While not a medical doctor, today’s interviewee is a Ph.D. scientist who completed a post-doctoral fellowship, and worked up to a physician-like salary over a 20-year career.
With a starting salary of about $80,000, you might be surprised to learn that he and his spouse now have a net worth approaching $5 Million, but that’s where they’re at. Practicing relative frugality and regular investing has paid off handsomely.
Full retirement is an option at this point, but an opportunity to join a startup was too good to pass up, even if it came with a substantial paycut.
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
You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?
Over the last five years, we have averaged $102,909 annual spending according to Mint. Now, that does not include health insurance. So, even if I include $36,000/year for one of those super-duper plans on the healthcare.gov exchange, we will probably be in good shape.
As of today, the total net worth, without including our house which is fully paid off is $4,785,597, says Personal Capital. So, I guess we could spend $191,423 per year if we go by the 4% rule.
We plan to do 3%, so, it will be like $143,567. We also plan to adjust our spending if there is a market crash. We probably have some discretionary expenses that could be cut from that $100,000 annually that we typically spend.
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
Well, the two of us are 55 and 53, and I am an immigrant from a South Asian country. My wife is from where PoF is from where all the women are strong, all the men are good-looking, and all the children are above average.
We now live on the east coast. So, taxes are way above average and so is the cost of living. We have twins that are in college and they will graduate next year. One of them is planning to go to medical school and the other one graduate school. We will help them as much as we can.
Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?
I have been the primary breadwinner since we both got out of graduate school. I have been a scientist in a pharmaceutical company my entire 20+ year career.
I started work at age 32 after a Ph.D. and a post-doctoral fellowship. My starting salary with bonus was about $80,000 and over the twenty-year career, I have gotten raises and promotions and my total compensation is now about $300,000.
My wife stayed home to take care of the twins and never went back to work full time. She teaches part-time and makes about $10,000 a year.
I was still working in the same job until two weeks ago because I didn’t know what I would do without working in early retirement. I was also paranoid about not working and having to withdraw money from our savings.
Then, I got a call from a recruiter with an opportunity to join a biotech startup that paid less salary than I was making, had worse benefits, but, was doing exactly what I wanted to focus on as a scientist. It was a sign!
I interviewed, got a job, thought about it for a week, walked to my boss’s office, and resigned. I still will be working, but, doing exactly what I wanted to do in a tiny startup without the guarantees and trappings of a big company.
If the company is successful, it will be a financial windfall. If not, this is my early retirement activity and I won’t have to touch my savings for a year or two until the company goes under (or I get fired). Then I’ll really retire.
Was financial independence a long-term goal of yours? Did you think you might retire early or be able to do so when you first got started in your career?
I am an immigrant and I came to US with a suitcase, $500, and a full scholarship to a small name-brand private liberal arts college.
I didn’t know much about investing. But, someone told me that I need to get to a point where I don’t work for money and my money works for me. That stuck in my head.
Fortuitously, I got a copy of William Spitz’s book Get Rich Slowly around the time I graduated from college and starting a PhD. That book fascinated me. I had saved a couple of thousand dollars from summer jobs and working during college.
Instead of buying a car with that money as I intended originally, I decided to buy a Vanguard S&P 500 index fund. Then, I put in about $50 or so a month from my whopping $1,000 a month graduate school stipend.
I did that for 25+ years while increasing the savings percentage all the way to a 40% savings rate now while taking advantage of 401(k)s, Roths, IRAs, backdoors, etc… and here we are!
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
- $1,450,000 in my 401(k)
- $300,000 in my wife’s traditional IRA
- $120,000 in two Roth IRAs
- $1,750,000 in a taxable Vanguard Account
- $750,000 in company stock
- $250,000 in unvested company stock (need to work another year to get it)
- $120,000 in cash in CDs and money market checking account
- $55,000 in an HSA
- $75,000 in individual stocks (play $$)
- Our house valued at $850,000 on Zillow is paid off
I have been an aggressive investor and plan to continue that deep into my retirement. Not counting company stock, I have an 80% stock 10% REIT, and 10% bond portfolio. The stock component is 55% US stock and 25% international. That was one of the portfolios I adapted from the Michael Spitz book in 1995!
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
Did I mention that I am a scientist?
Do you have investments in an HSA? How about 529 Plans?
My employer had an HSA and for the first five years or so, I contributed and used the money for health expenses. The last eight years after reading PoF and White Coat Investor, I have been accumulating money in the HSA to use during my retirement. I have it invested in the Vanguard Total Stock Market Index.
I did not count the money in the 529 plans towards our net worth. My twins are in (ahem) private top ten ranked universities and because of my income and net worth, they do not get a single penny in financial aid.
Yes, PoF, I am not following your advice about a public U. But, they worked really hard in high school and got in to these uber-competitive places even though we never pressured them. So, we felt that if they wanted to go there, we should pay.
We can afford it and we are now paying like $80,000 per child in college tuition. Because they are in these schools, they have made great connections for summer internships in the last two years, lined up plans for employment for gap years between college and graduate school. So, we are glad they went to these elite schools.
What has been your best investment?
I bought SNAP at $5. TSLA at $60. BioNTech at $20 or so. I am serious. But, only 100 SNAP and 10 TSLA. 10 BioNTech. So, those didn’t make me rich.
My best investment had been the bi-monthly Vanguard S&P 500 index investment for the last 25 years. I’ve been doing that no matter what, for the last 25 years and will continue to do that until I have to drawdown.
Your worst investment?
Since I work in the pharmaceutical industry, I thought I knew about the industry and bought healthcare stocks here and there looking for a home run. Next cancer cure, anyone?
I’ve also looked for disruptive technologies to invest in. Well, LYFT is still $50 after three years since I’ve bought 100 shares. I’ve lost more money in biotech investments than I have earned.
My individual stock portfolio has yielded an annualized return of 3%. During the same time, if I had invested that money in that S&P 500, I would have earned 17.6%. I really stink at picking individual stocks.
[PoF: Thank goodness for the Snapchat and Tesla stocks. If not for them, you might be in the red!]
What do you like to do with your free time? How much free time do you have these days?
Well, I haven’t quite retired yet. Still working. As I mentioned earlier, I just started working in a high-risk, high reward startup. This is my FIRE activity.
Eventually, when I retire, maybe I’ll exercise more, follow the PoF example and try to run a half marathon. And maybe I can sit around all Saturday and Sunday and watch all the football games on TV. Maybe I can splurge on cable or satellite TV since we have never had them.
Do you enjoy travel? Tell us about a favorite trip you’ve taken.
Oh, I wish COVID goes away and travel gets back to normal. We have traveled on vacation to South Asia (where I am from), many trips to Europe, Hawaii, Alaska, Mexico, etc…, etc… We would love to start traveling again.
When our net worth hit a certain milestone, we splurged and took a small boat cruise to see Alaska from the water. That was one of the most memorable trips we have taken. Would love to do something like that again. So many places to go and see. So little time.
Do you incorporate giving (money or time) into your post-FI life?
I have been doing some volunteer work with my expatriate friends in South Asia helping students in rural poor schools by providing them funding and badly needed school supplies.
My wife has been volunteering with similar activities in an African country. We would love to continue to do that in our retirement and actually spend time in those places helping in-person in addition to the financial help.
If retired, do you miss work? Do you get bored?
That is one of the worries I have. You never know the value of what you have until you don’t have it. So, it could be that if I retire, I might really miss work and will try to find a job again.
What advice do you have for others hoping to achieve the financial success you’ve found?
I was lucky to get on the PoF and WCI saving, investment strategy well before PoF or WCI existed. As you can see from my example, the strategy of saving a decent percentage of your income and investing in low cost index funds actually work.
Of course, the bull markets of late 1990s and the last ten years have helped tremendously. But, we also saved through the bear markets of the early 2000s, the Great Recession, and the 2020 crash.
Compare and contrast yourself with PoF
PoFs recent article about his weird frugalities really resonate with us. We must be brothers separated at birth.
We cut our own hair. Cook meals at home. Pack a lunch to work. Entertain at home. If we go out, we hit ethnic restaurants or holes in the wall where one get good food for real cheap.
We keep the thermostat a couple of degrees cooler to save a buck. Drive our cars until they die. Anyone interested in a 2004 Toyota minivan with over 200,000 miles?
We did splurge and buy a plug-in hybrid a few years back, just like PoF.
Unlike PoF, we aren’t into alcohol. That saves a whole bunch of money. We haven’t sold our own homes, either. That’s too much work.
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
What would be the cost of healthcare till we can get Medicare? I priced Obamacare and for a decent plan for the first year, it costs about $30,000. Don’t say health sharing ministries because I have seen the John Oliver episode on them.
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.
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!