Super Saving for an Early Retirement – Part 3 | White Coat Investor

[Editor’s Note: Today’s guest post was submitted by a long-time physician reader who wishes to remain anonymous. The decision to retire early is never an easy one. Here’s an inside look at the decision process. It’s particularly fun to have a longitudinal “study” of an individual white coat investor as it provides “the rest of the story”. We have no financial relationship.]

In August 2015, WCI published my first WCI guest post, Super Saving for an Early Retirement. Robust interaction in the comments section ensued, so I thought readers might enjoy the sequel to my story, which was published about two years later in 2017. People seemed to like that one, too, in part due to the voyeuristic aspect of watching my wife and me honestly explore a tense topic in a public forum.

It has now been more than three years since I penned Part 2. While I’m not arrogant enough to believe you are as invested as I am in the ongoing case study that is my life, I do hope that sharing my personal and financial evolution toward retirement will help those grappling with the same beast.

Before going any further with this post, I recommend you check out the original post and Part 2. They’re fairly quick reads, even in light of my tendency toward verbosity. But I realize your time is a limited resource, so here’s the TLDR recap:

My physician wife and I both have two copies of the recessive frugality gene, so we lived like financially-strapped medical students for many years, not upgrading to living like residents until several years after completing our fellowships. Without being particularly sophisticated investors, we accumulated a substantial net worth in a short period of time, through the simple process of investing the majority of our income every month in index funds and allowing compounding to work its magic.

Intensely focused on the “finish line” of early retirement, I was running on fumes, taking too long to pull in for a pit stop. Ultimately, I cut back my hours, life got better, some surprising marriage dynamic conflict ensued (told you to read Part 2!), conflict dissipated, personal growth flourished, and life continued.

 

Super Saving for an Early Retirement – Part 3

As a diehard fan of Richard Linklater’s Before Sunrise and his follow-up film (with the same actors) 10 years later, Before Sunset, I both wanted and didn’t want to see the third film in the trilogy – Before Midnight. While the chance to see how things turned out for Ethan Hawke and Julie Delpy another 10 years into the future was too juicy to pass up, I worried that the romantic shine on the first two movies might dull by number three.

Indeed, the third movie forced viewers to confront some painful realities of life, which left me sort of wishing I hadn’t watched it, but also grateful that it didn’t present an impossibly idealized version of the future. After all, who wants to compare their own life to perfection? All this is to say: I’m not claiming parity with Linklater; I just hope that this installment of Super Saving isn’t a disappointment and that you take something useful from it. If nothing else, you can take comfort in the knowledge that I—probably like you—have no idea how to walk this path perfectly.

Cutting Back Doesn’t Solve All Problems

In the physician FIRE world, the advice to “cut back” is sometimes imbued with magical qualities. That’s probably because decreasing the amount of time spent on painful tasks naturally increases the time one has to pursue more rewarding things—and that leads to awesomeness. No doubt, cutting back to about 25 hours per week of clinical time gifted me the time and energy to create a blog with a small but passionate following (not financial, not monetized, and not looking to cross-pollinate my audience with WCI’s), spend more time with my wife and child, work a couple of side gigs that I find intellectually satisfying, and spend lots of time exercising outdoors.

But what about those 25 hours I spend at work? Are those fulfilling hours? The answer to that question has been, increasingly, no. With each step-wise reduction in my hours over the last 4 years, I found myself better able to allow work-related annoyances to roll off my back – for a while. But as I equilibrated to my new normal, the frustrations would again begin to mount, and I have found myself questioning why I put up with this when I don’t need the money.

Of course, if I was motivated solely by money, I would have quit a few years ago after reaching financial independence. I’m sure that many readers, especially physicians, understand that it’s not all about the money. My identity is wrapped up in being a physician; I enjoy talking to, teaching, and helping so many of my patients; my colleagues are good people; and I feel like my life generally has meaningful purpose.

But those downsides…insert prolonged sigh here.

When Should I Retire?

Assuming one’s situation is analogous to the “frog in a boiling pot” parable, I don’t believe that the answer to the question of when to quit is ever straightforward. As much as I am a pros/cons type of person, I’ve had to approach this issue with a “what does my gut tell me” mentality, because my gut has been increasingly vocal. Unfortunately, my mind knows that my gut can be fickle, so the two organs have been engaged in a chess match that has, thus far, resulted in a stalemate of maintaining the status quo.

Within the last month, however, my gut is telling me that it’s starting to feel like the right time, and my mind isn’t protesting. And that worries me. Why does my brain appear to be acquiescing? What does my gut know that my mind doesn’t? Is my mind just getting tired of the struggle? Is this just a temporary aligning of the two organs’ orbits, but they’ll diverge again soon? Will I regret this decision? Shouldn’t I be in possession of something called “certainty” before moving forward?

If it sounds like I’m trapped in my own Woody Allen movie, I’ll concede that. At this point in my quit/don’t quit decision-making process, I think the best I can do is employ a hybrid approach. I can work on figuring out the tangible issue of which endeavors to pursue next. I can lay the groundwork for continuing a very light clinical load, somewhere, just to keep myself in the game until I’m more ready to say goodbye to patient care. And I can simply be present for the ongoing gut/brain chess match, staying attuned to anything that’s pushing me further in one direction or the other.

The Critical Influence of Living with a Retiree

OK, I may have buried the lead a bit, but my wife retired from medicine more than a year ago. She went through a similar amount of hand-wringing and perseveration prior to arriving at her decision, though for different reasons. Very little of her identity is wrapped up in being a physician. Though she enjoyed helping her patients, she was more punching the clock as opposed to responding to a calling. If she didn’t need to work for money, well…she’s got plenty of interests other than medicine.

Since retiring, her life has been wonderful—there’s really no other way to say it. She loves to learn new skills and work with her hands, so she threw herself into home and yard improvement projects with all the gusto one might expect from a high-achiever. She bought hundreds of dollars worth of power tools that saved us thousands of dollars in renovation costs—and gave her the immense satisfaction of regarding her handiwork and being able to say, “I did that completely by myself, with some [a lot of] help from YouTube.”

When the coronavirus came along, she was in the position to press pause on all of her projects and home-school our child, whose online education experience has been suboptimal, at best. Not only that, but my wife essentially made our child’s happiness her new job, given that the social isolation was significantly tougher on our extroverted kid than on either of her introverted parents.

And let’s not leave out the impact on my life. When she was still practicing, I had many household responsibilities on my plate that are now gone from my to-do list. Among other benefits, this has freed me up to disappear into the great outdoors for longer periods of time than in the past, which is restorative for my soul. My retired wife can also join me when she wants to, which is even better.

Is My Wife Ready for Me to Retire?

In Super Saving Part 2, I explained how our marriage had always been a 50/50 balance in most major aspects, such that when I cut back my hours and she continued full-time, we had to work through the ramifications of that on our relationship dynamic. In light of my wife’s prior reaction to me decreasing my hours, I hadn’t really considered the fact that the situation is quite different now. Back then, she was bitter because I cut back and she was still working full-time; if anyone was going to inhabit the role of the more-at-home parent, she always assumed it would be her. Now, she’s retired and relaxed, and she simply wants me to have what she has.

My wife’s current posture is all well and good—and I love her for it—but of course she acknowledges the critical influence our financial position has had on her thinking. In the five years since my first guest post, our portfolio has grown far beyond our original target “number”. While part of that growth was due to a bolus from our practice buyout, the last few years of substantial growth have been due to the same, boring process of investing the majority of our salaries in index funds and watching the money compound during a lengthy bull market. We have also amended our Investment Policy Statement a couple of times as our need to take risk has decreased, gradually shifting from 85/10/5 (percentage of stocks/bonds/REIT) to 70/25/5.

Additionally, our yearly spending has been remarkably constant (we don’t track it, we just query the prior year of bank statements every January), which we didn’t expect but do find reassuring. In the old days, my wife fervently believed that our savings would reach a number at which we would start flying first class and shopping at Whole Foods. Nope, we mostly fly economy and still clip coupons for the local grocery store. It’s funny to me that she continues to think our yearly spending is going to increase dramatically at some point when it’s clear to me that our DNA makes anything more than slow, organic increases unlikely. Because of this apparent fact, if I retired tomorrow our portfolio withdrawal rate would be a little over 1%, which has finally convinced my mid-40’s wife that we’re probably not going to run out of money.

My wife has been extremely careful to be measured in our conversations about me quitting, as she wants me to come to this decision under my own steam, as much as is possible. To her credit, even though our decisions obviously affect each other, she understands that this is an incredibly personal decision with fairly high stakes for my psyche. Remember, much more of my identity is wrapped up in being a physician, so she doesn’t want me to pull the trigger until I’m comfortable with the idea. She also understands that I feel the need to work in some capacity, so I should have somewhat concrete plans for how to fill my time, at the very least.

What Do I Want?

I’m great at knowing what I don’t want; it’s one of the perks of being a glass-half-empty kind of person. But what do I want? I want to do work that is intellectually and/or emotionally gratifying. If I can get paid for that work and avoid drawing down the portfolio at such a young age, even better. (Yes, I understand that we can safely spend down our savings. No, that realization doesn’t change the psychological impact. Yes, I know it’s pathologic, but I expect that mindset to gradually change as I age.)

In any case, I want the majority of my work to be location-independent. Maybe this is the coronavirus isolation talking, but I’m ready to travel for more extended periods of time when there’s no school, and having a set clinic schedule is too rigid. Most side gigs in which I’ve engaged these last few years have involved computer and phone work, which I enjoy and can do from anywhere.

As of now, I’m talking with one company for which I already do some work about joining them in a more robust, but still part-time, capacity. It’s a principled company with a noble mission, so I hope that works out. I’ve also had an initial discussion with a mature start-up about joining them as a medical advisor—another good company offering a good service. As for seeing patients, I suspect that my current organization, as flawed as it is, will want to keep me on one day per week to continue offering the services that my partners do not. This would allow me to not abandon (all of) my current patients, while giving me the flexibility of a limited contract (only work when I want to). If my employer balks, or if they eventually find they don’t need me anymore, there may be some other local options for an arrangement of that nature.

The rest of my wish list is fairly simple: exercise outside, hang out with the family, travel, continue re-learning a foreign language I used to know, read deeply about whatever I find fascinating, and make time for doing nothing other than meditating.

Given WCI’s typical backlog of several months worth of posts, by the time you read this, it’s possible I may have already given notice and have a plan in place for my next phase of life. Thanks for coming along for the ride!

Now it’s your turn. If you’re still working, what does your decision-making process look like, with respect to cutting back or retiring? If you are already retired, how did you finally decide to do it? Do you miss seeing patients? Do you wish you did anything differently? How is life post-medicine?

 

Join us March 4-6 for the Physician Wellness & Financial Literacy Conference 2021!

It’s a LIVE virtual event (eligible for up to 17 CME) packed with content for all levels of investors.

Register before 1/11 for free swag mailed to your door!