Just when you think you’ve got a lot going on, today’s interviewee, the first in our FIRE Crossroads series, is expecting his first child, starting a second career, and is at least halfway to his FIRE goal.
He and I happen to be the same age. I used to think that I did a lot of things later in life as compared to my peers, especially the non-physician ones, but when I see guys my age having kids and embarking on new endeavors, I feel young again.
Like many of his colleagues, the challenges brought by the pandemic have decreased his enthusiasm for medicine. What’s next in his life? Besides that first baby? Read on!
I want to thank today’s interviewee for taking the time to share his family’s story. If you’re interested in participating in one of our three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes.
Getting to Know You
Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?
First off, thank you to PoF for all the inspiration and education he gives to our physician community. I have learned a ton from PoF, WCI and others. I hope my story may help others on their journey to financial independence and living a purposeful life!
My family is slightly more than halfway there towards the number I want to achieve for financial independence. We are currently sitting on about $1.8 million in retirement savings. We also have between $50-75K can on hand.
I’ve been saving more cash this year because we are expecting our first child and I will be taking significant amounts of time off towards the end of the year.
Side note – one of the biggest benefits of academic medicine is paid time off! Whether that is for illness, maternity/paternity leave, it is an enormous benefit. Not to be overlooked. Now, back to our regularly scheduled program.
Understanding our retirement number is interesting because our spending and our earnings are anything but consistent. In the last few years, we have purchased a home, decorated, and now are preparing for a child. Our current savings rate is just shy of 30%, but in prior years, we saved 50-60% of our income.
We can reduce our spending if we need to, and I am doing other work to increase our earnings. So “the number” can be in flux and can change. However, I want to give our future selves a decent amount of options. Decreasing spending and increasing savings is a great way to accomplish this.
My wife and I do everything we ever wanted with our current earning and spending. We spend on average $10-12K/month. That includes mortgage, insurance, and all discretionary spending. It helps set the baseline for retirement, and I try to get a bit of a fudge factor in there.
Lately, I’ve cut back on my clinical hours and am spending more time with my family and on my business. I’ll get to this more later (especially in the help section at the end).
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
I just turned 45. I’ve been in practice now for 9 years. My wife is 38. And the most exciting news – we are expecting our first child any day now!
We live in Oregon and enjoy being able to ski, mountain bike, paddleboard, fly fish- just about anything we’d want to do outside is at our doorstep. We spent yesterday paddleboarding and went on a great gravel ride this morning. Our family prioritizes getting outside each and every day. It’s amazing how much better I feel mentally and physcvially when we accomplish this.
We moved in the last three years to our current location. It was an intentional decision to get us closer to the mountains. We love where we live and our incredible content. While I enjoyed my former job, I knew the city was not a long-term fit. Biggest lesson learned – I wish I would have listened earlier to my heart and moved years ago!
In what field are you working? How is your career going? What do you like best and least about your chosen profession?
Anesthesiology. I started my career in academic medicine and enjoyed teaching and the camaraderie within my Department. I’ve made the transition to private practice in the last three years. The cases are much more straightforward, but during COVID, the business challenges have been varied and constant.
As with many areas of medicine, overnight call is one of the most significant and onerous burdens. Thankfully, my group is very flexible, and there is a lot of trading within the schedule.
I’ve given away much of my call this past year, and this alone has tremendously increased my job satisfaction and overall well-being. I’d like to highlight, while I see many docs want to get out of medicine entirely, there are changes we can all make right now to make our work better.
I think about getting rid of some of that committee work, or giving up 1 overnight call each month. What about getting rid of the bottom 20% of your workload (whether that is administrative tasks, demanding and difficult patients) – how much better would your life feel?
COVID has hit home just how little control anesthesiologists have over our clinical time or earning potential. Last spring, the ORs were shut down for months, and even now, we are running at reduced capacity due to staffing and other constraints. While I enjoy having extra time off, for our younger partners, the financial strain is very real.
Personally, I’ve known I wanted to do “more” for a while now. In the beginning, I assumed that would be within healthcare – whether becoming a hospital CMO or other high-level leadership role.
However, seeing the systemic failures during COVID – unpreparedness, reactionary thinking, still stuck in our old modes of working and trying to get everything approved by 45 middle managers…
In many ways, these last two years have been a blessing. The slower workload has given me time to clarify what is most valuable to me and how I want my life to look and feel. And that will not be from the C Suite of a hospital!
In the last two years, I’ve started my financial planning firm. I work primarily with physicians and advanced practice nurses. I love getting to know and understand my colleagues’ purpose and what brings meaning to their lives and then showing them how to make those dreams happen financially.
I believe any physician has the mental ability to manage their finances, but so many of them want someone they can trust to help them along the way. Many physicians want to offload this task. I wanted my colleagues to have someone they could trust with their hard-earned income. I love these relationships with my colleagues and the freedom over my own time that it provides.
Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?
This is a fascinating question. I remember first feeling that I wanted more out of my life several years ago. In my old academic job, I kept thinking, “Surely this can’t be it. More book chapters and presentations so that I can get promoted. No thanks!” When my beloved Chair was rashly fired, I knew academic medicine was no longer in the cards.
I wish I spent more time working through those thoughts and feelings back then. When you step back and think about it, we chose to be physicians DECADES ago!
I was a different person in my early 20’s. I want other things and need different challenges. I’ve already worn many hats. I studied philosophy as an undergrad, took a three-year sabbatical from med school to go to law school.
One thing I’ve loved about PoF, Physician Philosopher, and others is showing the rest of us what is possible. And so much of it is a mindset. Walking away from medicine is hard – sunk cost fallacy and all.
I find it interesting that many in the physician finance or real estate space are anesthesiologists or emergency med physicians. I don’t know if it is the type of person attracted to these fields or we have more control over our schedules.
One significant advantage we have as anesthesiologists is choosing how much we work. Many specialties have difficulty doing that. So I plan to shift down my clinical work while growing my business.
I am more fulfilled when I have time for my family, taking care of my health, and time to explore and challenge myself. Eventually, I know I’ll be ready to step away entirely. But medicine has been my tribe for the last 20 years and leaving it entirely would be a big transition.
Back to the question – I was stuck and struggling but didn’t know how to move forward. Ultimately, I decided to work with a coach. After an online real estate conference, I received an email about an upcoming coaching conference. One of the presenting coaches happened to work at my local hospital.
I reached out to pick her brain about coaching and get some recommendations. It was late summer 2020 when I began working with Dena George. I could not have been happier! Dena is a phenomenal human being and helped catapult my life and business forward.
Looking back a year ago, I feel like a completely different person. While I still get stuck in my head at times, I know those thoughts are not me, and my success or failures do not define me.
Through this discovery, I realized what motivated these feelings was the need to clarify my life’s purpose. What kept coming back up time and agin was service. How can I serve others? How can I serve my family? How can I serve my community?
It may sound strange coming from a physician who cares for our patients and serves our community daily. But I was ready for more – my planning business came out of this desire to serve. This year, my wife and I are expecting our first child. Deep down, I know I am where I want to be—giving to others and helping them succeed.
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
Pretty standard stuff – all index funds through employer accounts. Some with Fidelity, currently at Vanguard. Passive investing. Set it and forget it. We rebalanced our accounts recently so we are back at baseline.
15% – REITS – VGSLX
78% – Equities
- 52% US – VTSAX
- 26% International – VTIAX
For the remainder, I have a cash balance plan at work which is all fixed income. Since I personally do not control the allocation in this portion, it’s all counted as fixed income. Currently, this portion is about 5% but will grow based on the yearly contribution limits (currently $100K for my age).
Lately, I’ve been thinking more and more about “moonshots.” Whether that is angel investing or venture capital — helping support early-stage businesses with capital. I realize this is not investing, but rather supporting early-stage businesses, most of whom will fail.
But because it would be 5% of our portfolio, it would not destroy our ability to retire early or comfortably if it went to zero. If it went up 10x or 100x our initial investment, however, it would change the dial in when and how we retire. Currently, I am not investing in this space, but it’s an exciting option.
Saving for retirement is not meant to be exciting. The slow, boring hands-off approach WORKS! You are letting time and compound interest do the hard work. We’ve reached the inflection point where our retirement accounts most years (certainly the last two years) earn more than what we save each, and the two working together supercharges our retirement accounts.
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Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
Primarily tax-deferred at this point – 90%. Until the tax laws change (fingers crossed we can save in 2022), we stuff money into backdoor Roths every year. Our Roth accounts are 8% of our current savings.
My wife works at a University and has access to a 401(a), 403(b) (pre-tax and Roth available), and 457(b). In my group, we have a 401(k) and Cash Balance Plan. This gives us access to over $200K in pre-tax space if we fill every account. It saves us a significant amount in taxes but defers dealing with the retirement tax implications.
One benefit of being a lawyer and financial advisor is reading the proposed tax law changes and seeing what is coming down the pike. The current Congressional proposal is a doozy and would cause some big headaches and changes for physician households. No more backdoor Roths. Increasing the top income tax bracket to 39.6% and increasing the top capital gains rates. WCI has a great recent article about the proposed changes.
Our initial plan had been to start making Roth conversions in the next few years as I decrease my clinical time and income. Our plan was to get 40% or more into Roth retirement accounts. I am keeping a close eye on the proposed tax changes. They will make Roth accounts even more desireable. The challenge will be figuring out how to fund those accounts.
Do you have investments in an HSA? How about 529 Plans?
I have not previously had access to an HSA account until my current job. However, we currently get health insurance through my wife and use a PPO.
We will be starting a 529 later this year!
What has been your best investment?
As groan-inducing as it may sound, my best investment has been in myself. My medical and legal education significantly increased my earning power and has paid back many times over.
For retirement accounts, as simple as it is, we use index funds with dollar cost averaging each paycheck. I don’t touch these funds, I don’t look at the balances more than once a quarter. Investing in this manner works!
As the current treasurer of our group, I am amazed at how many doctors are not maxing out their 401(k)s each year, much less saving in our Cash Balance Plan. More concerning, many have taken 401(k) loans out!
While it is NOT an investment, watching the value of our house increase 40% over the last two years has been a bit ridiculous. I feel very fortunate to have purchased our current home before the housing market went nuts.
Your worst investment?
One of the worst financial decisions I made was forgoing an employee stock purchase plan while I worked at Starbucks over 20 years ago during college. Starbucks had a remarkable ESPP!
Even worse, I didn’t save in my 401(k) with 6% matching funds. As a “broke” college student, I told myself I couldn’t afford it. I kick myself for both these decisions.
Into the FIRE
Numerically, what is your FI goal?
$3.5 to $4 million. This gives us a bit of a cushion and heavily discounts anything we’d receive from social security. Part of my conservative calculations here is the age difference with my wife. I’m seven years older than her. The women in her family all live very late into their 90s! So I want to make sure she is financially comfortable. It may make sense to purchase a SPIA for her once we retire.
As I’ve mentioned, we are expecting our first child. We will start saving in a 529 this year, along with a taxable account for general expenses. I really liked WCI’s advice on being able to help your children in their early 20s and 30s financially. Whether purchasing a first home, traveling the world, or getting married, these are incredible ways to get your child started on a firm financial foundation.
When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?
I will reach $3 million in the next three to four years based on running multiple scenarios. At that point, I plan to “coast” into the full $4 million.
I will dramatically cut my savings rate, currently hovering around 30%, down to about 5%, and will concurrently cut my clinical hours to 50% or less at that point. I’ve run the numbers on the tax savings, as well as the reduced retirement contributions, and cutting back to 50% or less clinically at that point is imminently feasible.
My current plan is to work clinically as an anesthesiologist per diem but primarily transition my work as a financial planner supporting 40 clients and their families. This allows me to cover our expenses and let our retirement accounts continue to grow. It also provides more control over my time and location.
Looking at many others docs who slow down and drop their clinical time, it seems most eventually quickly realize they are ready to walk away entirely. They want more time freedom and being chained to a hospital or clinic doesn’t allow you to get there.
What are your post-FI plans? How will your life change? What do you look forward to the most?
My wife and I want to continue to travel and see our family spread throughout the US, but make extended overseas trips as well. I look forward to more control over my time and attention. I want to be home to raise my son and spend time with my wife. We both love being outside on our bikes or skis, and it recharges me as few things do.
The second is growing my financial planning business. I enjoy working on the business and working within this community. Planning doesn’t require me to work from a particular location (like the OR!) – Nor does it need me to be awake in the OR at 3 am. It is a sustainable career for many years to come.
Have you made any major changes in your lifestyle or investments to accelerate your FI path?
We started out saving a significant amount – well over 60% when including student debt repayment. We didn’t know any better, so it didn’t seem onerous.
We also filled up all of our available retirement accounts. While we have increased our spending in the last few years (from $8k to $12K/month), we have continued to save at a high rate (Still around 30%). Getting money into retirement accounts early helps accelerate that process.
We can start slowing down and make some pretty significant changes in the next few years. I used to think that I’d grind as hard as I could for 10-15 years and then be done and just retire. But that doesn’t sound appealing to me at all anymore.
Those first 10-15 years are brutal, and no one knows what curveball life will throw at us. It could be cancer or other health issues, or a divorce. And then, once you retire, what are you retiring to? Working that hard didn’t leave any time to build friendships, learn new skills or hobbies.
A few years back, my best friend passed away from brain cancer. We went to med school together, and he was an anesthesiologist as well. He lived every single day with a smile. He was one of the best skiers I know and looked out for his friends. He worked very hard for his patients and was a great doc.
I strive to balance providing options and security in the future with still fully living every day. He also reminds me of how precious life is – and we don’t know when are time is up.
So now, I think the idea of working hard the first few years out of residency, paying off debt, and giving yourself more options. Then slowly ramping down (both financially and lifestyle) is more sustainable and achievable.
Recently, I’ve been reading 4000 Weeks by Oliver Burkeman. In it, he talks a lot about our mortality and limited time. It’s helped me focus on the 4-5 most important areas of my life. And then letting a lot of things fall through the cracks.
Are you facing any unique challenges making FI or RE more difficult?
No, I don’t think so. We feel very very fortunate to live in a beautiful part of the country, to have great health, and to grow our family.
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What advice do you have for others who are seeking financial independence?
Our most valuable asset is time, and yet we spend it like it’s a limitless resource. As physicians, we constantly strive and look to some future state when everything is perfect- whether getting into med school or a great residency- and finding the ideal attending job. And it doesn’t end. I see this within parts of the FIRE community. In always looking ahead, we forget to enjoy (or at least pay attention to) today.
Once I have $4 million, then I’ve “made it.” But in thinking this way, we miss out on the here and now. And honestly, right now is all we have. That’s all we can count on.
I’d like to see colleagues enjoy today a bit more instead of being so focused on the future. That doesn’t mean you blow all your money, but what if it meant taking two fewer shifts a month? Or one less overnight call? What if it meant structuring your clinic, so you were always home for family dinner?
Or could make your daughter’s soccer game? How would that feel? I appreciate how PoF, the Physician Philosopher, and others write about the need to balance enjoying today with planning for your future.
Spend some quiet time figuring out your why. It doesn’t have to be a big dreamy ideal – but it can be. Early on, when my wife and I were paying off $400k in student loans, knowing we wanted to get out of debt was an enormous motivator. Then we saved for our first house. After that, we didn’t have a strong why (retiring in 20 years doesn’t feel as pressing), and I could tell things seemed more complicated.
Money is only a tool. It does not solve that ache or emptiness in your heart, and it doesn’t prove you’ve made it. What it is that motivates you? What provides you contentment? What do you need? (I ask this last one because, as doctors, we are always caring for others).
At some point, ALL of this goes away, the career, the money, even our family. Focus on what’s most essential and valuable to you. It can and should be different than what I want.
From a practical standpoint, save as much as you can early on and pay off those student loan debts asap. Getting out of debt and front-loading your retirement accounts early makes it so much easier to step off the gas later.
Also protect your downside – life insurance and disability insurance will protect your family should the worst happen. Putting this effort upfront primes the pump and allows time to down the heavy lifting for you.
It’s much easier to slow down and save less than have to take more calls and save more in your later years. Learn about human behavior – where are your blind spots? How can you protect against them?
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
I’ve known for a while it’s time for me to transition away – in some capacity – from medicine. The drama with COVID has only solidified that belief. I struggle with leaving the identity and comfort of being a physician. I’d like to hear from others who have either slowed down or left entirely (hat tip to PoF sharing his experiences) and how they dealt with this issue.
Managing other expectations such as slowing down and saving less for retirement. I’ve been in high accumulation mode for the last 10-15 years, which will also be a significant change. How can we make these questions and decisions less agonizing? It’s not like this decision is not reversible!
For those running a business, what struggles and challenges did you have early on? Who did you turn to for advice and help?
PoF: Catch all the future interviews from those just getting started, at a crossroads, or at the end of their FI journey with a free subscription to Physician on FIRE.
I’ve shared my feedback privately with today’s guest. I wouldn’t want my opinions to influence yours. Please give your take in the space below!