Post FI Notes 003: FI Radiologist With One More Year Syndrome

Unlike the academic radiologist recently featured, today’s Post FI Interviewee works in private practice radiology, and he has a much friendlier schedule.

He’s also got a healthy net worth that would allow him to spend $200,000 a year or more with a low and safe withdrawal rate. This, despite a contentious and costly divorce.

While he could afford to retire, the job is good, the pay is good, and it just recently became a bit more flexible. It’s an enviable position to be in, and I can see why he might choose to work “one more year” more than a few times.

You may already be somewhat familiar with this anonymous radiologist based on his other work at XRAYVSN.com. He was also featured here previously in this Christopher Guest Post.

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.

 

 

Getting to Know You

 

I am a divorced 50-year-old full-time practicing radiologist located in the southeast region of the United States.

I originally started out as an attending in an academic setting in 2003 but in 2006 relocated to my current private practice (a 90+ multispecialty outpatient clinic).

I have one child, a daughter, who is about to turn 16 this October (wish me luck).

I have been completely debt-free since 2015 when I paid off the balance of my mortgage and finally owned “every blade of grass” on my property.

 

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?

To be honest, I have never sat down and budgeted expenses my entire life.

I get a rough idea of how much my annual expenses are by adding up all sources of income and then subtracting all the taxes paid as well as money that went into investments.

Last year was a strange year, for obvious reasons, so I do not think it was truly a representative of my annual burn rate.

Using the above method for a more normal year, 2019, my annual burn rate for my household would be around $150k.

Some of the big-ticket items include:

  • Private school tuition (I have been sending my daughter to private school since 6th grade (she is now in the 11th grade)) of $21,000.
  • Typical annual vacation costs of $10,000 to $20,000.
  • Property tax of $4,000.
  • Various insurance policies: $13,000.

 

I use a non-traditional way to calculate my net worth, which I feel gives a more accurate picture of what I can spend in retirement.

I essentially eliminate my primary residence, money in college plans, and vehicles/jewelry in my calculations in order to derive a “usable net worth” total.

Based on this net worth value, the 4% rule states that my safe withdrawal rate can exceed $240,000 per year.

Because I plan on retiring earlier than normal, and thus have a longer retirement window to navigate, I am more conservative, shooting for a 3% SWR (which currently projects to $180,000 per year).

 

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 currently support my daughter (age 15) and my mother (age 75).

 

Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?

I am currently working full time as a general radiologist.

Even before I became financially independent, I tended to choose lifestyle over money.

I interviewed at 5 places and received offer letters from each one.

I ended up signing with my current practice, with my initial salary almost $100,000 less than the other offers I had been given.

I chose this medical practice over the others despite the lower salary offer because it was the only one that did not require me to work nights, weekends, or even take call.

Once I became financially independent, I did notice that I began to prioritize my time over money even more.

I went from a 5-day work week down to 4 days by paying for coverage provided by outside radiologists.

Although my clinical hours decreased by 20%, the hit to my financial bottom line was far less as I was only losing out on the “least valuable” dollars.

This last year was very trying for me as volume continued to increase exponentially as the clinic continued to expand.

There were more than a few occasions where I thought I should just quit or retire because I really did not need the money anymore.

I was at my breaking point and experienced burnout at a level I have never been at before

Fortunately, we were able to hire a 3rd full-time radiologist who joined our practice in August.

With a 3rd rad to share the workload, the flames of burnout started to wane.

It was as if a switch was flipped and I have started to enjoy being a radiologist again.

The financial hit of adding a partner was easily tolerated thanks to being financially independent.

 

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 was quite naïve financially when I finished medical school and residency.

My father was a physician (who passed away at the age of 50 and I was 14).

I knew I could live a comfortable lifestyle as a physician from what I observed while he was alive.

I believe my father would have practiced medicine until the traditional age of 65 or so and I automatically assumed that I would do the same.

I never knew about the concept of financial independence until I was 40 years old and thus never even considered retiring early until that point.

Even then I could not fathom retiring early as I was just picking myself up financially and emotionally from the divorce.

 

Investing 

 

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

I initially started out investing in the traditional way of stocks and bonds, but I soon found myself leaning towards real estate investments primarily through syndications.

Although these values fluctuate, at the time of this writing I am around 40% in real estate syndications, 30% in the stock market, 25% alternatives, and the rest in savings.

I am fortunate that when I was a radiology resident in Ohio I was automatically enrolled in the state pension plan (OPERS).

After 4 years of radiology residency, a 1-year interventional radiology fellowship, and almost 2 years as an attending, I now qualify for a pension of $15k/year at the age of 65.

As for Social Security, I feel confident it will be there for me when I qualify but likely at a reduced benefit.

Based on the online Social Security benefits calculator, with my current earnings record, if I work for another 2 years, I would qualify for $21,000 a year benefit at the earliest qualifying age (62 years old) or $37,000 if I wait until I am 70 years old to claim the maximum benefit.

I was curious to see what sort of impact retiring early (age 53) would have on my Social Security benefits.

If I worked until I am 65 (15 more years,), according to the online calculator at age 62 I qualify for $27,000 a year benefit or $47,000 a year benefit if I wait till age 70.

Fifteen more years of working only bumps up my benefit at the most by $10,000 per year.

This really highlights the importance of knowing your Social Security Bend Points as pointed out by Physician on FIRE.

Diminishing returns makes trading the precious commodity of my time not worth it for the money received.

 

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

The account breakdown for my stock market portfolio is 40% in a brokerage account, 45% 401k, 10% Roth IRA, and 5% HSA.

 

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

I do have an HSA account which I plan to use as a “Stealth IRA,” which just hit 6 figures.

I have been funding it to the max every year that it was available to me.

Any qualified expenses are paid out of pocket and then save the receipts to claim later when I am retired.

This hopefully allows me to have the money triple tax advantaged (pre-tax money going in, no taxes on earnings, and no taxes on withdrawal).

I do have a 529 plan in the low 6 figures for my daughter which, as mentioned above, I do not incorporate into my personal net worth calculation.

Depending on where she ends up matriculating to, I may have to cashflow any shortfall.

 

What has been your best investment?

Apart from investing in my medical education which made all the subsequent financial windfalls possible, my best investment to date was being a ground-floor investor in the construction of my current medical building.

After being an investor in the building for 12 years, the group decided to sell in 2019 to a syndicate that specializes in medical real estate.

This syndicate literally made us an offer we could not refuse.

The proceeds from the sale allowed me to almost 16x my money (it was the largest check ever made out to me with the elusive 2nd comma present)

Factor in the cash distributions over the years and I profited even more.

What made this investment even more special was how I almost lost it multiple times because of my divorce.

I used the proceeds from the sale to seed multiple subsequent real estate investments, further magnifying the financial impact it had on my life.

Based on actual returns from 2020, the cash flow I received from just my real estate portfolio can cover over 80% of my annual spending.

I find positive cash flow far more valuable that the total nest egg amount because if you can survive on cash flow alone without needing to touch the capital, you truly have created a perpetual passive income money printing machine.

 

Your biggest financial mistake?

Despite 26 years of education, I have not had a single hour of formal financial training.

It should therefore come as no surprise that I have made a lot of financial mistakes in my life, learning along the way by using the school of hard knocks methodology.

I made so many mistakes that I had enough material for 5 blog posts!

I consider the most egregious mistake I made in my life was marrying my now ex-wife.

It was an ill-advised arranged marriage which I caved to in order to meet my mother’s wishes.

It was an incredibly contentious divorce, and I was hemorrhaging money to pay for lawyer’s fees etc. (I spent over $300k in legal fees alone during the divorce)

It is no exaggeration when I say the divorce created a 7-figure hit to my net worth (I was about to turn 40 and my net worth was negative $850k at the lowest point).

However, all was not lost because I truly feel I would be nowhere close to being financially independent had I stayed married to her.

 

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Post-FI Life

 

What do you like to do with your free time? How much free time do you have these days?

Even though I consider myself financially independent I have yet to make any drastic work changes, apart from adding a 3rd radiology partner.

I still average a 4-day work week although now it is a bit easier to get some extra days or ½ days off here and there which I have also taken full advantage of.

As for my free time, my daughter keeps me busy (we love to play chess), ride bikes, and even occasionally kayak at a nearby lake.

 

Do you enjoy travel? Tell us about a favorite trip you’ve taken.

My biggest regret in life (besides the marriage) was not traveling more.

I absolutely love to travel but during medical school and residency I never had the money or time.

Even when I became an attending, I barely took time off for vacation, choosing to earn more money instead.

Thankfully, I came to my senses and started prioritizing travel again a few years after my divorce.

It certainly helped that I finally found a companion I actually wanted to travel with, something that was not present when I was married.

My most memorable trip was a bucket-list destination for me, Bali.

I went there for my 45th birthday with my now fiancée.

She and I absolutely loved the culture there and the food was outstanding.

Because of currency arbitrage we were truly able to live it up while only spending pennies on the dollar.

 

What advice do you have for others hoping to achieve the financial success you’ve found?

I cannot preach enough about the importance of patience.

In this fast food, instant gratification society everyone wants to get to the endpoint right away.

Becoming financially independent is typically a slow grind.

They say the first million is the hardest and it is true.

Once you have the 1st, 2nd, 3rd and so forth, million in your portfolio it will begin to feel like a runaway financial train that only continues to pick up speed.

That is because your growing capital stack starts pulling its own weight and contributing to the financial pile.

This is the true beauty of having the coveted passive income.

The key is to transform yourself from a laborer into a capitalist and have money working for you rather than the other way around.

You want to be on the right side of the lender-borrower financial equation.

Money is untiring and continues to work 24/7, 365 days a week.

Another offer of advice is to not compare yourself to others and get discouraged.

We all have different paths and we progress on those paths at different speeds.

Lastly, I cannot stress enough that moderation is key.

I hear of stories of people being extremely frugal in order to FIRE as fast as possible.

They make themselves miserable in the process and justify doing so by thinking that the sacrifice will be worth it later on.

My father’s untimely death is a testament to the fact that we all are on borrowed time and that tomorrow is not guaranteed.

Add into the mix the fact that as we grow older our physical abilities decline, to the point that you may not even be capable of enjoying the activities you had been putting off.

 

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

Like many who consider early retirement, my biggest concern is anticipating medical costs/insurance coverage during the “danger zone” period prior to qualifying for Medicare.

I know that there are proponents for Health Share Ministries as a viable option, however it seems most are faith based, and I may not have them available to me.

I would love to hear thoughts on other options that would be available that I can look into.

Being fairly conservative I also feel like I am suffering from One More Year Syndrome.

It would be interesting to hear how others overcame this condition and actually pull the plug.

 

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’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!

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.

 

2 thoughts on “Post FI Notes 003: FI Radiologist With One More Year Syndrome”

  1. Thanks for featuring Xray! He’s a wonderful example of a later-in-life course correction where, despite being hobbled by a costly and painful divorce, life (financially, emotionally) really can and does get better with the one-two punch of financial literacy + discipline.

    Fondly,

    CD

    Reply
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Social security – with the updates they have done on “my social security”, you see what you are projected to get making the same amount you did last year until full retirement or change future earnings to zero and see what you are projected to get. That should give you a pretty good idea what you will get if you have already hit the second bend point and/or are close to retirement.

    Reply

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