Ether to FI: Don’t Call it Retirement (and a Net Worth Update)

What will you be up to in sixteen years?

I don’t pretend to know where I’ll be or what I’ll be doing, but our friend Ether to FI, who is in his second year now as an attending anesthesiologist, has some more concrete ideas.

lucidityIf you recall, he started writing for us a year ago and stated his goal of achieving a net worth of $3.3 Million in ten years, or enough to live on $100,000 a year with a low safe withdrawal rate of about 3%.

He’s made tremendous progress in his first full year as a physician anesthesiologist in the workforce. His finances will be outlined below in detail, but he’s also made progress in terms of thinking about his life plans and life goals.

When we met him last July, he hoped to be working into his 90s. More recently, he seemed to have a change of heart, and I almost had to add “RE” to the end of his “Ether to FI” moniker.

Today, he envisions being Retired Not Retired before his fiftieth birthday, or about 17 years after starting his anesthesia career. Note that is markedly beyond his goal FI date just 9 years away. Why keep working after achieving financial independence?

I want to thank E.T.F. for coming back with this update. But don’t call it a comeback. He’s been here for years. And don’t call it retirement…

 

Don’t Call It Retirement

 

June 30th, 2034

July 1st was the grand opening; June 30th will be the grand closing.

Let’s call it a separation of service. There is too much of the world to see and time is a limited resource. We have gained better clarity as a couple over the last year about our future desires.

First is spending more time together as a family. Second on the list is eliminating our need to trade our time for money. The third is traveling extensively at a leisurely pace. Goals 1, 2, and 3 are not compatible with full-time work.

In the FIRE community, retiring in your late 40s is not considered early. In the medical community, it’s extremely early. There are too many things we want to do as a couple to wait till the age of 65 to stop. 2034 gives us the balance of accomplishing career goals, giving our kids a stable environment (K-12), and still young and fit enough to enjoy traveling.

 

How long will the break last?

 

I have seen these “breaks” last a few years for some and forever for others. I refuse to call it retirement. One year ago, I placed great emphasis on FI, because I cannot imagine a complete break from work.

Work of some sort will always be there, I can see myself taking a few years off and then working for a few years, and repeating the cycle. Mrs. ETF will likely spend her time between years “on,” volunteering, but I doubt she will have an itch to return to work.

To make this hope a reality, we will need some money. Currently, we are trying to grow our net worth substantially by 2034. We are setting a big audacious goal of $300,000 available a year to spend.

(I can hear people already, $300k, seriously?)

Yep, $300k, we don’t plan on spending anywhere close to that amount. Who knows what the future will bring, but I cannot imagine having financial problems with a buffer that large. Even if we live past a hundred years old, starting with a buffer that large in my late 40s will guarantee our great grandchildren will never run out of money.

Setting a target this large will force out of our comfort zone of a steady paycheck. We have discussed creating other streams of income, this new goal should spur us to action.

 

ETF Hiking Views

a view from E.T.F.’s recent hike in seattle

 

Our finances: One year in review

 

We have made some progress over the past year, growing our net worth from $80,283.87 to $364,089.20. I am very proud of our progress. New year, new goals: $800,000 by the end of year 2.

CMGGo big or go home!

Let us review this past year. I rolled my residency retirement account into an IRA. The Roth 403B portion went directly into a Roth IRA. The traditional 403B plus the employee match was moved into a Traditional IRA.

I then converted the traditional IRA balance to Roth, paying the taxes. This opened up our ability to do Backdoor Roth IRAs.  $22,000 was added to our Roth IRAs, $5,500 in each of our IRA’s for 2017 and 2018.

We beefed up our cash position primarily for our house purchase hopefully in the next six months, and we will keep on adding to it.  $25k is our emergency fund, the additional $67k will be part of our home down payment.

We have cranked up our retirement account contributions, maxing out all available options at our jobs.  I am happiest about our college savings for our kids. Initially, it stood at $7,080, and now they have $37,795.  It looks like the mini E.T.F.’s are going to college.

 

 

DDQThere will be a few things spurring our net worth along. We are planning on buying a house. I don’t expect much appreciation over the course of one year, but we will have a 15-year mortgage. I am debt adverse, and I will have extra motivation to aggressively rid us of the mortgage in 4 years or less.

We will continue to contribute to retirement accounts which between myself and the Mrs. E.T.F. is $120k a year. We will top off little E.T.F. 1’s 529 at $40k, and increase ETF 2’s 529 to $25k.

We will also open up a taxable account this year with at least a $10k VTSAX contribution. We have a lot of moving parts, but Mrs. E.T.F. and I work best with defined goals.

It has been a great year, thanks for following along and stay tuned.

Only 5,760 days left.

 

Follow Ether to FI’s progress to financial independence in these previous posts:

 

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[PoF: This is a great example of what can happen when you have a laser focus on your finances from the day you start earning a physician’s salary. Now I’m not saying every physician will be able to replicate his numbers; he’s got several advantages that a lot of you won’t have (and some that I didn’t have, either).

His wife worked and helped pay his way through medical school, graduating with manageable student loan debt, which they paid off by the time he finished residency.

He’s in a high-paying specialty.

He does not have a high state tax burden.

Nevertheless, these benefits he enjoys are no reason to think you can’t make smart decisions with your money and save a significant sum at a relatively young age. It might take you twice as long, or you may only save half as much, but anyone with a physician’s salary should be able to increase their net worth by paying down debt and / or investing from day one.]

 


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

 

What do you think of the E.T.F.s’ progress thus far? Or their audacious goal of adding $536,000 to their net worth over the next twelve months? What odds would you give them?

 

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17 comments

  • Super impressive, truly. I increased my networth by$250,000 in one year working in the same specialty (though in academics). And you beat that by a good $30,000! Good for you, ETF. Seriously, what a great job!

    Keep up the strong work. My wife and I bit the bullet on buying a home, but will still pay off our $200,000 in loans in our two year time-line that we set. It’s all about reaching your goals, but in order to do that you first have to make specific and attainable goals. You’ve clearly done that in this post.

    Keep the updates coming! It’s fun to follow along.

    TPP

    • Ether to FI

      I think I have found my twin. Who says all physicians don’t know what they are doing with their money. Happy that you are also making progress, I wish there were more people like us chasing FI. Cheers to continued progress.

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  • Wow. That net worth growth is truly outstanding in such a short time after finishing residency.

    You will find that at a certain tipping point your net worth will start to accelerate even faster (which is truly scary as your net worth already is screaming along down the highway as is). That’s because the money you have as capital will start making capital of its own and continues to contribute to the system 24/7.

    At the rate you are going and the time frame you mention you truly can be breaching an 8 figure portfolio by then. Great buffer of 300k/yr. I’m actually shooting for around 125k/yr from passive income streams in hopes that I never need to consume the principal.

    Best of luck going forward. You have demonstrated what is possible if you have a financial goal early on

    • Ether to FI

      We are trying to keep growing the goose, in hopes that it keeps laying eggs that grow into even bigger gooses. We are aiming high, and hopefully, we surpass our goals. Thank for commenting

  • Congrats ETF. You are doing an incredible job. It is amazing how far a high savings rate and keeping expenses low can take you. We were able to increase our net worth by a substantial amount with the same mindset. Keep living like a resident and use the rest to build wealth.

    A little hiccup for us with this advice was that by the time we were residents we already started inflating some of our living expenses!

    Your goals really are big and audacious and I don’t doubt your success. Especially with having total family buy in with FI.
    Good luck!

  • SG

    Great Job ETF

    Do you mind discussing what your average monthly expenses are? Just trying to piece together how you are making such great progress.

    Also do you ever question “a buffer that large in my late 40s will guarantee our great grandchildren will never run out of money”

    Did you or your wife inherit money? Do you think the idea of giving your kids a financial education would be more worth while than a large trust fund? Do you think you would be the same person if you knew you would inherit a large trust fund? I ask because I struggle with this idea as well.
    Thanks!

    • Ether to FI

      Our average monthly expenses are around $8000. Sometimes a little more, sometimes less. $2300 of it is daycare. I cannot wait for a public school in a few years. I anticipate we will spend $5-6000 a month after daycare ends. We do a lot of traveling, which I did not factor into our monthly expenses. Travel money is strictly from working extra shifts in an attempt to keep our savings rate high. If you factor in miles and points, we are able to spend a lot less on travel than we would be spending. I wish we inherited some money, but

    • Ether to FI

      Neither my wife or myself are counting on any type of inheritance. My kids should not count on any inheritance. My goal is to start them off in life debt free, and help them in their 20s, develop a high savings rate, and create substantially larger net worths for themselves because of their head starts. I will leave an inheritance for them to manage for the great-great-grandchildren I will never see, but only if they have proven they have handled their finances well. I hope the “inheritance” is not used by my kids or their kids for that matter in their lifetime. If my kids are terrible with their money, I will put it in a trust to give future generations a start in life, but no one should expect to be a trust fund baby. I would rather watch the money burn than see it wasted that way. ETF 1 and 2 better be great with money, they have me and my wife after all as examples and to get help.

  • Wow. I’m very impressed with ETF’s numbers, progress, and his trajectory. Congrats, ETF!

    It’s good to know that there are more and more young physicians who are financially responsible and literate like ETF. He made a plan early on and he is implementing it very well.

    I’ve been following his story and trajectory from the beginning and initially I thought his goals were quite lofty. But I have no doubt that he will achieve them. ETF’s laser-like focus is impressive.

    I would like to say my trajectory is somewhat similar, but I am battling a HCOLA problems and a high tax burden state that is dragging down my net worth potential. I guess one positive of living in such an area is that the appreciation of my house has grown substantially.

    Anyway, excellent job ETF. Continue on this path and I wish you success as you achieve your goals of spending more time with family, not needing to trade time for work, and traveling leisurely.

    Best of luck! 🙂

    • Ether to FI

      Thank you for following along since the beginning. I hope to continue to make lofty progression so that I motivate myself to go after them. Stay tuned, we hope to continue to watch that net-worth grow.

  • Mike

    How do you get to 110k in retirement accounts a year between yourself and your wife?

  • Ether to FI

    I can put in $55k between a mandatory 403B + Supplementary 403B + Employee Match. I can add an additional $18,500 in a 457B and $5500 in a Roth IRA. Grand total for me is $79,000.
    Mrs. ETF can put $18,500 into a supplementary 403B + $18,500 into a 457B + $5500 into a Roth IRA. Her grand total is $42,500.
    Our combined total is $121,500

  • Gasem

    The problem with projection is reality has a way of inserting itself. I’ve lived through 10 recessions, 6 of them since I started investing. Like Jagger says you can’t always get what you want. In a recent analysis I did, I realized RE is basically buying a mortgage on your future. Your future is leveraged, and leverage breeds failure. If you work 18 years, you have 50 years to fund. The only way to fund 50 years on 18 years is to multiply your funds while drawing down your funds at the same time. Since I am retired I’m interest is analysis of portfolio deflation. I could care less about accumulation. Deflation is a different animal.

    In anesthesia terms it’s the difference between induction and emergence. Induction is easy propofol, sux, tube, newsweek. You’re likely a sevoflourane anesthesiologist. I cut my teeth on halothane and ethrane and even did a cyclopropane mask anesthetic once. Emergence is very different on all three and different than sevo. Emergence from sevo/nitrous is even different. You haven’t lived till halothane puts your little bit acidotic AAA patient into v-tach while he’s bucking on the tube. And the surgeon is freaking out because his heparinized patient might blow the repair. I call it doing the curly shuffle. Reality inserted it’s ugly head into my projection. My point is before you start thinking in “date certain” terms you better have a precise plan for actually funding 50 years same as you need a different plan for emergence on each of these anesthetics and specific contingencies. The devil is in the details. Good job on your induction!

    • Ether to FI

      Gasem, thank you for the comments. I am really hoping to work till I drop, I would just like to take breaks lasting a 1-3 years at a time. Even in those breaks, I want to do non-anesthesia work. I am thinking instead of a full induction requiring emergence. I am thinking of a propfofol MAC, sleeping but arousable. Thanks for following along, I always appreciate your insight.

  • EnjoyIt

    Nice article and I applaud your motivation. A few things I would like to interject maybe worth considering:

    1) Do not expect returns to be consistently high as they have been over the years. The last few days is a great example which means that getting to $800k by the end of 2019, although doable may require contributions much higher than you are currently making. I would recommend your goal not be a net worth but simply a contribution amount. The net worth will eventually follow. Otherwise you are setting yourself up for potential failure even though you aren’t failing at all. Our goal every year is to spend less than X, save at least Y, and do Z. After doing this since graduating residency we have hit 25x expenses this year. Although the recent correction brought that down to 24x, The FI goal just happened and will happen again soon enough.

    2) It sounds like you are busting your butt picking up extra shifts in an effort to achieve your lofty goals. Early in your career jump starting retirement savings is a great idea since you still have lots of energy. The reality is that you can’t go at 110% for very long before you fizzle and burn. Sometimes working a little less, making a little less, and enjoying the ride more will provide a bit more longevity in your career. The problem is that once burnout sets in, it is very hard to shake. Just taking a 2 week vacation often times is not enough and can end up putting a hamper on your long term plans. Especially if burnout gets you to start making mistakes and lose credentialing or turn into a law suit. Believe me, I have seen this happen more than once.

    3) Considering you currently spend $8k a month which will be $6k a month after kids enter school, I am completely baffled why you want a retirement goal of $25k a month spending. It seams kind of a pointless waste of your time and energy that can be better spent enjoying your life today even more.

    4) Although money makes life easier, there is so much more to life and happiness than having lots of money. Simply being financially comfortable can open doors of happiness by eliminating certain stressors or create experiences but beyond that the extra money is useless and may even create harm. There really is such a thing as too much money.

    Good luck in your goals and thanks for sharing your path.

  • Ether to FI

    I will address each point

    1. $800k is an outrageous goal that I actually hope I don’t achieve. I need this market to tank sooner rather than later if I am going to beat POF to the 10-year goal.

    2. I have already slowed down, its funny when a few $1000 dollars of call easily becomes unattractive when sleep deprivation is busy kicking your butt. I am trying to force myself to create other streams of income by setting lofty goals. Trading time for money no matter how much they pay is a losing proposition long term.

    3. Once again the $25k is an aspirational goal not for me or my family to spend, but to have the ability to help other people, starting foundations, sending strangers to school or starting new businesses, taking care of my extended families.

    4. I am continuing to learning to chase happiness.

    Thanks for commenting.

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