By Dr. Jim Dahle, WCI FounderI recently had the opportunity to go backpacking with a couple of men near my age. One was a little over 50, and the other a little under 50. Neither are doctors, but both, now at the height of their careers, are currently making “doctor-like money”—one as an airline pilot and one in oil and gas. As it often does in conversations with me, the subject turned to finances.
Both are doing just fine financially. They've both been saving and investing their entire careers. Just a little at first but more as they went along. Now, they're both headed for what is almost surely going to be an early retirement by about their mid-50s. They're both excited about this—with good health, good relationships, and lots of plans to do more fun stuff like backpacking, traveling, and adventuring. They just need a few more years for everything to fall into place financially. Their financial plans are basically on autopilot, and while the exact timing might be a little uncertain, they'll both retire very comfortably in just a few more years.
Winning at 50
Reflecting on their situations after the trip, I thought, “This is what winning looks like at 50.” One of them will qualify for a substantial pension in a couple of more years, and they are both already multimillionaires. They're financially literate, managing their own portfolios, using mostly index funds, and saving financial advisory fees. Both are soon-to-be empty-nesters, and they are thinking about selling their current house and buying one more suitable for their planned retirement.
More information here:
How I Went from a Negative Net Worth in My 30s to Early Retirement
Lessons Learned from Achieving Financial Independence
Doctors at 50
The situation for doctors at 50 is much more variable. I run into some that are already very well-to-do, with net worths over $5 million and climbing. However, there are plenty on the other side of the bell curve, too. Net worth surveys, such as those done by Medscape every year, reveal that a substantial portion (25%) of doctors aren't even millionaires in their 60s, much less multi-millionaires at 50. In fact, about 12% of 60-something docs don't have a net worth of $500,000—even when home equity is included.
That's not winning. I'm sorry, if you've been earning $200,000-$500,000 a year for the last 20-30 years and you have less than a million of it left, you kind of blew it. That doesn't mean you can't make a few changes and improve your situation, but I wouldn't describe you as “winning the game.”
So, what does winning look like at 50? The original financial plan Katie and I drew up as a PGY2 in 2004 assumed our income would peak and flatline at about $225,000 a year and that we would have $2.7 million in 2004 dollars (which we thought was enough to retire) when I turned 51. The plan was then for me to work part-time after that for as long as I felt like. Thanks to physician incomes rising, a better-than-planned savings rate, and the extra income from the business of WCI, we exceeded that plan and became financially independent when I was about 43.
However, I think that original plan is still a pretty good outline of what winning looks like at 50 for a doctor. By 50, most docs have been out of residency for 15-20 years. If the average doc has been earning $363,000, saving 20% of it ($72,600), and earning 5% real on it, they should have something between $1.5 million-$2.5 million saved up for retirement. They should be rapidly approaching financial independence. Student loans should be gone. The end of the mortgage is probably in sight. There's something saved for college if there are any kids and they're on a short runway toward a comfortable retirement. Maybe they're dealing with a little burnout, and they would like to cut back. Great! They can afford to do so. Or they can grind for 2-5 more years and punch out early. The choice is theirs.
More information here:
You Should Invest Like a 50-Year-Old Woman
What If You're Not Winning at 50
Feeling pretty good about your situation at mid-career? Good, I'm truly happy for you. Not feeling so good? I'm sorry to hear that. The good news is that you're still only at mid-career, and no doctor is ever more than 10 years from retirement. If doctors can come out of residency at 30 and be ready to retire at 40 or 45, why can't a doctor with nothing saved at 50 be ready to retire by 60 or 65? They can. The math works the exact same way. Yes, you'll have to maximize your earnings and cut your spending so you can save well more than 20% of your gross for retirement, but it can certainly be done. You just have to want it bad enough to make the sacrifices necessary to get it. Even if you're 60 with nothing saved, you can still work until 70 and dramatically improve your retirement situation.
I can't quite say “it's never too late,” but you might be surprised at what you can accomplish with just 5-10 years of hard work, aggressive investing, and delaying Social Security.
Need to get your own financial plan in place? Check out the Fire Your Financial Advisor course! It's a step-by-step guide to creating your own path to financial freedom. Even better, we now have separate tracks for attendings, residents, and medical students. Try it risk-free today!
What does winning at 50 look like to you? How close do you think a doc should be to their desired nest egg by 50? What would you recommend if they're behind?
This post landed at a meaningful time for me—I just turned 51 and worked my final shift as an EM doc last night. With the house paid off and a withdrawal rate around 3%, I’m not living extravagantly, but I have everything I need. That feels like a win. Thanks for all the help and guidance over the past 10 years—it’s made this possible.
Awesome to hear these stories! Congrats!
Our pleasure. Tell us more about your decision to stop working completely.
Emergency medicine just became too stressful for me. I must have enjoyed it when I picked it at age 25, but I’m a different person now. The parts I do enjoy, like camaraderie and teamwork, I have found in other more pleasant activities. That’s really all there is to it.
I feel this! I’m not quite punching out yet but am close to being able to and its appealing for the exact reasons you mentioned. It’s just become more stressful and the “is the juice worth the squeeze?” question has become harder and harder to answer. Congrats to you!
Congrats! Now GFY!
Hahaha!
Maybe you can tell us emergency docs about your other pursuits that might be viewed as a substitute for the camaraderie we will surely miss once our last shift is over?
What percentage of doctors do you think retire early? I wonder if medical schools and residency programs take the average career span into account when deciding on the # of spots each year. If more doctors retire earlier than expected, the shortage may become exacerbated, perhaps partially-mitigated with AI advances.
Yes, that’s probably a risk, but not a very high one in my opinion given how few doctors actually manage their money well. Most doctors can’t retire early and many of those who can choose not to.
But I don’t think med schools or residencies think about this at all. They take as many as they reasonably can.
Interesting. Reading this gave me an objective perspective of a WCI approved checkpoint at circa 50. I think the tricky part for younger physicians / couples looking to retire early, is how much more money they need than this checkpoint, being that much further away from Social Security and non-penalty 401(k) withdrawals. Also, the elephant in the room is people have very different definitions of winning. I personally want to live just the way I do now as an attending, even when I’m not working. So naturally, the nest egg has be a lot larger. Thankfully, as a high income dual physician couple, we do save aggressively even while being able to afford nice things. The reality is is that the vast majority of physicians not reading a blog like this/caring about personal finance, do not really save much beyond their 401(k) for retirement, if that, and spend as if they will make their attending salary for the rest of their lives. Divorces, second homes, maybe a costly business venture or 2, private school (even while living in solid public school districts) all do not help this case. You are right that it’s never too late to start and that you can extend your career an extra 5-15 years to fill the gap. But, as a 36 year old physician who has never taken more than 1.5 weeks of vacation in a year, I can tell you its a whole lot easier to grind at this age and make your money, than it would probably be at 56.
There are plenty of valid ways to get money out of 401(k) prior to traditional retirement age. Also, look at a series of substantially similar periodic payments under IRS rule 72t.
It sounds like as a dual MD couple with good habits you’re doing great financially. But 1.5 weeks vacation/yr? Loosen those purse strings just a little and make yourselves take more time away to recharge (with or without the kids😄). It will benefit you in the long run whether you retire early or keep grinding
Take some more vacations if that’s something you and your loved ones enjoy doing. I’ve seen plenty of colleagues die in their 40s from some freak health issue.
And traveling in your 40s is not the same as traveling in your 30s is not the same as traveling in your 20s. I took almost every single day of vacation available to me throughout my 20s and 30s, and as my body continues to gradually break down I’m thankful I did all those long flights to the other side of the planet when I was younger.
I appreciate front-loading the work/suffering sentiment, but I can tell you as a dual physician couple with a high savings rate you will run into the issue of having too much… then as the WCI has said (it better), you will probably wish you had used that money to buy back that time in your 30s. If you have a high savings rate, then you may be overestimating how much you need …. and once the house is paid off, a huge expense is gone. 2 physicians =~ half the amount of time needed to work to reach goals. Also, what are you going to do with yourself being only used to 1.5 wks of vacation/yr? You need to ease into it.
Question for WCI: I primarily teach personal finance to law students and young lawyers. Are you aware of any similar studies/resources tracking the net worth of attorneys?
I would love to get numbers like this in front of my students while they’re at the very beginning of their careers.
Even after teaching personal finance for years, my jaw still drops when I see stats like 12% of doctors in their 60s have a net worth of <$500,000.
Thank you as always!
Matt
I don’t know of a survey nor could I find one Googling for a minute.