Today’s dual-physician couple has not yet arrived at their crossroads, but they can see it if they zoom out far enough on Google Maps. Will they turn left? Or right?
Financially, they will likely reach their goals when he’s in his early 50s and she’s in her mid-40s. If they hold out another four to five years, not only will they reap the benefits of working one more year again and again, but they will also qualify for a beefed-up pension and health insurance for life.
That’s not an easy proposition to walk away from, and that’s their primary conundrum at the moment. What would you do in their shoes?
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. To see other posts in the series, visit our Q&A archive.
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 wife and I are 30-40% on our way to FIRE, so we can start to see the outer fringes of a light that might be the end of the tunnel!
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 45 and my wife is 37. We have no children and support no other humans (but have two dependents…errr dogs named Charlie and Beau). We reside in northern Illinois.
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 hospitalist for a VA hospital and my wife is a general internist with a regional health system. We both are passionate about having the opportunity to change our patients’ lives for the better, but at the same time, we feel like the time commitment hinders us from our other true passion which is traveling.
Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?
I don’t think we are necessarily at a crossroads in the sense that we are making any major changes soon.
Our plan (at least since I took the government position) was to work until age 57 (and for my wife, age 49) because we both feel the pension and federal employee retirement system benefits were “golden handcuffs” from which we cannot walk away.
In reality, we could likely retire in nine years, at 53 and 45, but it will depend on the health insurance environment at that time.
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
We both have 90% of our investments in the C-fund (the S&P 500 fund within the federal TSP program) and VIIIX, the institutional S&P 500 fund from Vanguard.
The other 10% is in both Vanguard’s REIT index fund and a very minor amount in cash.
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
We have 60% in tax-deferred/Roth/HSA and 40% in a Vanguard brokerage account.
Do you have investments in an HSA? How about 529 Plans?
We contribute the maximum to our HSA every year. We have no 529 plans.
What has been your best investment?
Honestly (and this is not just an attempt to get this interview published 😊), the numerous hours I have spent reading PoF’s and Dr. Dahle’s websites (along with BIG ERN) have been by far the best investment in our future.
Your worst investment?
For the first two years of our career, we worked for the same hospital system and were investing most of our money into a stock fund with a 1.25% expense ratio.
Into the FIRE
Numerically, what is your FI goal?
This is a very interesting question. We are aiming for a 30X expense goal and our retirement spending in today’s dollars will be around $120,000 annually, so $3.6 million is our current “number.”
When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?
As I mentioned above, we will likely reach our goal in eight years, assuming a conservative real return of 3%, but the early retirement part will be questionable at that time due to the extra benefits of retiring 4 years later at age 57, which is my minimum retirement age in order to have an immediate pension, and being allowed to carry the FERS health insurance forever and pass that coverage on to my spouse in the event of my death.
What are your post-FI plans? How will your life change? What do you look forward to the most?
Our only post-FI rule is we MUST be either on the west coast if we do not immediately retire early, or in Costa Rica whenever we do pull the trigger.
Have you made any major changes in your lifestyle or investments to accelerate your FI path?
At first, we were only maxing out the tax-deferred plans, but after discovering the physician financial websites, we recognized the importance of the triple-tax advantage of the HSA, not to mention the power of the backdoor Roth IRA!
Are you facing any unique challenges making FI or RE more difficult?
I was very poor during graduate school and med school, so of course, I jumped at any loan money they threw at me that was “extra” after tuition was paid.
The result, unfortunately, was owing $500,000 in student loans but I have paid 75 of the 120 required months towards PSLF. It should be about 111 out of 120 but I was short-sighted in residency and did not make payments during the low-income years.
What advice do you have for others who are seeking financial independence?
Keep it simple!
Aim to invest at least 25% of gross income. Don’t keep up with the Jones families. Utilize all of your tax-advantaged space. Never borrow against your retirement accounts. Low-cost index funds are king!
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
Is it worth working four more years than I might otherwise in order to keep great health insurance for the rest of our lives?
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 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!