Cory S. Fawcett, MD, is a retired (he would say “repurposed”) general surgeon who lives in Oregon with his wife when they aren't galavanting around the country in their RV. His original plan was to retire at 50, but he didn't really have anything to retire to at that point, so he spent a few years figuring out what he was going to retire to while gradually scaling back his surgical work. It appears he has retired to a life that involves quite a bit of travel as well as work. He has been teaching the Crown Financial course across the country for quite a while and decided when he stopped practicing that he would start teaching doctors to stop doing dumb things with their money. So he started writing his first book and got it into the publisher's hands a couple of years ago. As part of her research, she asked him, “What about this white coat investor guy?” That was apparently the first time Cory realized that not only had I been working on this mission for half a decade already, but had already published a best selling book. I don't know if he was disappointed or exciting about that, but he kept at it anyway and you are the beneficiary of his efforts.
Over the last couple of years Cory has published three books. He admits the blog was originally just a way to market the books, but I think he has rethought that approach since I met him face to face at FinCon. He also came by Utah on his way home and bought my wife and I breakfast. Today, we're going to review the first three books in his planned series of 12 books. The reason why is that they're the best physician-specific books I've seen come out since The White Coat Investor: A Doctor's Guide to Personal Finance and Investing was published in early 2014. There are actually several dozen doctor-specific financial books now, but most of them aren't that good. The majority are marketing ploys by financial advisors and a surprising number of them (including some I've been sent this year) actually include some terrible advice.
The Doctors Guide to Eliminating Debt
The first book in the series is The Doctors Guide to Eliminating Debt. The best way I can describe this book is “Dave Ramsey for Doctors without the bad investing advice.” Many doctors and other high-income professionals can't relate to Dave Ramsey's books, show, or course due to the dramatic difference in dollar figures and financial situation between average Joe and a typical doctor. So in his book Dr. Fawcett uses a Christian perspective on debt and a doctor's financial situation to teach people how to get out of debt. Not manage debt. But eliminate debt.
At breakfast the other day, Cory told me about his real estate empire (more than half his portfolio). It all began in 2001, the very same year he finished paying off all his personal debts. In his book, he describes becoming debt-free this way:
When I decided to become debt-free, something interesting happened. A weight I didn't know I was carrying seemed to lift from my shoulders, as my debt load decreased. Without the debt holding me back, I was financially able to retire at the early age of 51, despite living in a financially depressed area that provided a below-average income. It's not difficult to become debt-free. You don't need to make great sacrifices–like living on peanut butter and Top Ramen–you merely need to make an adjustment in your attitude about how to use your money. Once the adjustment is made, it doesn't take long to get out of debt. In fact, it will take less time for you to get out of debt than it took to get the training that put you so far into debt in the first place….Especially when you tackle the problem with the same energy you used to get through all those years of training.
If you're a high-income professional, and you have debt of any kind, I think you ought to read this book.
Buy The Doctors Guide to Eliminating Debt today!
The Doctors Guide to Starting Your Practice Right
Dr. Fawcett's next book is the best in the series (so far) in my opinion. While there is some overlap between all of his books, there is only one chapter in this book dedicating to becoming debt-free. Most of it is solid practical advice or the graduating resident or young attending. He introduces it like this:
Yes, there is life after residency. A busy practicing professional can have a great home life and career without working as hard as a resident. You can run a practice and still watch your kids grow up; you don't have to miss their once-in-a-lifetime milestones because you were too busy working. Burnout need not be in the equation. Debt doesn't have to rule your life. You can take control of your future and live the dream you chased when you were just a kid who wanted to be a doctor.
The book is divided into all the different types of chapters you would expect. There are chapters on getting the right start, finding a job, negotiating a contract, licensing, credentialing, insurance, spending, setting your lifestyle, and planning for retirement. The advice is all good- don't buy too much house, get the good job by looking intelligently, one house-one spouse-one job, don't sign bad contracts, buy appropriate insurance, make a written plan for how you will use the money you make in your practice, and save for retirement.
As a general surgeon, he does a far better job of discussing how to make sure call is fair than I could ever do as an emergency doc. His discussion of planning vacations (both in budget and schedule) is also excellent.
Overall, it's a great book and well worth your time if you find yourself at that stage of life, have already read The White Coat Investor, and are looking for more physician-specific early career advice.
Buy The Doctor's Guide to Starting Your Practice Right today!
The Doctor's Guide to Smart Career Alternatives and Retirement
Cory's third book takes us to the other end of your career where he talks about retirement, semi-retirement, alternative careers and lots of other cool stuff that is most interesting to those in mid-career and later. He begins with statistics that show that 1/3 of doctors want a dramatic change in their career–whether that is retiring, cutting back, or or switching to a non-clinical career. Frankly, I'm surprised that number is so low. Every time I speak to a group of docs almost all of them would work at least a little less if they could afford to do so. Dr. Fawcett's points out that most of these docs don't really want to retire, they just want to get away from those aspects of their job that they don't like. He also warns about becoming fixated about retirement:
Don't get me wrong–I'm not opposed to retiring if it's the right choice for you. It is the obsession with retirement that can rob you of mindful focus on today. It is too easy to get stuck on this one issue and let it play over and over in your mind. With each new playing, you become a little more dissatisfied and confused, until you don't know what to do next. If you don't find joy in your work and you are persistently longing for the day when it is over, why not stop what you are doing now and move on to something you love? Don't wait until you are 65 to do what you love to do….if you want to quit practicing clinical medicine, retirement is not your only option.
Again, you'll find a little overlap with the other books, but for the most part all of the information is new. The first two chapters are great and force you to focus on figuring out why you want a change and what you would do if you retired. Then he spends one chapter on clinical career alternatives, one chapter on non-clinical career alternatives, and one chapter on what he retired to when he left his main practice- locum tenens in rural America. Other chapters include a discussion of the financial phases of life (learning, earning, and burning) and preparing for a full retirement. The “Making an Exit” chapter is excellent as it discusses the nitty-gritty of actually leaving the practice. The remainder of the book is much more general rather than physician specific, but he talks about retirement income, building a retirement lifestyle, and some estate planning issues. This book is also great because it contains cameos from people who have done some interesting things outside of medicine like Kevin Pho of KevinMD and even a section about me!
Overall, it's a great book for the doctor who is less than satisfied with his current career. It's not so much a how to deal with burnout book, so much as it is a practical discussion of what your options are if staying with your career isn't an option for you. I highly recommend it.
Buy The Doctors Guide to Smart Career Alternatives and Retirement today!
What do you think? Have you read any of Cory's books? What did you think of them? Why do you think doctors too often manage their debt instead of eliminating it? Why do you think so many docs are looking for a path out of medicine and what do you see as their options? Comment below!
Interesting. I was wondering about these books and Cory’s path, and now I know. We have done some basic things with our practice to make it enjoyable. For example, taking the Monday off after working the weekend, increasing the standard vacation days, adding holidays and extra practice holidays like the Friday after Thanksgiving. Still making it through your first book recommendation. I am blown away that so many states defaulted on their debt. It really takes you back to a different era. Additionally, it confirms what we learned in 2008. That is, that the economy can get very ugly very quickly. We know it is coming, we just don’t know when. Last year my favorite from your list was “The Over Taxed Investor.” Loved that one.
Leaving Mondays open after a weekend of call was one of the best moves I ever made. The burden of that day, after 3 days of adding patients to my hospital list and having several surgeries to work into the Monday schedule, was lifted greatly by not having to work those cases around an already full day. If you have such a schedule, do yourself a favor and leave the day after open. If you are reluctant, try it a few times and see how it goes.
Cory,
We take it even further than that. It is a day off. No pager, no paper work, etc…It is a true day off with no responsibility whatsoever. Granted, that may be more of a specialty specific mentality, but we hire doctors for our practice to cover the extra holidays, Monday day off, and extended vacation days. It is more of a life philosophy and a wellness plan that works well (pardon the pun). I agree with you that it makes a world of difference, but I advocate making it a true day off rather than a pseudo day off. Most of us enjoy medicine, both for intellectual reasons and humanitarian reasons. Features of a schedule such as this allow physicians to achieve a continued enjoyment for medicine.
Randy Gertner, I like your group’s plan. It is so nice to see groups get together with the hope of making a great life in medicine, not just making a living. You can enjoy being a doctor if you play the game well. Looks like you are doing that.
Cory is a wealth of information and experience. I wish I had had someone like that to advise me when I was starting out. Don’t avoid the “Starting Your Practice Right” book because of the title. It isn’t just for those who are starting a private practice. It is for every physician (even the employed), but most useful for those just completing residency.
Thanks for the kind words WealthyDoc. You are right about the title. After hearing feedback from several readers, we should have called it “The Doctors Guide to Starting Your Medical Career Right,” or “The Doctors Guide to Transitioning out of Residency,” or “The Doctors Guide to Becoming an Attending.” Many doctors have not picked up the book because they thought is was a nuts a bolts book for opening a private practice office, which it is not. I think every Resident and new attending should read it, but I might be biased about that.
I made a similar observation in my review. It’s a good book whether you’re becoming an employee, joining an established private practice, or starting one of your own. Where were the publishers on that one? 🙂
Thank you, White Coat Investor, for your kind comments about my book series. I would also like to thank you for opening my eyes to things I should be doing with my blog. Hearing you lecture at FINCON17 and discussing things with you and your wife over brunch were extremely insightful. You have inspired me with some new ideas. Keep up the good work.
Coincidentally I just finished reading his third book (on retirement and career alternatives) a couple of weeks ago. I had actually discovered him at the SEAK conference on non-clinical careers in Chicago last month. I had hoped to talk to him but he was in high demand, so I bought his book.
The book does a good job helping physicians to focus on what they want to do as they retire or semi-retire. There are many options after clinical medicine and not all will apply to an individual physician, but it’s still helpful learning about them. A lot of it echoed what I learned at the SEAK conference. Fawcett focused one chapter on his own locum tenens experiences, something I wasn’t really interested in but I did enjoy the chapter.
If someone has been reading about financial independence for a while and has been following WCI, his financial advice will mostly be things you already know. One thing I did like was his treatment of when to start taking social security. The common advice is to wait as long as possible, but he made the point that for people with a nice nest egg they are better off taking SS early and leaving their tax-advantaged accounts alone until they are forced to start withdrawals. I hadn’t run into this idea before but it makes sense. I searched WCI and couldn’t find an extended discussion of it though I did see where Dr Dahle had mentioned it before.
Overall if you are thinking about how to handle retirement or semi-retirement I recommend the book.
Rando,
Sorry you didn’t get a chance to talk with me at the SEAK conference. There were only 50 mentoring time slots available for the conference so there were many doctors who didn’t get the opportunity to chat. If you still want a mentoring session, you did pay some big bucks to be at SEAK, get in touch via my website and we will set up a conversation. Best of luck with whatever you were SEAKing at the meeting.
Thanks very much for the offer but I think I have things figured out, at least for the time being.
I think if you have a large enough taxable account then it is not a good idea to take ss early. I like to think of ss as the best longevity insurance policy out there. Everybody’s situation is different. One size does not fit all. I need to buy your book to see what else I need to be doing.
Don’t worry, it’s coming in a Pro/Con post in about a month. I certainly do not agree with his take on when to take SS.
Looking forward to it!
Look at Michael Kitces website on withdrawals in retirement
He believes in a blended approach of personal and Ira withdrawals and some Roth conversions
Does not believe to spend down all personal assets, then Ira distributions
Might be fun to compare and contrast that with James Lange’s recommended approach (which is basically taxable first.)
Not only are his books fantastic but he is a great guy. I’ve corresponded with him a few times and he’s given me some fantastic and practical advice. I reread parts of “…guide to getting out debt” anytime I’m thinking about doing something stupid. Keep up the good work Cory.
Thanks for the kind words Frank. I sometimes have to go back and re-read the book myself to stay out of trouble. Temptation abounds.
I had the pleasure of speaking with Cory on my podcast, specifically about the “career alternatives” book.
Not only was the book comprehensive, but the author is an all-around great guy. 🙂
David Draghinas it was great fun to do a podcast with you.
I have read starting your practice right. I wish I would have read it a few years sooner, but it is a good read. Highly recommend it for any resident. I look forward to reading career alternatives retirement book. I do agree that I often find myself focusing on retiring too much. Then when I have some annoyance with my job I tend to blow it out of proportion.
kitces makes a great argument for a blended approsach to retirement distributions; personal assets, iras, roth conversion leads to the best 30yr results
I’m not sure you understand his argument. I’m quoting his summary of it here:
https://www.kitces.com/blog/tax-efficient-retirement-withdrawal-strategies-to-fund-retirement-spending-needs/
He’s saying spend taxable first, both on living expenses and Roth conversions. That’s pretty much the conventional wisdom as far as I can tell.
I took it a step further. In my accumulation phase I invested nearly twice as much in post tax accounts as pre tax accounts. I maxed out pretax accounts early and put excess investment cash into tax efficient post tax investments. About age 55 I realized RMD was going to kill me, so I pretty much stopped aggressive pre-tax investing, just 401K match. I continued MSA. I also aggressively tax loss harvested my post tax accounts to accumulate about $500K of LT cap loss over about 30 years.
I then retired at 65. My goal is to move money aggressive from tIRA to Roth IRA from 65 to 70, up to the 15% (or 12% if the tax bill passes) bracket’s top end. It therefore costs me 15 cents to move a tIRA dollar into the ROTH instead of the 33 cents it would have cost during my working life. I get money to live on by selling post tax stock, and mixing it with LT cap loss. This gives me cash with no tax bite. During the course of my conversion the entire amount I take from the tIRA will therefore go into ROTH since I am living off cash and effectively have no income. In the mean time the tIRA is intact but now has quite a bit of bonds. From the papers I have read at early retirement you want to reduce your AA to become more “bond-ish”. As you progress forward if you then move more stock-ish, the chance of making a mistake becomes a smaller and smaller percent because your demise becomes a bigger and bigger percent. So it becomes a race between sequence of return risk v longevity, with the hope longevity wins but not by much.
I also now have tips as an inflation hedge in the trIRA since I no longer supplement my income with work. Inflation will kill you in retirement so some protection is not to be ignored. As I Roth convert I will invest in stocks which over time will reverse my bond-ish allocation back toward stock-ish on a dollar cost averaged glide-path. At 70 I will have to RMD and I will start SS at the age 70 rate. About 9 years after that my wife will start SS and 3 years later her tIRA will RMD. My WR is under 3%
I call this retirement by epoch. At the end of each epoch I will effectively re-retire as a new income stream starts. By doing this I get to control my tax bite for a longer period. I hope to keep my annuity income (RMD + SS + DW’s RMD + DW’s SS) in the 15% or 12% bracket and then if I want to buy a car or take a trip to China, I just slice a little off the post tax stock “roast”, finish it with a demi glace LT cap loss and obtain a tax free ride or trip. I intend to use the Roth’s as wealth transfer to the kids and as insurance.
In order to do this effectively you need time and a plan to execute each epoch. I have read stocks and bonds are more expensive right now than in history, at about 90% of relative value in each category. I’m pretty much a quant when it comes to this kind of thing. We will regress to the mean and the one who is hedged will win. What that means is over the next period of years average growth may be in the 2.5% (real) range instead of the 5-6% (real) we are used to. This is why I have chosen a WR below 3%. I put it here because it’s an important thing to consider.
Thanks for an interesting post
How large are your tax-deferred accounts that you felt RMDs were going to kill you?
At any rate, with a sub 3% withdrawal rate, I wish I were your heir.
1.6 M If the tax law passes I hope to get it to around 1 M when RMD hits, with a 12 cents on the dollar tax bite instead of 25. The RMD on 1.6M is about 80K peaking at 225K v 1M 48K peaking at 141K. SS is about 42K
I have a young wife with proven young genes so this plan is more for her than me. She likely will have a 50 year horizon. I’ve already traveled everywhere back when it was safe to travel, had my “sports car mid life” and all that, so now I’m really digging the Zen of owning the entirety of my time again. Best thing ever.
Thanks
Seriously?
You know what the RMD at age 70 is on a $1.6M IRA? It’s 3.6% * $1.6M = $57,600. If you have no other taxable income, $20K of that comes out at 0%, $18K at 10%, and the rest at 15%. Perhaps an overall tax rate of 10%. That’s “killing you?” Even if you had $100K of other taxable income, that’s still all coming out at 25-28%, which is surely less than the savings you had putting that money in there during your peak earning syears.
While I think you’re doing the right thing with all the Roth conversions, I think passing up additional tax-deferred contributions in order to invest in taxable out of fear of an RMD problem was probably a mistake. And not an uncommon one. I’d recommend James Lange’s writing on the subject in Retire Secure. Tax-protected accounts are pretty valuable and passing up contributions to them is usually a mistake.
To each his own. You asked the value of my IRA when I realized the danger in continued contribution so I told you. That was 10 years ago and it’s 5 more years till RMD. The iRA’s continue to grow but I mostly use it for diversifiers like bonds and reits. Instead I increased my post tax money dramatically. I’m not that impressed with pre tax gains if you have harvested cap loss to apply to post tax gains. I don’t buy the boiler plate. The largest holding of untaxed money is tIRA accounts and 401k’s, where is your guarantee? Do you buy the boiler plate ” take the money out at a lower tax rate?” One day ss was not taxed the next it was. Tax law is fickle and you are a 1%er with a bullseye on your portfolio What if they means test IRA’s over 2 million? Why do they make you RMD in The first place? I have post tax money and cap loss = rich man’s Roth. I have diverse ways to fund my life that doesn’t depend on IRA tax law continuity.
So you’d rather invest in taxable where it is taxed every year than put money in a Roth? Because that’s effectively what you’re choosing to do. For example, let’s say you were 60 and still working and trying to decide whether to put $50K in your 401(k) or just invest it in taxable. You chose to invest in taxable. What I’m saying you could have done is put the $50K in taxable, move $50K from a traditional IRA to a Roth IRA and use $20K of your taxable money (or income) to pay the taxes on that move. In effective, you are investing $70K into a Roth IRA instead of $70K into a taxable account. You’ve got to be a real cynic about tax law to pass up a tax-free and asset protected account in order to invest in one without those attributes.
It’s your money, do what you want with it (and if you’re no longer working, you’re probably past the point where you can do anything about this.) I’m mostly writing this to point out to others facing the decision you faced that passing up a tax-protected contribution out of fear of RMDs is usually a mistake.
Your calculation only looks at one data point. An RMD annuity has a variable stream of data points. If all your dough is in an IRA it doesn’t much matter what your tax free rate of growth is (typically 5 or 6%) it matters what your tax rate is when the money comes out as ordinary income. Typically 10%-25% unless you’re really rich, then it’s more.
https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/ira_calculators/rmd
Put some numbers in this calculator and run your cursor out 15 years. It doesn’t kill you the first year it kills you about the 15th year and continues to kill you till you’re dead. Once you RMD, you loose a lot of flexibility in planning especially if all your dough is pretax. This is called bracket creep and the congress loves bracket creep. Early money (when you’re 30) grows the most so IRA like accounts are the place for that. Late money doesn’t grow much no matter where you put it, it maybe doubles taxable or pretax, BUT if it’s post tax you are not liable to ordinary income tax, just cap gains and there ways to mitigate cap gains. The risk is they raise cap gains higher than income tax but given the congresspersons are all holding cap gains it’s unlikely to happen.
First, “being killed by RMDs” is a wonderful, first-world problem to have. It’s like the problem I currently have where my marginal tax rate is 46%. Sure, I’ve got to pay a lot of taxes, but it beats the alternative.
Second, the solution to the “being killed by RMDs” problem is Roth contributions/conversions, not passing up retirement accounts to invest in taxable. In fact, that approach actually makes the RMD problem worse because there are taxable distributions coming in from the taxable account instead of tax-free distributions from the Roth account.
The post tax bite depends on how you structure your post tax money. E.g. BRK.B is essentially invisible to the tax man till you sell it. IWM is also a pretty good bet. Also DFA funds. Just some examples
https://ylpr.yale.edu/inter_alia/slam-door-why-congress-should-end-backdoor-roth-ira
The back door roth was on the chopping block in the presen tax bill. I haven’t heard about its disposition lately so it likely will survive this time. Are you working harder but making less money? How can that be if the government is your friend?
Maybe not so cynical. It can go away with the stroke of a pen.
You’re getting kind of hyperbolic now with the government/friend/working harder making less stuff.
Without doubt there are ways to invest more tax-efficiently in a taxable account.
That’s still not a good reason to pay more taxes than you have to and give up asset protection and estate planning benefits that you could have. But hey, it’s your money man. Do whatever you like with it. Seriously, if you think your assets inside a tax-protected account are more likely to be seized by the government than your taxable assets, then don’t put any more in there.
My opinion is that your fear of government/potential tax law changes has actually caused you to give more money to that government than you had to, which I would find a little funny if I didn’t feel so bad about you overpaying your taxes. If you read the tea leaves differently than me, that’s okay.