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How This Doctor Can Retire by 45 (Case Study)

How This Doctor Can Retire by 45 (Case Study)

| March 28, 2017

My jaw dropped. My heart stopped for a moment. I was heart-broken.

I didn’t want to believe it. This couldn’t be true, but unfortunately a couple of days later I confirmed that it was true.

Here’s what happened…

My friend, co-author, financial blogger, aspiring radiologist, and loving mom Dr. Amanda Liu passed away.

She was in her early 30’s. She was a radiologist in residency that had a daughter approaching 10 years old.

As a father of two girls, I couldn’t believe it.

Sadly, Amanda isn’t with us any longer, but her words and spirit are. She once wrote an article, How I Could Retire by 38 (But I Won’t).

I was so inspired by that article that I reached out to her and thanked her personally. We had a great relationship and I miss her very much!

In memory to Amanda who was dedicated to financial independence and mental health for her physician brothers and sisters, I’ve been studying a few physicians who are on track for an early retirement and doing so in a way that they have the wealth and even more importantly the health & enjoyment of life while they are doing it.

Make sure to download The Roadmap to Retiring by 45 by clicking below:

Download My Roadmap

There Are Some Who Start Their Retirement Long Before They Stop Working- Robert Half


Who Could Possibly Retire This Young?

This month, I am sharing a case study or two of physicians that can and will retire before 45 and why many of us (including me) won’t retire until well after 45.

The first person I thought of is my frequent email correspondent and fellow northerner PhysicianOnFire.

He has an incredible blog dedicated to FIRE- Financial Independence Retire Early.

I read at least one of his blog posts every couple of weeks and share them freely on social media.

While he’s never revealed the Clark Kent behind his Superman identity nor the Physician behind the Fire, we can learn a ton from him.

I think he’s graced us with an incredible level of transparency and leaving us with a few good giggles and belly laughs along the way.

Here are five specific lessons that I’ve learned from PhysicianOnFire…

I Have Never Liked Working. To Me, A Job Is An Invasion Of Privacy- Danny McGoorty

Lesson# 1:  The Way You Are Raised Financially Matters

In this post, PhysicianOnFire emphasized that his path to independence was paved initially by his parents. They taught him the value of compounding and the value of working.

He said, My Dad taught me the Rule of 72 when I was a kid.  When I got a job in high school, they helped me open an IRA, and helped me fund it when the $4.25 an hour I earned at the grocery store wasn’t enough.  They also covered the taxes for a Roth conversion (but not this Roth conversion) when I was in a low tax bracket.

I think instilling the value of money and then combining that with working at an early age and then combining that with investing set him on an early track to success.

I’m not sure what his vices were… but I know I saved up the dough I earned as a kiddo to buy this:


I think I probably would have served just as well by learning that same lesson and having my parents show me what my money could be instead of spending it and saving it.

Anyhow, on top of these lessons, PhysicianOnFire was blessed with having a history of family who made smart choices about money. He’s alluded a few times that his grandparents helped some with college. Being raised by financially smart people helps in multiple ways and some of us aren’t blessed with this.

However… it’s never too early to start! Also, consider, what lessons are we passing onto our kids about money?

Can we break whatever generational curses may have existed in the past and instead start generational blessings?

Lesson# 2: There’s a Tremendous Retirement Cost to Choosing The Wrong School

PhysicianOnFire was not only smart in making investing decisions as a pimple-faced, gangly teenager (I resembled that remark), he acted incredibly wise in the major financial decision of where to attend school.

Luckily, he had killer grades and aced math. He had the pick of the litter when it came to undergrad schools.

While he flirted with the idea of being near fast food joints on campus, he decided to stick to an in state public entity that paid ENTIRELY for his tuition.

He said this in his post on financial independence, I graduated in 4 years, enjoying it so much I decided to stay for 4 more, finally leaving in 2002 with an M.D.  I consider my choice of college and medical school to be an important first step towards FI. 

Between the scholarships, the in-state public school tuition, and a college fund set up by my grandparents, I was able to finish undergrad with money in the bank.  I took out loans during medical school, lived in shabby apartments next to campus, and was able to graduate with a hefty five-figure debt.   If I hadn’t had my grandparents’ help, or had gone to private school at any point, my debt would have easily been six-figures.”

As most of my readers and listeners are well beyond this age, it may seem a shade too late for this advice. However, I really want to encourage you to think about it this way- what was the cost on his parents for these decisions?

Probably nothing, my friends! If anything, it’s helped them to retire much, much, much earlier.

What are you willing to sacrifice to send your kids to undergrad?

Consider this: if simply ONE of your children go to a private university tomorrow and you have to pay entirely out of pocket without them being responsible for a single cent, you could easily be out $250,000 of your retirement funds versus let’s say $80,000 for a public institution.

If your living expenses are $90,000 a year, that’s at least two additional years you will have to work to allow them to do this.

If you have three kids, that’s six additional years you’ll have to work.

That’s not even including the growth that you could have had in your assets.

Lesson# 3: Stay Laser-Like Focused on Your Financial Goals from The Start of Residency

PhysicianOnFire was laser-like focused on achieving his financial goals from the very start of residency.

He was determined to build his nest egg and bought a small, comfortable condo that didn’t tie him down financially.

He said, “I was able to save enough during my internship for a 10% down payment on a one-bedroom condo in residency.  I became a homeowner, had a nice place to live, and the place appreciated in value.”

Lesson# 4: You Have to Make Sacrifices To Retire Young

In this post on his story, he certainly worked his tail off.

He said this, Fast-forward to my first big paycheck. While the other 20-some new residency grads in my class spent the first week of July studying for the written board exam, I took a one-week locums position, taking call on the 4th of July. I used that check to pay off a loan I had taken during residency.

Time was money, and I turned my time into money every chance I got. I had a 3-week job lined up right after the Saturday exam, then drove over a long weekend to a 25-weeker up north.   don’t think I took a full week off until late spring.”

While he didn’t state it outright on the post, this inevitably meant that some other area of life got neglected.

Rather than enjoying the family BBQ and feasting on ribs & hot dogs on the 4th of July, he chose to work to get his debts paid off and increase the size of his nest egg.

This meant additional sacrifices beyond the usual ones in residency. He probably missed many more birthdays and family celebrations than your typical attending physician or resident. I’m sure this had a cost in some relationships that he didn’t have time to invest relational capital.

However, today he is sitting pretty and doesn’t seem to have any regrets about that season of his life.

Work early and work hard so that you can have flexibility later in life.

Can you pull a couple shifts here and there AND have the discipline to use that money to fund your financial goals?

Lesson# 5: Self-Discipline & Self-Mastery Are They Keys to Unlock an Early Retirement

More than any other category, I’ve found in working with over 150 clients that are physicians and regular folks, living expenses are the biggest determinant of when you can retire.

PhysicianOnFire has the self-discipline and determination to keep on top of what those are and understands the impact that they can have on his retirement. This doesn’t mean that he hasn’t made a mistake.

As a matter of a fact, they made a six figure choice that was tremendously painful. He wrote,

“In the fall of 2015, we sold the big waterfront house, for over $200,000 less than we had into it.  Yeah, that stung.  But ripping off that humongous band-aid made us debt-free and more importantly, financially independent.

We once again have a waterfront home on the bluffs overlooking the river.  We spent a lot less on this home but it suits us very well.  Having become somewhat debt averse and already paying 2 mortgages at the time we moved here, we decided to sell some funds from the taxable account and buy the home with cash, keeping my goal of being debt-free at 40 a reality.  

I took the liberty of underlining their goal and how they made a big sacrifice to keep this dream a reality. PhysicianOnFire and his wife were willing to do whatever it took to hit that goal- even if it was extremely painful.

They had mastered themselves and were willing to look in the mirror and do a self-assessment. This meant that take a loss, an extremely painful loss because it allowed them to improve their financial standing and allowed them to move forward towards their ultimate dream.

Check out what he said to say about mastering frugality here.

Bonus Lesson: Who You Marry Matters

PhysicianOnFire is one smart dude. However, it sounds like the smartest decision was who he married. He claims she is more frugal than he is!

Beyond who you marry, even more importantly is the commitment staying together. Divorce costs so much.

In 5 Keys to Unlock Happiness In Physician Marriages with Julie Sotile Orlando, she gives some fantastic advice for physicians to keep your marriage flame alight.

[perfectpullquote align="full" cite="Catherine Pulsifer " link="" color="#00008b" class="Danny McGoorty" size=""]Planning To Retire? Before You Do, Find Your Hidden Passion. Do the Thing You Have Always Wanted To Do.[/perfectpullquote]


How He Can Afford To Retire Early

Now that we understand his mindset and some of the ways he got started on the road to success, let’s break down how the numbers work and what’s within his spending patterns.

Check Out Multi-Millionaire Family Tracks Spending For a Year: They Spent How Much!?!?

PhysicianOnFire tracked his spending for a whole year (and I assume regularly) on Between their houses and vacations and eating out and the stuff happens in life, they spent $74,000 a year. That’s a bit over $6,000 per month.

Make sure to check out the link above for how that broke down.

Here are some awesome habits I wrote down that they have which has led to their wealth accumulation and relatively low living expenses:

  • Cheap cell phone plan (I know my family could do better here!)
  • Renegotiated their cable/dish bill (Again, I know my family could do better here!)
  • Good public schools (no fat bills for private primary school)
  • Low property taxes (lives in a low cost area)
  • Bought cheap technology ($400 laptop vs. $2,000 laptop)
  • Did dog swapping with friends & family rather than using a kennel while on vacation
  • Cuts own hair
  • Shop at the Goodwill and other second hand stores
  • Is Self-Insured (doesn’t need life insurance or disability insurance due to wealth accumulated)
  • Has NO debt
  • They track their spending

Here were some things that I noticed that were NOT included in his analysis (although, he acknowledged most of these):

Let’s say that health insurance is $1,000/month if they had to get it on their own. It could easily be $1,500/month or more, but I’m assuming that they find a great deal.

I’m also going to leaving substantial giving off the table- although for my family & I, that’s something we budget for and maybe you do too.

Are you ready to nerd out?

Let’s crunch some numbers to see how this could work!

That makes total living expenses of $86,000/year. I don’t know what his asset mix is between pre-tax, Roth, and non-qualified, but I’m going to guess if like most doctors that it is heavily pre-tax with some non-qual and some Roth and that he’ll do a mix of all of them.

I don’t know how much money he has- but he’s alluded to being a multi-millionaire. Let’s say his portfolio is a grand total of $2,000,000. On a current portfolio of $2,000,000, that’s a draw rate of 4.3% NOT including taxes.

Keep in mind we want to account for inflation as well. I usually target 3% for inflation. That’s a total draw rate of 7.3% based off of today’s values. Not too bad- I think you could make a case for retirement- but there’s not a whole lot of wiggle room if you are earning 5% with a more conservative, income based assets as opposed to a more aggressive asset mix that could kill you in a downturn where you need your portfolio to live on.

However, he’s still working for a while. Let’s say that there are more contributions to the tune of $400,000 or $80,000 a year and he gets some growth. (I suspect he is saving closer to $200,000 a year due to his specialty, but I will low ball it here).

If the growth on the existing assets is a mere 5% a year, using simple interest rather than compounding interest of initial principal of $2,000,000 that’s $100,000 per year or $500,000 over 5 years.

That’s a grand total of $2,900,000.

I have fancy computer programs that could calculate all this stuff and run Monte Carlo simulations- but let’s keep this relatively easy to understand.

Let’s say that he pulls $12,000 a year from Roth and non-qual and $74,000 a year from pre-tax money. He’ll probably owe at least 15% in federal income taxes and maybe another 5% in state income taxes on the pre-tax money.

That’s $14,800 in taxes per year in retirement to start out.

That makes for total expenses of $100,800 ($74k basic living expenses + $12k health insurance + $14.8k in taxes). Let’s call it $100,000 to keep it in simple math.

Now, we’re looking at $100,000 expenses over $2,900,000 in assets. That’s an even lower draw rate of 3.44%.

Let’s make sure we add inflation to that of 3%. This gives us 6.44% inflation adjusted draw rate.

If he earns a mere 5 to 6% rate of return, he will barely even dip into the principal!

He has way more than enough room to account for buying a new ‘used’ car or to replace his roof or virtually any other obstacle that may come his way.

Plus, if college is more expensive for the kids than they thought or he finds they want to travel a little more or they want to start donating money to causes that are important to their family,  he could always pick up a locums shift every now & then.

Of course, his blog is going to continue to blow up and he’ll be making a ton of money from advertising- so why bother?


Final Thoughts

My friends, I’m not saying that retiring early is for everyone. As a matter of fact, in the next article, you’ll find out that it’s not for me and maybe it’s not for you.

However, regardless of whether you are 25, 35, 45, 55, or 65, learn what you can from PhysicianOnFire.

Keep up with him on his blog and learn from his knowledge.

What lessons have you learned from this case study? What are you going to do to move yourself closer to retirement?

Let me know what you think. Shoot me an email at or give me a ring at (800) 548-1820


Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.

The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation.