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How Much Money Do Physicians Need For Retirement?

I stumbled upon the comment above which was made by a physician on the POF blog post – an informative blog for physicians wanting to master their personal finances.

What I found interesting from this particular comment is that it’s apparent that $1M isn’t enough to retire on. This is a common enough blanket statement which I’ve tried to address with many posts on my blog and wanted to delve in more here.

The comment goes on to indicate that:

$2-3M means a life of frugality which I’m guessing is a bad thing.

$4-5M is just barely enough.

$6-7M seems to be the sweet-spot.

$8-10M seems to be the Holy Grail.

My first thoughts were that these numbers are relative. If I woke up tomorrow with a net worth of $2M I wouldn’t know what to do with all of that money.

If Oprah Winfrey woke up with a net worth of $8-10M she would probably break down and cry.

 

The Physician Mentality

The current physician mentality is summarized well in the post above as proven by the many likes and agreements it received.

Determining the feasibility of retirement in terms of those concrete numbers is both good and bad.

It’s good because as long as there are physicians out there hustling hard for those mega millions it allows little guys like me to sneak by and live a lavish life of freedom without having to work hard for it.

It’s also good because it allows for blanket advice such as “if you have $XM then you are set for retirement”.

It’s bad because medicine, as it is practiced these days, is slavery and working decades in a such a field can be draining for some.

 

Retirement Beyond Numbers

Some physician households are able to live amazing lifestyles on $1,500/month whether they choose to stay in the US or move overseas.

Dare I say, retirement is a mindset and less a dollar value? I still have a number in mind for my own portfolio – $500k, in fact.

To get beyond the numbers it’s important to ask yourself what you are capable of when it comes to designing your exact lifestyle.

What do you need to enjoy life?
How well can you adapt?
How sustainable are your lifestyle habits?

These questions will tell you a lot more about your retirement number than a math equation or a fixed dollar-value.

Math is logical but there is a huge downside there – it clumps everyone into one class. You can use the math to guide your decisions but when you pan-decide based on numbers alone then you’ll inevitably find yourself in the $8-10M-goal club.

 

A $8-10M Retirement Nest-egg

$8-10M is the Ferrari of retirements. It’s the DD implants. It’s the 1 acre mansion in La Jolla. Does that mean everyone wants it?

When there is no need or desire for a certain asset then holding that asset will simply expose you to excess risk or at best create an extra headache and stress having to maintain that asset.

Why risk the quality of my uniquely chosen and designed lifestyle for a retirement number which was manufactured by large brokerage companies?

Why become a target?

No doctor sat down one day and individually came up with the $8-10M number, nor the $6-7M, nor the $4-5M numbers.

A savvy salesperson came up with these values and started touring speaker circuits and scaring physicians into thinking that this is the right amount to have in a retirement account.

Physicians, too busy with their profession and patients, just nodded, put their head down, and began burning themselves out to reach these numbers.

Dude, who the fuck is gonna spend $10M in their retirement years?!

If you parked that money in nothing more than gov’t bonds you would see a passive income of nearly 275,000/year. That’s $23,000/month for a retiree!

Excess Wealth

Anything in excess is bad – we may not know what those downsides are because few of us achieve such wealth but if your lifestyle doesn’t require $8-10M then it’s worth rethinking whether you’d wanna reach that value.

From a practical standpoint, excess wealth is not an easy goal to achieve. Even if it’s only a couple of million dollars, it’s still important to figure out if it’s a worthwhile goal to shoot for.

There is always a trade-off. Time is money and money doesn’t accumulate for free. How many hours of your free time are you willing to sacrifice for something that you don’t need?

My proposition is to use that free time for something better – spending time with family, learning new things, pursuing dreams.

 

The Hard Questions

I love my fellow doctors, even the dude who thinks that $6-7M is the sweet spot for retirement. I’m only judgemental because I want every physician to rid themselves fully of the bullshit with which we’re brainwashed.

  1. What ideal lifestyle do you want to achieve?
  2. What are you willing to do for it?
  3. What things can you not live without?
  4. What can you cut out of your life and still enjoy the shit out of it?
  5. Whose definition of an ideal life are you living – truly yours or bitten off?

The cover image for this post is a beautiful Tahiti beach. It symbolizes peace, happiness, tranquility, and a desirable lifestyle.

Ironically, I can find 100 such beaches all over the Polynesia or Southeast Asia and live there for around $1,000 USD a month – in luxury.

 

Living Someone Else’s Perfect Life

Mainstream news shows the rich owning 10,000 sqft homes and having condos in different cities. It shows them taking lavish vacations and driving beautifully designed automobiles. They wear custom designed fashion and dine at restaurants with $300 plates.

After we have acquired everything luxurious that’s out there and taken every unique vacation and have run out of things to renovate in our homes, we still have to wake up in the morning and live our lives and turn the lights off at night and go to sleep.

Why should I believe that that is luxury?

Why is luxury a massive home with marble floors and a rotating car platform, or an elevator in the living room?

Why isn’t luxury being able to sit at a coffee shop at 8pm on a Tuesday night, sipping coffee, with no place to be the next day and no major responsibilities to worry about?

I have bought $2,000 shoes, $15,000 watches, a modern downtown penthouse, and a luxury automobile and that kind of luxury didn’t deliver what I hoped it would. I won’t judge anyone for doing the same but I can tell you that I was living someone else’s definition of an ideal life.

 

Design Your Ideal Retirement

If you want to own a beautiful stone cottage in the countryside of Ireland, then do so, it won’t cost you but $30,000.

Do you want to spend your mornings looking out onto the ocean and reading your favorite book by a fireplace? Great, you can get one for less than $90,000.

It won’t be a good use of a post for me to list every single way a physician could enjoy the same luxury in life for which others pay millions for. Instead, I hope that whoever reads this post rethinks their definition of an ideal retirement lifestyle.

 

Retire Right Now

I have healthcare professional friends who feel stuck in their professional fields. They believe that they must continue working as physicians, dentists, pharmacists, nurses, NP’s, PA’s or else they are missing out on something or risking something.

1. Do Something You Love

Retire from medicine today if you want to. Pull the plug and go do something outside of medicine like teaching yoga or working at a library.

Retirement is the ability to stop working a job that we aren’t 100% happy with. Financial independence is one way of being able to retire. Another way is to do what you love doing – something that you’d do for free which someone else is willing to pay you for.

2. Cut Expenses

Secure yourself a cheap place to rent or a paid-off home and escape the high-cost systems such as gadgets, automobiles, debt, and consumer spending.

3. Create Passive Income

Invest your money in the securities market or rental income properties or businesses. These will earn you a passive income which should be able to sustain your lifestyle expenses without you having to work much for it.

4. Get Creative

If you are going to live someone else’s dream then you’ll have to abide by their rules and that might get expensive.

Instead, design your own unique lifestyle and fuck everyone else. There are so many ways to enjoy the kind of lifestyle you desire without having to do it the mainstream way.

5. It Is Possible!

It is possible to retire on a retirement nest-egg of $300k regardless of what anyone else tells you. There are numerous happy, intelligent, hard-working individuals who have managed to retire on even less than that.

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