When Do You No Longer Need To Work Full-Time
Let’s define part-time. This could be either working a certain percentage of a full-time schedule, 50%, 60%, 80% etc. or working a per diem schedule for a few weeks and taking a few weeks off. And of course for someone with low enough expenses it could mean working for a few months and then taking a few months off.
If I worked 30-40 days then I would have enough to live off of for the rest of the year… how sweet is that?
30 Years Old With A Little Saved
Let’s say you are a 30-year-old doctor and you got $250,000 of debt and you got $100,000 saved. Can you start working part-time?
In the above scenario I think it wouldn’t be prudent. I am not trying to be your financial adviser, if you really need to figure out the details you would be best served by a financial adviser. I am very happy with my adviser and would recommend him highly.
If you worked just enough to make minimum payments on your debt and enough to live off of you would likely not gain enough experience early in your career and you would be in your mid to late 40’s before your student loans are paid off. In that time frame your $100,000 invested would likely grow to $182,000. By age 65 it would grow to $370,000 (in today’s dollars).
35 Years Old With A Decent Stash
Now, let’s say you are 35-year-old and you didn’t splurge on a Hummer or a couple of condos (ehem!….what?) and you have $75,000 of student loan debt along with $250,000 saved/invested. Well, in this scenario I could see you going to part-time, working perhaps at 60-70%, only if your expenses are low. However, if you have a traditional American lifestyle budget then forget about it.
Sticking with the above example, if your expenses were in the $3,000/mo range then working part-time could net you enough money to pay down the debt as well as have enough to live off of. Working even 50% would allow you to accomplish this. Even better, at 50% you could start qualifying for IRA deductions and possibly be able to write off some of your loan interest.
The above 35 yo doctor could see their $250,000 grow to $550,000 if they just invested it and without adding anything to it. Of course the $550k would be had by age 55. Still, it’s a nice lifestyle.
38 Years Old With Half A Mill.
Let’s get to the more juicy cases, 38 yo doc, $30k of student loans and $500,000 invested. This is a sweet situation indeed. 8 years is enough to gain plenty of experience in medicine. With $500,00 invested one can really see money momentum at work. Without adding a dime to the stash this investment would grow to nearly $1,500,000 (that’s 1.5 million!) by age 65.
If this person’s expenses were in the $4,000-5,000 range then the first step would be to pay off those student loans. Working a part-time schedule, let’s say 50%, would still create an income of $100,000. This is more than enough to pay for living expenses and even stash away the $18,000 current limit for a 401(k). And just for fun, if you added this $18k every year until age 65 the $500k would become…. you ready?…. $2.2 million!
Instead of part-time this doc should probably go to a per diem status. All of a sudden a lot more options open up. Sure, they would have to pay for their own disability insurance (usually not much more than $400-600/mo), their own life insurance and health insurance. As a per diem one can pick the best shifts (avoiding cold & flu season), the higher paying shifts (evenings and weekends) and also work the hours and times of the year that they prefer so that they can fly off to … Slovakia.
Imagine working 3 months the entire year at $85/hour. You could gross $40,000, of which $29,750 would be after-tax income. That comes out to $2,480/mo that you can spend on your living expenses. I love it, you work 3 months and you get 9 months off!! This income would also qualify you for healthcare subsidies from the health insurance exchange.
Are you considering going part-time at some point?
What barriers do you see when thinking of going part-time?