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I recently revealed my plan to decrease my workload as a part-timer this fall. I detailed the schedule and the math behind the taxation in a post on this site (So Long, Full Time Employment!) and the news has also circulated amongst my real-life colleagues at work.
While I do get my share of quizzical looks due to my relatively young age in my early forties, I honestly haven’t been on the receiving end of much negative feedback, at least not to my face. More often than not, the response is some combination of “good for you,” and “I wish I could do that.”
Well, maybe you can do that!
I waited until I was easily financially independent (FI) with more than 25x anticipated annual expenses saved before even contemplating a part-time position, but that doesn’t mean FI is a prerequisite.
To be honest, you don’t have to have anything saved up in order to work part-time, but it certainly helps, particularly if you have an interest in retiring early. In one of the 4 Physicians posts, we learned that working full time prior to making the part time can decrease the time to FI dramatically.
What’s Your Part Time Number?
Dr. Am Requests Permission to Go Part Time
Last fall, a physician in his early forties asked the Bogleheads if he or she (we’ll go with she for the sake of this post) could afford to go part-time. Dr. Am gave us some details of her situation.
- She’s got 8x to 10x desired retirement spending saved up.
- Halfway done saving for college (presumably, she has children).
- House is paid off.
- Saving 1/3rd of her income annually..
- Not interested in retiring until at least age 55 to 60 (in about 15 years)
- Expects a combination of pension and social security to deliver $37,000 a year at age 62 (but not counting on it).
What do you think? Yea or nay?
It helps to have a framework to come up with a reasonable answer. We’ll have to make some assumptions, too, since there’s just not enough information to say positively yes or no. But we can come up with a good idea of her best move and figure out how to think through the question and the variables.
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The Analysis for Dr. Am
Let’s make some assumptions so we can do some math.
- Retirement Savings $800,000.
- Desired retirement spending $80,000 to $100,000 per year.
- Working part-time will give her enough to live on and finish saving for college.
- No net additions to retirement savings as a part-timer.
Here’s a peek at how long it will take Dr. Am to reach FI if she goes part time and stops contributing to retirement assets now.
Based on our assumptions, to have $100,000 a year in today’s spending power, it will take 19 to 57 years at 2% to 6% real (inflation adjusted) returns. If we bump it up to 8%, the goal is achieved in a timeframe that Dr. Am will be happy with.
My recommendation to Dr. Am would be to work at least a few more years full time if possible, and consider dropping to part-time in her mid-to-late forties. It might also be worthwhile to earn enough to continue putting some money towards retirement each month.
If we have her work full time for several years until she is halfway to her $2,500,000 target and have her contribute $2,000 a month as a part-timer, the goal could be reached within a decade or two after that depending on returns.
Keep in mind this reports the number of years remaining to the goal after working a few more years to build up the nest egg to $1,250,000.
How does that compare to the status quo option of continuing to work full time?
Let’s assume Dr. Am has accepted my Live on Half Challenge (whether she’s heard of it or not) and is saving $100,000 a year while living on an equal amount.
If she simply decides to work full time to reach her goal faster, she’s got 9 to 13 years to go at 2% to 6% real returns.
Part Time Work Isn’t All About Math
Math is wonderful, but the numbers don’t know what Dr. Am or any of us plan to do with the newfound free time that comes with a part-time gig.
Just as we love to say you should have a plan to “retire to something,” you should also have a plan for how you’ll spend the additional time you’d be purchasing by dropping to part-time status. You might be escaping burnout. Perhaps you’ll be spending more time with your kids or just carving out more time for yourself.
While working part-time will prolong your working years, improving your work / life balance may make work more enjoyable, and you might also be more relaxed when away from work.
One decade of a hectic, stress-loaded career with little time for yourself or your family sounds terrible when compared to a couple of decades of a more leisurely paced where you’ve got time for your patients, your hobbies, and everyone else that wants or deserves some of your precious time.
For an excellent and thorough guide that explores the many facets of part-time work, be sure to check out The Happy Philosopher’s Physician’s Guide to Working Part Time. He has walked the part-time walk for a number of years and can relate better than I can at this point, as I am four months away from beginning my own part time schedule.
What is Your Part Time Number?
Would you consider part-time work at some point? How close to FI would you need to be? Dr. Am asked the question with no more than 40% of her goal number achieved. That may not be enough, particularly if future returns are tempered as many experts expect them to be.
What if you were 60% of the way there with 15x expenses saved? Or 80% with 20x? I’ll leave you with one more Excel spreadsheet that you can use to help think through the answer. All of the gray fields in this one are customizable.
I encourage you to play around with the numbers to best fit your current situation. If you’d like a copy of this spreadsheet to play with at home, please subscribe to the e-mail list and you’ll be able to download the Excel file that has this and all the other calculators from the site.
Interested in reading more about part-time work as a physician? I”ve got you covered.
Is part time an option in your line of work? At what point would you (or have you) strongly consider slowing down? Any advice for Dr. Am?
53 thoughts on “What’s Your Part Time Number?”
Just a question on your FI number in the calculator. I’m just curious why the FI # changes so dramatically depending on the # of years expected to be in retirement. I’ve always assumed my # using the 4% rule (or 3% depending on your level of comfort) to calculate and your calculator has thrown this assumption WAY off. In my specific case I assumed 3-4 million would be enough for me to be FI, but when I assume I will live to the ripe age of 95 now I have to save 6 million! Please explain.
I think I figured out where you went south.
The “Desired Years’ Expenses for FI” section is asking you how many years worth of expenses you want saved up to be considered financially independent. The default is 25 for a 4% SWR. If you want a 3% rate, enter 33.33. It doesn’t matter much how long you anticipate being retired, although a more conservative approach may be warranted for a 50+ year retirement.
Cheers!
-PoF
Whew!!! Yes that’s it. Still on track!! Thanks!
I wanted to early retire, especially after the EHR became mandatory. It just bugged me that I was spending so much time documenting the EHR rather than paying as much attention to my patients. When I gave 6 months notice to my colleagues at age 56, they all suggested working part-time instead of stopping cold turkey. But I had enough savings, and I found that the costs of remaining in practice (malpractice insurance, medical license fees, board specialty fees, DEA registration fees, CME hours and their fees, group practice overhead fees, etc) remained the same while my income would drop as part-time. So a greater percentage of my lower pay would go towards fixed expenses. It just made more sense to go to full retirement.
What do you consider the “lump sum”? Net worth? Retirement savings? All savings? +/- primary residence?
I consider pretty much all savings except maybe the emergency fund to be retirement savings.
The primary residence only counts if you have plans to downgrade in terms of home price and use the equity to fund your retirement. Otherwise, it’s usually more of a consumption item than an investment when you factor in all the costs of home ownership.
Cheers!
-PoF
Excellent article. Working part time could be an excellent gig if one was passionate about their work. I have a family member that is an anesthesiologist. He lives a great life but isn’t very aggressive with investing. Thanks for all of the insight.
I think it will be an excellent gig for me. Can’t wait!
Thanks for the mention PoF. Interestingly. I’ve bounced between part-time and full-time more than once due to extended leaves in my group and have some observations. Stay tuned for a blog post soon 🙂
Another physician here. 43 years old. Just dropped to 90%. Add in 10% administrative time and that puts me at 80% — 4-day clinical work week.
It’s a small enough change that it won’t reduce my savings rate or impact my life style. However having a fixed day off in the middle of the week will go a long way toward allowing me to keep doing a job I love for the most part, hopefully until age 59 1/2. I’ll probably drop down another 10-15% once the house is paid off in 8 years.
My plan is to do the slow fade as opposed to an abrupt early retirement.
I’m beginning to think the “career deceleration” “career curve” is the way to go!
http://wealthydoc.com/blog/has-retirement-retired
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My part time plans are much more related to life events than a number- when I have kids in a couple of years I plan to cut back. My practice allows for benefits at 0.6 FTE, which would mean working 3 days a week and sounds amazing. I’m okay living an average Joe lifestyle instead of a fancy doctor lifestyle if it gives me more time for family and hobbies. My goal is to be financially independent by 55 and, like the Dr A thought experiment post, I can meet that pretty easily even with part time work.
I am currently part time in Gen Peds, married to a Fam Med Doc. After 3 years of practice, I decided to go part time for 1 year. It is one of the best decisions I have made. I am paying more attention to my husband, more time for house work that I enjoy, and I even get to help my husband at work. We had time to train for a marathon and a half marathon (and complete it!). Finances wise, we are far from being financially independent. We plan to retire in our home country (we are IMGs), so we do not need millions. The time off work gave me and my husband the opportunity we need. I dread going back to full time later this year but the sooner we can achieve FI, the sooner we can get home 🙂
I’m just finishing fellowship and nowhere near FI now, but I’ve already noticed that my new employer considers 0.875 FTE full time as far as benefits are concerned. A lot of things could change between now and then, but I could envision perhaps 5-10 years from now that 10 weeks off per year instead of 4 may sound like a fair trade for 12.5% less pay, and would still allow progress toward financial goals. Of course, I would want to make sure we were well on our way toward the kind of things WCI mentioned above first.
We used to be able to get full benefits at a 0.4 FTE level. Then it changed to 0.5 FTE. Now it is 0.6 FTE and you have to pay a lot extra $ to get the full benefits. Anybody else noticing a trend here? HeHe
It used to be that your house and your car would be the biggest expenses in life, and now we have healthcare expenses getting higher and higher. And they are recurring expenses, and very rigidly fixed. How is this not like a tax?
Until recently this was a fun thought exercise I liked to play around with when I reviewed our finances at the end of each month. I had assumed I would wait until I reached FI to make any big changes, but in the past year I’ve started testing the waters of going part time. I’m fortunate that my employer maintains the same benefits as long as I work between 30-40 hours per week. I also get comp time for any hours I work above my base hours, so there really isn’t any downside to lowering my base hours. In fact, I thought I would eventually go back up to 40 hours per week, but I’ve been loving the greater freedom to not work 40 hours!
Regarding the question of whether people should take time off (or go part time), I think we would all be better off if more of us did this. We are often not productive when we are feeling burned out or unmotivated at work. So taking some time to recharge is not only healthier, but it would make us far more productive in the long term. Too often we put the pursuit of money before our health, our families, and even our sanity. So while we can always earn more money, we can earn back more time.
My part time number is FI and working part time because I want to, or if I could work part time and fully save for retirement and all expenses covered. If I was in a specialty that made 500K to a mil per year, part time is still awesome!
It’s funny how one fields full time can be another fields “part time”. My wife and I are both full time. However, I work regular hours and average 40 to 45 per week. She averages usually over 60 with in house call and some weekend work.
I am in no “rush” to cut back but will probably look into it once FI, just because I can. She might look into cutting back a bit sooner, and we are sort of using WCIs aforementioned checklist (no debt, adequately funded 529s) prior to her doing so.
Apart from finances, I feel that interpersonal relations with group members could be a barrier to part time. To our knowledge, no member of her group has ever pursued part time before. I can bet if/when she tries to do this, it may feel a bit “weird” to ask about it, almost as if you are not pulling your weight in a very hard working group. I think something could be worked out, but some days we wonder if it would be better to work full time several extra years then be done altogether
This is something I’ve thought about a lot and would strongly consider if my job allows it. I could work 10 years full-time then FIRE. Or I could do 5 years all out, pad the savings, then go part-time but continue to contribute to tax-protected accounts and retire after another 15 years. The second scenario is very enticing to me. First, if I FIRE, I don’t know what I’d do with myself. I have hobbies but not enough to fulfill all my free time. I enjoy the work I do and am not itching to do something else (besides my hobbies). Also, having a young family, I would be somewhat limited by my kids and their commitments, working part-time I’d get to spend time with them, and a part of me wants to stay employed until at least they’re in college. Working part-time, less of my income goes to taxes, more money (as a percentage of total portfolio) can go into tax-protected accounts. By having a longer accumulation phase, I let compounding have more of an effect vs brute force savings, my FIRE number will be lower (due to shorter retirement period), I can maintain health coverage, and I can keep my skills intact and have flexibility if I need more money, bad market returns, etc.
I think 25x expenses (or 4% SWR), makes the most sense. That said, I agree with you that maybe it’s more of a work/life balance thing and working part time can help ease into that transition. Personally, I can’t see myself not working. I get too restless. I can see myself pursuing countless other endeavors though!
Light bulb moment! I’m pursuing FI & setting my own schedule because my career hasn’t gotten me more weeks of vacation, because of job transitions. When my dad was my age, he had 3-4 weeks. He also worked at the same place his whole career and had 5-6 weeks by the end. My mom stayed at home early on, but then became a teacher, which allowed her plenty of time for travel.
I changed career direction in taking this job, with the intent that I can make this a contract role and set my schedule a few years in the future once I have more experience on my resume. This type of role also has the potential for remote work. When I visit my mom, I often think I could do 4-6 hours of work (or more on a rainy day), but with a view unlike my cube, and then have the afternoon to enjoy her company. We’ll see what my future holds. 🙂
Thanks for the jolt to the brain about my -why-. 🙂
I am forwarding this article to someone who I had coached about 3 weeks ago on exactly this topic, with eerily same numbers. I frame this discussion in terms of sitting on a different rung of ladder with a different vantage point at different stages of life.
I’ll share a bit of my part-time/full-time story. I had a Psychologist teacher in Residency who was a very successful entrepreneur. He helped me with the following calculation – your hourly rate x number of hours you work each week x 44 (never more) is how you can quickly figure out how much you’ll surely have as a self-employed person.
Then you divide the money into savings, expenses etc, and you still have 8 weeks of vacation time left, and if needed you can work a little more to make up for the deficit. This 3-4 weeks of built-in buffer is a huge stress buster – adds up to 10% of income if needed. Of course, strong discipline is needed not to abuse this time to work more – to be used only if serious situations come up.
This calculation has served me well. Never felt the need to work 40 hours, or do undesirable work, and plenty of vacation/free time.
We’re planning to use our double income status to “cheat”. When we hit a certain percentage of our final goal number (around 70-75%) , I get to quit. With only Mr. BITA working we will still save, though much less than we do now, and more slowly wend our way goalwards.
Hmmm the more you write about part-time, the more I want to cut back. Part time is a relative term in medicine. I think an orthopedist would consider my current schedule part time already. Although there is some hostility to cutting back in medicine I may bear that and cut back more anyway. I was going to see how it went for you but I can’t wait until after October to find out. WCI talks a lot about career longevity and I think he is right in its importance. Anything that keeps you engaged at least partially will help financially as well as the work-life balance part. Since I am debt-free and have 529’s stocked up and am FI I have no financial reason not to improve the balance.
This is definitely our plan for three reasons.
1.) Even if we had assets at 25X our spending I would not feel comfortable b/c I am not confident that our spending will stay constant (especially things out of our control with uncertainty of health care) and I am not comfortable with current market valuations or interest rates.
2.) To get to the number where we would be comfortable (probably more in the 33X+ range) would take several more years when our child is young and we can not get that time back.
3.) Once you have substantial savings, there are great tax incentives to not maximize your earning which is taxed in high marginal brackets and also causes taxable investment gains to be taxed.
By working less you can live a lower stress lifestyle much sooner and every additional dollar you make (and your investments make) will be much more tax efficient.
Our criteria to start the transition were investments 20x our expenses which we hope to not touch for quite a while, paid off house meaning low living expenses, and done saving for kid’s college.
I have a minimum of 2 years (age 39) before I can even consider being part time. I have to hit partner status. My finances are not there yet. I suspect 5 years is more likely and I will go to 90%. That will give me an extra 2 days a month.
At that point hopefully my student loans will be gone. Then stay 90 or 80% until I have been at my job for 11-12 years (47-48 years old) when I will be fully vested in our pension plan and decide if I will retire completely or go down to 60% until I am 60 and can retire with full early retirement (if it does not change in the next 24 years).
So less about the math of savings and more about getting fully vested in the pension. If I stick with it I could earn potentially $112K per year pre-taxes at age 60.
I don’t know if there’s a number, but I think you need to have accomplished some of your financial goals. Things like:
1) Paid off student loans
2) Be into your “doctor house”
3) Maybe even paid off the mortgage
4) Maybe done saving for college
Those sorts of things. While part-time work may cover your living expenses, there’s a decent chance that it won’t allow you to save nearly as much as you need to, even with the much lower tax burden associated with it.
WCI,
I think the word “need” is relatively strong. There is no need to be debt free. You just need to make sure the math works for your situation. I still have old student loan at under 2% and a mortgage under 3% that will take me many many more years before it is paid off. By then I might even be retired, but the math works in my favor by not paying down that debt.
I think it would really increase your stress level to be in debt even at a low rate when you consider part time or no time. Yes the math can favor low rate debt but most people psychologically are less happy. I think you will find that when the big checks stop you want low fixed expenses.
I’m in marketing so my work is super-flexible. I currently work remote 100% of the time, but I’m tempted by the alternatives. I’d love to work a traditional job part-time and spend the rest of my time working on passion projects and other things around the house. I don’t think we’re there yet financially, since we still want to pay off student loans, but it’s in the nearish future. 🙂
Part time also lends itself better to certain fields. Fields that don’t need continuity of care lend themselves better to the part time approach. It becomes a more difficult task when your practice requires continuity of care. If you are unavailable to your patients, they will go somewhere else. For a small private practice part time may be difficult to implement. I think the ability to go part tim is a big advantage for fields like EM, Anesthesia etc.
I am a physical therapist and agree with this. However, working quarter time, does not have to mean working a 10 hour week or a quarter of your normal shifts. I am looking at travel assignments that would allow me to work one quarter of the year, providing help to a clinic in need and providing me a “retired” lifestyle for 9 months. Not a bad alternative to my current 40+ hour weeks with 4 weeks vacation and can also allow me to collect a fair amount of compensation as tax free living expenses versus highly taxed salary.
I’ve been thinking (and writing about this very topic) at the moment.
If your chosen field and practice allows it, going “hard-core” part-time (i.e. quarter-time or less) might be a viable alternative to full retirement. My practice (radiology) has at least 1 individual that works about quarter-time, which allows her to maintain group health insurance coverage while still enjoying tons of time off.
Plus, if some unexpected event results in a need for more income, the transition back to full-time is nearly seamless—except for the lost afternoon naps!
I don’t think I will be hitting part time anytime soon.
However, once our debts are paid down and the kids are out of the house, the idea of only working a few days a week with the opportunity to take a month off would be great.
It would allow time for a nice trip somewhere or a visit to help out caring for potential grandkids. The part-time income would help protect the nest egg.
As far as day to day, the part timers I see at work really seem to enjoy themselves because they focus on the joy of caring for patients. They don’t burden themselves with running the practice, a worsening payer mix or the future of medicine in 20 years.
In fact, I need to do a better job of just enjoying the work right now!!
Step 1 is to get out of debt. In pursuit of financial independence, the part time discussion shouldn’t enter the picture until you’ve made at least partial progress towards your FI number (or have a high earning spouse to make up the difference).
I can’t wait to have a few weeks off at a time. We plan to spend a few weeks in Hawaii as a family next February, and I’ll hit up the WCI conference in Utah on the way back.
Cheers!
-PoF
There is a WCI conference?
Indeed! March 1-3, 2018. More details to be announced.
Sorry PoF, but you don’t need to be debt free to work part time. This is especially true for some of the older very low interest student loans as well as those low interest rate mortgages. Physician jobs are extremely secure and you are much better off arbitraging the debt into investments that fit your asset allocation.
True, you don’t have to be debt-free. By getting out of debt, I meant having a positive net worth.
I’m not saying you shouldn’t carry any debt, but at least have more assets than debts before contemplating a move that would compromise your earning ability.
Best,
-PoF
I think I’d also respond with “good for you” and “I wish I could do that”.
I’m a Ph.D. (i.e. not a real doctor) in a senior management position so it’s 50+ hours or zero, plus a lot of travel. I think working 25-30 hours per week would be perfect in order to have more balance in life. This would give enough time with family as well as for exercise, healthier cooking, and more. When I build the perfect day in my mind, I end up with about this time for productive “work” while still having time for other important things that are currently neglected.
Unfortunately many jobs, especially highly paid ones, don’t have this option. It’s certainly possible to find a much lower paying, part time job in my field but it would be a very different job than what I have now. And many of the parts I do like would not map over to a part time job.
So for the many people in a situation like this, it’s better to keep the nose to the grindstone for a few more years while saving a lot each year, and then make a stark transition to something else after FI is achieved. It would be nice to have an ability to phase out of a demanding career and I expect the options will increase given the demographics but it’s not a path that HR will accept in many companies yet.
But I’m happy for those that can make it work….keep paving the path for the rest of society!
It’s interesting to hear the options available or unavailable in various industries. It’s tough to be a part-time CFO, but quite possible to be a part-time radiologist.
Similarly, a number of jobs can be done remotely, but that’s not remotely possible for anesthesia or any procedure-oriented job.
Cheers, Dr. SIBF!
-PoF
I quit OB when my accounts at Vanguard rose above 5mill. I am still working 3 days per week. Before going part time I would recommend that you have your nest egg full. Determine your number and hit it before going part time. I can live off a part time income but really saving for retirement would be hard.
Many of us would describe that nest egg as not just full, but overflowing!
If you ever decide you’re ready to drop the 3 days of Gyn, I think you’ll be in great shape. Health insurance is expensive, but I would guess you can easily afford it.
Cheers!
-PoF
I’ve been wrestling with the same question as Dr. Am. I’m very fortunate that my job allows me for the most part to start cutting back gradually (as long as I find someone to pick up my shifts). Even though I’m only 39, I’ve decided to make the cut now instead of later. You can always work more, but you won’t get this time back.
If she’s asking the question, it usually means there’s something back there telling her there’s a better work/life balance. If her job allows, I’d recommend that she start cutting back gradually today and see how that adjustment affects her life and her finances. Maybe she finds the perfect balance at working 10-15% less and it ends up prolonging her career. Maybe with her free time, she gets resourceful and finds a way to spend more time with her family and make a little extra on the side to compensate for her lost income. Who knows, but she’ll never know unless she tries something different.
Great point, PIMD.
Incremental cutbacks may be ideal. Larger group practices and certain specialties tend to make such an arrangement more tenable.
In anesthesia, my schedule is so variable that I don’t think I would notice the difference of a 10% or 20% cutback other than in the paychecks. It’s not like I’m dropping every other (or every) Friday.
Dropping 40% of my shifts is a gamechanger, though.
Cheers!
-PoF
I dunno, When I drop even 1 shift a month, I can really see and feel the difference. 10-20% is a big deal. Over the last 4 years I have been decreasing my shifts from 1 shift every 9-12 months. It has been a game changer for me. Unfortunately we will be a bit short staffed for about 4 months and I will likely need to pick up extra shifts. Much easier to pick up extra shifts when you are working less. But, after that I am going to cut back by another day.
Part time is definitely great when you reach the number needed to coast to retirement age.
Personally, I’m not sure if I would want to go part-time. I would prefer to break off the chains as soon as possible and to do that, I would most likely have a full time job to maximize my income. On the other hand, if I had a job that I loved deeply, then there’s the chance of going part time.
For me, I’d say it would really depend on my situation. And for my part time number, I believe I have reached it already (last time I calculated) and can technically coast to retirement age.
For Dr. Am, I agree with your analysis of having her work a few more years before transitioning to part time.
Thank you for the comment, SP.
Like you, I don’t think I would have considered part time on the path to FI. A lighter schedule made more sense when I realized I was FI but not yet comfortable quitting my job and leaving a lucrative career behind.
Cheers!
-PoF
That makes sense, PoF.
Now that I think of it, part time would be a great way to transition into FI once you’ve reached it, especially given all of the “one more year” stories.
It’d be a great way to transition and once the person is fully ready, they can just move the rest of the hours from part-time over.
Best,
SP