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They are two hard-working dentists who have done very well for themselves. In their mid-30s, they have a net worth approaching $2 Million, and they could easily coast to a shared FIRE goal, if they had one.
That doesn’t appear to be the case, though, as he reports. While they’ll be in great shape financially, and he sees the benefit of working less or not at all in the next decade or so, she feels differently.
He realizes that full FIRE looks quite a bit different if his life partner is tied down to a job, even if it is one that she thoroughly enjoys. How will they reconcile? He asks for your thoughts on their first-world conundrum.
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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?
We are moving along quite well on our FI journey and I’d say we are right around the halfway point. Our household has an annual spend of around $120,000.
Plug and chug this into the 4% Rule (25 x $120,000) and we get an F.I. number of $3 million. If I aim for a more conservative 3.33% withdrawal rate, 30 x $120,000 would equal $3.6 million.
Our nest egg is currently about $1.9 million. Applying the Rule of 72, if we just sit back and do absolutely nothing, $1.9 million would double to $3.8 million in 10 years if we project 7.2% growth.
We can be considered “Coast FI” by our mid 40s. Our plan right now is to keep feeding the nest egg, so we will most likely hit our FI number earlier, perhaps early 40s. Our net worth is approximately $2.5 million after factoring in home value/debt and dental practice value/debt.
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
My wife and I are in our mid-30s and recently welcomed a baby into this world.
We live about an hour outside of a city, so taking advantage of some geographic arbitrage (thank you PoF for writing about that!).
In what field are you working? How is your career going? What do you like best and least about your chosen profession?
My wife and I are both dentists, and we’re about 8 years out of training. I feel like we’ve hit our stride and we’re at really good points in our careers.
We are still learning and definitely still far from being considered masters of our craft, but confident in our skills and happy with how far we’ve come.
There are many things to like about our jobs – good hours, compensation, autonomy, and practice reputation within the community. As in many fields, managing people is probably the least enjoyable part.
We started off with about $500,000 in combined student loan debt, and our range of household income has been $325,000 – $650,000. After we finished our training, we definitely experienced some lifestyle creep but were able to pay off our student loans in about 7 years while investing at the same time.
In hindsight, we got really lucky that we started investing early because the market has had awesome returns during that time period. It’ll still be a while before we can do our Dave Ramsey debt-free scream; we still have dental practice debt (~$690,000 4.25% 10 year) and a mortgage (~$340,000 2.5% 15 year).
Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?
We’ve worked really hard to get to where we are. When I learned about the “Coast FI” concept and realized our portfolio no longer requires new contributions to reach our FI number in approximately 10 years, this was a huge load off my shoulders.
Cutting down to part-time is something I’ve considered. Maybe I can start dialing down the number of days, number of hours, and/or number of patients. Maybe this is possible sooner rather than later?!
Investing
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
Our nest egg is all index funds, and I haven’t really had the itch to try anything else yet. We used Boglehead Rick Ferri’s Core-4 80/20 portfolio as a template (48% US Stocks, 24% International Stocks, 20% Bonds, 8% REITs), but I’ll admit my risk tolerance has increased with the recent market returns.
Our overall asset allocation is currently at 87/13, but I’m comfortable letting it float up to 90/10 as long as we have a healthy 6-month emergency fund.
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
We max out our 401(k)s and backdoor Roth IRAs every year, then extra monthly savings go into our taxable account.
Our taxable account has grown considerably (~$1 million). We try and keep REITs in Roth IRAs, bonds and international stocks in 401(k)s, and US stocks in our taxable account.
Do you have investments in an HSA? How about 529 Plans?
We qualify for HSA’s and max those out every year, and we contribute $1,250 per month into our child’s 529.
What has been your best investment?
I’d probably say education. Student loans stink, training was hard, but “front loading” the time, energy, and money was totally worth it!
Your worst investment?
I hate to say it, but I got suckered into whole life insurance… At the time, I knew absolutely nothing about personal finance, a total ostrich. We were making decent income, but didn’t know what to do with it besides put it in our 401(k)s or spend it.
Whole life insurance and mutual funds (that happened to be actively managed funds) were recommended by two different financial advisors (salesmen). First opinion recommended it, second opinion recommended it…I didn’t bother getting a third opinion, and I didn’t even know what a fee-only fiduciary was at the time.
I figured the financial professionals are there to help people like me, and this is just what investing was. We agreed to those products, but I had an uneasy feeling about them.
Luckily, it wasn’t long before I found White Coat Investor and started reading financial blogs, books, and listening to podcasts. We did end up working with a fee-only fiduciary financial advisor who helped us ditch those products. It really hurt at the time, but it was a sunk cost. We got out of those products, and we moved on with our lives.
PoF, I’m not sure if I’m breaking any rules here, but I’ll give an unsolicited plug. As a disclaimer, I get absolutely no kickbacks and they never asked for me to do this…Just my honest review.
We had an amazing experience with Ryan Inman and Kayse Kress at Physician Wealth Services (and Financial Residency Podcast). I’d highly recommend them if you need a fee-only fiduciary financial advisor who will be transparent with their pricing and won’t sell any commissioned products! We worked with them until I was comfortable to DIY our investing.
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Into the FIRE
Numerically, what is your FI goal?
Around $3.6 million, but we’d aim to overshoot this.
When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?
After playing around with a compound interest calculator, the math seems to work out for us to be FI by early 40s if we stay on course with monthly investments. This totally blew my mind!
Once we are comfortably FI and no longer rely on a paycheck, I could see myself cutting back to two days of work per week. I’d consider dentistry to be a well-paid hobby at that point.
With this extra free time, I’d pursue my hobbies and test the FIRE waters. If I’m loving my off days way more than my work days, I’d consider going full FIRE. If I still find fulfillment from work, I could keep practicing, but probably dial down the patient volume.
What are your post-FI plans? How will your life change? What do you look forward to the most?
I think it will be an amazing feeling to be in full control of my time. Morgan Housel has written that money’s greatest value is to give you control over your time. Wealth is the ability to do what you want, when you want, with whom you want, for as long as you want. I don’t know if he’s written about FIRE specifically, but that sounds a heck of a lot like FIRE.
With the increased autonomy over time, I’d spend more time doing other things I enjoy. I try to keep a diverse “portfolio of hobbies” which helps with different seasons and different circumstances.
When some aren’t feasible due to weather, or a global pandemic, or having a young child at home, there are different ones to fall back on. Some of these include running, cycling, skiing, reading, travel, and spending quality time with friends/family.
I look forward to being able to slow travel several times a year. Without a job to get back to, this opens up a world of opportunities that we didn’t previously have.
Have you made any major changes in your lifestyle or investments to accelerate your FI path?
There was a period of time when I tried to be super frugal to get to FI as fast as possible. I would overanalyze and scrutinize our spending. While this helped with our savings rate, I noticed this behavior started negatively affecting me and my relationship with my wife.
After zooming out and realizing that we are actually doing pretty decently on our FI path, I’ve been more willing to spend and selectively splurge on things that we really enjoy.
This is kind of counterintuitive because loosening up the purse strings decelerates us on our FI path, but it’s making the journey much more enjoyable.
As mentioned previously, the major investment changes were ditching the whole life insurance and actively managed mutual funds, and DIY-ing our portfolio.
Are you facing any unique challenges making FI or RE more difficult?
I guess this isn’t unique, but I have FOPO – fear of people’s opinions. I’m a little self conscious about what my family and friends would think if I told them I don’t work anymore.
While I got bitten by the FIRE bug and got really into this stuff, my wife has zero interest in retiring early or even cutting back anytime soon.
She’s supportive of me cutting back to part time, but she’s thinks the full RE part of FIRE is too extreme. From a financial standpoint, this is awesome, because we will continue to have her income!
From a lifestyle standpoint, longer vacations and slow travel may not be feasible because of work demands. Quite the first world problems, right?
What advice do you have for others who are seeking financial independence?
At first, the numbers/spreadsheet part of personal finance was scary to me. But after learning a little more, the investing part of the equation is actually the easy stuff. You can optimize and simplify. It’s mechanical and finite.
From this technical perspective, I’d say the first step is just to track your spending, then calculate your FI number. Once you have a ballpark idea of how much you need, you can play around with a compound interest calculator and see how much you need to invest to reach your target FI number by your target FI age.
The other part of the equation is the behavioral, emotional, more mushy stuff. Things like asking yourself…What is your relationship with money? How do you view money? Are these views serving you, or are they holding you back? How do these views affect you and others around you?
If money were no object, what do you want to do with your time? What gives you a sense of purpose and fulfillment? What brings you pure joy? What do you currently “have to” do that you wish you didn’t?
Try to have a vision of the life you want to live, and use money as a tool to get yourself closer to living this life.
Any book recommendations?
Reading some behavioral economics / money mindset books can really help accelerate your path to FI. Some things really do move the happiness needle, but a lot of things don’t. When you become more self-aware of these things, you can be more frugal and spend more intentionally.
- Predictably Irrational by Dan Ariely
- Dollars and Sense by Dan Ariely
- Happy Money by Elizabeth Dunn
- Psychology of Money by Morgan Housel
- I Will Teach You To Be Rich by Ramit Sethi
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
Has anyone out there been really into FIRE, but your spouse is anti-FIRE?
How did you align your lifestyle and goals? Was there any resentment when one FIRE’s and one doesn’t, even though the household is comfortably FI?
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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!
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10 thoughts on “FIRE Crossroads 015: 2 Dentists, Nearly $2 Million, and 2 Different Goals”
Crossroads 015
Thanks for sharing your current perspectives and future goals. You two are doing amazing financially as well as managing a healthy marriage while working together. I will have to agree with several of the comments when it comes to life changing . We really don’t have a crystal ball of what life will be like in 10 years. I too am a dentist who thought I would retire at 40. I am so thankful I did not for various reasons. Children can be an expense that is hard to predict, ranging from childcare, type of schools, activities, health issues, etc. And of course one child may not be enough. I know from personal experience, we just wanted one child. Well as fate would have it, we ended up with three wonderful gifts. Our goals changed because our family grew. I’m glad I did not hang it up as I now work to provide without worrying about money and now work has become a hobby. Find balance and be open minded to what may happen in 10 years. You might find you and your spouse do a 180 on how you feel about work and life.
Really enjoyed reading this article. It looks like you have a great plan and trajectory.
I was interested in getting a point of clarification for my own purposes as I see this referenced quite frequently. When one says their annual spend is $120k per year, does that annual spend number typically include federal and state income taxes? Using the 4% rule on $120k, you can estimate your FI number to be $3M. But if you need to pay income tax on asset withdrawals to net $120k, could the true FI number be closer to $4M? I realize the tax burden could vary greatly depending upon the mix of tax deferred, Roth and after-tax assets. But I was just curious as to how it typically works when estimated annual spend amounts are listed in this space.
Unless you’re in a high-income tax state and have nothing but tax-deferred money to live on, the effective tax should be nowhere near 25%.
In fact, you could live on a low six-figure income with zero income tax fairly easily — see the scenarios outlined here. Most retirees with a $120k budget will be paying some taxes, especially after RMDs kick in if no tax planning has been done prior, but I’d guess many will pay 10% or less.
Cheers!
-PoF
My spouse is not anti-FIRE, but she loves work and doesn’t plan to stop even though we are nearly FIRE together. Nevertheless, she supports me in doing whatever I see fit with my time.
I came to a crossroads myself (007-interview) and decided to step back from working full-time, with a part-time job, to instead working two part-time jobs while blogging, and it has been incredible. I now work between 15-30 hours a week, compared to 50 hours a week, and have the time to pursue my passions. I am about seven months into this journey, and my partner has no resentment regarding my change in work frequency.
Some people love to work, and there can be various reasons why. Nevertheless, that doesn’t mean that your household cannot be composed of both a working and non-working partner.
My biggest takeaway is to keep an open dialogue and respect your partner’s choice while also being supportive.
I enjoyed the post and it’s nice to see a dental couple with solid financial plans. I was in your shoes about a decade ago and FIRE’d last fall in my early 40s. Though my spouse was staying at home and I was in a 50/50 dental partnership. My wife and I had 4 or 5 years of preparing for FIRE together, so nothing was rushed… compromise may be the only answer to dealing with differing opinions on FIRE in a household.
This may not apply to your situation, but as a dental practice owner when you retire/sell there is a lump sum heading your way. I maintained a small cash/bond allocation of below 5% (the rest in indexed equities) until I sold the practice, then with the lump sum was able to set a comfortable “Retired asset allocation”. Some caution though, there is an element to this of “don’t count your chickens before they hatch”.
Congrats on your current financial situation, seems you’ve done well. And now you have some time to make some presonal life decisions.
Congratulations! It looks like you are making tremendous progress toward early financial independence. Your wife may be anti-RE but based on your nest egg at your age she appears to be very pro-FI.
As a solo practice owner, I feel that going part-time isn’t a good option for me. I think it can be difficult for staff and patients to accept part-time hours. I have seen solo practice owners who did this and it negatively affected the value of their practice when they tried to sell. Even some practice owners who have brought on partners or associates (while the owner went part-time) have had a difficult time. But I’m assuming that you and your wife are partners in the same practice. You may have a great situation where you can go part-time. Just make sure that you think it through first.
I also suffer from FOPO (clever acronym!). My wife and I have tried to gently discuss personal finance and investing with family and friends with limited success. I am sure they don’t understand FIRE. Because of this, I would be worried about judgement if I decided to completely FIRE while my wife was working full-time. If I were working at least part-time, or at least busy in a constructive way and taking on the majority of household responsibilities, I don’t think I would feel guilty.
Like other posters have commented, a lot can happen in the next few years. Don’t be surprised if you and your wife are on the same page with RE by the time you are FI. Regardless, you are well ahead of the game and on the way to a successful future.
When the genders are swapped, it’s called having a Stay at Home Wife. So if you drop out and she keeps working, definitely take on a larger share of the household planning, childcare, and any other household activities that you don’t outsource.
Speaking as a full time working woman whose husband has had a couple of extended unemployment spells, it is really nice just having things taken care of so I don’t have to think about them. I also like his salary, but not having any of the mental load of running the house was really nice while it lasted. (As was fresh bread every day, though that did add to my waistline.)
What would cause resentment, I think would be having to do the majority of the household stuff AND working full time while my husband enjoyed life.
I totally understand the OP’s feeling and having a spouse who is not fully on board. First, count your blessings and be happy your spouse is on board with whatever you personally want to do. Your spouse is not anti-FIRE. Some spouses don’t even do that and their feeling can be that they are working and so you should be working because otherwise there will be resentment. So that’s already a plus for the spouse to be okay with whatever you do. Second, and this is what I’ve done, your spouse seems like she’d be open to the statement that being FI just gives options. She can be realistic and know that while she can’t see herself not working in her 50s, she doesn’t know for sure how she’ll feel then. FI is all about options. FI allows you to pull the fire escape cord if in fact you’re in an emergency. That to me is the whole point.
Also, you might think you want longer vacations or slow travel now but perhaps as you get older you’ll see you don’t want that and you’re a homebody. My point is good to plan so you have all these options….be open to everything changing, and expectations changing.
All that said, you have a new child and I don’t know if you expect to have more, but I’d expect your expenses to go up and wouldn’t assume your current spending. I’m not saying you’re way off, but I wouldn’t be surprised if it creeps up to $150k or so. And that’s okay! You guys are killing it and I’d focus on spending a little more to enjoy. This is something I also have to work on so I get it.
It looks like you have a ten-year horizon until you FIRE, and a lot can happen in ten years that might change your wife’s mind about joining you in early retirement. My wife (a general practice physician) always said that she would continue working once we reached our FIRE goal because she loved her job. Well, throw in the pandemic, insurance company hassles, and some disagreeable partners and now that we’ve reached our financial goal she was the first one to retire early! Another major factor for her was the ability to spend more time with our kids before they grow up and leave for college.
I’m going to work one more year before I join her. I’m not quite ready to retire and my job provides a lot of great benefits (including working remotely) so it’s something I can tolerate for a little longer. With our kids still in school we only have so much flexibility when it comes to vacations.
You are on a tremendous trajectory. Keep up the great work, but try to not get too far ahead of yourself, especially because of the new baby. Your life as you know it will be changing massively over the next few years as he/she grows into a person with activities, friends, school, etc.
Also, make sure to enjoy these years…..they’re too short.