FIRE Crossroads 005: Newly FI Physician Figuring Out the Next Step

In hindsight, perhaps this interview should have been a Post-FI Notes interview. The thing is, though, that he didn’t know he was financially independent until he sat down with the questions, ran his numbers, and realized he could actually afford to retire!

His situation is a bit different than many of our other interviewees. While he does have an adult child who has a child of her own, our subject today is no longer married and essentially is planning for expenses for one. He does say he’d like to help out his family and even his friends if they can’t afford to come out and play when he’d like them to.

What’s the budget for this bachelor? And how can he use his various assets to live well with minimal taxes? He’s got questions such as these and more.

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.

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 goal was to be in a position to work part time in the next two years and be able to fully retire in 5 years (or continue to work for fun).  When I sat down last night and drew out a personal financial statement, I realized that I could actually fully retire now!

I’ve reached my goal but have no intention of retiring yet.  I want a buffer and a hefty amount of “play money”.  My net worth is $2 million.

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’m divorced.  I have celebrated 21 anniversaries of my 39^th birthday and remain very physically active so I can remain 39.  I’ve got two grown children who are 97% independent.

When they both moved out last year, I sold my 5 bedroom house and downsized to a nearby 2 bedroom condo, mortgage-free.  I live in a beach resort town within sight of the Atlantic Ocean.  Owning a surfboard is mandatory, haha (riding the thing is the challenging part!).

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

I’m Board Certified in Family Practice.  In 2006, I was recruited by an Orthopedic Spine Surgeon to work as a non-surgical Orthopedist and I love it!  95% of patients with back or neck pain (HNPs, radiculopathy,etc) can get better without surgery.  My patients like me because they know my job is to get them better without surgery.

If they have to go to surgery, they know they’ve exhausted all non-surgical means available.  The high success rate is extremely rewarding.

What I dislike the most is insurance pre-authorizations dictating how I can treat patients.  The roadblocks, red tape, and BS is more than excessive.  A close 2^nd dislike is the electronic medical record.

I have a side gig that keeps me involved in Family Practice.  I report that income through a single-owner LLC.  I plan to keep this after my Ortho career ends.

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

Two days ago I would have said “yes, I’m at a crossroads”.  I have savings, investments, and real estate.  I wasn’t sure how to fit it all together to create FI.

After drawing it out last night it became pretty clear.  I can see now that I DO have just enough now to be FI (so thank you for this survey!) but I do not know how to proceed in the near future to live comfortably and minimize taxes.

I’m healthy and physically active, I anticipate I will need to fund a 30+ year retirement.

Investing

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

Other than my primary residence (condo) I have two townhomes that provide rental income.  The only debt I have is the mortgages on those two properties.  My goal is to pay the mortgages off.

The rental income can fund 50-75% of my monthly expenses.  The three properties are 30% of my net worth.  20% is in a diversified 401(k) through my employer, 20% is an annuity, 13% in brokerage accounts (most of that is Telsa stock), 5% is in cash, 2% in a Roth IRA, 2% in a HSA, and 1% in a Profit Sharing Keogh from my LLC.

The remaining 7% is in non-income-producing assets (car, vacation timeshare in Park City).

The percentage in stocks, bonds, etc… I’m not entirely sure.  I would guess the Tesla stock might skew the percentage a little tech-heavy.  Within my biggest accounts (401(k) and annuity), I believe my balance is good.  I have not analyzed every account and totaled them to answer this question any more accurately.

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

HSA as above.  I do not have a 529 but I would like to start one for my daughter’s 5-year old son.

What has been your best investment?

The Tesla stock!

Your worst investment?

Getting married?  No worries, it’s not happening again!

Into the FIRE

Numerically, what is your FI goal?

I read on one of your posts a goal of having an income sufficient to cover monthly expenses plus $1 million.  My monthly expenses are estimated at $5,000, but now I am thinking of upping that number to $7,000.

If I use my cash and brokerage accounts I can pay off the townhouse mortgages.  The rental income plus activating annuity payments would cover the $5,000 per month right now.

My plan (for now) is to work, use employment income to pay off the mortgages, preserve the Tesla stock in my brokerage accounts and leave the annuity alone.

Social Security income in 7-12 years is in addition to all of the above.

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

I guess I just hit FI?  Just barely – but I didn’t realize until last night I was there.

Once I am more comfortably (and safely) into FI, I plan to work part-time as long as it is fun.  I enjoy my practice.  The extra money earned will be more “play money.,”

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

I go snowboarding one week each month (Jan, Feb, Mar).  ***That will continue or expand***

I want to travel more, in the US and abroad.  If friends cannot afford to come, I want to pay for them.  It’s more fun for me that way!

I want to be able to visit my daughter and her son in Colorado at least once a month, possibly 10-14 days per month (he is not my grandson because I feel I’m still 39 – thus too young to be a “grandparent”.  He is referred to as “my daughter’s son” 😊 ).  Maybe I’ll live there 1/3 or ½ time.

My son remained local, I do not have to travel to see him (of course, he could move at some point).

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

Selling the house and eliminating a mortgage was big.

My two kids becoming established in their new careers over the past year has been huge, they are almost 100% financially independent. (I’m teaching them all of the lessons from FIRE).

Buying Tesla stock before the split was a very fortunate decision.

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

No unique challenges.  I need to bite the bullet and pay for some trusted advice on how to strategize retirement income (but I’m too cheap so far to do it!!)

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

START EARLY!! No matter how small.  And it’s never too late!

[Ask and answer any additional questions that would further contribute to your story.]

I have not purchased long-term care insurance.  Somehow it doesn’t “feel right.”

I have ZERO fear or concerns of dying.

My biggest fear is being bored in this life!

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

For any other single people, what is your FI number?

Is my monthly expense estimate in the ballpark for someone with no mortgage?

I don’t buy a lot of toys or “things” – lately I’ve enjoyed a “minimalist” attitude, but I DO like to play and travel.  I spend money on having fun times much more than buying items.

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.