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Retirement for Physicians

My definition of retirement might vary from yours. Just as your definition of health is likely different from mine. I’d gander a wager that you haven’t really sat down and figured this shit out; what would retirement look like? I’ve written a lot about the topic of retirement for physicians but I have more experience now so let’s rehash this.

My definition of retirement is that you can cover your household expenses without earned income. For me, as a physician, if I’m not seeing patients and not doing consulting work I would still have some money coming in.

Passive Income

This term has been bastardized a bit. Basically, passive income is income that comes in with minimal time and effort investment. And since physicians have to spend a lot of time and effort to make money, passive income is a rather exciting opportunity.

If you have a rental income property managed by a rental agency, the profits from that are mostly passive. You might spend 10 hours a year managing it but you’re earning several thousand dollars in return for that effort.

Stocks, bonds, CDs, P2P, and some other paper assets are good examples of passive income. You obviously had to earn the money to put into that account and you have to babysit it but other than that it’s fairly hands-off.

Passive income could be that your investment value grew in size or it could be a steady inflow of income from your investment.

Rental income, for example, will give you steady passive income. But the house or apartment itself might go up in value as well.

With an index fund, you might have passive income from the dividends and the actual fund might also go up in value.

Doubling Your Money

In breadmaking, they say “show me the crumb shot”. People upload the photo of what the inside of the bread looks like after it’s been baked. It’s proof of how good your technique worked.

Doubling your investment is good proof of passive income – at least for me. It’s been a good litmus test and it’s my crumb shot for you guys to voyeur.

I’ve invested somewhere around $120k and my investment returns have been somewhere around $100k. I have a balance of around $222,000 in my brokerage account at Vanguard.

This will continue to grow = passive income.

And every year I’ll get another 2% of dividends from this = passive income.

2% of 200,000 is $4,480. That is a very respectable sum of money. That’s about $370/month coming into my account which I can spend. Or I can choose to reinvest it for even more growth.

Retirement & Passive Income

The way it works traditionally is that you invest your money in your working years as a physician. Retirement for physicians is a bit different in some ways because most of us are accustomed to rather luxurious lifestyles.

Once you retire you might think that you can drop that down quite a bit. But habitual habits become habits. You get used to upgrading your car and wardrobe regularly. And you won’t be able to eat in any restaurant with a white table cloth.

Some will prefer real estate and others stocks and bonds. Some will prefer a mix of both. It depends on what resonates well with you and probably the kind of mentors you have around you and what they did for retirement.

No matter what it’s worthwhile to start investing. Buy that little $50k house in Nevada and rent it out. Put some money in your 401k and add some more to a private brokerage.

Retirement Without Passive Income

Are you allowed to work in retirement? The retirement police will tell you otherwise. I’m 43 and retired but I’m not considered retired because I still work.

The difference is that I want to work and don’t have to work. And if I stopped working I would have enough passive income to cover my household spending.

I believe that working in retirement is a great way to cover your retirement as a physician. You can work in a community health center or do a little telemedicine or you can do some of the consulting work which I’ve learned to really enjoy.

It doesn’t even have to be work in healthcare. As a physician, you can be a coach, a yoga teacher, open up a bookstore, or teach medical English online.

Working in Retirement

Don’t expect to hit your retirement age and have something flexible lined up that you can do. It doesn’t often work out that way.

During your working years as a physician that’s when you want to start planning for any kind of work you might enjoy in retirement.

I like consulting, you might like handyman work. Whatever it is, dabble in it a little now and get the feel for it. It’ll make it much easier to transition into it once you’re ready to pull the trigger on full-time work.

And remember, you don’t have to quit cold turkey. You can cut back at your main work and then do some teaching or baking on the side and see how that sustains your lifestyle.

Retirement Lifestyle for Physicians

When I was investing aggressively and saving aggressively to quit medicine many of my colleagues thought it was a bad idea. Many also believed that it wasn’t realistic to stop working at age 39.

4 years later and those same colleagues, who are great friends, express praise. Some wish they could do the same and others are now working towards it.

The point here is that it doesn’t matter what others are doing. Carve out your own path and do the math. Your math and your risk tolerance will be quite different from mine.

My retirement lifestyle is yoga, rock climbing, cooking, reading, writing, and walking. I’m in heaven with a mix of these things. My spending and my investments is optimized to afford this kind of lifestyle.

My net worth is a little over $1 million now. That makes me a millionaire even though I never set out to hit that number. For someone else even $5 million wouldn’t be enough to live a comfortable lifestyle.

The Lies of Physician Retirement

You might be living in SF or NY right now and spending a lot of money. But if you’re also investing well and building some skills to earn money off of in your retirement you are working towards the right goal.

Retirement experts will tell physicians that you need $8-10 million to have a comfortable lifestyle. Basically with this amount of money you’re covered for any damn contingency possible. That’s like wearing a helmet when you drive – good but hard to pick your nose with one.

When you retire you don’t have to live in SF. You don’t even have to live in the US. You don’t have to have a big house or have 3 cars. You don’t even have to have a car.

As a physician, you are also in cray high demand. People trust you and your expertise is worth a lot of money. Your income opportunity in retirement is really high.

A Healthy Balance in Retirement

My recipe for retirement is a mix of the following which you can modify to fit your need.

1. Internationalization

Build some residency abroad. It doesn’t hurt to have the ability to live abroad should the political shit hit the made-in-china fan.

Learn another language or don’t. But have some money in another stable currency abroad.

My favorite places are Mexico, Spain, Australia, Canada, and Turkey. You’ll have a lot of work options there and you’ll be able to assimilate fairly easily.

Imagine how cool it might be to one day work in a refugee camp as an American physician in Italy or Turkey.

2. Real Estate

Buy a few small properties over your working years. They don’t have to be 500k properties. My condo in Spain was $125k and the one in Portland cost me $140k.

Small, easy-to-maintain properties can easily be rented. And you can always live in them in case you decide to leave the US for a while.

There are cheap properties all over the world but they likely won’t be on your radar because of the powers that be are trying to have you spend more, not less.

3. Develop a Skill

You already have many skills but you may not know it. Figure out what skills you have and develop it.

Forget the mainstream education system which lied to us and told us we must go to school and get a certificate to have a valuable skill.

People are making top dollar teaching English, dancing, and piano. There is a lot you can do from baking a good pizza to brewing good beer to sustain a lifestyle some day.

4. Invest in the Market

Whether it’s index funds or P2P lending or individuals stocks or bonds, start investing in the market. You’ll learn some great skills.

I am not talking about investing in stocks and bitcoin in 2021 which seems to be the rave. Everyone is going to do well in a market like 2021. I’m talking about learning investing over a decade.

I started in 2012 and I’m just an intermediate-level investor – maybe even a beginner. But I’m making money. I’ve made money in shitty markets and I’ve made money when it’s booming.

There is nothing wrong with day trading or trading cryptocurrency but you should be able to do it in various market conditions and not just when it’s trending up.

5. Start a Business

I’ve started, owned, operated, failed at, and sold several businesses over my life. Starting a business is easy in the US. Stary your first business even if it’s just selling something on Etsy.

Having the autonomy to be your own boss is a powerful tool in your retirement arsenal as a physician.

6. Build a Network

The solo mentality in the US has become an epidemic. And we’re finding ourselves lonelier than ever. After all, it’s hard to go through this life alone.

You might not think that others are as trustworthy as you are or as capable or competent. That’s not true. I’ve learned the opposite about myself. That I’m not as reliable and trustworthy and capable as I thought I was.

This realization helped me be more open to meeting new people and building a network of those who are on a similar path as myself.

All of you guys who are reading my shit are part of my network. You email me, you comment on what I write, you run things by me, and I’m running things by you.

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