenty for a physician to live on in retirement. While that may be true for some, for others it might not even scratch the surface of their needs. Estimating actual expenses during retirement 20+ years out may be a lesson in futility. As history is often the best predictor we have of future market returns, I personally believe historical earning is also a better tool than projected expenses with so many unknown variables in play. Making a huge assumption that the physician is able to live within their means on their earnings just prior to retirement, it only makes sense that they should also be able to live on it during retirement. Yes, this could cause result in an excess amount for retirement. Other than perhaps the unnecessary sacrifices taken to accumulate the amount during the earning years, what would be a disadvantage to having excess retirement assets? The excess could mean a higher withdrawal rate or a larger bequeathement, if that is in the plan. This is just my opinion.

      So even if a physician earns 100k now, or is certain they will be able to live on the equivalent of 100k in their retirement, then it could make sense. Even so, 100k will be 168k in the 18 year retirement horizon at 3% inflation illustration. 168k x 25= 4.2M, which is 40% more than the straight 100k x 25 calculation of 25M.

      So, returning to the illustration, if the 400k/yr earnings just kept up with inflation, then annual earnings would be 798k at the time of retirement. Of course their earnings may not keep up with inflation, in which case the amount would be less but for the purposes of this example we are trying to calculate equal inflation indexed earnings for planning purposes. Doing the calculations for 100% replacement:

      798k x 25 =19,950,000.

      Because they are trying to maintain 100% income, they withdraw their previous years salary, 798k the first year, which is of course a 4% withdrawal (not adding the inflation in this calculation, since it is assumed their salary wasn’t taken lump sum one year prior so is inherently indexed to inflation). Then each following year, or whatever withdrawal period they plan, it could be adjusted for inflation, market conditions, etc., or of course taken as a fixed withdrawal rate, which is not necessarily recommended.

      There should be some tax savings because not not all of the 798k will be ordinary earned income. It will be a mixture of ordinary income from tax deferred accounts and long term capital gains in the worst case scenario, but hopefully there would also be some tax free component from a Roth, etc. to lower tax basis. There are still a lot of variable such as overall portfolio rate of return, other sources of income such as social security, rentals, etc. At least MRDs won’t kick in for another 12 years in this example.

      20 million is a big number, but the calculations behind it aren’t far fetched at all. They are humbling though. The bottom line is, If a physician wants to have a retirement that mimics his earnings, he’s either got to invest a lot, have an extraordinary annualized return on his investments, or delay retiring to give those investments even more time to grow, hopefully. The other option is to cut back spending, either by choice or necessity. As many have mentioned, spending may naturally reduce as we age, but that’s far from a commonly accepted dictum. It’s a daunting task but one that certainly bears repeating over and over on this forum.

      Note, I’m not a financial person, just a doc trying to figure things out for myself. These are my opinions and mine alone.

      • Errata 100k x 25 = 2.5M. I left out the decimal.

        I also left out that if the returns are good, taxes are reduced and/or spending is comfortably reduced in retirement, the 80% rule of thumb comes back as a viable estimate for planning purposes. If those don’t happen, then even 100% may not be adequate for a high rate of success.

  29. Keep plugging away. It’s easy getting rich slow it you are consistent and patient . And don’t panic. Didn’t sell any thing when Covid hit even when market tanked and now went to 11 million. Retirement is like surfing , just have to ride the wave but keep heading to shore

  30. As a physician, I can imagine that it must be an exciting time when got enough money to retire. Although it’s not always going well at works, I will keep striving for it.

  31. @Fired
    Congrats on your retirement. It is now September and the market recovered from the devastation in March.
    What was your strategy in terms of cash buckets? 1-3 years cash, etc. so you did not have to touch any of your equities which is what kills the average investor who sold because of the “crash”.
    My next concern is when the next bubble hits us and how long it will last. This may not be issue for you/anyone if they have their buckets set up correctly. This is what I would like to know how you managed yours.

    • I keep 2-3 years of basic expenses in money market which will cover emergencies like roof new windows repairs etc or for fun money splurge 350 k . Living expenses come out of $7 million taxable account 56% stock 34% bond 401k Will not be touching till I absolutely need to ie RMD At 3.6 million. Take social security at 67 . Pension $1000 a month kicks in at 65

  32. although Covid 19 has been awful for everybody and the world, its always good to at least find some lemonade when the world gives you lemons. Since joining the Fire movement this year covid 19 has made me appreciate things i took for granted such as my family and friends and took stock of how lucky i have been in life. I appreciate a simple jog , a phone call with scattered family , my love of flying ( with covid lock down i am so glad i invested in a really high end VR flight simulator which was worth every dime). Also with no where to go on vacation my retirement spending has dropped a alot which helps my retirement porfolio.

    Keep counting your blessings

  33. Update : in some ways I am glad the market tanked as I transition to FIRE which I am on schedule to do in 3 months from my practice. It’s a good test run to see if all my planning and budgeting and portfolio allocation actually works in the real world and to see if mindset is right about handling the vagaries of the market. Fortunately my plan and mindset worked no change in my retirement income despite covid catastrophe. I think the core thing you have to do is run the models of what your portfolio will do in the worst case senario ie now. From there figure out how much income that generates. This will tell you how much you need to fire and what your income will be. Let that worst case scenario be your base income .Old adage hope for the best but plan for the worst.Always plan for a rainy day since it will always rain

  34. Markets tanking due to Coronavirus but running a good budget and consistent investing and modeling worst case scenarios based on asset allocation models on vanguard means no panic no sweat in my FIRE journey. Time to tune out the noise and enjoy the income stream from investments and most important thing is to do nothing in terms of investments

  35. Update

    Assets hit 10200000
    Based on portfolio model asset allocation . The worst that could happen if the 1930 style Great Depression hit would be down to 7500000 which at 3 percent withdrawal leaves plenty income . Tried taking 1 month off and loved it . It’s amazing how busy you can be just focusing on yourself and your needs. Intense workouts each day . Felt better no stress look better. So I am going Fire in 6 months. It turns out I don’t need to be a doctor to be happy developed little hobbies . Reconnected with classmates , all of whom would Fire if they had the money

    • Congrats on that 8th digit!

      There’s nothing within reason you cannot do with a nest egg like that. You’d be more limited by time and imagination than money.

      Glad you enjoyed the month off and I wish you full success as you transition into this new FIREd life!

  36. Just turned 39 with no debt (other than mortgage) and am partners in my practice. I see patients 3 days a week and support my family. Just hit 7 figures in savings. Plan to cut down patient days slightly this year while taking on other consulting projects. Reading your blog has helped me think about my future and FIRE, and realize the huge power that comes with it early on. I see patients because I still enjoy it, but have the flexibility to also be home with my young family some days. Also live like the millionaire next door in a very affluent community (my car is a 2011!). I really enjoy reading your posts and all the comments- thank you!

  37. I’m on the more modest end of the financial spectrum compared to what I see here. At 56, I retired from group practice end of 2017. I had several numbers in mind when it came to early retirement for a couple. The minimum amount I would consider to retire is $3M in liquid assets, since that amount would require closely monitoring expenses. At $4M, I would have less concern about possible sky-rocketing medical premiums, out-of-pocket expenses, and long-term care expenses. But when I reached $5M, I knew that was more than enough for us to enjoy the lifestyle and travel we desired. It has been nearly 2 years since I walked out the hospital doors, and there have been no financial regrets so far.

    • Your thinking aligns well with mine. I left my job in the mid-range of the numbers you present. I am quite a bit younger, but also have found another way to earn an income, so I’m not enacting our drawdown plan just yet.


    • good to here of another successful MD who joined the FIRE movement . Makes me feel better about pulling the plug on medicine . I would like to hear from MD’s who Fired and any surprises they found after they retired either emotionally and financially and how your filling in your free time

  38. If a doctor truly loves their business, they’re most likely work until their 80 or 90 years old before they think about retiring. Or they can use the awesome power of the Internet to start a side hustle and achieve “side hustle millionaire” status, retiring from their doctor job sooner than hoped for. Agreed? 🙂

    • Agreed. I think most are MD are pretty hardworking dedicated people who would not do anything else but be a doctor , but I do think given recent medscape survey on physician burnout showing > 40 percent with serious burnout and most with some element that the landscape of medical practice is changing for the worst which post challenges for future manpower. Just anecdotally most of my colleagues would either quit , curtail hours , or do no clinical work if the finances are right this is despite being in specialty that pays 400k with 10 weeks vacation which is very sobering . For me I accomplished everything I needed professionally with teaching fellows publishing , going up the academic food chain so not much more I feel I need to do . Life is too short to do the same thing over and over again. Sometimes it’s good to move to another challenge

    • Just reentered blog so i dont know what all topics covered but several essential things have to be answered before you FIRE

      1) what will I do with my time

      2) what are my projected expenses

      3) how much income generating NET worth not total net worth do i need

      4) what withdrawal strategies will I use . ie constant dollar ( 4% rule) , constant percentage, or variations of the above

      1 and 2 are personal answers each person will have to answer but three and four could have multiple opInions

      AIER website an excellent source goes over differing strategies and has a excellent realistic calculator of with withdrawal percentage . A paper in their website , if you go constant percentage which i think is safest for FIRE would be 3.5% if retired 65 with dec of 0.1% for each year retired before 65 so at 55 years old 2.5 % withdrawal rate is safe

      Net worth needed to fire at say 55 if you consider most MD’s make between 200 k to 400 k . lets say you want to maintain your income at 250 K ( but this may vary based on porfolio value per year ) then you really do need to FIRE at $10 million dollars which is pretty daunting for most MDs.

      WebMD in there annual survey shows only 15% of MD by age 65 have $5 million at retirement . So I dont think FIRE is realistic for most MD’s except for a lucky few

      For me personally , i am getting out of Medicine despite being at the top of my career in my mid 50’s because doing same thing for 25 years is pretty boring and lost its challenges. Its like a golden cage. I did not want to be like my MD dad who kept working till 66 so since high school i developed a investment game plan and educated myself and invested early starting as a resident . kids colleges fully funded , house cars paid off and no debt personal or education( thanks dad)

      Income generating NETworth $9.2 million mixture of stocks bonds , with also small pension kicking in with social security should be close to 10 million i need . bottom line is it takes really early planning and educating yourself and not trusting your money to advisers etc

      bottom $ 10 million is the correct figure

  39. The essence is start and save early for retirement, no matter how much you earn. Making a habit to save for the future as early as possible can makes a lot of difference. Right, it all depends. Your post is a good reminder for anyone to think about the future and save wisely.

    From: Primary Care Physicians in Houston | Internist in Houston

  40. Regardless of where one lives be it NYC or Omaha, with significant different costs of living, there are 2 essential variables to take into consideration: 1. Need for long term care ( and long term care insurance such as excellent policies sold by NY Life, Lincoln National not Genworth slowing becoming insolvent ) because most of us will need assisted living at some time, some earlier, some later, and this cost will devour ones retirement funds, and will cost more each decade so buy a policy ASAP, age 50 better than 60, 60 better than 70. 2). A party now in power of the House may be able to Institute in 2-3 years Medicare for all, a basic living allowance for all ( Washington state trying this ) and taxes will skyrocket as will the deficit. We are all planning paying between 30- 40pct on pension plan income, home or other passive rental income, etc. What happens when these post retirement taxes double. My advice, get long term care insurance and DO NOT retire until 70-75. Work for the VA or wherever so your stock portfolio is untouched except for the mandatory payments withdrawn by law from your plan starting at age 71. Start a Defined Benefits Plan If one has a few employees like 4-7 or so. As you get older, one can place into the plan quite a sum, your accountant will describe. Dump profit sharing plans. Save, work, get rid of all debt, strategize. Good luck

    • Most financial gurus, WCI, etc would disagree and say LTC insurance is a mistake, especially w policys available currently, and one would be much better off self-insuring w saving more. Second, “don’t retire til you’re 75?” Please don’t tell us all that’s serious advice…(?)

  41. Good discussions. I have a lot in common with “Wendy” except I am 50 and still working and have decided to make a major investment in my practice and continue for 10-15 more years. I live in a 3 million dollar house-fully paid and toy with the idea of upgrading for superior ocean views (not seriously anymore). I have a lot of other assets and no debt.My practice has done very well financially and retirement has been possible for quite sometime, but the question is about what level of lifestyle I want, what I will do afterwards, and how much I will leave to my kids. One thing that this blog has not addressed much is the last issue and more specifically the responsibility we have to our children. What should we leave them? This involves a lot of soul-searching. Frankly, I inherited nothing and even though I loved my parents very much, I am amazed by the superior lifestyle many people have who have been blessed with a good inheritance. Because I went to Ivy league schools (which are very disproportionately attended by rich kids) and live in an affluent area, I have many close friends who have inherited millions of dollars and had access to trust funds at an early age. And if those folks keep their heads on straight, they have awesome lives-much different than us working hacks. Can you imagine if you pass on 10m to each kid invested in equities? That’s 220k inflation adjusted in dividends (taxed at 23.8% +local). The principal never touched and growing in capital gains historically well outpacing inflation.
    Being kids of physicians our children are statistically smarter. What a gift to society to have well-funded, smart kids that never have to worry about money (always have a big safety net) and can concentrate on fulfilling whatever potential they may have. I work for my kids so that they can will be able to have a voice; I hope they can avoid the pitfalls of rich and poor kids. I try to teach them the best values (despite my expensive house, I live a reasonably modest life) and not be materialistic but that money is very important. There is a “ruling class” in this country, and it is related to wealth. Shouldn’t we give our kids a shot at that?

  42. When I start telling doctors that the correct answer is “it depends” they never seem satisfied. Their eyes glaze over as I drone on about risk tolerance, market cycles, FIRE philosophy, future taxation rates, RMDs, longevity, monthly expenses, fund costs, and asset allocations.

    Then I started using that simplified breakdown that I posted on my early comment to this post (way, way above).

    Now I at least get their attention and wake them up by saying, “You need FIVE MILLION DOLLARS.

    Yes, $5M.

    It sounds so excessive, but for most doctors, it really isn’t. 4% is $200K. 3% is 150K. Those are less than they make now. And less than most of them spend now.

    You can do fine with less of course but for people who can’t even listen to a detailed answer to the question – I’m sticking with this initial answer. If they have followup questions we can begin to tailor a plan to them and they may need much less.

    If they have no interest in finances they will not be optimized in investing. They will get taken advantage of. And they will spend too much. Better for them to err on the side of having too much.

    • And that’s $5 Million in today’s dollars. If you’re talking to someone who plans to retire in 20 to 30 years from now, by then they might need $8M to $10M to have the same purchasing power of $5M today.

      That being said, I think $2M to $3M today can be adequate for the individual or couple that isn’t choosing to live an upper middle class lifestyle. $100,000 a year is a pretty good lifestyle once the mortgage is paid off.


      • Maybe PoF,
        But 3% SWR on $2M is only $60k. And that’s before taxes. Most doctors I know would struggle on that.

  43. My wife and I will face this question in the future as she will begin practicing this time next year. Your point at the very beginning is the most important: lifestyles vary and retirement timing isn’t the same for everyone. There are different preferences for quality of life, spending, uses of our time, length of retirement, and any number of other variables to consider.

    I think the intriguing part of your question is how much does a high-earner need to retire? Many folks assume high-earners have an easy life because money isn’t a problem. It is true that high incomes can make up for a lot of mistakes but they don’t provide immunity from financial dependence. Some people immediately experience lifestyle creep and find it hard to control expenses and right-size their budgets to allow for adequate level of savings even to contemplate retirement. What’s most important is prioritizing saving and retirement and keeping your spending at a sustainable rate into retirement.

    This will be an interesting dynamic to observe as my wife and I will be seeing that step-wise change in income with her job beginning next year. Savings and controlled spending will both be priorities, that much I already know.

  44. For early retirement . What are most people payin per month for say a good blue blue shield non hmo plan. Seems like health insurance is the biggest reason keep working . I budgeted 2000 per month for family of 4. And what ways can I cut health cost

  45. Need some advise, I have always shooting for early retirement at 60 since before med school especially after seeing my physician Dad nearly wreck his health working way too long till his 70’s . I have been very diligent and at age 54 saved 8.5 million in mutual funds with no debt no mortgage and kids college fund funded fully. I like many of surveyed physicians think we need more money to retire like 10 million to retire. The problem I have now is doing the math i should have enough to retire now but I have this fear I need more and need 10 million and part of me has a tough time letting go of a profession i am so use to doing despite the fact its getting to be a drag . Need advise on how other MD’ s got over this fear of letting go 2) I have been using a retirement withdrawal calculator for the American Institute of Economic Research which give a range of safe withdrawal rate of 2.7-3.2 % not the 4% rate which gives me a 95% change of having enough money lasting till age 90 . I was wondering if any other MD’s have used this and what their opinion was of its value . Also on of their analysis papers found low withdrawals at the beginning gives greatest utility

    • David, you’re doing amazingly well.

      Not only is a withdrawal rate of 3% low enough to withstand some terrible market returns, but you also benefit from a generous budget that probably has a decent amount of fat to trim if you absolutely had to (which is very unlikely). Set aside a few evenings and read the 27-part ongoing series on safe withdrawal rates at Early Retirement Now.

      Whether you continue to work or not, it’s quite likely you’ll hit that $10 Million mark. The median outcome of using a 4% withdrawal rate over 30 years is to end up with 2.7x the amount of money you started with.

      Your issue isn’t a money issue, but one of identity. Be sure to contemplate what life will be like after you’ve retired. Develop hobbies. Consider working less before calling it a day.

      For what it’s worth, my retirement assets are about a third of yours. They’re also 50% to 200% higher than most early retirees I know who have already left the game.


    • I totally understand the letting go issue. I completely stopped working at 57, and despite the hassles of the job, I do miss interaction with my old staff at the medical center. I would suggest going part-time for about a year, and easing yourself out of practice. If you are able, take a month off as a “simulated retirement”. Don’t just sit at home, but do some travel or hobbies to see if you miss your old job or not.

      Regarding savings, this is a tough one. When I hit $10M, I started thinking of calling it quits, but thought this was not enough. Due to market gains, I am now up to $13M, and can tell you that I am just as unsure of what the “number” really is. My mistake was buying an expensive home in a state with no income tax, but the property tax is $65K, and insurance for living on the ocean is another $10K. I thought I needed to show others that I had “made it”, but now realize that I would probably be just a happy living in a condo for about 1/4 of the yearly cost, with the same ocean view. The lesson here is to keep your expenses reasonably low without denying yourself the ability to splurge from time to time.

      I firmly believe that we are in an era where stock market gains will not match the historic average of 10% before inflation. If you own a 50/50 stock/bond portfolio, I think you should expect to maintain a 3% sustainable rate of withdrawal with virtually no risk. 4% would probably work as well, as long as you are willing to cut back some spending during bear markets to avoid eroding you nest egg. Check out Vanguard’s Nest Egg Calculator. I found this quite helpful, and it also illustrates you don’t need to have much more than 50% in stocks to weather a 35 year retirement.

      Regarding Vanguard, it is absolutely essential you invest with a company that has very low fees. Mutual funds have many hidden fees that can severely limit performance, so stick with ETF’s. Diversify, and rebalance. Read William Bernstine’s books. He is a former neurologist that bailed out early to pursue investing in a very serious way. His later books are easier to understand than his early texts, which can be quiet dry. Never, never buy an annuity.

      I would say that with a well balanced portfolio of ETF’s, rebalanced yearly, $8.5M should easily be enough. Don’t get caught on the “hedonic treadmill” like I did, or you will be up to $20M, still feeling that it is not enough. I have met many multi-millionaire 80-year old men, that would gladly burn it all to be 20 years old with $50 in their pocket. Let that sink in for a minute.

      Good luck.

  46. Undated articles are worthless. Why would an otherwise smart person like yourself consistently omit the single most important piece of information for readers? You MUST include a date to provide context and relevance!

    • People are quick to comment, so even if the article is undated, the first comment date will suffice. The article should be dated March, 2018.

      I think it is important to keep in mind “the number” that you may be looking to attain before retiring is a moving target due to the persistent force of inflation. Most residents today will have no problem hitting the $10M number by the time they retire in their 50’s–the only problem, $10M will buy the average 4 bedroom home.

      Even if one were to have $10M saved, it matters whether it is in a pre- or post-tax account. Even more daunting is to have the money invested in 50% or more in stocks which is required to keep ahead of inflation. Believe me, it is hard to sleep when the equity portion of your portfolio can fluctuate over $100K per day on market volatility.

    • Wendy makes an excellent point. You can easily find the publication date in the first comment. I would add that the concepts here are valid whether it was published yesterday, 5 months ago, or 5 years ago.


  47. Here is my “problem”. I worked in a solo subspecialty practice for 27 years, and am currently retired at 58. I had read “The Millionaire Next Door” years ago, and saved about 50% of my income, and had always dreamed of retiring early. No spouse, no kids. Luckily, from reading Bogleheads, I did not bail out of the market in 2009. For some unexplained reason, I thought I needed to buy a big beach house on the ocean in FL. That is when my anxiety level increased. Even though I was able to pay for the house with cash, and have about $12M in a balanced portfolio, I am waking up at night thinking I must be nuts, since between property taxes and insurance, I am burning through $75K per year. Upkeep on the home is probably about $30K. I figure I need about another $80K for other things such as travel, food, etc. I know many of you will laugh, and say that that mine is a nice problem to have, but I find myself with more anxiety having “made it” than when I was a junior doc in my 30’s with minimal savings. I have thought about selling the house and moving into a condo, but with the tax changes, I will likely have to take a 10% hit on the sale, but at this point I may do it anyway to be able to sleep at night. It may not be the answer, since I will then have about $17M invested, and will then worry about a market downturn.

    I think the thing that I learned from this is that even thought I was not wild about work, it did provide structure in my life, and happiness is more a function of mental state than having a lot of stuff.

    • Thank you for the comment, Wendy. You’ve clearly done very, very well for yourself and are now financially able to lead the life that you want.

      The conundrum is how do you define that life? I agree that there is some expectation that a decamillionaire like you deserves to live in a $5 Million beach house, but that should only happen if that’s what you truly want. It sounds like it’s probably not.

      The good news is you can afford to do whatever makes you happiest — if that’s a small condo as a home base and a nomadic life, go for it. If staying put is easier, you can do that, too. If you’ll worry too much about a market downturn, you can transition to a more conservative portfolio. There isn’t a fix for everything, but you can take steps to mitigate your anxiety. A life coach may be able to help you sort out what you want most out of life and how to best achieve it.

      Cheers to your success!

      • Thanks for your kind reply.

        One thing that nags at me is the fact that Jack Bogle has noted that the current P/E ratio is currently high compared to historical averages, and as a result he expects stock returns to be below historical averages to allow for a correction of this distortion. Nobody can predict the future, but I respect his opinion, and am now wondering if the 4% rule should now be reset to the 2.7% rule based on this phenomenon. Long term, say 30 years, probably wont make a difference, but for the next decade, we may be in for a readjustment of expectations. Here I go again, trying to predict the future, an exercise that I have learned is a silly undertaking, but I find it hard to ignore the wisdom of Bogle.

  48. The amount you need is not really related to your profession, it’s more related to your lifestyle. It’s simply a calculation based on a multiple of your yearly expenses. Some people use x 25 or x 30.

  49. 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.


      • POF
        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.


  50. 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.

  51. 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.


  52. The way I answered “how much is enough” was to go to SSA.gov 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.

    • 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

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

    • I count our home(s) and 529 Plans as part of our net worth, but not as part of our retirement savings for the FI calculation.

  54. 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.

  55. 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.

    • FC

      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.

  56. 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.

    • 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…”

  57. 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.

  58. 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.

  59. 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.

  60. 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.

  61. 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.

  62. 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 🙂

  63. 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.


      • 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.

        • 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).

  64. 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.


    • 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 wrote the conversion data into a spreadsheet so I could understand advantages and disadvantages of conversion, which I can present if interested. It’s actually pretty illuminating especially with regard to SS, RMD and tax management for both married and single. The data is specific to my conversion but the pattern of the spreadsheet is generalized and gives a pretty good idea of how to think about this. I can include enough info to teach anyone to build their own spreadsheet specific to their situation.

  65. 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.


  66. 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.

  67. 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 to meet you, as well, John!

      I think it’s wise to have a FI number in mind, even if you have no plans to retire when you hit it.


  68. 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!

  69. 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.

    • Amen, brother!

      I’ve never been a budgeter, but I have heard from many people, including physicians, who swear by it.


  70. “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!!

    • “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.

        • 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.

  71. 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

  72. 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.


  73. 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.

    • That’s where we’re at with retirement savings (and funded 529 Plans), and I agree that it’s plenty for a family in the upper midwest in 2018.


  74. 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.


  75. 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.

    • Love the breakdown. Only thing I would add / change is adding the word “relative” in front of frugally [frugality].

      A budget of ~100,000 per year may be somewhat frugal compared to our peers, but is plenty of spending money for a debt-free couple in most places. I’m sure you would agree.


    • I like this summary. This is probably a bit higher than regular people’s target.
      I think $3M is good shape for most people.
      $5M – you’re set.
      $10 – Yeap, you’re rich.

    • That is a great summary! Totally agree. I think it is good to shoot for the $8-10M. Who knows when one will just want to live it up for awhile. Living on ~$100k/year sounds comfortable but not luxurious. I hope I have a midlife crisis or two!

  76. 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.


      • 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?

        • Thank you for the questions and comments, K-man.

          Regarding income tax, you need to include that as part of your “spending” in retirement, and it will vary widely based on the composition / tax diversity of your portfolio and the taxable income it generates. It could be as low as zero, even with a comfortable annual spend if you have significant assets in taxable and Roth accounts.

          Dividends are generally taxed more favorably than you’ve outlined, but they’re not a magic income source. In fact, taking dividends in a market downturn is akin to selling a portion of the portfolio, even when stocks are down. I detail my feelings on dividends in this post — the comments are enlightening, as well.

          The 4% rule is designed to give you a high likelihood of portfolio survival in a near-worst case scenario. If the first 5 to 10 years of retirement are anything but terrible in terms of market returns, you should be able to increase your spending significantly. Do a search on variable withdrawal rates for more info.


        • Respectifully, I think you have a flaw in your calculations. You stated the following: to expect a 6% (?) return on stock market. Minus 3% of inflation equals = 3% overall returns.

          It should be instead: 6% average returns stock market (although the hystorical figure is more in the 7% range) minus inflation 3% MINUS 4% of dividend payouts equallying -1%.

          The average return figure of the stock market that you use of 6% is inclusive of the dividends not just from capital gains.

        • The market has, on average, returned 7% real returns (after inflation). Nominal returns are closer to 10%. I think it’s smart to use conservative figures, though. Best to have too much money than not enough.

          The S&P 500 dividend payout is currently about 2% and if you reinvest the dividends, you get the total return to compound. Alternatively, you can keep the dividends as spending cash. Either way, you get both the increase in net asset value and the dividends spun off.

        • Thanks for your insight PoF! I feel I am talking to a legend already. Thanks for the correction.

          I prefer to use a very conservative figure of expected real stock gains of 2% plus probably 1.5% dividends giving you a expected real stocks return of about 3.5%. Data from Bernstein. Probably this figure will apply mostly in the intermediate term 1 or 2 decades.

          Will a longer investment term of 3-4 decades approach the historical figure of real 7%? Hard to say as past performance is not guarantee of future results. I think it does not hurt to expect less. If we get more HURRAY!!

          I do not know where the 4% figure of dividends is coming from. Probably is an optimistic (but still possible) figure of nominal returns for dividends. The drawback I see taking this assumption is the huge run the market has had over the past decade. Although I do not rule out that perhaps these new valuations and Schiller’s P/E ratios might be the norm for the future. I do not neccesarily agree they will revert.

          Disclosure: 36 y/o, current allocation 70% stocks (35%US total, 15% small cap value, 20% international), 20% bonds, 10% REITS.

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