By Dr. Jim Dahle, WCI FounderWhile not easy to acquire, a million dollars isn't what it used to be. A millionaire when Monopoly was invented is the equivalent of a decamillionaire now. However, $5 million is still enough to provide quite a luxurious retirement. Per the 4% rule of thumb, a $5 million retirement kitty will provide an inflation-indexed $200,000 a year of income with a high degree of certainty—$200,000 goes a long way, especially if you've got the mortgage paid off, don't have car payments, and you have paid for both your and your kids' college educations. In fact, most people who retire with $5 million will die with far more.
Would you like to retire early and retire well? On over $5 million ($200,000 a year in today's dollars)? Here are five ways to do it.
#1 Get a Job (or Better Yet, 2 Jobs)
This slow and steady method has been employed by countless multimillionaires. Here's how it works.
First, go to college.
Second, get a halfway decent job.
Third, marry someone else with a halfway decent job.
Fourth, put some money away each year and invest it using a boring old portfolio of index funds.
Fifth, sit back and wait until you turn 55.
If you start earning and saving at age 22 and your investments have a real, after-inflation return of 5% a year, you will have $5 million at age 55 if you save . . .
=PMT(5%,33,0,5000000) = $62,450, or $5,204 per month
That's a lot of money for a lot of people, but it is doable for a couple earning $80,000 a piece. It requires them to save 39% of their income, which most people aren't willing to do. You might be, though. You could also increase your income throughout your career, which makes it easier (it lowers the savings rate).
If you need help putting together a financial plan to get you to $5 million, consider taking our Fire Your Financial Advisor online course. It'll take you from zero to hero, and you'll finish the course with a financial plan you built yourself and, thus, understand. The one-week, money-back guarantee eliminates your risk, and there's even a version that qualifies for CME.
#2 Become a Professional
Another option is to become a high-earning professional, like a doctor. While this is a very competitive process and involves years of difficult education and training, it also results in a high income that can be used to build wealth. You are probably also more likely to marry somebody else who is a high-income professional. Let's say that, between the two of you, you earn $600,000 a year but not until age 32. Plus, you owe $500,000 in student loans.
If you start earning and saving at age 32 and your investments have a real, after-inflation return of 5% a year, you will have $5 million at age 55 if you save . . .
=PMT(5%,23,0,-5000000) = $121,000 per year
That $121,000 per year is a savings rate of 20%, the standard amount I suggest that docs save for retirement. Obviously those student loans will have to be paid back out of the other $479,000 per year in earnings. Or go get PSLF.
More information here:
A High Savings Rate Covers a Multitude of Sins
Saving for Your Future Stranger
#3 Use Leveraged Real Estate
Learning how to be a skilled real estate investor can increase your returns—perhaps to as high as 10% real. This involves additional risk (leverage and less diversification), additional expertise (which must be acquired somehow), and additional work. But it would allow you to save less money. If you start at 22, you would need to save . . .
=PMT(10%,33,0,-5000000) = $23,000 per year
That's just 29% of an $80,000 income or 15% of a $160,000 income. However, if you're that high-income professional type starting at 32, you could get away with . . .
=PMT(10%,23,0,-5000000) = $63,000 per year
That's a savings rate for that $600,000 couple of just 11%. It would be 22% of a single $300,000 income. You can learn more about this pathway in our No Hype Real Estate Investing online course. Its one-week, no-questions-asked, money-back guarantee means that the course is a risk-free option for you.
#4 Get a Windfall
Five million can show up without all of that earning, saving, and investing. You could win $5 million in a lottery. You could receive $5 million in an inheritance. While I don't really recommend either of those methods, they do create pentamillionaires all the time. Unfortunately, many of those who receive them don't have the skills and attributes necessary to hold on to the money, which are very similar to the skills and attributes required to build it gradually.
Another windfall option is to come up with just one great idea or to develop one incredible skill or product. Maybe you're an NFL superstar or a famous singer or an actor. Perhaps you patent your great idea and sell the patent. You might only work for a few years but manage to get $5 million out of it.
More information here:
What to Do with an Expected Inheritance
#5 Build a Business
Small business owners not only receive an income but often build a valuable business that can be sold when they're ready to retire. While these businesses can be a medical or dental practice, they are often something far more mundane. A dry cleaner. Car washes. Gas stations. Subway franchises. Locksmith. A plumbing, electrical, or drywall company. Maybe you spend all of your income during your career, but selling the business at the end provides that $5 million nest egg.
Lots of businesses fail, of course. There's a lot of risk in the entrepreneurial pathway. But it can also work out spectacularly well. None of those in pathways 1-3 are going to end up with $30 million, but the business owner might.
Combining Pathways
No rule says you can only use one of these pathways. Combining them can be even more powerful. We started saving for retirement in our mid- to late-20s. We also got some of that doctor income and saved a big chunk of it. We used investment real estate. We also had a successful entrepreneurial venture. It hasn't been sold, but it provided a high income due to a profitable talent. Predictably, we hit that $5 million mark well before age 55, and we've turned our focus away from building our own retirement nest egg and toward legacy and philanthropy. Maybe you can find a way to combine one or more of these pathways, too.
What do you think? Can most people get to $5 million by age 55? Can you? Which pathways are you using? What's your savings rate? What's your nest egg goal and target age?
Become radiologist
Work for multiple companies reading studies especially the more lucrative ct and pet types
Read 5-8k a day of 1099 income which is what the hard working gunners can achieve
Move to peurto rico and squash your taxes down to almost nothing. If not that then Texas for example
Save and invest 500k a year or more in stocks bonds precious metals bitcoin etc attempt to buy the dips while parking cash at 4-5 percent in the interim
Do it for 10 years
Done
Way before 55
While this may have worked in the past, and may still work for the next few years, there is a very real risk that diagnostic radiologists are going to be replaced by AI.
Eye roll
Radiologists all over the world,
You’re probably right. I can’t imagine a scenario in which a publicly traded company that owns dozens of hospitals, employs thousands of providers, and is responsible for millions of patient visits, would knowingly choose a slightly inferior result in exchange for reduced labor costs and increased profits. I’m sure no other healthcare systems would follow, claiming competitive pressures and a lack of radiologists forced them to do so, and that our government, free from all corporate influence and flush with cash, would never allow such a thing to happen under the guise of improving access to care. Insurance companies surely wouldn’t accept such a change by lowering reimbursement for its use. And of course, I’m confident that as a last resort, doctors would all unite to stop it.
I’m not anti-radiologist or pro-AI. I just believe what our medical system has been telling us for the last 25 years. I’m skeptical enough that if I were in medical school right now, diagnostic radiology wouldn’t be the basket in which I’d put all my eggs. I hope I’m wrong and you’re right. Cheers.
We are far closer to PAs and NPs taking over primary care and emergency care. Seems like that is the very real risk.
AI reading complete imaging studies? AI companies have been attempting for years to gain traction in subsections of radiology and the only one that is remotely good is for perfusion imaging. Lesion detection has been attempted for years and is equally as poor as 15 years ago despite AI.
NPs ordering a slew of CTs at the rate of an ER doc? That is not as difficult and will happen soon. I would be telling residents about the eggs in that basket instead.
But sure, you might be right.
Having worked as a de facto emergency physician in my youth, you are not giving the difficulty of practicing (unsupervised) in the ED setting nearly enough credit. APPs have a substantively identical role in the ED today to that of 35 years ago, at least as was true in the military in those days. You may well be correct with regard to primary care, however; it will be interesting to see how that plays out over the next decade.
I find it fascinating (and somewhat insulting of course) that the work of an emergency physician boils down to ordering CTs in the eyes of a radiologist. Who do you think is doing all that recommended “clinical correlation?” A brand new PA in the ED is slightly less useful than a brand new MS4. Even a PA 10 years out is still not the same as a doc 5 years out. There is value in the MD education and residency training and it doesn’t take long hanging around in the ED to see it, even if is is hard to see from your big monitors in your home office. 🙂 Radiologists are my favorite consultants and they save my butt and vice versa (“Are you sure you meant to dictate what you dictated on this one?”) but the dumping on other specialties thing got old long before any of us left academic centers.
You should feel insulted.
It’s insulting to have people outside of your specialty making comments they know nothing about.
An ER doc suggesting that AI will replace radiologists is insulting, as is a radiologist suggesting ER docs will be replaced by PAs.
Thanks for what you do in the ER.
I agree that AI isn’t replacing any of us any time soon. It doesn’t even replace bloggers (and that’s way easier). It mostly just steals from them.
I hate to continue an argument, but I don’t understand how I insulted you (as an anonymous proxy for all radiologists). Perhaps in retrospect my original comment came across as flippant, but I certainly didn’t mean any disrespect to radiologists.
I didn’t mean to suggest that AI can read films better than you in 2025, nor that it ever will. I am afraid it won’t matter. I’m guessing that at some point in the next 30 years it will be close enough that the cost of a Rads AI program + the added malpractice insurance cost will be less than the current cost, and someone will make the switch.
I know several small ERs staffed exclusively by APPs. No one argues that those ERs provide an equivalent level of care, but they exist because of the economics and availability.
You don’t have to agree with me. But I am allowed to have an opinion on the business of Radiology without being a radiologist. Do you think all decisions in medicine are made by doctors, let alone doctors of the same specialty?
I’m skeptical of our system that seems to prioritize profit above all, not the skill and experience of radiologists. It sounds like you’re an expert on all things Rads/AI. I’m certainly not, so I will humbly defer to your expertise. As I mentioned previously, I sincerely hope you’re right and I’m wrong.
P.S. I know your CT comment was meant to be a dig, but I actually agree with you. A lot of ER docs do order too many CTs (and that includes me). I appreciate all the reads you provide, especially at night.
I think the point of all of this stuff, and I have argued about the AI issue philosophically for years (and have been right), is that there is a fundamental error in first principles and/or critical thinking that takes place, which is very common in modernity. Too much ego and trust in marketing to the masses, which includes many physicians. JD gets a bit defensive but the context he dismisses is that ER volumes of imaging, increasing every years for the last – I don’t know forever – are obscene. I’m not necessarily saying I’d do anything different but it’s not because of “the practice of good medicine.” He even once wrote to a commenter that “You don’t know it’s negative until you order it” which is pretty funny if you actually think about how that proves the point. Regarding AI in radiology, “slightly inferior” is also hysterically funny, as AI can’t do anything but occasional binary tasks, certainly it can’t do anything a radiologist does, which is the most important thing in the hospital at this point, proven by the ordering (or at least the money making and CYA parts – it is diagnosis after all).
I could go on, but the issues with the health system(s) have, and will have, WAY more to do with the system running out of money as the debt balloons. For that reason, any given specialty won’t be an issue – one should just recommend not going into medicine, if you have that opinion.
There is certainly a lot of imaging done in the ED and it has certainly increased over the years. But whether that is “obscene” or not is not as easy to say. To the person sitting in the ED, whether the patient or the doc, with uncertainty that can be removed with an imaging study, one more study doesn’t seem very obscene at all, nor is the risk of the radiation all that high, particularly in older patients that are getting most of the studies. There is some expense there that the “system” could save, but that is not a particularly high priority for the ordering doc, the patient, or the radiologist reading it.
At any rate, when studying this issue, one CANNOT just take the % of “negative” studies and use that to say “too many studies are being ordered” without also dictating a percentage of acceptable misses, acceptable to patients and docs who must deal with the consequences as well as courtrooms that will be sorting out liability. Certainly if every study ordered is positive, there aren’t enough studies being ordered.
As I said, I’m not saying that I wouldn’t (over)order were I an ED physician, but I wouldn’t call it good medicine, which is my point. What we’re facing is incentives that are all about abusing ER docs (oversee 8 flying monkeys on your single license), abusing the radiology service (th hospital gets technical fee which is enormous while the pro fee both loses every year and to inflation), and now is causing entire loss of staff for patients due to the imaging. This is the eventuality of having fee for service to an extent, but we’re also not able to keep up with the volume because mostly if you aren’t a radiologist you don’t know the number of studies, number of images, and advanced imaging ALL have gone up insane amounts for 10-20 years. Medmal caps would help but that still doesn’t stop the dangerous amount of imaging we do (hint: it can’t really be done and collapse is coming). “AI” can’t do 1/10,000 of the stuff a radiologist does, by the way. They can sell it to you, though. Good luck with that.
Remember the point is that we’re running out of money, bodies, attention, etc.
Good, fast, cheap. Choose 2.
The issue is that “overordering” is in the eye of the beholder. It’s easy to call it “overimaging” once it comes back negative. But there are precious few studies ordered that anyone knows with 100% certainty are going to come back negative.
If one wants fewer studies ordered, that can be done. There is a cost to that too.
Agree that a lot of ER providers (mostly non-docs in my experience, but varies) way over-order imaging nowadays. For instance: initial CT abdomen has been discouraged as unneeded per ACG and AGA guidelines for acute pancreatitis, for many years now. (And repeatedly, in subsequent guidelines). It’s almost never helpful or changes management, nor do you need it for the diagnosis of acute pancreatitis. Yet I’ve never seen an inpatient with pancreatitis who hadn’t had a CT in the ED. Sorry WCI, but a lot of imaging in the ED is reflexive and to CYA, without tons of thought going into whether it will change diagnosis or management.
In a case with three or four doctors involved, only one has to want a study to have it be ordered.
I’m not sure what you mean by that; but regardless, it doesn’t matter who orders it from the ED. If it’s unneeded, it’s unneeded. A lot of imaging/labs/procedures are reflexive – including in GI. The CT-not-recommended for acute pancreatitis is just one example.
If I already knew what was causing the patients symptoms, I would stop testing. It’s easy to say something was unneeded after it comes back negative. The tricky part is sorting out what’s unneeded before the test is done. I see precious few studies trying to determine that. But there is wide variation between docs, so there’s certainly room for improvement. It’s just not clear exactly who’s ordering too few and missing too much and who’s ordering too many and hurting patients and wasting money.
It’s so funny all the people saying AI is replacing radiologists. And funnier is that it’s always people not in radiology that keeps saying it. Great for us since just scares residents away from rads residencies so our salaries are going to continue to skyrocket as they have in the past few years. Those of us in rads know AI isn’t even close and likely won’t be ready for a couple decades at the minimum. Unfortunately, all this fear mongering is going to lead to delayed reads for pts.
As for this post, I’m doing the multi-faceted approach. Thankfully, I have savings rates high enough that I’ll hopefully be able to reach that goal in each stock/bond investments and real estate. Love me some diversification of retirement fund sources.
Hopefully you enjoyed your life while living like that. Although if you are pulling in $5k-$8k per shift no special market timing or investing skill required. Just dump it all in standard index funds with saving 50% plus of your income.
Certainly a viable pathway. Seems sad to spend four years in college, four more in med school, 5 more in residency, and 1 more in fellowship (14 total) and then only work in your chosen profession for 10 though. But it’s your life and you get to make the decisions. So long as you’ve paid for your schooling, you can punch out any time you like. Consider part-time for a while though is my advice.
I generally agree with you JD, but the way docs are treated/not treated, the way the culture generally is, the fact that most people are single and if productive are “paying” for other people’s freebies and to have kids – after a while, what’s the point? We’re all working just to make money anyway, big picture. It’s far different when you are single than when you have a family and your life becomes pretty routine, is my point. The tax rates in the US are confiscatory and marriage is NOT incentivized whatsoever (for men). I like medicine but the system is failing and blames docs for a lot of things. Much of it, when you consider taxes and what you could be otherwise doing (investing beats the pants out of being a high end wage slave who can get sued), makes little sense in medicine anymore, if we’re honest. I think the only part I really would like about being in a hospital anymore is if I were teaching residents (rad here).
Great advice
# 6 : Cash Balance Plan. Our group established one years ago and the amount you can shelter esp. during your peak years is amazing. may not hit 5M by 55 but can get pretty close.
The account it goes into only has a little to do with how much is in there at 55. There are far more important factors at work, like how much is contributed. Yes, you can contribute a lot to a CBP, but you can contribute even more to a taxable account.
We did it by age 58! And I was an employed general Pediatrician. Not sure how, but we did something right. We don’t have any kids. That probably helped.
It can be done, and I say that as someone who’s nothing extraordinary. I hit a net worth of $4.5M by age 47 working as a PA-C and was able to retire soon after. I used a combination of strategies: Early on, I invested in private real estate (mostly single-family homes) that eventually generated enough cash flow to make me financially independent, then was fortunate to land a high-paying niche 1099/S-Corp role that allowed me to shelter a lot of income from taxes, and maintained a 100% savings rate on that 1099 income for several years, which was immediately placed into low-cost index funds. Now, a year into early retirement, I’m looking at part-time or per diem work to stay mentally sharp and add a cushion of cash in case of a major recession. Plus, I think continuing to work, even just a little, in a profession where I’m helping others sets a meaningful example for my two young children.
Good for you, breh
You’ve got kids too. Enjoy it, do what you want, don’t spoil them.
Give back and do all you can to crush leftism and its related diseases/spawn globally.
Saving five million for retirement is not retiring “on over $5 million a year (in today’s dollars)”, though? I’m assuming that’s a typo?
Good catch. Dr. Dahle’s entrepreneurship has been SO successful that $5 millions per year is what’s on his mind.
Pulp Assassin-
We’ve been successful no doubt. But not THAT successful!
Ha ha, yes. Fixed.
Don’t think we did it until 58? But option #1-2 (both MDs, but saved over 20%) only even though not fully employed all the time (he retired at 47 and I did no or part-time several years throughout life), assisted by military coverage med school costs and further assisted by being pretty frugal.
2 physician income. 4.3M plus paid off house (net worth over 5m). In year 10 of post residency. Came out with 350k debt. One went part time a couple years ago. Peak income around 850k. This with kids and one deciding to go back for 1 year fellowship after first year. Invest early.
Thanks for another interesting post! One thing I’ve wondered many times when reading these posts is how to “properly” define savings. For example, putting money in a 401K/403B/457 does they count as savings? Putting money in a pension, does that count as savings? Does paying for insurance? Etc.
Or, alternatively, does only the money you put in a checking/savings/money market/etc. after paying bills, putting money in retirement, etc.?
Perhaps there has been a post about how to calculate your savings rate and what exactly should be counted — apologies if I missed it.
What’s being talked about here is money being saved for retirement, so yes, anything in a 401K or pension or anything else like that (or anything saved/invested with the intention of not spending it until retirement). Insurance wouldn’t count; that’s money being spent, not saved (unless you’re talking about a whole life account, which I know nothing about except to avoid them). You can calculate the rate by dividing what you save by your GROSS income (not take-home).
The RATE is actually not that important, though; rules of thumb get thrown out about how much you should be saving, but really, you should be running the numbers and getting a dollar amount to put toward retirement each year based on when you want to retire and with how much money balanced against your current income and expenses. I can never go by any of the “you should save x%” rules, because med school started in our later 30s, so rules of thumb based on people leaving residency 15+ years younger than we did won’t work, so we ran the numbers. I think we end up saving something like 30-40% of gross into investment accounts earmarked for retirement each year, but that percentage varies because our income varies and the target amount to save for retirement goes up a little each year, and I don’t care what the rate is, I care that I’m putting enough away to keep us on track for our goal. We’re on track to be able to retire (with between 4-5M in retirement accounts) after about 15 years of attendinghood, at around age 60, same year our mortgage will be paid off.
Thanks!
Yes.
Yes.
No.
You can calculate your own savings rate any way you like but you should stay consistent. Personally, my numerator is everything that goes toward retirement and my denominator is my gross income. If you get an employer match, I’d include that in both.
Thanks for the clarification!
What about Roth vs pretax savings for the savings rate calculation? Include the taxes paid on the Roth contribution in the numerator?
I count them the same and I never count taxes paid in the numerator. You can do it however you like though, just be consistent.
You should consider underweighting traditional IRA/401k contributions (non Roth) in your calculation for a more realistic estimate. The “ticking time bomb” of taxable RMSs is real as you move through retirement.
I guess I could but it’s a trivial difference in my case because my tax-deferred accounts are such a small percentage of our portfolio. And if you’re going to do it for your tax-deferred accounts, you should also do it for your taxable accounts, and basis is constantly changing.
It’s more hassle than it’s worth for most, but there’s no reason you can’t do this and adjust your asset allocation accordingly if you wish.
Thanks for sharing the link to the windfall post from 10 years ago. Had never seen it before and it was a great (and personally relevant) read.
Very well written article and great advice (coming from a financial planner). Having been married to a physician (together from high school through residency), I saw a lot of physicians exiting residency/fellowship more ready to start living and purchase the expensive car, large home, elaborate vacations, etc. The common thread amongst the medical professionals that build wealth quickly in an already shortened career due to the demanding training timeframe is START EARLY and stay disciplined. If you can only put $20 a month into a Roth in residency, do it. It builds that discipline and you’ll be excited to put more back when you can. One thing I would add to the article where a solid financial professional could add some value, is helping with effective tax planning. Most CPAs do not do this. There are a lot of ways to put back more than the standard IRA contributions, but also finding the balance of doing your best to stay in the lowest brackets possible while accumulating wealth, but also thinking through what taxes look like in retirement. If you do retire at 55, you’ll need several years worth of income in non-qualified accounts (can’t touch the IRAs until 59 1/2). Lets say you have the first 5-10 years of income in a non-qualified account that is in tax managed strategies. You can then at that point consider starting large Roth conversions now that you’re in that lower bracket and getting income from tax managed non-qualified investments. By the time social security kicks in, (assuming it’s still around), a large portion of your tax-deferred funds could now be in Roth growing tax free and not subject to RMDs (and also an amazing asset to hand down to your kids). If you’ve saved all of your money in tax deferred strategies, you are not going to like your tax bill when you start taking RMDs in your 70s and can result in an unnecessary draw down of this wealth you worked so hard to build.
Lots of nuance there.
https://www.whitecoatinvestor.com/how-to-get-to-your-money-before-age-59-12/
https://www.whitecoatinvestor.com/dont-fear-the-reaper-rmds/
https://www.whitecoatinvestor.com/roth-contribution-or-conversion/
Thanks for those links, nice touch.
Exactly! Prioritize Roth contributions now. Taxes are at historically low rates. My retired cohort are all converting their traditional IRAs and 401ks to Roths as fast as possible. Your taxable RMDs will go out to your 80s and 90s! Your future self and heirs will thank you!!!
Taxes aren’t at historically low rates. They’re certainly not at historically high rates, but the income tax rate started (for the second or third time) in 1913 at 1-6%.
https://bradfordtaxinstitute.com/Endnotes/IRS_Form_1040_1913.pdf
A Roth conversion decision is far more complicated than whether or not you expect tax rates to increase.
https://www.whitecoatinvestor.com/roth-contribution-or-conversion/
And big RMDs aren’t a bug, they’re a feature. You’re right that Roth conversions are the solution to an “RMD problem”, but most people don’t have an RMD problem. They’re just not rich enough.
https://www.whitecoatinvestor.com/dont-fear-the-reaper-rmds/
Thanks for your thoughtful response and prior posts. Agree it’s more complicated than simply tax rates. The most important issue is reasonably predicting the tax rates at the time the assets are converted to cash. If you can’t or don’t want to do that, your friend’s advice for a 50-50 split between Roth and conventional 401k/IRAs is very reasonable. Some would advise 33-33-33 split between Roth, conventional IRA and non-tax advantaged brokerage/other investments. For clarification:
1. Present federal tax rates are at historic lows going back to 1988-1990. You need to look back at the 1950’s to see what our government can do – 91% top marginal bracket, although multiple loopholes and deductions brought that down to 40-45% effectively. With the present level of deficits and spending, the argument for future lower tax rates is difficult to make convincingly.
2. There certainly are purpose related caveats, like charitable contributions, but living expenses through a long and productive retirement remain the major concern.
3. I don’t fully understand your third point. If our younger colleagues follow your advice, they should become rich enough to have an RMD problem! It’s a good problem to have!!! Ha!
The linked post further explains the point that there is more fear of RMDs than true RMD problems.
Interesting article and comments!
Are we talking $5 million net worth at 55, with a plan to downsize and live off this value, or truly retirement accounts and investments worth $5 million?
The latter is not easy to do unless one truly has a good early start, excellent income and a diligent over-the-top savings percentage…and of course market fortune.
I hit the NW milestone early this year at age 48 (interventional radiology – AI likely won’t push wires and catheters during my career) and plan to cut back in early 50s, but honestly I feel nowhere close to saying I can throw in the towel.
I would feel much better getting to invested assets worth $5 million plus between my retirement, brokerage and real estate holdings.
Good luck to all WCIers out there. I wish you wealth, health and wisdom.
What’s all your money tied up in that you have a $5M net worth but you’re still a long way from $5 million in investable assets? Those two numbers are pretty close together in my life and always have been.
That’s a very good question. About 1.5 million is real estate which is not readily accessible (ie. personal home equity plus homes we bought for both sets of parents) who will live there for the long term and they are thankfully all in good health.
1.5 million tied up in my practice.
2 million in equities between retirement (majority) and brokerage accounts.
So I look better on paper than I feel at the moment.
Therefore, I feel I need a greater cushion to cut back.
Ahhh…there’s your uniqueness. Everyone is unique. So you do have a big gap between nest egg and net worth. It is possible the gap will close when you sell the practice and/or sell one of the parental homes. I agree you should probably ignore all that for now when making calculations. Perhaps as you get close you can start including some discounted value for the practice since you’ll definitely sell that when retiring. Your $2 million will likely double over the next decade, but if you need your money growing faster than that, you either need to save more or sell something.
Thanks for taking the time to consider my situation, Jim. Best wishes to you and your family!
Yeah, I don’t like using net worth with respect to retirement for this very reason. I track my net worth for personal growth reasons, but when it comes to retirement I only include things that will be used for retirement like stock/bond accounts and investment real estate in my case. I don’t even include the small amount of BTC I have with the volatility. And you have to live somewhere so I don’t include my residence. But for the article just easier put net worth for simplicity so I understand that being used.
Dr. Dahle,
What would you say the minimum FI/RE is for a single doc in 2025 at age 50? Married and with 2 kids? Is it around the 3-5M mark as we seem to suggest here, or is it dependent on your assets being liquid? Does having a house (paid off or not) matter? It seems real estate is still desired by many for the leverage possibility and something that is known and treated well via taxes (for now), but increasingly it’s more of a liability with demographic or debt bubble issues like approaching again (not saying now, but looking like in 10-20 years for sure).
25Xish what you spend. If you’re spending $100-200K, then $3-5M seems about right. The house is totally separate and if not paid off, those mortgage payments better be included in that $100-200K.
You think even a modern physician in good shape should use age 75 as the age of retirement end? Or that with the 100k spending you put in for 25, you clearly won’t spend that 100 near the last 10 years, so you’re covered (you’re also assuming lodging, so yes, I guess you’re covered with that fortress). Thanks for the reply.
I can’t figure out why you said, “You think even a modern physician in good shape should use age 75 as the age of retirement end?” but no, I don’t think very many people, much less a doc in good shape, should plan to be dead by 75.
K Space Invader,
4% annual withdrawal on 3 millions will give you >100k without decreasing the principle if your investment return is >4%. So 3 millions would last you forever, not just 25 years, that’s what WCI meant by saving 25X what you spend.
Yes, I understand, but thank you anyway.
Inflation and BTC I think both go nuts in the coming years, so get ready. But yes, no guarantees and 4% should be doable if you have that kind of capital (2-3M), it seems, easy.
For doctors, lawyers, and other professionals, I agree that using that high income to acquire wealth-generating assets, like real estate or other businesses, is a way to supercharge financial freedom.
I like to think of my W-2 lawyer job as a way to raise capital for my real estate portfolio. If I didn’t have a W-2 job, I’d have to raise outside capital, which is a hard job in and of itself. Instead, I save my paycheck and use it as fuel to continue buying more rental properties.
In essence, I (the real estate investor) raise capital from myself (the lawyer).
Great post,
Matt
You forgot to list option 6. Become a firefighter in California and retire with a pension
It’s the same as your 4%
Forgot —
The firefighter in California won’t have to borrow hundreds of thousands of dollars.
And if one doesn’t care about dying with an estate then it’s very similar…