Most physicians I know work more than full-time, and today’s interviewee is no exception. His days are long, the workload is heavy, and after more than 12 years of more-than-full-time work, his current job gives him almost 4.5 weeks off.
As you’ll see below when he shares his numbers, he can afford to work less. Is this the right time to make that move? If so, which of two options should he take?
He’s also got a number of specific questions regarding what to do with investments he’s got in various accounts that belong to him and his wife. You’ll see those at the bottom, and I hope you’ll find a minute to respond.
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?
My family and I are at the crossroads of our financial journey. We are about halfway to our goal of being able to spend $120,000 per year in retirement.
Although we have thoughts about heading toward a more minimalistic lifestyle and not needing nearly as much. Our net worth is about $3 million. We have $2 million in retirement accounts.
[PoF: I’d say you’re more than halfway to your goal — you’re awfully close to being ether, in fact, depending on how much of that net worth is home equity. See How Much Money Does a Doctor Need to Retire?]
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
Currently we live in St Louis, MO. My wife and I have been married for 13 years and we have four children — 3 girls and a boy. They are 11, 9, 6, and 4.
So, we are chasing them around like crazy folks with all their activities. We bought our reasonable doctor house to fit all these kids about 6 years ago and are on pace to pay it off in the next 5 years.
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 musculoskeletal radiologist at the same academic center where I did my residency and fellowship. I am in my 12th year of being an attending physician.
The good: I like teaching the residents and fellows and I do have a lot of direct patient care as a radiologist, which can be both good and bad. The residents and fellows are very bright, come from very different backgrounds, and want to learn from me. They keep me intellectually stimulated.
My salary is OK but the golden handcuffs and benefits of my job are pretty nice. I have moved up the academic ladder over my career but I do not aspire to be the most well-known MSK radiologist in the world, head of the MSK section, or chair of a radiology department. I also have amazing colleagues that I will miss a lot.
The bad: I currently work too much for my liking (typically 11-12 hr days, 5 days a week with 6 weeks of nights and 6 weekends) and my job is somewhat stressful due to the volume of work I am doing per day and the difficulty/riskiness of some of the procedures I perform. I get 22 days of vacation per year which is very few for radiology. My current job is not very flexible as compared to many radiology jobs.
Non-direct patient care radiology can be performed from anywhere there is a high-speed internet connection. This is not something that is really offered currently for me in the job I have.
Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?
My crossroads: I am thinking about changing jobs or going part-time to acquire more time and flexibility with my time. I do however want to keep a similar salary so that I can continue to contribute similarly toward retirement.
My favored option currently is to join a MSK subspecialty teleradiology group full time and work part-time/per diem for my current employer. This would allow me to work from home and make slightly less salary on about 4 hours less of work/commute per day.
There is also a lot of flexibility in this job as I can do it from anywhere and anytime during the day. It would be much easier to coach my kids’ sports, make it to their school functions, and to occasionally have lunch with my wife with this flexibility.
I would also have much more vacation with this job than the previous job. I do worry about how I will deal with the relative lack of adult interaction as compared to my current job when I am relegated to working in my basement office for several hours a day.
The part time/per diem work would allow me to do some in-person teaching and have some direct patient contact plus make a little more money. I would, however, lose the golden handcuffs and benefits of the University. The big one being a very nice college tuition benefit for my four children.
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
Our nest egg is entirely in index funds through TIAA at work and Vanguard personal accounts. The allocation is 72% stocks (47% US, 25% international), 20% bonds (15% total bond, 5% TIPS) and 8% REITs.
The bonds and REITs are all in tax-deferred or Roth accounts.
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
403(b): $750,000 ($190,000 of that in Roth)
457(b): 330,000. Through a very stable employer with reasonable options if I were to leave the job.
Sep IRA: $145,000. I started this about 10 years ago when I started getting consulting income for a side gig.
Roth IRA: wife $98,000
My Roth IRA: $72,000. I put money in this account before I started a side gig and then started using a SEP IRA.
Wife’s 401(k): $28,000
Do you have investments in an HSA? How about 529 Plans?
We started using a high deductible insurance plain about 4 years ago when we were finished having children. Since then we have accumulated $23,000 in the account and have it invested in an aggressive low cost index fund with 90% stocks: 10% bonds. We do use our HSA to pay for most medical costs at present, instead, we’re saving the receipts and planning to reimburse them later.
We started investing in the Missouri 529 when we had our first child 11 yrs ago. We have about $250,000 in the plan and fund up to the maximum state income tax deduction every year ($16,000). With this money, I want to pay for my 4 kids’ undergraduate school plus $1,000 or so to each of our 30-plus nieces and nephews for college.
We do use some of this money (about $6,000) every year to help offset the kids’ private grade school. This account could be overfunded if I stayed at my current job through age 55 as there is a very good college tuition benefit in my current job. It would probably be about just right if I left my current job soon, continued funding at my current rate, and lost that sweet college tuition benefit.
What has been your best investment?
Your worst investment?
I have two worst investments:
- We bought a $500,000 whole life policy on my wife about 9 years ago before we started learning a lot more about personal finance. This was sold to us by a family member. At this point, we are going to keep it and give it to our kids/grandkids as inheritance as we are to the point of reasonable gains.
- Not learning about personal finance much earlier. We ended up using a financial advisor for several years. His overall rate was reasonable and we did save a fair amount of money through him. But no one cares about your money as much as you do.
Into the FIRE
Numerically, what is your FI goal?
I like the round number of $5 million although that is more than necessary, given our spending. We tend to be pretty frugal and spend mostly on experiences, childrens’ activities, and charities but not things.
We spend less than we contribute to wealth growth every year. Our current spending is about $10,000 per month. We contribute about $150,000 per year to wealth growth. My guess is that, in retirement, we will move to a cheaper cost of living location and travel a fair amount making our living expenses less than $10,000 per month. This would give us a FI number of $3.6 million for 30 years.
When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?
Given our current retirement accounts at approximately $2 million, plus our high savings rate, we should hit our FI goal within the next 10 years by the time I turn 55. But, I would hope to like my job enough and be healthy enough to continue to work part-time. I’d spend the rest of the time chasing my kids, traveling, and working on the family farm that I grew up on.
What are your post-FI plans? How will your life change? What do you look forward to the most?
My post FI plans are similar to my pre FI plans but with just more time to do the things I like. We will travel more. We have set a goal to see all the national parks. We will probably buy an RV to help us on this journey. We will continue chasing around our kids and try to take them on many of these trips.
I would like to get back to playing in the outdoors more than I do now. Growing up, I would spend my extra time hunting and fishing with my 6 younger brothers and cousins. I’d like to get back to doing that more. I’d also like to go back to helping on the farm, particularly the crops work. Not so much on the scooping manure work 😉
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Have you made any major changes in your lifestyle or investments to accelerate your FI path?
We have not really changed our lifestyle to change our FI path. Our saving rate has always been fairly high because we are frugal and good savers. What has really helped me to understand our FI path better is becoming financially literate and understanding how much we “need” in retirement and where we are in our journey to get to FI.
It has also helped me to understand the importance of decreased spending and how that would decrease our FI number. It has also helped me to understand that I can change jobs and we will still be OK financially (so-called FU money).
Are you facing any unique challenges making FI or RE more difficult?
Our main challenge to FI/FIRE right now is trying to decide about what to do with my career and how that might change our ability to save as much money.
Additionally, my current job has some golden handcuffs (large dependent college tuition benefit) that we need to consider with job changes. We have been hedging on this bet ever since we started investing in 529s with our first child so we should be OK, regardless.
What advice do you have for others who are seeking financial independence?
I give my residents and fellows a lot of the same advice that I have read over and over on the PoF, Physician Philosopher, and White Coat investor.
- Avoid rapid lifestyle creep.
- Save a lot but don’t skimp on experiences that you and your family can enjoy together to make memories.
- Get financially literate (so you don’t buy whole life, pay a financial advisor too much or any money at all, or put all your money in a speculative asset).
- Finally, my favorite financial quote. “No amount of money ever bought a second of time.” Tony Stark in Avengers: Endgame. This quote helps remind me that your time here is relatively short/finite. Money is important but should not dictate all things in your life. You should, however, be aware of and consider the money consequences of your decisions.
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
I would love to talk about the financial implications of changing jobs. I have not done this before.
My 403(b) is through TIAA and has reasonable investing options and fees. Should I transfer it to my Vanguard account?
I can’t move my 457(b). What is my best option for handling my current 457(b)? I have 60 days to decide what to do with it. My disbursement options included single lump sum, fixed period payments between 1-15 years, a lifetime annuity, a fixed period annuity, minimum distributions, or partial lump sum with an annuity.
What do I do with my HSA? Transfer also to new job HSA in order to have all HSA money in the same place?
My wife has a 401(k) from a former employer that does get charged some fees every few months that is more than I’d like. Should I move the 401(k) money to decrease the fees?
Finally, we give over $10,000 per year to various charities and our church. We expect that this amount will increase over time. We also don’t really plan on giving our kids/grandkids much more than the whole life policy and any land that we have when we die. Left over funds we would want to go to our favorite charities. Does it make sense to start a DAF now?
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!