Let’s first talk about why I won’t retire at 38, even though I can.
- That’s less than 3 years out of fellowship. It would be the beginning of my professional prime as a radiologist. I’d like to use my skills and knowledge from 26 years of schooling to serve others. I get a wonderful sense of fulfillment from draining a patient’s pelvic abscess today; I will also relish saving someone’s life by making a imaging diagnosis in 7 years.
- I want to care for others beyond myself and my daughter (Mini Wise Money.) These people include my parents, MWM’s paternal grandparents, some of my extended family, & my sponsor child Mariela.
- I want to provide for MWM more than I have been blessed with growing up. While I worked 7 jobs in college trying to send meager money home to help my parents with their 30% interest rate credit card debts, I’d like MWM to have at least 1 but no more than 2 jobs in while going to school full time.
- I’d like to keep blogging. Blogging costs money and a lot of time. I plan to support my blog because helping others succeed financially & personally is rewarding to me.
- I’d like to give more. I sponsor one child now. I’d like to sponsor more. I may even adopt a child one day, so that Mini is not so lonesome when I’m in heaven one day.
3 things to help you achieve financial independence/ability to retire sooner includes:
- Lower the cost of your debt by refinancing.
- Mindful financial practice.
- Make your money work for you.
Now, let’s see how I CAN retire at 38.
I first started my calculations with my current post tax annual income of $52,671 and annual savings of $29300. My annual savings rate is 56%, which gives me financial independence (ability to retire) in 13 years.
Savings include 23.5k in Roth IRA & Roth 403b, as well as 1k in taxable investment & 4.8k in home equity. Note that my home equity does not exactly grow at 5% ROI (return of investment) but I have 5k of additional savings that will make the 4.8k in home equity a bonus even if it’s getting negative ROI (home value drops rather than grows.)
This does not account for the fact that in July 2020, I will get a pretty big raise from PGY to attending-hood.
Accounting for the transition into attending-hood:
My calculations with the jump in salary when finishing fellowship here:
My attending post tax annual income $160,857 (based on an ultra-conservative estimate of 250k annual income, when most rads I know are getting 300k to start at academic/VA jobs) and annual savings $137,486.
My annual savings rate is 86%, which gives me financial independence (ability to retire) in 2.8 years of finishing fellowship (8.8 years from finishing medical school.)
Assumptions:
- My employee job will pay $250k/year pre-tax. (I presume a contractor job will actually allow me to save more as business deductions are numerous and liberal.)
- I will continue to live like I do now after becoming an attending. Like I said before, I’m blessed to be born an materially low-maintenance girl. I get free haircuts from Mini; free clothes from friends and families who can’t stand my monotonous wardrobe (7 pairs of scrubs) and need more space in their own.
- With the same expenses, I’d save the rest of my post-tax dollars, so annual savings of $137,486.
I find it extremely liberating to learn that
at 38, just 7 years from now, by year 2023,
I will work because I love to,
not because I have to.
Financial independence does not mean that I will drop all that I love and care for today to travel the world or become a full time gardener. It simply signifies that
my motive for working & not retiring will be
more profound than monetary necessity.
Final fun morsel to chew on:
If I live as I do now (PGY2, with 22 years of schooling) but I choose plumbing instead of doctoring, I would have reached FI (financial independence) at 31. I would have also had more personal, family, and party time even before retiring at the tender age of 31.
Point is:
financial independence is not an end in itself;
it is a means to fully enjoy one’s life,
professionally and personally,
more than otherwise.
- How many years before you reach FI?
- I will continue to live, work, love the way I do today when I reach FI. Would you do anything different?
- Are there things you’d like to change today that may impact your time or path to FI?
Share your insights, experiences, and questions below!
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I wish I had read your post regarding paying off Student Loan via CC. That would have save me so much $$. I went another route via living with parents/in law until my SL was paid. It was frugality to the max! We paid off 260k SL & save enough money for downpayment for our home. Finally purchase the house in 2015, loving the fact that our mortgage rate was 3.75%/ 20 yrs . We bought the cheapest house in a very nice neighborhood. Yet I found it harder to reduce spending with a house. Last year, we saved ~25% of our income. Right now we are debating if we should put that $ toward principle or to our retirement accounts. I dislike the idea of living with debts. Seeing how you able to handle so many credit cards at once, taking advantage of their 0% grace period to reduce debt is a very clever idea. I have never thought of it that way. Now im sharing your post to all my grad friends
Dear Aileen, you did such a great job with paying off your SL! I like the way you did it too 🙂 If you have the discipline to live well below your means and to destroy your SL the way you did, I’m certain you will manage your cash flow carefully to acquire the assets that will generate for you the greatest return.
Personally, I’d max out retirement accounts and invest beyond that before paying more mortgage principle. The other thing I wanted to mention is that perhaps you want to consider refi your loan? Recently, people are getting 2.875% for 15 year fixed from BOA… pretty unbeatable. I would at least check out what new interest rate/term you could get with refi (since we are still at historic low interest rate with the feds gradually dialing up.)
I’d check out the options and then run the numbers. it may or may not make sense, but it’s nearly always worthwhile to check out your option 🙂
best of luck!
I. love. your. blog Im reaching my big 3-0 this yr, mother of 2 toddlers. Im trying to reach FI so i can work less & have more time for my boys. Your blog is very inspirational! 🙂
i am on the same page with you. i want more time with Mini Wise Money. She’s the most precious person in my life and the most precious resource I could offer her is my time, my undivided attention and partnership. she’s actually planning our very first family mini-retirement, where we just take 3 months off from school and work to go do something she likes! the next post on this Friday is about her planning of our first get-away. I wish you the best of luck getting FI, let me know if there’s any topic you’d like to hear about or if you have any question. It always makes me very happy to know whatever little I know and share is helpful to someone out there!