Who Is Missing Out More On Life…
Doctor A’s Career
Doctor A works 40-50 hours a week 8am-5pm Mon-Fri for 25-35 years. Early on in her career she purchases a nice house, gets new cars every few years, enjoys regular outings for drinks/dinner with her friends, goes on nice vacations, surrounds herself with nice furniture, and nice electronics to fill the empty storage spaces. This doc eventually retires at age 58-65 and then spends her retirement years doing things she was too busy to do during the working years.
Doctor B’s Career
Doctor B works 40-50 hours a week with every other weekend and morning free for 10 years and retires at age 38-40. Doc B takes an occasional trip usually purchased with miles, hikes locally, mountain bikes for a little more excitement, rents a small apartment in a location close to work, commutes by bike and got rid of his car early after residency. He then spends his time in retirement pursuing more reading, learning, and even starting a new woodworking hobby which eventually turns into an income stream.
It’s Normal To Retire Only When The IRS Says So
Doctor A of course is looked upon as the normal doctor, the one who did things right. She bought a house to save on taxes. She saved about 20% of her gross income into her retirement accounts. She paid off her student loans by age 45 and had a paid off house by age 56. She saved very little in her taxable accounts so she decided to work until age 59 before retiring. From a lifetime of working and spending on things that would bring her pleasure the transition into retirement wasn’t smooth. There was some concern about running out of money.
5 years into retirement there was a major stock market ‘crash’ which decreased her fund values by 40%, this caused her a lot of stress and she decided to go back to work as a per diem in order to not touch her funds. Her house was paid off but she still owed property taxes and there were maintenance expenses on the house.
If Dr. A’s savings or investments for whatever reason are wiped out completely she would be left devastated with not much time to build it back up. She never developed another income stream and doesn’t know how to live on anything less than $6,000/mo. Life without cable TV, nice dinners and vacations is quite depressing and unbearable. Even a bad inflationary economy could drastically hurt her quality of life. Years of work have also left her a bit out of shape and dependent on healthcare.
Dr. B Sacrificed A Fabulous Life He Could Have Had For Financial Independence At A Young Age
Doctor B was thought of missing out on life for most of his 10 year career. His car-less ways were questioned. He was considered too cheap and too frugal to take vacations and enjoy life. His student loans were paid off in 3 years. He saved 60-70% of his gross income and was able to capitalize on a large stock market downturn by purchasing some funds that were on sale while his colleagues were stretched thin paying down student loans and mortgages.
He learned how to live on less, be self-sufficient, learn valuable skills such as cooking, woodworking and camping/hiking. Exercise and health weren’t a big issue because his lifestyle supported this naturally. Soon after retirement the housing market crashed due to major insurance company failures and he was able to get a house that needed some work for substantially below market value. Since the property couldn’t be insured the bank wasn’t willing to offer a mortgage so he purchased it cash with very little competition.
There May Be No Clear Winner But Who Sacrificed More?
Doctor B was thought to be obsessed with money and was told by others that he should just relax, money doesn’t matter and one should live it up. The people saying this of course were the ones that were willing to trade their free time for work time in order to afford these tangible goods that they were so adamant had no value.
In the end you will know what works better for you. But don’t think you have to retire at age 65, 59.5 or 55 just because there is some document out there from the IRS or on a 401(k) website recommending a specific age of retirement. If you are okay with working 40 hours a week until your later years then do it, if you want to retire earlier there have been many docs who have done so.
What’s your ideal retirement age?
If you could afford retire today, would you?
And finally, how do you define ‘retire’?