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Leaving a Prestigious High-Paying Career in Your Early 40’s

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The following is a guest contribution from blogging friend Physician on FIRE, an anesthesiologist transitioning to early retirement. Physician on FIRE focuses on issues facing high earners looking to retire early. His writing combines technical investing and tax planning insights with an emphasis on living purposefully and giving back. I invited him to share his story of achieving financial independence quickly and walking away from a prestigious, highly-paid profession to retire at a young age….

I couldn’t wait to finish residency and start earning a real living. I was a 30-year old physician, and I was broke.

I started my career as a traveling anesthesiologist, working in hospitals in need of help, and I was willing to work. A lot. Everyone else I graduated with took a week off between finishing residency and taking the written boards; I worked that week and took my first week off about six months later.

Eventually, I realized that time away could be restorative, and I settled into a more reasonable schedule with enough time off to counter the many nights and weekends I was working on top of a busy daytime surgical schedule. But I had a hard time saying “no” to additional dollars, and it wasn’t unusual for me to take a working vacation, providing my services in new surroundings when I had a week off.

Life changed abruptly when the hospital I called home started a death spiral into bankruptcy after the Great Recession. My wife and I had a toddler and infant at home, the dream home we had built on the water, and suddenly I had no job.

Getting My Priorities Straight

After a tumultuous transition period in which I traveled for work once again, we settled into a life where I had a much more family-friendly schedule. My current job doesn’t even allow me to do locum tenens (travel work) outside of their system. In hindsight, I consider that policy to have been a blessing.

A few years ago, I found myself studying for an onerous, expensive recertification exam, and I started to ponder how I would feel repeating that process as the next ten-year cycle came around.

Having stumbled upon the concept of financial independence right around that time, you can imagine my surprise and delight when I realized that we were in a position to retire right then and there given our relatively frugal ways and high savings rate over the previous decade.

Not only would I not have to worry about taking that stupid test again, but I could easily afford to start prioritizing family time over work immediately. I stopped worrying about my inability to work extra shifts and started contemplating what it would be like to work less instead.

Part-Time Work and Slow Travel

In the fall of 2017, I downshifted to a wonderful part-time schedule that I was able to negotiate. When you’re in a situation where you don’t need the job or the income it provides, you’re negotiating from a position of strength.

When I started my career, I was eager to trade my time for money. I’ve now flipped the switch, giving up a six-figure sum annually to have a schedule that better fits our desired lifestyle as a family. I’m home for dinner more often, see my boys before and after school most days, and have found time to take better care of myself.

My new schedule involves a single 100-plus hour workweek (some of which is weekend call from home) followed by a few weeks off at a time. We quickly took advantage of our newfound freedom, spending three weeks in Guanajuato, Mexico on our first extended family adventure. I loved how our lives slowed down. There were no alarm clocks, save for the barking dogs and crowing chickens. There was no working late due to add-on cases. There were no pagers.

In Mexico, we had no need for a vehicle. Our boys, ages 7 and 9, would get some schoolwork done in the morning. After a hearty breakfast of eggs and fresh fruit, we’d all venture down the winding stairways and alleys to attend our daily Spanish language classes. Most afternoons involved some sort of outing, be it a hike, a museum, or just strolling through town. Before we knew it, our three weeks were up and it was time to go home.

Looking to repeat that magic and escape the brutal cold of a Minnesota winter, we made plans to spend most of February in Hawaii. Trying to take advantage of all there is to see and do on multiple islands, it turned out to be a very different kind of trip at a busier pace, but once again we felt as if three weeks was just not enough time. And sadly, winter back home was far from over. March came and went like a lion, and we realized we may have come back home too soon.

Transitioning to Early Retirement

The current plan is to work for another year and a half or so, taking extended family trips where we can fit them in. Later this month, we leave for a medical mission trip in Honduras. There is a large orphanage on the compound where the surgical center is located, and family members are encouraged to join the volunteering medical professional for the trip. My wife and children will be involved in the lives of the orphans while I spend my days guiding patients safely through surgery. I anticipate an eye-opening and rewarding experience for all of us.

Back on the homefront, my replacement has been hired to begin his career as an anesthesiologist in the summer of 2019, and when he is comfortable working independently, I plan to turn my pager for the last time. There are a number of aspects of the career that I will miss, but I also feel comfortable moving on from both a personal and a financial standpoint.

From that day forward, three-week trips can be extended to three-month adventures. We’ll have the freedom to buy one-way tickets and wing it from there. The world awaits.

Funding Our Early Retirement

While I am a big fan of deferring taxes as much as possible, a solid physician’s salary and a high savings rate meant putting a majority of our investments into a taxable brokerage account. While having a slight tax drag on over 50% of our portfolio is less than ideal, having a sizable taxable account gives us a lot of flexibility.

Retiring at age 43, I plan to spend dividends from the taxable account while also slowly depleting a 457(b) account over the first five to ten years. When desired, I could pad our annual allowance by selling shares in the taxable account.

Eventually, I’ll be able to easily access the 11% or so of my dollars that exist in my 401(k), which will likely be rolled over to an IRA. I don’t anticipate a need to access the money early via SEPP, and I may very well convert the tax-deferred dollars into Roth dollars while we’re in this position to do so with a decreased tax burden. With a 24% federal income tax bracket extending all the way up to a taxable income of $315,000, a golden opportunity exists for higher net worth early retirees to make Roth conversions at a relative bargain, reducing future required mandatory distributions in the process.

Roughly 27% of our retirement dollars are in Roth accounts. All Roth contributions are available for withdrawal, as are Roth conversions after five years. Typically, I only make backdoor Roth contributions, but my balance was boosted when I made a large conversion of a SEP-IRA in 2010 when it appeared the ability to do so was going to be time-limited.

Finally, while the plan I’ve outlined came together before I started writing about financial independence and early retirement, I’ve found I’ve been able to earn an income online, so the implementation of some of this drawdown strategy will be delayed until a time when the online income also ceases. In other words, my retirement from medicine and retirement from earning an income are no longer coupled. It’s a happy accident, but one worth mentioning for the sake of full disclosure.

Can I Retire Yet?

It’s not that I have a strong distaste for the work that I do. It’s rewarding in many ways, but also stressful and exhausting at times. Somehow, about-to-be-born babies have gotten together and decided to cause their similarly exhausted mothers a maximal level of pain between 2 and 3 a.m. The pager goes off, and it’s the Physician on FIRE to the rescue.

While it’s wonderful to be the hero who wields the long needle and saves the day, it can be awfully disruptive to one’s own schedule to be that guy on a regular basis. And while I’ve only been a practicing anesthesiologist for about 12 years, I’ve been wearing the pager since I was a third-year medical student in the year 2000.

I may be focusing too much on the pager, having been on call for two of the last three weekends as I write this, but it’s not just that. I’m ready to reclaim my time, and while there are anesthesia jobs with no call, there aren’t any that allow you to work from home, and there won’t be anytime soon. Location independence is important as I envision the next chapter in our lives.

I’ve done the math and checked it twice. We could retire now based on our current annual spending with a withdrawal rate of 3% or less. That’s ignoring any future income and Social Security. The money is there. What we’re lacking is time and freedom.

I’m enthusiastic about our future of slow travel, restful nights, and making family memories wherever we may roam. We’re ready to start the next chapter of our lives. What do you say? Can I retire yet?

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Comments

  1. Yeah, most of you guys do very well with “how I did it blogs,” and you will have a built-in audience of high-income medical burnout folks, so yes, you can retire early for sure! You will be fine. One thing, you might want to reconsider the tax implication of your dividend harvesting strategy. A resource that really helped me think this through for my situation is: The OverTaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog, by Phil DeMuth. Good luck!

    • I read WCI’s review of the book. Does that count? I enjoy Phil’s writing, but haven’t gotten to that one.

      To be clear, I don’t have a dividend strategy other than to collect what the index funds force on me. The only individual stock I own is Berkshire Hathaway, and the lack of a dividend from Mr. Buffet and company is very appealing to me. I’ve expressed my anti-dividend leanings here (https://physicianonfire.com/selling-shares-beats-collecting-dividends/) and took some heat from the dividend growth investors for it.

      I’m confident I’d be OK with or without a blog, but having one gives me something else to do. I donate half my profits, and I’ve enjoyed seeing the audience grow as I reach more people with the message of financial independence.

      Best,
      -PoF

  2. A note to the editors of this site and other ER related sites:
    Please do not accept articles from early retirees or prospective early retirees which lack explanation of their plan for medical insurance.

  3. This article which you accepted from an outside author/blogger, does not include his thoughts or plan for dealing with insurance. My request is that you – and all bloggers – address this as a matter of standard practice in all your articles.

    I did not ask for a quick, easy answer. At this time, there isn’t one. Most bloggers are getting insurance through continued employment, a spouse, or as a retiree benefit. That’s great for them, but none of that applies to me.

    • I can speak to that, Larry. The top options for early retirees and the self-employed worker will depend on a few factors, including general health (pre-existing conditions), taxable income, and risk tolerance.

      If taxable income is in a range that qualifies you for an ACA subsidy, I would certainly look at your state’s exchange and browse the options.

      Health sharing ministries are a second option that won’t work for everyone and comes with certain stipulations, but if you and your family are in good health and willing to abide by the rules (usually including a religious affiliation — Liberty is the most liberal in this regard), these can offer affordable healthcare compared to traditional insurance.

      Finally, the ACA penalty is lifted for those who purchase non-conforming plans in 2019, opening up the option of a catastrophic plan for someone who can weather most storms and pay out of pocket, but needs to be protected from six-figure and seven-figure medical bills from a catastrophic medical event. These can be used in conjunction with the health sharing ministry plans, which are generally capped per event, or as a standalone option.

      It’s a good question, but I don’t think the topic needs to be addressed in every article hosted here. I will admit the cost of healthcare is among the biggest unknowns for early retirees, small business owners, freelancers, and independent contractors, and everyone else under 65 who doesn’t have employer-provided health insurance.

      Our plan will likely include a health sharing ministry plan, catastrophic coverage, or both.

      Best,
      -PoF

      • Thank you for your reply. Let me be clear, I didn’t say that _every_ article needs to discuss insurance. But if you’re writing an invited guest article on another blog to introduce yourself and give an overview, then yes a brief mention of “here’s how I/we are handling health insurance” is essential to the conversation.

        There is one ACA provider in my area (many areas have none) and the only coverages available are HMO based and are generally crap. With the mandate eliminated, ACA’s days are numbered anyway.

        I recently talked to an insurance broker who said that non-ACA coverages are still available but are partial insurance at best, if you can qualify for them (they can deny due to pre-existing conditions). The sharing ministries are a curious concept but have their own quirks. The broker claimed that many of his clients used a package of one or two insurance policies and a sharing group.

        It just seems absurd to me that with a mid-seven-figure net worth, I stay at my job not for the income, but in order to have decent health insurance. Currently good health can turn on a dime, the risk of going without is simply too high.

        Thanks again.

        • Chris Mamula says:

          Larry,

          Understand your frustration. Not to add more frustration and complexity, but the health sharing ministries are not bound by ACA rules, so can deny due to pre-existing conditions as well.

          Best,
          Chris

        • I retired 2 years ago at 63 and purchased ACA coverage at lowest level. I chose to take the risk b/c I had generally good health. I did set aside funds equal to the total out-of-pocket limits (i.e. $10k), just in case. Fortunately I did not have to use much of the funds except for occasional co-pay or co-insurance. Now I’m on Medicare and shopped for a supplemental plan & prescription plan. I thought I would do the same strategy – have a lower coverage/cost while I am younger and healthy, then switch up to more coverage as I aged. Unfortunately, the Medicare supplement plans will not allow this. You can go from a full coverage plan down, but not reverse. Consequently, my supplement plan, including prescription, costs more than my previous ACA plan.

  4. Nice story! Yep, I’d say you can retire right now if you want to. We had a similar dilemma around lacking time and freedom with the family. We had hit an unsustainable lifestyle when we were both in oil and gas and that was what focused us to make our Lifestyle Change. It’s not 100% funded where we wouldn’t have to worry about income, but it let us take a significantly lower paying job and let me leave my job to have a way better overall lifestyle and more time with the kids. We’re just kicking that off this summer, so I’m excited to see how it will turn out and what I find to do to keep my purpose in life since it won’t be “work” anymore.

    I’m excited to read more about your journey as it unfolds too!

  5. Why work another year and a half? With blog income and net worth covering a 3% drawdown for expenses. 100+ hour work weeks sound crazy even if its once a month!

    • To be honest, Jason, at this point it has less to do with money and more to do with a smooth transition for my four anesthesia colleagues and the two facilities we cover.

      I’m often tempted to hang it up sooner, but one of my partners has a four-month military obligation spanning 2018 & 2019, and my replacement has been hired. He finishes residency in the summer of 2019 — he hails from this small town and is training in my old residency program, so it’s a perfect fit. When we hired him, I decided I’d stick around until he was here and ready to work independently.

      Best,
      -PoF

      • That’s because you are a good human being, POF.

        Hanging in there when you know you could “hang it up” is incredibly kind of you. I bet your group really appreciates that, and its a nice gesture given the flexibility they’ve allowed you to have in the last two years working in private practice.

        Thanks for the reference to this site. I’ll continue to check it out.

  6. Seeing as how we are in a time that envy and jealousy appears to be prevalent among much of the general population, you will likely have many that are bitter towards your success at such an early age. I for one applaud your willingness to put in grueling hours both to get your degrees, and the hours it takes to be an effective medical professional. I am also very happy for your ability to retire at such a young age with confidence that you will “make it”. My wife retired at 57 and I joined her three years later at 60 (we are now 64) so while we did not retire nearly as early, it was still a little bit early. At this point we are traveling 4-5 months out of the year, and even factoring in those costs (e.g. we are some of those people that have a lot of timeshare points that are working well for us), we only spend 3% or less of our assets. SS does alleviate the burden somewhat, but as some elective debt is being retired, we are moving towards only being in the 2+% range for asset spend in the near future. You are in great shape with the % situation you declared, since you probably have some leeway there if things change dramatically.

    We have been blessed with outstanding medical coverage throughout our 38 years of marriage, and we will be set when they force us into Medicare by having the luxury of our existing insurer as our secondary payee. I agree with other posters here that medical coverage is key, but as you stated there are ways to skin that cat. Best of luck and welcome to the club!

  7. Interesting read. Missing from this article and the many FIRE folks who blog (including Chris) is the savings amount they accrued before deciding to retire. It’s the key (maybe the most important one) factor many of us aspiring FIRE folks wonder about and is rarely mentioned. It also lends credibility to the FIRE blogger. Someones retirement age (and family situation) with accompanying savings offers relatively easy comparison to oneself and the “can we do this too” analogy.

    • Chris Mamula says:

      Frank,

      I generally don’t share my exact numbers, b/c everyone’s situation will vary greatly depending on what you spend. It’s more important to focus on your needs. Once you know your desired spending number, you can then start with the assumption that you could withdrawal 4% annually, so the inverse of that is to say you would need to save 25x your annual savings, assuming you are investing in paper assets (stocks and bonds). Darrow recently shared his “Retirement Flexibility Scale”. https://www.caniretireyet.com/retirement-flexibility-scale-choosing-safe-withdrawal-rate/ I think this gives a nice framework for whether that 4% number makes sense for you, or whether it makes sense to adjust it up or down.

      I have shared that our household’s annual spend is in the $50k range and our goal was to achieve investments of 25x spending, so you can do the math to get a rough idea where we were when taking the plunge. Our number does not include our paid off home or savings for our child’s college, b/c we wouldn’t anticipate using them to fund our retirement expenses (though we could by downsizing or having her pay her own schooling). We also anticipate variable future income (from working on things that interest us, real estate/Airbnb, etc), SS, inheritances, etc. If we didn’t have these contingencies, we would likely shoot for a number closer to 33x our spending similar to that reported by PoF in this post.

      Many bloggers do share their net worth. https://directory.rockstarfinance.com/blogger-net-worth-tracker The highest of anyone on that list that I would recognize as being in the FIRE community is ERN at approx $3.25M. At the low end is someone like Steve of ThinkSaveRetire who at about $950k. I think those are pretty good representations of a range of those that FIRE, with me being closer to the lower end and I would imagine PoF being closer to the higher end of that spectrum if that helps.

      Chris

    • A lot of people who write articles that can be seen by anyone on earth don’t necessarily want the exact numbers to be discoverable. I can’t blame them. I used to publish numbers, and I was in the Top 5 on that Net Worth Tracker when I did, and I would still be top ten if I hadn’t decided to delist my net worth.

      But I knew my name would be attached to the site sooner or later, so I’ve started using general statements like “we could spend a low six-figure sum with a withdrawal rate under 3.5%.” I didn’t use that exact line here in this article, but I have elsewhere, and that gives you a pretty good idea of where we’re at.

      Cheers!
      -PoF

  8. Philosophical FIRE says:

    One subject that doesn’t get much attention is the “morality” of early retirement.

    Obviously everyone is entitled to make their own decision, and if you have the resources and desire to retire early no one should fault you.

    On the other hand, if you work in a field (such as anesthesiology) that brings benefit to the world, how much do you consider the fact that you are not fully using the enormous resources used to educate and train you? It is one thing if you work in an industry that is less obviously valuable (finance comes to mind), but if you work as a physician or a scientist how much do you consider the adage “to whom much is given, much will be required?”

    Not a criticism, just a question from someone who is contemplating a similar move….

    • This is something I’ve thought about a fair amount.

      I feel guilty monetizing a site when I don’t need the money, so I donate half the profits. I feel guilty choosing to leave a lucrative career at a young age, so I build up a donor advised fund worth 10% of my retirement assets. I feel guilty leaving my group before the next hire is here and trained, so I’m more or less committed to another 18 months, even though I often feel I’d be happy leaving sooner.

      Regarding how I help society as a physician, I see my job as a contract with society. I get paid well for what I do and make sacrifices in my own life to provide those services day and night. Some like to point out that tax dollars helped fund the schools and training programs I attended. That’s true of anyone who attended public school at any point in their lives, and in residency, I worked like a dog for a little more than minimum wage. Anything I might have owed in terms of dollars has been more than paid back in both income taxes (I’ve paid something like $1.7 million in 12 years) and free care or care reimbursed below cost to thousands of patients.

      Still, I do carry some guilt. I’m curious to see how it feels to do donate my services in a third world country, and I’ll have an answer a month from now when we return from Honduras.

      Cheers!
      -PoF

  9. PoF,

    Great post! I have heard about you in my random readings online (I’m not a pro blogger, nor do I scour the internet, however I do read content from time to time..). @Chris Mamula (a friend of mine) has also shouted you out.

    Similar to you and Chris, I am in healthcare as well. Similar to you, I earn a good wage and have done travel and contract work. Also similar to you, over a year ago I was fortunate to be able to drop down to part-time work – about 24 hours per week. I am no longer that busy professional I once was. We have children too, both young, so I am able to spend significantly more time with them. I am home before 5pm on 5 of 7 nights of the week. And I have perpetual 3-day weekends for life (really read, “until I decide to completely toss in the hat!”). Your mention of negotiating your employment from a position of strength speaks volumes.

    It is a real shame what many high income earners do with their money. The vast majority make more and spend more. These folks could truly have so much more (of the things that truly matter), if they just changed their spending ways. Its nuts!

  10. My wife and I will retire in 6 years with combined pension income of about 50k annually. Our current spending is approximately 85k per year. Both pensions are well funded presently. My question is, is it reasonable to subtract 50k from 85k and multiply the remaining expenses 35k by 25X to come up with our retirement number. We are shooting for 40X to be on the safe side. Our home is paid and medical is accounted for in the annual expenses. We presently have 35X right now using this formula. We must work the additional years to receive all the pension/medical benefits. Great blog!

  11. You are definitely able to retire! What a fantastic life this will give to your children. They’re old enough to remember you worked hard to get to this stage and now can share the adventures and rewards this hard work and savings has provided. I think your current lifestyle of extended traveling together as a family and future longer trips will be very motivating to your children to achieve similar results for themselves. Working together as a family in Honduras will provide a great opportunity for your children to see that hard work also allows one to give back to others. You have a great plan!

  12. I read a lot of PoF but continue to learn. The term Location Independence is new. I look forward to some clarification on that term.

    • Chris Mamula says:

      Location independence essentially means that you can pick up and live your lifestyle from anywhere in the world. For example, my wife continues to work, but her work can be done from anywhere with a secure, reliable internet connection so she is not tied to any physical location. My only work is my efforts working on this blog, which can be done from anywhere. Thus, we are location independent. Make sense?

  13. Kudos on your early retirement. I retired from a busy career in Anesthesiology last August, at age 60. Even at that age, it felt a little “early” to me, but I was pretty well done with nights and weekends. The last year and a half of my working career I spent doing locums, both for my old practice and at another hospital a few hours away. During my locums period, I did not take any call, pretty much just worked a regular 8 hr day (or many times less). I was astounded at how nice it was to be able to practice and be relieved of all the stress of long days, call and weekends, not to mention running a busy practice. At your age, I would encourage you to consider keeping your medical license and credentials up to date. You could continue to do some locums work, it should not be difficult to find places that need help but do mandate call. It would give you tremendous flexibility, and allow what you have now to grow undisturbed. Life is full of uncertainty, I just think it would be good to keep the door open for a while which allows you to practice and make additional income if something comes up.