.

[FlowRate]

What sort of investment accounts do you hold your savings in while taking those 4% withdrawals? I would imagine when someone is in retirement and needs that money to last for life, they move things to a very conservative investment vehicle. What very
conservative vehicle is giving 4-5% annual.return on average?

If you're asking about a typical retirement age and a 4% withdrawal then yes, it's like 60% bonds / 40% stocks. (Or vice versa, but some substantial mix, typically--your asset allocation is ultimately a personal decision, there is no right answer.) You still need some of the upside of equities unless your starting portfolio is just way more $$ than you'll ever need.

For a more perpetual withdrawal rate (goal is to basically keep the real value of the portfolio constant or even increasing) you need the upside of equities even more than typical retirement (which plans to spend down), so it's often like 80% stocks.

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[NITRAS]

I can’t tell if you’re being sarcastic or not regarding hedonistic vs realistic lol

But is true, there’s no good reason to want or need that kind of money other than hedonistic desires (and the reality is, I don’t even know what I’d spend it on... I don’t like fancy vehicles/clothes. Though I do want a nice house), I suppose feeling total financial security is likely around 10M. (Not sarcasm, in case that’s not translating well).

No one answered my other questions though, what is a number you guys want to get to and how would you go about it? I’m not trying to fill this forum up with money talk, I love psychiatry and I love seeing patients, but I just wonder if anyone is reaching for a certain number that makes them feel like content and completely secure.

This is the way I see it. You can never be completely content or secure. Money fixes lots of problems, but it doesn't fix them all. We are all going to die. That being said, there are things you can do with $100M dollars than you can't do with $10M dollars. Want to pay off your grandkids' first house? Want to build a library? Start generational wealth that will last? You need more than the average decamillionaire.

You seem too nice to make $100 million that fast.

And yes, I was being sarcastic about it being realistic. I'm not a doctor, medical student, or anything like that, but I know about what doctors make per year, about how much would go to taxes, approximately what living expenses are, and yeah, it didn't sound realistic.

It isn't about being nice. Most physicians make between $200k-$500k. To save $100M, you usually need to make much more (like a 7 figure income). I could do it at my present rate. . . . when I'm in my 80 and increase my investment rate (which will happen after I pay off my house this year).

EDIT: always interesting how increasing my savings rate from 35% to 50% really doesn't change the number of years but from 41 to 38. Compound interest is so cool (and frustratingly slow).

 

[ER BlueBlood]

Invest 15k per month at a 9% return for 20 years and you'll have $10.2 million. Doable by anyone if you work hard. In my state if you max out your 401k and put the rest of the just over 10k needed to save each month directly in the market in a S&P tracking ETF you'll have between 110-122k left to live on if your income is 400k pretax.

9% return over 20 years? What if we see a lost decade? I would dial that down a bit but that’s just me

 

[Mad Jack]

9% return over 20 years? What if we see a lost decade? I would dial that down a bit but that’s just me

We're working on averages. Worst case you still do fairly okay

 

[finalpsychyear]

Sounds like someone has fundamentally misunderstood the 4% rule (and also taxes apparently).

Is it an extreme to view the entire needing 25x to reach FIRE to only count stock/mutual funds/cash in your taxable investment account since you can access those at anytime without any penalty aside from cap gain taxes?

Most people count everything IRA, 401k, hsa, real estate but my recent thinking is if your in your early 30s these funds cannot count as you won't have access to any of them before 55-59?

 

[dpmd]

Is it an extreme to view the entire needing 25x to reach FIRE to only count stock/mutual funds/cash in your taxable investment account since you can access those at anytime without any penalty aside from cap gain taxes?

Most people count everything IRA, 401k, hsa, real estate but my recent thinking is if your in your early 30s these funds cannot count as you won't have access to any of them before 55-59?

You actually can access them as the penalties are not necessesarily outrageous. It is an extreme view in that it could make the goal out of reach for someone wanting to literally retire early and/or lead to them working a lot harder or living worse than they really need to for a long period. I guess if your goal is to die sitting on a very large pile of assets then go for that number. If the goal is to be financially secure so that you get to the point where you are only working because you enjoy it then your goal number doesn't need to be as strict in interpretation.

 

[finalpsychyear]

You actually can access them as the penalties are not necessesarily outrageous. It is an extreme view in that it could make the goal out of reach for someone wanting to literally retire early and/or lead to them working a lot harder or living worse than they really need to for a long period. I guess if your goal is to die sitting on a very large pile of assets then go for that number. If the goal is to be financially secure so that you get to the point where you are only working because you enjoy it then your goal number doesn't need to be as strict in interpretation.

I stand corrected. The Roth ira conversion ladder and rule 72t early distribution are hidden gems of rules in the ira which no one really talks about.

Summary:
1.Roth Ira conversion: you must know 5 years ahead of when to retire as any conversion cannot be accessed for 5 years after it is done but you avoid the penalty but do pay income tax on the conversion at the moment you convert.

2. section 72t normally used 5 years prior to 59.5 using the SEPP rule. So a 40 year old can access his 401k without penalty but will receive some type of amoritized payout till 59.5 when they then have full access but you avoid the10% penalty with this rule just pay income tax obviously.

 

[finalpsychyear]

You actually can access them as the penalties are not necessesarily outrageous. It is an extreme view in that it could make the goal out of reach for someone wanting to literally retire early and/or lead to them working a lot harder or living worse than they really need to for a long period. I guess if your goal is to die sitting on a very large pile of assets then go for that number. If the goal is to be financially secure so that you get to the point where you are only working because you enjoy it then your goal number doesn't need to be as strict in interpretation.

I think people forget about the taxes in that 25x number. To be honest if someone wants 25x and their fatfire number is 100k/yr you would technically want closer to 3 million and assume 20% long term cap gain tax even though it may not all be taxed but being conservative.

Also, when you take the 100k out of a taxable brokerage (not talking about ira, 401k etc) assume it is all profit after selling stock which you have held for more than 1 year and your retired and have no other income does the 100k get added to your annual income or how much tax are you paying in a no tax state on average if you have any idea?

 

[LADoc00]

100m? Shoot for 10m and count yourself lucky you are not divorced, overweight and living in a rental by 55.

 

[Lovetowork]

I’m nearing NW of 10mm. Mid 40’s.

 

[leaverus]

I’m nearing NW of 10mm. Mid 40’s.

Damn, not bad. All from physician income as primary source? Includes spouse's income or just you?

 

[Lovetowork]

Damn, not bad. All from physician income as primary source? Includes spouse's income or just you?

Both doctors.

 

[airplanes]

I think people forget about the taxes in that 25x number. To be honest if someone wants 25x and their fatfire number is 100k/yr you would technically want closer to 3 million and assume 20% long term cap gain tax even though it may not all be taxed but being conservative.

Also, when you take the 100k out of a taxable brokerage (not talking about ira, 401k etc) assume it is all profit after selling stock which you have held for more than 1 year and your retired and have no other income does the 100k get added to your annual income or how much tax are you paying in a no tax state on average if you have any idea?

I realize it's been a few months, but no one responded. Do yourself a favor and look up and understand capital gains tax rates, cost basis, and progressive tax brackets because it sounds like you don't quite understand them.

For example, under current tax law, if you live in Texas and in a given year you sell 90k worth of equities that you bought at 10k (so 80k of capital gains) plus 20k withdrawal from your 401k for a total of $110k of income for the year, you would actual pay ZERO in state or federal income tax. You could easily withdraw 200k/yr while paying a very low effective tax rate if you play your cards right.

Try this calculator for yourself. 2020 Capital Gains Tax Calculator - See What You'll Owe - SmartAsset

I also have no idea what your second paragraph (really one extremely long sentence with no punctuation) is asking.

 

[doctalaughs]

.

 

[doctalaughs]

Both doctors.

Not bad for mid forties, even on two specialist incomes.

Any inheritance or family money?

It’s amazing how a few hundred k In your twenties can make a huge impact on accumulating wealth.

 

[Lovetowork]

Not bad for mid forties, even on two specialist incomes.

Any inheritance or family money?

It’s amazing how a few hundred k In your twenties can make a huge impact on accumulating wealth.

Nope, I estimate I’ve saved/invested 200-300K a year for the past 15 or so years. Along the way paid off loans and mortgage also.

 

[Lovetowork]

Congrats on being wealthy at a young age. Where do you invest (stocks, real estate, etc)? Any advise besides saving of course?

Put half your take home into the market.

 

[doctalaughs]

Put half your take home into the market.

Cannot emphasize this to new attendings enough.

I did the same as this poster, near same age now (albeit only 1 specialist salary so can only save 120-150k/yr). This should not be hard at all if you make 400-600k range for majority of your career. Just keep doing that for your whole career and you’ll end up pretty wealthy.

 

[robellis]

Cannot emphasize this to new attendings enough.

I did the same as this poster, near same age now (albeit only 1 specialist salary so can only save 120-150k/yr). This should not be hard at all if you make 400-600k range for majority of your career. Just keep doing that for your whole career and you’ll end up pretty wealthy.

What is pretty wealthy and when will you end up with that amount

 

[bravotwozero]

What is pretty wealthy and when will you end up with that amount

So I used an investment calculator to to see how much I'd end up with in ~10 years, if I sock away 10k/month (this is actually 30% of my monthly paycheck before taxes) for around 10 years, +/- 1-2 years. Assuming a 6% rate of return, which is pretty conservative, you'll end up with approximately a $2.5 million portfolio, with a total investment of $1.2 million, effectively doubling your money. Not too shabby, and an amount I could live off of.

 

[goldsummer]

And here I thought I was being ambitious w/ 15M by the time I'm 60

When I saw the thread I thought of the idea of having one million in the bank, seeing the six zero's in a row and got all giddy like it was a lot of money. lol.

 

[dpmd]

When I saw the thread I thought of the idea of having one million in the bank, seeing the six zero's in a row and got all giddy like it was a lot of money. lol.

I still get a little giddy seeing 6 figure bank balances (I have lots of accounts so most have under that excluding the 401ks).

 

[robellis]

So I used an investment calculator to to see how much I'd end up with in ~10 years, if I sock away 10k/month (this is actually 30% of my monthly paycheck before taxes) for around 10 years, +/- 1-2 years. Assuming a 6% rate of return, which is pretty conservative, you'll end up with approximately a $2.5 million portfolio, with a total investment of $1.2 million, effectively doubling your money. Not too shabby, and an amount I could live off of.

I don’t think this is correct, when I run the calculation of 10k per month for 10 years at 6 percent return i’m getting 1.5 million not 2.5..

 

[dpmd]

I don’t think this is correct, when I run the calculation of 10k per month for 10 years at 6 percent return i’m getting 1.5 million not 2.5..

He said plus or minus years so I assume he was fiddling with different time frames and rates of returns. 14 gets you 2.5 at 6%. Either that or he started with some money in the calculator.

 

[doctalaughs]

I don’t think this is correct, when I run the calculation of 10k per month for 10 years at 6 percent return i’m getting 1.5 million not 2.5..

Correct, about 1.6 m.

But 10 years is a super-short career. Do 20 years and that 1.6 m is 5 million. 25 and it’s 7 m.

Also 6% is pretty conservative. 8% and the numbers are about 2, 6 and 10 million for the 10, 20 and 25 year careers.

Personally I’ll do 18-20 years full time and probably another 10 very part-time (like 30% of normal) which should get me easily past 10 m.

 

[bravotwozero]

He said plus or minus years so I assume he was fiddling with different time frames and rates of returns. 14 gets you 2.5 at 6%. Either that or he started with some money in the calculator.

Yeah, my apologies, in my personal case I'd be starting off with 400k already invested. Important piece of info I should not have left out, without which the calculations will be off.

 

[FlowRate]

Personally I’ll do 18-20 years full time and probably another 10 very part-time (like 30% of normal) which should get me easily past 10 m.

300k infinitely sustainable fixed withdrawal is pretty badass. Just curious why you're aiming for that? Like you must have some sort of high expense you want to support, whether that's big family vacations, driving very fancy cars, flying planes, or whatever.

 

[doctalaughs]

300k infinitely sustainable fixed withdrawal is pretty badass. Just curious why you're aiming for that? Like you must have some sort of high expense you want to support, whether that's big family vacations, driving very fancy cars, flying planes, or whatever.

No fancy cars (I drive a Camry) or planes (not into flying) or second homes. I do like nice vacations and plan to treat my kids families etc.

Probably when it gets around to it, I’ll spend far less than that. That type of money buys security though (for yourself but also kids/grandkids) particularly if there are major world events that cause instability and disruption of society. Particularly, if you put the money in multiple diverse repositories.

If we go on merrily without WW3 maybe I end up passing on wealth, which is fine as long as you don’t tell the kids now, so they develop a work ethic and self reliance.

 

[MedicalDestiny]

$250k
Just help me pay off my loans

then I can actually have a life

feel like I’ll never get there, lack of knowledge for work opportunities and bad luck?

 

[Lonestar]

You guys are forgetting the big elephant in the room.....taxes. Unlike other Americans you get to be patriotic and give half of your income to uncle sam. Take that into account when you calculate your take home pay on your 400-600k specialist income especially going forward. As I said already you only need about 4 million to live comfortably. You can achieve this number in your mid forties if you plan carefully. Oh and you can put it in some blue chip dividend stocks like Verizon, AT&T, Coca Cola, Johnson & Johnson, Abbvie, Phillip Morris, MMM etc.. You don’t even have to sell your shares when it’s time to get a steady income. Just live off the dividends.

 

[dpmd]

You guys are forgetting the big elephant in the room.....taxes. Unlike other Americans you get to be patriotic and give half of your income to uncle sam. Take that into account when you calculate your take home pay on your 400-600k specialist income especially going forward. As I said already you only need about 4 million to live comfortably. You can achieve this number in your mid forties if you plan carefully. Oh and you can put it in some blue chip dividend stocks like Verizon, AT&T, Coca Cola, Johnson & Johnson, Abbvie, Phillip Morris, MMM etc.. You don’t even have to sell your shares when it’s time to get a steady income. Just live off the dividends.

I don't give anywhere close to half my income to uncle sam and I would guess no one here does. Pretty sure you are just confusing marginal tax rates with effective tax.

 

[abolt18]

You guys are forgetting the big elephant in the room.....taxes. Unlike other Americans you get to be patriotic and give half of your income to uncle sam. Take that into account when you calculate your take home pay on your 400-600k specialist income especially going forward. As I said already you only need about 4 million to live comfortably. You can achieve this number in your mid forties if you plan carefully. Oh and you can put it in some blue chip dividend stocks like Verizon, AT&T, Coca Cola, Johnson & Johnson, Abbvie, Phillip Morris, MMM etc.. You don’t even have to sell your shares when it’s time to get a steady income. Just live off the dividends.

2021 Tax Brackets -- How They Actually Work | White Coat Investor

Get a tax plan in place to better manage your wealth in 2021. Start by understanding tax brackets and how they work.

www.whitecoatinvestor.com

 

[sloh]

2021 Tax Brackets -- How They Actually Work | White Coat Investor

Get a tax plan in place to better manage your wealth in 2021. Start by understanding tax brackets and how they work.

www.whitecoatinvestor.com

A reply in the comments section is spot on:

“I have often read online people saying things like if they got a raise they’ll end up paying much more than just what the raise was worth because they’ll be in a new tax bracket. It’s also interesting to see people’s eyes glaze over when you explain the tax brackets to them. These days I just agree with them and let it be.”

It’s almost like people creating excuses for themselves not to make more money.

 

[Splenda88]

You guys are forgetting the big elephant in the room.....taxes. Unlike other Americans you get to be patriotic and give half of your income to uncle sam. Take that into account when you calculate your take home pay on your 400-600k specialist income especially going forward. As I said already you only need about 4 million to live comfortably. You can achieve this number in your mid forties if you plan carefully. Oh and you can put it in some blue chip dividend stocks like Verizon, AT&T, Coca Cola, Johnson & Johnson, Abbvie, Phillip Morris, MMM etc.. You don’t even have to sell your shares when it’s time to get a steady income. Just live off the dividends.

Why not put it in Vanguard VYM with a dividend 3.5-4%?

 

[Splenda88]

2 mil in the market plus 1 mil in real estate and I will say good bye to the rat race (eg,. working ~20 hrs/wk) if can I can achieve that in 10 yrs.

Once your house is paid off, 1.5 mil is enough money to retire in IMO...

I am a non trad physician; that is why I am aiming for a 10 yr semi retirement.

 

[FlowRate]

2 mil in the market plus 1 mil in real estate and I will say good bye to the rat race (eg,. working ~20 hrs/wk) if can I can achieve that in 10 yrs.

Once your house is paid off, 1.5 mil is a enough money to retire on IMO...

I am a non trad physician; that is why I am aiming for a 10 yr semi retirement.

By 1M in RE do you mean your primary residence, rentals that you personally manage, REIT?

 

[Splenda88]

By 1M in RE do you mean your primary residence, rentals that you personally manage, REIT?

Primary residence plus 2 rentals...

 

[finalpsychyear]

got a few attending friends invested heavily in crypto who think that investment alone gets them to their 25x number in the next 2-3 years. They are convinced this bitcoin is going to 100-200k minimum in that time range.

 

[CocoMelon0531]

Net worth north of 2 mil net worth as a resident

Bro, it’s not hard when you buy the future world currencies

it’s a great feeling...

 

[CocoMelon0531]

got a few attending friends invested heavily in crypto who think that investment alone gets them to their 25x number in the next 2-3 years. They are convinced this bitcoin is going to 100-200k minimum in that time range.

Yeah I firmly believe that. North of 100K by Xmas and 1 million if you’re willing to wait for another 3-4 years.

 

[finalpsychyear]

Yeah I firmly believe that. North of 100K by Xmas and 1 million if you’re willing to wait for another 3-4 years.

Yeah I think if it hits 100k in 3 years a few of those attendings will retire. Someone during lunch said ETH will hit 10k if that happens but who fricking knows. Bump this if either happen and I'll let you know if those guys are still working lol.

I guess if a share of berkshire can go for 300k+ then maybe this can someday too. I feel tesla buying is going to create a domino effect and we will all be left wondering why we just sat and watched lol.

 

[sylvanthus]

Im gonna try and get 1 million in retirement/index funds then drop my hours to 0.8 FTE, when I hit 2 million, drop to 0.5 FTE, 3 million, drop to whatevers tolerable and gets me out of the house on occasion. Im already old, so not gonna bust my arse and retire "early", as it wouldnt be early anyhow. I would rather do a combo of cutting back hours to hang with the fam, and also able to retire at a reasonable age.

 

[deleted446889]

Yeah I firmly believe that. North of 100K by Xmas and 1 million if you’re willing to wait for another 3-4 years.

What advice would you have for students with essentially negative net worth? Throw whatever we can spare into crypto and forget about it? Or just accept our bad luck/timing lol

 

[CocoMelon0531]

What advice would you have for students with essentially negative net worth? Throw whatever we can spare into crypto and forget about it? Or just accept our bad luck/timing lol

Start investing. Time in the market beats market timing, whether that's cryptos, stocks, real estate, or whatever. The USD money printer has your back. My 401k this year is up 12% so far, and that's the go to strategy for passive investors without any sense of financial sense. My house is up 10-12% in the past 8-12 months.

Don't worry too much about the taxman. You don't pay tax unless you sell -- that's Buffett strategy despite blabbering about "Hey, tax me more, please." Lol

There is no such thing as bad luck/timing. I'm in my 30s, who started investing when I was in my early 20s in undergrad. I made sure to max out my Roth on a yearly basis with my mediocre income in undergrad working simple jobs, in my previous career for 2-3 years, during med school w/ my wife income, and then during residency.

Almost done w/ residency with Roth size in 400-500K, with to be future gains, home equity in 100K, and cryptos net worth of 2.0 mil. I wasn't born into riches or anything. Just simple patience, saving as much as I can into tax efficient vehicles, and going on my daily life.

 

[OnePotatoTwoBobs]

I know a couple who started from scratch and reached 50M over the past 10 years. They were both trained as physicians. Later one of them started her own franchised clinics, and the other one stayed and works as a surgeon. They also had multiple children over the years. Bought a 2M house, tore it down and built a new one. Once they had money, they also opened restaurants and of course invested. I have no doubt they'd reach 100M by the age of 60. It's just that it doesn't happen with a regular job and savings and stuff.

 

[Steve_Zissou]

Actual question, what's the point? Is it money for the sake of money? Sounds exhausting to work extra hard to just save up money that I will likely never use. I can understand wanting to give your kids a leg up, but 100 M isn't really necessary to do that and I guess I'm not willing to sacrifice all my life to make a big fund for the next generation.

 

[FlowRate]

Actual question, what's the point? Is it money for the sake of money? Sounds exhausting to work extra hard to just save up money that I will likely never use. I can understand wanting to give your kids a leg up, but 100 M isn't really necessary to do that and I guess I'm not willing to sacrifice all my life to make a big fund for the next generation.

At that point it almost seems like money becomes a game.

 

[Chemist0157]

Actual question, what's the point? Is it money for the sake of money? Sounds exhausting to work extra hard to just save up money that I will likely never use. I can understand wanting to give your kids a leg up, but 100 M isn't really necessary to do that and I guess I'm not willing to sacrifice all my life to make a big fund for the next generation.

With that much money, I'll just have someone make my points for me.

 

[doctalaughs]

At that point it almost seems like money becomes a game.

There’s always more you can “want.” At 100M you probably charter private planes for vacation but don’t own your own jet. You have 3 homes and stay in the presidential suite slope-side in Aspen, but don’t own the 40M slope-side mansion (or the mountain). You mix with the billionaires and probably feel poor next to them.

Lol, I agree beyond a certain amount these “possessions” have a diminishing (or zero) return in terms of happiness- for each person that’s a different level though!

 

[emergentmd]

100M is a nice goal but not to make major life sacrifices after the 5M mark IMO.

When I hit 5M in assets/cash and cash flow 300K a yr from the assets, I will be working one day a week to keep sanity.