By Anonymous Guest Writer
At 52, I quit my job. I had been in academic medicine for 25 years. It wasn’t my plan to retire in my early 50s—in fact, it was a distinct departure from my plan. I still had five years left on my mortgage, a car that was 12 years old, and two kids who haven’t started college yet. It was awkward when I told my family, friends, and neighbors that I left my job. They began frequently asking, “Have you found a new job yet?” or “Are you retired?” I found this increasingly uncomfortable, and on top of that, I wasn’t sure what the answer was.
Did everyone expect me to continue to take care of patients forever? When I meet someone and they ask me what I do, do I still tell them I’m an EM doc? My kids heard me say that a few months after I left my job and corrected me, saying, “No you’re not. You don’t do that anymore.” Do my kids think less of me now? It took some reflection to give myself permission to acknowledge that, after 25 years, I had saved a lot of lives (and taught countless residents and students to do the same), made a difference for tens of thousands of patients and their families, and made a lasting impact on my community. I tell my kids that they can pick whatever career they want, but try to make a difference—do meaningful work. I felt I had done that, and I slowly began to be OK with it.
I had paid my dues—more than that, even. I had given back to society tenfold.
More information here:
4 Reasons Doctors Feel Trapped in Medicine (and How to Escape)
What to Do in Retirement?
There’s a lot to adjust to when you leave work, potentially permanently. They say that people get bored. I hadn’t taken real time off in decades, so I have plenty of forgotten hobbies. It’s taken some time to rediscover them—doing some carpentry, writing, photography, pleasure reading, coaching my kids’ soccer team—but I quickly learned to fill my days.
I found it harder to wake up without a sense of purpose. I don’t miss delving into 200 emails each morning, but I always went to bed knowing what I needed to accomplish the next day and the next week. I always knew when I was going to work on short- and long-term administrative projects and how I was going to tackle them. That’s probably why so many new retirees pick up a clinical shift a week or get involved in volunteering.
The other challenge established by our society is that our sense of identity and our self-esteem are tied to what we do. Over the years, when I meet new people, I should first introduce myself as a father of two. Instead, I’ve always said that I’m an EM doc. But how will I introduce myself today? Or tomorrow? It's certainly something I've been pondering.
In reality, I actually haven’t decided if I’m retired yet.
More information here:
Early Retirement and the Likelihood of Regret
How to Never Run Out of Money in Retirement
How Do I Pay My Bills Now That I've Retired Early?
Of course, I couldn't even consider the question of early retirement if I hadn’t prepared for it financially. To be honest, I’m surprised that I’m there now (and I actually met with a financial advisor for a one-hour consultation to double-check my math for me, just to be sure).
Now I’m 52 and left my job, and I somehow squirreled away enough for retirement and college tuition times two kids. And not just retirement—early retirement. My money has to last a lot longer in retirement than if I worked another 10-15 years. That classic 4% rule (which should really be 3.5%—people are living longer and spending more than they used to) isn’t going to cut it at age 52.
There are a few things I learned very quickly. First, my money was invested smartly for someone who still has a decade left before retirement but way too aggressively for someone who is done with work. That needed a quick rebalance. I also had to take a deep breath and drop my disability and life insurance. I had enough money saved up now to take care of my family, so I didn’t need to spend any of it on monthly payments for insurance I no longer needed.
Next, I was used to having monthly expenses to pay and a monthly paycheck to pay it with. But it was very new—and rather disconcerting psychologically—to have those same monthly expenses but no paycheck. I also was no longer saving any money—something I had religiously done since I started earning a paycheck. With the help of some good advice, I decided to withdraw money (equal to that month’s bills) from my investments once a month and transfer it to my bank account to mimic a paycheck. It made sense from a financial perspective, but it also was comfortable psychologically to have a monthly “paycheck” land in my bank account to pay my bills.
That raised an interesting new question. I had always known that with the market, you “buy low and sell high.” But I had never thought much about it. Since I just invested each month and never really withdrew anything, there never was a risk of selling low. If the market dipped, it would come back up, and whatever I “lost” would be back in there (e.g. say, the Dow was x amount and it lost 10%. If I kept my money in there and three months later the Dow had climbed back to x, I’d have the same amount of money as before the market dipped).
But with a monthly “paycheck” coming out of my investments, suddenly selling low was a real tangible possibility. If the market dipped that week or month or quarter (or if there was a recession) and I sold investments to pay my monthly bills, I would be out a lot more than that amount and it would take a lot longer to recover that money (e.g. if the Dow dropped 10% and then I paid my monthly bills, the market would have to recover 110% to make up for what I spent when I wrote those checks). Without a monthly paycheck to cover my bills, I needed a new strategy.
I decided that when the market was doing well, I should pay my bills each month by transferring money out of investments to my savings account (where I pay my bills) as I had planned. But if the market wasn’t doing well, I needed another option. I would need to expand my cash in my savings account at my bank so that I could pay my bills out of that money. I decided to expand my “emergency fund” to several years' worth of expenses. I put this into a high yield savings account, typically 0.5% nowadays—not to plug any specific financial institution, but Citibank has a 0.5% option that’s pretty accessible (it’s not much, but it beats the 0.01% rate at my own bank). You can put up to $250,000 into a bank account and have it FDIC insured (and insure another $250,000 at a different bank, etc., until you have your cash buffer out of the market).
On good market months, I pay my bills out of my savings account and then transfer money from investments to bring that back up to $250,000. On months when the market isn’t doing as well, I just pay my bills out of my savings account. When the market rebounds back to its original high (next month, next year, etc.), I top my savings account back off to $250,000 again.
What’s my threshold for deciding if the market has dipped low? It’s helpful to know some history. Starting from World War II, a market correction of 5%-10% occurs on average once a year and typically rebounds back in about a month. A larger correction of 10%-20% occurs about every three years and typically bounces back in about four months. A 20%-40% drop is a recession. While I like to see a dip return to the previous high before withdrawing (and just pay my bills out of my savings account), I will tolerate around a 5% dip if the market doesn’t seem like it’s going to come back for a while.
Pulling that much money from the market when it is doing well and putting it in a bank is painful since bank interest is so poor. The market averages 5%-6% over the long haul, and inflation is typically 2%-3% over time. “Investing” money in a bank nowadays is under the inflation rate, so that money is losing value. It’s especially odd when I’ve always thought of market investments as long-term and not as a month-to-month re-valuation. Several years' worth of living expenses is a lot of money coming out of the market and into cash. How many years do you need? I’ve read 1-5 years, with three years being the median recommendation. The Great Recession of 2007 lasted five years until the market returned to its original pre-recession number.
You’ll have to decide your comfort zone. If I had to do it all over again (and actually retired when I originally planned to retire), I would have started shifting cash over earlier and more gradually over a five- to 10-year period before retirement, as it would have made the transition easier and also made for a more appropriate asset mix as I neared non-working age.
I’m not sure if I’m retired. I might go back to work clinically. I might test the academic waters elsewhere. I might start volunteering for Habitat for Humanity or maybe start my own business. I’ve always dreamed of becoming a Park Ranger. Or maybe I’ll sit home and write, take up photography and carpentry again, read a book for pleasure and help my kids with their homework after school. I can’t wait to see how it plays out.
If you've unexpectedly retired early, how did you go about paying your bills? Did you sell your investments? Did you expand your emergency fund? Psychologically, was it a difficult transition? Comment below!
Great story, thank you for sharing! Just some musings in math regarding market dips… you write that “if the Dow dropped 10% and then I paid my monthly bills, the market would have to recover 110% to make up for what I spent when I wrote those checks.”… I think it’s worth noting the required market increase is the reciprocal of the drop. So if it drops 33% (to 67% present value), it needs a 49% increase (or to 149% present value) to make up for it. If it drops 50%, it needs a 100% increase (has to double in value!). For a 10% drop it really needs to increase to 111% present value, but my main point is, the recovery is not simply the same percent lost… the bigger the drop, the much larger the required recovery to re-attain the lost value.
Great article. I’m in a similar situation – 52 and just stepped back from CCM. Going to work as a hospitalist and see how it goes.
Thank you for sharing your story in this post! This type of content is largely missing in the FIRE community especially for physicians.
Your post truly reaches me as I am in a very similar position. An unexpected medical condition is ending my surgical career (for the foreseeable future at least) at the age of 51. I too am sorting out my new identity and my new day to day life. I am still also sorting a lot of guilt about leaving complex patients who may be in need and colleagues who have had to cover for me as the medical issue was sudden and not expected.
It is an abrupt change to look at one’s portfolio with withdrawals in mind instead of growth. We are fortunate that a military pension is going simplify our financial planning a great deal but there are still many anxiety filled decisions to make (payoff mortgage? Cancel life insurance? How create steady income from a portfolio?) and the markets seem unsteady currently and the timing less than ideal.
I again appreciate your sharing your story as it truly reached me and it is an inspiration that others are embracing the same challenges. Although I struggle with guilt I do also feel I have paid back any debt to society multiple times over as a physician (and over a two plus decade military career). Despite what your kids say (mine have said similar) you will ALWAYS be a physician! I too may go back if I recover and the setting is right, but that seems a long way off right now.
Ironically I have also dreamt of the park ranger role- maybe I will see you out there! Best wishes to you and your family on your transition!
I love the part where you talk about how you will introduce yourself to new people that you meet. The identity as a physician is so tied in with what we are but few of us would rate it as the most important thing. On my personal mission statement I have 1. husband 2. father and 3. physician. I sure don’t introduce myself to new people that way but I should- thank you for that insight.
I religiously read the WCI email every single day first thing in the morning. Good content most of the days. But this particular one resonated with me so much, I could have written it myself (I am not a doctor) . Like some of the earlier comments, this type of content is sorely missing in WCI, FIRE or in Bogleheads community. I loved how you described the psychological effect of the missing incoming monthly amount into the savings/checking account and the painful way to sell equities to pay the bills. I couldn’t come around to doing selling my funds so I took another job to see the cash flow and I regret taking the new job. I want to quit it. Your entry gives me the confidence that I should employ methods like yours and that I am not alone in doing such things. thank you!
I humbly request Dr. Dahle and the WCI content providers to have lot more decumulation related articles. We have plenty of articles to help with the accumulation phase but there is a large set of people who have saved enough to retire early but psychologically unable to deal with spending and don’t know how to go about doing it. Please help! Thank you in advance.
I second this request.
There are other sites also covering this. If you want a really in-depth analysis the SWR series on Early Retirement Now can make your head hurt. ESI Money also spends a lot of time on post-retirement topics (including non-monetary topics). The Retirement Manifesto has a post on The Retirement Bucket Strategy, which is closely aligned with this article (and in fact is part of a series). It adds in a mid-term bucket where the spending money is pulled from, but is exposed to more risk than HYS, where the spending money sits.
And before Jim says it, he would gladly welcome more guest posts on post-retirement living and planning!
SEQUENCE OF RISK-most important principle nearing retirement as well as the Marginal Utility of Wealth
Thank you. Your story really resonated with me. I think the most difficult part was how to tell that to colleague’s and friends and what their perception of me was going to be
I quit my job at 52 because of stress, went through a bout of depression second guessing my decision.
Took me a couple of months to break the news to relatives and friends.
After a lot of pondering, went back into the job market and looked for a job under my terms.
Making much less, but am able to sleep at night.
Great article. Lots of difficult issues especially now that inflation is 8.5% thanks to our government. This destroys your wealth having cash making 0.5%.
Maybe I’m mistaken, but I think inflation is high in most places worldwide right now.
I would venture that the vast majority of us here live in the US where inflation just hit 8.5%. So who cares what it is worldwide when we are losing vast buying power by the minute due to excessive money supply?
I was responding specifically to your “because of our government” comment. I do think that is a contributing factor, but there are likely many more reasons for current inflation if other parts of the world are also having the same problem.
Thank you for your openness about your early retirement. I went through similar experiences when I retired at 54 at the beginning of the pandemic. I found your description of your investment conversion to savings interesting because I have not heard it described in detail like that before. Congrats on finding a method that works for you.
Thanks so much for this great story. I’ll now be hard at work gradually increasing our “cash on hand” with your insight. Also 52, also have children not yet in college…..what’s your college funding plan?