FIRE Crossroads 002: From Military Service to Private Practice Radiology

With a net worth of $2.5 Million in their mid-forties and a strong pension coming their way, I’d say today’s Crossroads interviewees are in a sweet spot.

Why then, does he continue to work full-time when he doesn’t have time to do the things he enjoys? He does have plans to change this in the future, but he feels he’s reached a crossroads and could benefit from some reader input.

I want to thank our anonymous author for his past and continued military service. While he does occupy a sweet spot now, he and his family have undoubtedly made countless sacrifices to be in the position they’re in.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes.

 

FIRE-Crossroads-002

 

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?

This is a little challenging for me to answer. I would say we are “near” FI. I could probably stop my full time regular employment tomorrow, but we would have to significantly alter our lifestyle, including moving to a lower cost location.

This isn’t something my family is willing to do, even if it means I never have to work again. I think we have definitely reached the halfway point; although, this does bring up an interesting consideration.

We haven’t really set a specific number to “hit” in terms of FI/RE. My goal is to know I have enough to continue working on my own terms. I hope to work part-time with no weekends, holidays or nights in the relatively near future. I like my job, just not those aspects of it.

 

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 am 44 M, wife 43 F and we have one 9 year old child (4th grade). We live in the upper Midwest in the suburbs of a major metropolitan city.

We do not have a responsibility to financially support anyone outside our household. Both sets of parents and our respective siblings are alive and require no financial support at present.

I would be remiss if I did not mention my wife and her impact on our path to FIRE. She has her masters degree and was in the workforce until our child turned 6 months old.

During her working years, she earned a solid income and a good portion of our net worth is due to both her earnings, and maybe more importantly, frugal lifestyle. I once saw a quote that said “I married a goldmine…my wife is frugal.” This is absolutely true for me.

More importantly, my wife is undoubtedly the CEO/COO of the household. Without her our household would completely collapse. She handles nearly all the daily operations for our family. She keeps a meticulous schedule and makes sure we are all in the right place at the right time.

Her support, patience and understanding are certainly a major factor in what we have achieved thus far. I think we make an excellent team and I am so fortunate to have her as my partner.

 

In what field are you working? How is your career going? What do you like best and least about your chosen profession?

I am a full-time private practice radiologist. I am a full partner at a large PP group. I have been with my current group almost 4.5 years. Prior to joining my current group I was active duty military.

My entire medical training and career was on active duty until I separated in 2017. I continue to serve in the Reserves, which comes with both its challenges and benefits. The Reserves has a fairly significant time commitment, on top of an already busy full time schedule, which has been challenging to navigate.

On the plus side, the eventual pension and healthcare benefit will definitely aid us in reaching FI much faster. In exchange for my precious time and risk of mobilization/deployment, the Reserves have provided an insurance policy of sorts in terms of financial security.

 

Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?

Yes, I do feel we are at a crossroads. We have a very healthy net worth for our age (2.5M+). This includes all investment and retirement accounts and our home equity. It does not include my future pension or health care benefit.

We built our dream home in 2019 and do not regret it one bit. After moving countless times while being the military, it was our splurge. We put a hefty amount down (>20%) and did a 15-year mortgage. In conjunction with the payments we have already made, and the upswing in housing prices, there is a significant amount of equity in our home.

On the flip side, the mortgage payment is really the only thing that is keeping me from going part-time. We live a fairly frugal lifestyle for my income. The mortgage is really our only major recurring expense.

My group does offer different options in terms of vacation and time off. In one scenario, you can remain a partner but work 4 days/wk and take less set vacation weeks/time. The 4 days per week worked are not set and can change from week to week. This is the model I would like to move to next, and I asked to transition in 2022, but our current staffing situation cannot support it.

So, I plan to move to this model starting in 2023. In order to take even more time off, and/or not work holidays/weekends/nights/call, you are required to give up your partnership and become an employee. This is what I plan to do after I am certain we have “enough.”

My current plan is to convert to an employee around the time I turn 50 and never work another weekend, holiday, or night shift. At that point, I will work part-time for as long as I desire, maybe another 10 years when my military pension and healthcare coverage kicks in at 60. I will probably end up in the enviable position of VeryFat FI/RE (not sure if that’s a thing). [PoF: Some call it moFIRE, as in, morbidly obese FIRE]

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

I keep things very simple. I am currently approximately 80/20 stocks/bonds in my retirement accounts.  For our taxable account I am nearly 100% stocks (R-E-L-A-X, this is not a primary retirement account for us, see below).

We have substantial equity in our home and a rental property we own from when I was in the military. I do not hold any alternative investments such as crypto. This might be a mistake, but I am comfortable staying on the sideline for now.

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

For our investments we are roughly 50% taxable, 30% deferred and 20% Roth. The taxable and deferred balances are increasing quite rapidly, Roth not so much.

[PoF: This may represent an opportunity to move to assets with greater potential for appreciation in the Roth IRA.]

 

Do you have investments in an HSA? How about 529 Plans?

Both. We max out our HSA every year. We contribute up the maximum for state tax deduction to a 529 for our child. Our child may not need the 529 plan at all, as I was able to transfer my full GI-Bill to them while I was on active duty .

This is the equivalent of a full ride, with room and board, to a state school. This is a really nice benefit from having served on active duty for a fair bit of time, including a 7 month stint in Iraq. We figure our child can use it for graduate or professional school, or keep it invested for our future grandchildren.

 

What has been your best investment?

Well, it has been the most fun to watch our taxable account grow. We only hold VTSAX and VFIAX in our taxable account. We switch between the two for each deposit, usually every couple of months.

We use them as tax loss harvesting partners, which came in handy during March of 2020 (6-7k loss on the books). My plan is to continue contributions equally to the two funds, and then when the balance of one fund reaches our mortgage balance, we will pay off the mortgage. That’s when I will be certain that we are completely financially independent at (or more likely above) our current lifestyle.

I know the math works out better to stay invested. I think the peace of mind of being entirely debt free will be worth it to us. I know other disagree and that’s fine. After the mortgage is paid off, I will alter the funds in this account to mirror our overall asset allocation (breathe, anti-100% stocks folks).

 

Your worst investment?

Before I became at least somewhat financially savvy, I used to dabble in individual stocks and some goofy expensive mutual funds. I have always been interested in personal finance, but just didn’t know what I was doing when I started.

A quick side note about becoming at least partially financially savvy. I spent approximately last 12-18 months on active duty reading nearly every single blog post on WCI (sorry PoF). [PoF: That’s quite alright! I imagine Physician on FIRE was either non-existent or in its infancy back then, and I’m a big fan of WCI.]

I was a major lurker on the forum too (I used to know all the characters on the WCI forum). We were not real busy at work, so I had a lot of time during the day. I learned so much information it was incredible and so enlightening. The content was exactly what I needed.

Interestingly, I found the WCI website while researching the question about whether to stay on active duty or separate for a civilian career. I am thankful to all the financial bloggers who have taught me so much and given me the confidence to completely control our family’s finances. It really is a wonderful feeling.

 

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Into the FIRE

 

Numerically, what is your FI goal?

Not really a number for us, but when the mortgage is paid off, as I discussed above. I think separately from that, we would probably like to have ~2-3M in investable assets in addition to my pension. I think that would be VFatFIRE for us.

 

When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?

I think we will have the mortgage paid off in 2-3 years, depending on the market. I’m fine if it takes longer. I plan to continue to work, just not at the current pace. I will likely work part time until I am at least 55, maybe 60. Radiology is a terrific field and I truly enjoy the (day) work. I also enjoy the camaraderie of the people I work with. I think it would be hard to give that up completely for me.

 

What are your post-FI plans? How will your life change? What do you look forward to the most?

This is a grey area and one of the reasons I plan to continue to work, at least part-time. I enjoy golfing, traveling and college/professional sports. I would like to do more of all of these things as I have more free time.

I also want to take over the vast majority of our home and property maintenance. I enjoy doing most of this kind of work. But at present, I have to contract almost everything out because I just do not have the time or energy to do it.

Of course I love spending time with my wife and child. We try to stay active together and love to do outdoor activities like hiking and biking. I also enjoy golfing, traveling….

 

Have you made any major changes in your lifestyle or investments to accelerate your FI path?

The decision to stay in the Reserves and earn my pension/health benefit has certainly played a significant role in our path to FI. As I stated earlier, this has served as a semi-insurance policy.

We have always lived below our means and this has been the major force driving our path to FIRE. It has been nice to slowly and deliberately increase our spending. I believe we have earned it.

 

Are you facing any unique challenges making FI or RE more difficult?

My current pace of work is not sustainable. As I cut back, so will my income. It is very hard to complain about even a “cut back” salary however.

 

What advice do you have for others who are seeking financial independence?

There is nothing new or unique from me here. Live below your means. No, really. Live below your means.

Invest early and often. Keep your investments simple and understandable. Do NOT panic. Make a (solid) plan and stick to it.

 

 

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.

 

 

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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!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.

 

12 thoughts on “FIRE Crossroads 002: From Military Service to Private Practice Radiology”

  1. I find it interesting that many people on the path to FIRE have to hit *the* number and then they cut back. If your FIRE number represents when you can truly work on your own terms, then why not stop working or work on something non-medical that you are passionate about? The OP likes his job a lot and desires to cut back once FIRE is achieved. It’s clear the OP is well on his way, and since the plan is just to cut back and still work another 10-15 years I think the OP can cut back sooner rather than later, or when the cut back happens, can cut back more than he thinks. It might delay getting his numbers higher but given the compound interest calculators, he will be at $2-3m and a paid off mortgage well before turning 55. Cut back sooner! I know he said his group won’t let him but I think he can become an employee before he’s 50. Spend more time with your family, especially before the child moves out

    Reply
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  3. Great interview. I would love to hear whether this person has any concerns about being 100% stocks in their taxable account. While I understand the general reasoning (ie stocks are generally more tax efficient, so they belong in a taxable account), this can lead to significant variability in this person’s liquid assets. While the bonds in the other accounts would offset that volatility, they are a bit less liquid than the brokerage account due to all of the restrictions on tax deferred / tax-free accounts.

    I only ask because I did the same thing – nearly all of my bonds are in tax deferred, and my taxable and Roth buckets are 100% stock. It’s very tax efficient, but if we have a stock market meltdown shortly after I early retire (well before 65, hopefully) my liquidity wouldn’t be as high as it would have been if I put more bonds there. I’m starting to add more bonds to taxable now to offset that, not sure if that’s the best idea or whether my concerns are overblown.

    Reply
    • My portfolio is set up similarly. The difference is the interviewee has a HUGE fixed income portion that is his military pension, which I imagine will provide a steady six-figure income stream for life.

      I see no reason to be “100% stocks” when you have the equivalent of a multiple-7-figure fixed income portion in the form of a federal pension.

      Cheers!
      -PoF

      Reply
      • If he has a steady six-figure income stream for life from his military pension that will cover his expenses and covered healthcare to boot, why NOT be more aggressive with his equity/bond ratio? Maybe not 100% equities but somewhere between that and 70/30? Build it up for his kids or charities down the road.

        Mo’ money, moFIRE!

        Reply
      • POF,

        So, you have greatly overestimated my future pension. An O-6 with 20+ yrs of active duty service might have 100k/yr pension; but, because a good portion of my time served will be with the Reserves, my benefit is lower. My rough estimate is 50k/yr (today’s dollars). Again, this doesn’t kick in until I’m 60. To be perfectly honest, the health care benefit is probably as equally appealing as the pension. Health care costs are so unpredictable (and rising) it will be nice to have this piece of mind.

        I knew I should avoid the 100% stock issue. I’ll just say our taxable account is geared toward growth in an effort to pay off the mortgage early. I know it could lose 50% (or more) of its value at any point. I don’t care. I don’t need that money for anything else anytime soon. I will modify the asset allocation as needed, most likely when the mortgage is paid off…maybe sooner as we get closer to that point. Our other investments and income provide more than enough security to leave our taxable account asset allocation the way it is.

        Thanks for the opportunity to share my story. I appreciate the feedback from you and your readers.

        Cheers,
        Crossroads 002

        Reply
  4. With a federal military pension, FIRE really depends on their monthly income goal, what the estimated military pension will and what to do about healthcare insurance.

    The military pension will begin at age 60, and I believe requires a reserve commitment until age 60.

    If he retires from his civilian job before age 50, I believe he is able to continue his medical insurance through his reserve commitment until age 60. Then when he retires, I believe that he will continue his medical insurance until age 65, and then I believe that you enroll in Medicare and then the military insurance would become a supplement.

    This is a big advantage for early FIRE, because one of the big questions is how to fund and enroll in good medical insurance.

    A lot of this has changed quite a bit, and there are different options depending in part on when you joined active duty. I am not up to date on all of the changes.

    He should also have social security, so an additional federal monthly supplement.

    Another option would be for him to join the VA. You can take your active duty years and convert them into years of service for a federal civilian pension. You would need to work at least 5 years and retire at age 62. If you are enrolled in a federal health insurance plan for those five years, then you should be able to qualify for federal healthcare insurance in retirement.

    However, I suspect that your civilian federal pension would be considerably less than a military pension at age 60.

    Having a civilian federal or state pension is a significant benefit that is often not even referenced and is not usually even discussed in the FIRE online discussions. There are many physicians who work in city, county, state or federal positions throughout the US, and for them, FIRE planning has more options and nuances. In at least some situations, a retirement earlier than 62 is possible, but usually no earlier than 55. In some cases, you can retire early and then wait for a pension later at age 60 or 62.

    Planning is also complicated a bit by consideration of the funding levels of these pensions. In some states, the pensions are well funded, but in others, they are not. In some states there are strong constitutional guarantees for the pensions, but not in all states. Some are moving towards defined contribution plans with matching funds, but most are still defined benefit plans.

    It would be good to have a detailed article sometime about this to round out the FIRE discussion. In most cases, early FIRE couldn’t be done with a civilian government pension, unless you retired early on savings, and then were allowed to wait until age 60 or 62 for the civilian government pension. Each government entity has their own rules and formulas to calculate the pension.

    From just reading what is in the interview, I would think that the radiologist will gradually cut back on hours, and then retire early sometime in his 50’s; live off of accumulated savings, and continue to drill in the military reserves until age 60. At that time, he will probably have a significant military retirement pension based on the combination of active duty years and reserve duty points. He also should have very affordable medical insurance, and can take SS at 62-66, or delay longer. Delaying longer, if he is in good health would be a consideration because of the military pension. POF advocates for delaying Social Security in most cases.
    .

    Reply
    • A lot to unpack here, but I’ll only address a couple things. Reserves do NOT require a commitment until 60. I’ll be done with my commitment at 48, and will retire. No more drills or threat of activation. Just won’t start to collect my pension or healthcare benefit until 60.

      No interest in working for the VA. In fact, turned down two opportunities to interview with the VA in the last couple weeks. I like my current position in a PP group. Going back to Govt work would be complicated and almost certainly not worth it.

      SS will be gravy for us. I know we will almost certainly have some future benefit. We will work those projections into the equation as we get closer to pulling the trigger on part time work.

      Thanks for your thoughts!

      Crossroads 002

      Reply
      • The rules can be convoluted and change, and there’s a lot that I have forgotten.

        Everyone I knew, worked with and/or drilled with in the reserves had to go to 60 to qualify for the retirement. However, they also did not a lot of active duty time. I remember one physician who wanted to retire, but he had to go to age 60 to ensure that he gets medical benefits at age 60. (Those were the days before the Affordable Care Act.)

        The active duty time you’ve acculumulated apparently gives you enough points and years to leave at age 48, and then wait for a retirement at age 60.
        That’s a great option to have.

        VA. I mentioned this mainly for completeness and for those who have active duty time, but not enough to qualify for a military retirement at age 60. It’s an option not well known.

        A defined pension plan (which is usually these days from a government entity) definitely changes the picture for FIRE, both in the timing and how you invest. The main thing to think about is how stable the Defined Benefit Plan is. Many of the city and county plans are significantly underfunded. This is also a problem with some states. Guarantees differ from state to state.

        I would think that a federal pension would be relatively safe, despite the government’s ongoing deficits.

        It seems that you have a lot of good options. Congrats. I would vote for you to enjoy your life, and spend more time with the family. It’s wherever you find the most satisfaction.

        Reply
  5. I think Dr. Crossroads 002 is a great example of flexibility when striving for your financial goals. With prior Active Duty and now Reserves, he is certainly familiar with the changing needs and rules that the military places upon our service members. Further, the 100% stocks in taxable and the 15-year mortgage are just forms of leverage that he can afford. Finally, I also like how he has a flexible plan to forego partnership in his group for more autonomy.
    Well played!

    Reply
  6. “Make a (solid) plan and stick to it”, Well said, FIRE Crossroads 002. Those without a plan do not know what to do when things go haywire, while those with one know what to fall back on. Thanks for sharing your story and perspective, I enjoyed it! I had not yet heard of moFIRE, and I nearly spit out my coffee when reading it.

    Olaf, the Mile High Finance Guy

    Reply

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