FIRE Crossroads 019: When $10 Million is Not Enough

When I was a young attending, I came to the realization that one day, if I kept doing what I was doing, a $10 Million Dream was within reach. It would take time, but I would get there eventually.

As I got further along in my career, and I crossed that first $1 Million milestone, it became clear that I could be happy and free with significantly less than $10 Million. Today’s interviewee has moved the needle in the opposite direction.

What was once a $5 Million goal has been stretched to $15 Million. Is inflation the culprit? Expensive tastes? Or are there other factors involved? I’ll let him take you through his thought process.

I will point out that a salary like his is very high and not representative of that of a typical physician, much like last week’s interviewee who earns a multiple of what a typical dentist makes.

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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? 

That’s a tough question to answer. My financial journey continues to evolve as my career goes forward and I continue to accumulate wealth.

When I started my career about 10 years ago as an academic physician, my income was pretty much burned through with my student loan payments, my mortgage, and my moderate lifestyle.

The only retirement savings I had was through the university where I worked. They would take directly from my check each month. I was making $300,000 per year at that time and was able to put in $53,000 into my state retirement plan.

Most of that $53,000 came from employer contributions. So, I never really read much about finance or investing at that time because it didn’t seem like something I needed to do.

In 2013, after only a year as an academic physician, I took a job with a private practice cancer center in my state. That’s when my income began to take off. When I realized how much money I was going to make in private practice, I decided that I needed to learn how to manage it.

I quickly learned about index funds, backdoor Roth IRAs, and the benefits of self-managing my accounts. I read everything I could get my hands on. Within a few weeks, I had a financial plan in place.

Initially, I said I would save/invest 15% of my income and use another 15% to pay off my student loans. I had approximately $140,000 in student loan debt.

I paid the student loans off in 6 months and then converted to investing 30% of my income.  Everything went into index funds. My initial goal was to have $5 million and then retire.

That has changed dramatically over the years since my accumulation rate has been well above what I expected. Also, my lifestyle somewhat followed my income and I realized I was going to need more than I initially thought to have a comfortable retirement.

My current net worth is $5.1 million, with $4.3 million of that being in investment accounts.  The rest is equity in my primary residence and my lake cabin.

My goal now is to retire when I reach $15 million in my investment accounts. My net worth really means nothing to me. All I care about is how much I have invested. If things stay on course, I should be at $15 million in 12-15 years.

 

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 household includes my wife, myself, and my 3 kids. My wife and I are in our early 40s, and the kids are ages 4, 7, and 9. All three go to a private school here in our town where I pay a total of $1,800 per month in tuition.

We live in a small town in the Southeast part of the US that would be considered by many to be very rural. For our state, we’re actually a decent size town. My wife and I were both raised in small towns and really enjoy this style of living.

 

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 Medical Oncologist working in a private practice group of 4 total doctors and 35 staff. I enjoy what I do on a day-to-day basis for the most part.

The relationships that Oncologists make with patients is probably the strongest draw to the field. There are not many professions where you get closer to your patients and become part of their family.

I just don’t enjoy the pace at which I do it. The total hours aren’t bad, it’s just the intensity of those hours that wear me out.

Now that I am becoming more and more wealthy, I start wishing I could take longer vacations or just cut back on hours. Unfortunately, in Oncology, that is difficult. You can’t just change up people’s chemotherapy schedules or delay their visits to suit your travel desires.

There’s not really a part-time Oncology gig either. If you’re going to do it right, you’re pretty much all in.

As far as my practice goes, it is a great set up. We are one of the few remaining private practice groups for Oncology. We have a great relationship with our local hospital who supports us very well even though we are a private group.

My income has been more than I ever thought possible. My first full year in practice I made almost three times what I made in academics. Over the last 4 years, I have made over $1 Million each year.

I have clinic on Monday through Thursday, which means my schedule isn’t too demanding.  We have a great staff, an amazing office manager, and awesome nurses.

 

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

 I definitely am itching to have more flexibility to travel or just be able to be absent from work for long stretches of time. I’m still trying to figure out how to accomplish this without having to completely leave the practice.

I am just a few years away from being able to stop contributing to my retirement accounts and just let compound interest get me to my goal.  If I did that, then I could probably just find some type of part-time hospitalist job. But, I’m not too excited about that option.  I don’t like the idea of locums, either.

Oncology is just not a field to float in and out of patients’ lives.  I anticipate that I will likely just continue working as-is for another 10-15 years and then cut bait. The job is too good to walk away from just yet.

 

Investing

 

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

I’m not sure how detailed you want this answer, but I’ll break things down in detail just to show how everything is laid out. I have very little in bonds.

I consider my income as my bond or “low-volatility” component.  I seem to think a lot like JL Collins here. Everything is mostly invested in stock index funds.

I have everything with Vanguard and use only their mutual funds. My annual investment contribution has ranged anyway from $112,000 in 2014 to as high as $440,000 in 2020. Here’s my money breakdown:

 

Investments:

401(k): $690,000 (90% Total Stock Market (TSM), 10% REIT)

Roth’s: $177,000 (100% TSM)

Inherited IRA: $180,000 (100% Vanguard Lifestrategy Growth – 80% stocks/20% bonds)

Taxable: $3,200,000 (98% TSM, 2% Muni Bonds)

 

Real Estate:

Primary Home: $750,000 ($400,000 remaining on mortgage)

Lake Cabin: $250,000 (paid off in 2019)

 

I plan to start increasing my bonds over the next few years to be closer to 75/25 once I decide to retire. Right now, that 2% bond allocation in my taxable account is really just my emergency fund. I try to keep around $100,000 in the bond fund at this point.

I don’t even consider my two homes in the conversation with my investments. They are more of lifestyle choices. I use the Lifestrategy Fund for the inherited IRA because I have to take RMD’s every year from it.

The bond component to the Lifestrategy adds a little bit of cushion in case the market tanks and I still have to withdraw the RMD.

 

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

As you can see, the majority of my money is in my taxable account. I have been blessed over the last few years to save/invest between $200,000-$400,000 each year for the last 6 years.

At that level, you fill up your tax-advantaged space pretty quickly. I looked into rewriting our 401(k) at work so that we could invest more in the tax-free space, but all the means-testing and such just wouldn’t allow us to do anything but profit sharing. I didn’t want to go that route because of the high number of employees we have.

A little side note here, I think investing beyond your tax-advantaged space is what separates wealthy docs from regular docs.

Most of my fellow doctors in town are maxing out their 401(k)’s and such, but very few are investing beyond that. They seem to think the 401(k) is good enough and they just spend the rest of their money.

When you’re making $300,000 or less, that’s probably all you can do. But when you get above $400,000, you really should save beyond your 401(k).

 

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

I don’t have access to an HSA due to the current type of insurance we carry at the office. I have tried to convince my insurance carrier to provide a high-deductible plan, but so far, they have not.

I do contribute $500 per month to each of my 3 kids 529 plans. I have around $215,000 total in my 529 plans. My goal is to have $200,000 available for each child when they go to college.

My kids are currently 9,7, and 4; so I have a little while until college. Every year or so, I roll the money that’s in my state’s 529 into the Vanguard Nevada 529 because I like my investment options there better.

 

What has been your best investment? 

My investment of myself into a private practice group. I would never be anywhere near where I’m at today financially speaking if I had stayed in academics. Even the hospital-owned groups in my region would have been much less income.

We were very nervous at the time when I transitioned to private practice, but boy, has it paid off!

My second best investment has been my investment of time and energy into teaching myself personal finance and basic investing. I’m very thankful that I developed that passion early in my career.

I could have easily blown everything I’ve made on beach properties, fancy cars, and flamboyant trips.  It has placed my life and my family’s life on a whole different trajectory than I ever thought possible.

 

Your worst investment?

Toward the end of 2020, I invested both of my entire Roth accounts into BioNTech (BNTX) because of their vaccine development. I quickly made a 25% profit in only 1 month and then converted it back to Vanguard TSM.

I call this my “worst” investment because it planted the dirty little seed in my head that I could possibly make a lot more money if I started buying and selling individual stocks.

I now have to continue to remind myself that my steady investment in index funds is the proper path. I just got lucky with BNTX.

Just a side note here, I bought that BNTX at 111. It quickly dropped to 87 within two weeks and I was very upset. But just two weeks later, it was up to 140 and I sold.

However, it then went on up to 447! If I would have left that money in there just a few more months, my Roth accounts would have been 4 times their value from my initial investment.

I think about that everyday. It’s now just a funny story that one of my friends like to remind me of frequently.

[PoF: In recent weeks, BioNTech has traded in the $140s to $160s, very close to what it was when he sold his shares about a year ago.

“I think about that everyday.” That’s a big reason I mostly avoid individual stocks. Every day, you’re contemplating whether it’s best to buy, sell, or hold your selected ticker symbols. And when you don’t get it just right, which will be the outcome 99% of the time, you’ll be second-guessing yourself and saying “woulda, coulda, shoulda.”]

 

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Into the FIRE

 

Numerically, what is your FI goal?

$15 million. I’m definitely a fatFIRE guy, but that’s okay. It used to be $5 million until I began to really pull in a high income.

We don’t have a lot of financial obligations. Most of our spending is discretionary, so we could easily trim back if needed and lower that number way down.

The only large fixed payments I make each month now are my mortgage payment, my kids tuition, and my health insurance. Two of those will disappear in 10-15 years.

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

I’m currently 41 years old. I should reach $15 million shortly after I turn 50. If I really think about it, I’m not really working toward a number. I just plan to work until my kids graduate high school. That will be when I’m 55 years old. I will likely be well above $15 million at that point.

 

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

 It will definitely involve more travel. I would really enjoy spending a month at a time in different countries.

I would also work out a lot. My wife and I are already fitness fanatics, but time constraints with kids and work make consistency very hard.

We’re really into CrossFit right now and I would enjoy trying to become more competitive at it. But, we could easily be into a completely different sport in 10 years. We used to be heavy into triathlons, but that is a thing of the past now.

Also, I want to have a more coastal lifestyle. I could see us having a second home near the beach somewhere with a nice center console boat. I tell my wife that my retirement present to myself will probably be a really nice boat.

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

Not really. I started following my financial plan of saving/investing 30% very early in my career. When you add my very high income to that, it has set me up for reaching my FI goal very well.

For the last 2-3 years, I’ve actually saved about 40% of my income to continue front loading the pot. I’m just now starting to spend a little more since I’ve already saved so much. I splurged earlier this year and built a very expensive pool with a cabana at our house. I could have bought a small home for the price I dumped into that project. At least it adds some value to our house. But more importantly, my kids love it and we have hosted numerous gatherings with friends as a result.

 

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

Nothing really comes to mind here. I think the biggest challenge for me now is to not get too comfortable with where I’m at.

I’m someone who loves big ticket items and could easily blow through money rapidly. I’ve got to keep myself focused on continuing to invest 30% every year.

 

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

I think the best advice I could give someone is to start EARLY. You should set up your financial plan EARLY in your career and stick to it. Set rules up like saving/investing 20%, paying debt with 10%, etc., and follow those rules.

If you can just get lots of money in your pot EARLY in your career, you are set. Even if you don’t understand investing, those first few years are all about saving more than investing. Give yourself time to learn about investing and then move your money into the appropriate investment vehicle.

In all honesty though, it really only takes a few weeks to learn everything you need to know about investing. If you spend a few hours reading blogs like PoF and WCI, you’ll learn just about everything you need to know.

I started my journey a little before PoF made it big, so I spent hours reading through the Bogleheads forum and WCI blog, on top of reading numerous basic finance and investing books.

 

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I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had 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.

 

20 thoughts on “FIRE Crossroads 019: When $10 Million is Not Enough”

  1. As someone who has already reached his FIRE goals and retired from medicine 3 years ago at age 39, I have a suspicion that the OP and many of the commenters here will continue to have a moving goal post and will never be satisfied no matter how much money they accumulate. From experience, I’ve found the easiest part of FIRE to be saving and investing. The harder part is sticking to your original goals, avoiding lifestyle creep, and realizing that time is worth more than all the money in the world. I didn’t retire with nearly 10 million, but I’m still living a generally FatFIRE life, traveling the world (here in Italy right now, in fact), and pursuing so many of the hobbies that I had to put aside in my pursuit of medicine.

    I’d highly recommend the book “The Psychology of Money” for those whose financial aspirations seem to be growing faster than their portfolio.

    Reply
    • Having recently matched to heme/onc fellowship, I got very excited reading this. It’s my dream to join a private practice that has its own real estate and infusion center and have a 4-day work week.

      Reply
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  3. I’m 41 in derm and on par with your current assess and goals. Lol I had to read your post to my wife – as my number had been 10 and now perhaps more as my kids are 4 and 7.. going to be awhile before we can travel freely and for them to be done w school. Out of curiosity, any particular reason for 15mil? 600k / yr of cash flow draw down seems out of proportion to your lifestyle, coastal living or no. I too *can’t wait* for my center console boat at retirement.

    I would love to dm you as it is really hard to find others in my current situation and plan for the future.

    Reply
  4. Thanks for this post! We are a two physician household, both in very high earning specialties with a combined income over 2 million. I feel most of the posts on WCI and POF don’t resonate with me generally (even though I enjoy reading them) so this was refreshing to see. Would love to hear from other high earners more often.

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    • I agree, please set the example by telling us your story, $2M a year household income is very impressive. Look forward reading about you. Thanks

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    • Love the way the math bounces out. In this field, I can see real estate getting in the way of the job. I’ve done very well with CA real estate as a teacher. FatFIREd at 52 also. Very similar net worth, also going to 10 Mil in a few years just based on leverage and saving the profits , eating a little, and plowing the seed corn into next project (apartments)
      Wonder how your portfolio would look had real estate been a bigger portion. I may sell all off and roll into a DST (delayed sales trust ) for tax purposes, mot interested in a syndication DST. (Been there) A little patience, we can get there!

      Reply
  5. Great job! My initial goal was 10 million as well however due reading Die with Zero my goals have changed I realized I could definitely live on less. My income is around yours but I am in veterinary medicine not human medicine. I save 60+% of my income and my goal is to travel the world and trying to complete an Ironman.

    Reply
    • I read the book as well and realized there is only so many go/go years in one’s life. I have 10M, was going for more but really have no idea why when I reflected. Now I plan to gradually cut back and build on my hobbies/life away from medicine. I will likely still be over 20M by 60 due to compound.

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    • I had no idea that Vets could make that kind of money. I’m guessing that it didn’t happen working for someone else but that you own your own practice.

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  6. I got to FatFIRE at 55, but have continued to work and accumulate money. My wife and I are now at 20M. I’m 61 and she’s a few years younger. We have just one kid who has done well and is finishing residency. We got to this number by being frugal and disciplined. We keep looking for ways to transfer our wealth to her. We have been giving her 30k a year for several years now and that is now worth over 500k. We are giving her 300k for buying a house. We will buy all the furniture for her house. She also gets our used cars whenever she needs one. This way, she can save all her own money into a taxable account after maxing pretax space. She will be set for retirement and can in turn give a lot of money to her kids.

    My advise to young people on the fatFIRE path is to be frugal, work hard, be faithful to your spouse and invest like a boglehead.

    I wish I had retired earlier. All this accumulated wealth won’t buy me more time to enjoy it.

    Reply
    • $20M is a large number. Did you have student loans? What field? What was your range of income throughout your career? If it was really high, what allowed you to increase your income? Developing new skills, geographic arbitrage, owning a practice? I feel that I could make $400-500k every year for 30 years, safe 50%, invest intelligently and still not have anywhere close to $20m.

      Reply
      • Im an anesthesiologist. Started in private practice at age 39. I’d been in academia making 150k. I credit the book ‘the millionaire next door’ to my obsession with saving and investing. By my second year in practice I was making 700k and for the next 10 years I made between 700 and 1.2M every year. My wife was making 180-200 in a corporate job. We bought a small house for 200k cash. Used Japanese Cars for cash. And we lived off my wife’s income. Rest we saved. Picked up extra call, worked very hard. My widowed mother helped us with the kid and house. I taught my kid physics math and chemistry for next years level every year so she got straight As all through high school. That was the best investment so she ended up going to undergrad and med school for free.

        I invested in SPY and QQQ in my taxable account. Every month. Almost all my after tax income. I bought some shares of AAPL, Google, FB Nvidia and AMZN. But that’s only 10% of my portfolio. Rest in index.

        The key to stealth wealth is to live way below your means.

        Reply
  7. Love the goal of making $10 million in the next 9 years to get to $15 million. Why not right?

    One thing you may want to consider is getting to $24.12 million, given that is the current estate tax threshold for married couples. It could definitely go down under Biden.

    The estate tax threshold is a fun goal to have. However, after about $10-$12 million, in today’s dollars, I’m pretty certain you will feel financially free.

    Sam

    Reply
    • Ha. OP here. We all need goals right? When I do my crystal ball projections, I usually input the assumptions of saving $15,000 per month and ROI of 7% to accomplish my $15 mil goal in 14 years. Over the last few years, I have saved much more than $15,000 per month, so that is a pretty conservative assumption. The 7% is conservative if you don’t consider it inflation adjusted. It’s quite aggressive if that is post-inflation. As I mentioned in the article, $15 mil is an arbitrary goal is set anyway. Not real reason for it.

      Reply
  8. Good post. The biggest part of this story is how does one make $1mil in income? Is it mostly collections from professional services or ancillary revenue from other parts of the practice? Making money off of the other docs? How much of your overall revenue are you taking home? Knowing these answers can help other docs look for a similar situation.

    Reply
    • OP here. My practice is a 4 person partnership. We are a private practice group and run a very efficient business. All of our income is pure revenue from the practice. We are an “eat what you kill” practice so I don’t make money off of my partners. The 3 younger partners all make over $1 mil per year the last 3 years. The much old partner is around $400,000 but that is because he sees a lot less patients and gives a lot less chemo. I do have a side income of $1000 per month from a local hospice company as one of their medical directors.

      Reply
      • FatFireOncDoc, thank you for replying to all the comments! Your responses are very informative. If you don’t mind me asking, what percent of your revenue do you take home? I am a first year derm attending working in private equity and I take home 45% of my collections (~60% if you include health insurance and retirement contribution). Trying to get an idea what I could expect if I went into private practice.

        Reply

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