Today we are lucky to have a guest post from someone over on the other side of the continent… Florida that is. After my recent posts on the Tubb’s Fire, our evacuation, and the loss of our home and all of our earthly possessions our retired doc reached out to me. We had some great email exchanges and I asked him to write a guest post about his life philosophies…So here you are. Enjoy reading someone else’s perspective on work, life, and retirement.
Break on through to the other side
EJ asked me to guest post about how I got here. We share the experience of having our houses burn down a year or so into attending-hood and the chaos that ensued.
I am a fully retired Anesthesiologist and Pain specialist. I turned 65 this year so I’m truly done. No more side gigs. I’ve turned my work back into my time, and it feels great, though still a little foreign. It’s very Zen. Zen is a form of vigilance and self discovery through meditation. I don’t meditate, but my new freedom and lack of stress, my ability to attend to whatever I want whenever I want is delicious. Describing retirement is a bit like describing the taste of honey, impossible except by actually living through the neurological experience.
Ed. Man this makes me want to retire early for sure. I have studied meditation and Zen Buddhism practices in particular. It is a matter of presence and mindfulness. Focusing on the actions to lead to insight. As for honey, it is delicious and I eat some every day.
I started my work life at age 11 with a paper route, worked in a gas station, drove a truck, drove a wrecker, worked in a stone quarry ballin’ a jack hammer, worked as a janitor, delivered pizza, eventually became a research scientist then an electrical engineer. In college I taught physics and HATED teaching the premeds. One thing I would NEVER become is a physician. Never say never.
I acquired a girlfriend (Nurse) who was divorced from a academic Nephrologist and soon realized my engineer’s salary wasn’t going to cut it so I spent a year studying for the MCAT. I scored in the top 1%, so I applied.
By then I was 29. I had a side gig teaching electronics in a local Jr college and I was taking some grad level Physiology coursework at the local university. So I wasn’t completely out of academia.
It was fun to see my interviewers get to my MCAT scores.. Pause.. I say that so you can live vicariously since we’ve all suffered through those interviews. I got in, the girlfriend flew the coup (proof God loves me), and it turned out I was destined to be a physician. I say all that because the totality of my experience led me to my career, not just a dogged career path.
Ed. Pretty wild how life can lead you down the path you were meant to live. From engineer to doctor and all because of a woman. Wars have been raged for similar reasons (Helen of Troy!) and many will continue to make decisions based on companionship going forward.
Agreed though, you are lucky she flew the coup. It allowed for the rest of your journey to unfold. And yes, NEVER SAY NEVER. I have learned that more than a few times in my short time on this earth.
Rule #1 Be open to change
It was 1981 and interest rates were 18% with repayment starting immediately. I had saved enough money as an engineer to fund my education, EXCEPT inflation cleaned my clock. (note this) I was out of money by the end of my 2nd year. No way in hell was I going to take out a 18% loan so I raised my right hand and swore to defend the Constitution with my life, and went Anchors Away.
I joined the Navy. They paid for 2 years and I served for 2 years. Fair deal IMHO. They let me finish my residency and I trained as a cardiac anesthesiologist and learned to stand toe to toe with the biggest ego’s in the universe! Actually I had a blast. Medicine was so interesting, saving lives and wining valuable prizes. I had let them socialize me.
I got to my first duty station. All this high horse power cardiac training and they needed a pain management Doc. I knew something about pain management so I saw a couple patients. In a month I had become the pain management doc for the Southeastern US for all the services. This was back before pain became what it is today. They also made me assistant director of the ICU. (Don’t volunteer)
Ed. Thank you for your service. I had debated joining the military to pay for medical school (this was pre-9/11). Financially it does not make sense in the long run, but as a 22 year old looking at $200k in debt it sure looked promising. The other downside of military training is that they can determine how you train and what you do when you come out.
Rule #2 When life hands you lemons make some hard lemonade!
I was in during Desert Storm, we were going to deploy but then we didn’t, and soon after I was retired. I took some locums work around FL and longer jobs because I wanted to get a feel for different practice styles. I only took jobs where I could live on the beach. I made them get me a condo and I brought my wife, she brought her WOK and life was golden. I banked my salary, we lived off the perdeim and before you knew it I had $300K in a retirement account.
Ed. Working locums like another anesthesiologist I know – Physician on Fire. You are a man much like me. The way to my heart is my stomach and my wife is a great cook. I also know my way around a kitchen, but not like her.
It also seems like you grew your retirement accounts quite quickly. I am 4 years out and still not at $300k in my 401k. This is due to my student loans and other foolish things I did early in my life.
Rule #3 Save early, save a lot. Don’t buy crap like Porsches or Mercedes. Marry a girl who knows her way around a wok and is willing to put up with your BS.
I invested in mutual funds but in those days it was pretty much all about actively managed funds like Fidelity Magellan. I eventually found a practice I liked and became fee for service private practice, in other words my own boss. Best move I ever made. Nothing clears the mind like working for yourself. Just don’t take it too far.
I got into some side gigs and K-1’s and limited liability deals, Not recommended unless you completely understand the business. My hospital forced us into a group, so suddenly I was a group owner with employees and contracts and payroll and rules of incorporation, retirement funds tax accounting for a C corp and so on and so on and scooby dooby dooby.
It was a lot more work but I maintained control over our future so for me it payed off. During this time I started a pain block practice on the side. I did the practice in the hospital so I had no overhead. It was a side gig. I put away about $300K extra per year just from this gig. Far far more than what any of that K-1 crap generated.
Ed. Amazing how side gigs can pay so much. Pain is one of those fields though with a large financial reward. As far as being our own bosses, it seems like medicine now is going further and further into a employee based business which I think will lead to further burnout in medicine. This is one of my biggest concerns about the future of all of our fields.
Rule #4 leverage what you know. If what you know generates a lot of dough why screw around playing with yourself being a tycoon? Medicine is way too lucrative.
Ed. Also known as keep it simple. We are doctors and we make a high income. Don’t go playing around with stocks thinking you will hit it big. There are people doing that for a living and only a small portion of them can beat the market.
Rule #5 Being the boss is good, a real headache but good none the less.
I went through a bunch of different portfolio styles, even did some day trading and option trading and commodities. Too much work though I did make some money.
I adopted 2 girls from China, and with the last one I took a laptop to China and made $50K day trading, though it was night trading since China is 12 hours ahead. This paid for both adoptions, but I wouldn’t recommend.
Just stick to plunging money into whatever gives you the most return week in week out. I went through several recessions. The key to recessions is low volatility. I
n 2008 I decided to get professional management instead of DYI after I read a book by Ben Stein and Phil Demuth who introduced me to Modern Portfolio Theory and the Efficient Frontier. This was the portfolio I had been searching for.
In Oct 2 2007 My less volatile portfolio started to fall, and fell 2/3 of what the SPY did, and by 2011 I was even. By 2013 I was 18% ahead. It took SPY till 2013 to reach zero because of the higher vol. During the same time frame. I’m not dissing anyone’s portfolio I’m just saying vol is as important as return maybe more important.
Interesting. I am typically a fan of a S & P indexed fund, but there is a point to be made for 3 fund portfolios or some other type of diversification. I don’t think anyone here faults others for their portfolios, just if they are spending a ton of money on fees and actively managed funds.
Rule #6 Watch your volatility. Don’t just start adding stuff to your portfolio by guessing. Did you know VNQ has a volatility of 25%? VTI is only 15%
Eventually our group lost the contract, we were replaced by Blackstone, yes that Blackstone. So I retired. In the meantime a group of surgeons became tired of being jerked around by the hospital so they built a surgery center and guess who still had a corporation, malpractice and a billing mechanism.
My partner and I set up that place. No call, no weekends, health care, about 20 hours 4 days a week, damn near nirvana. I did that for 7 years. We eventually sold out to a management company so the center would have continuity in staffing when we split. I hated being an employee. Finally I got a snoot full of “modern corporate medicine” and bid it Adios the week I completed enough income to make my SS cap.
This is not the story of FIRE but it is the story of how to leverage what you know, and make it pay you. I could have made it work when I retired the first time, but the idea of setting up a SDSC intrigue me, and it was very lucrative. I did not buy in because:
Rule #7 Know who you’re going to whom you’re going to sell. In this town there really isn’t anyone to sell the ownership shares so don’t buy.
Financially I’m good. I came to understand continuing to work after I already made all the money was just buying me liability. Plus I can sleep to noon if I want.
Portfolio wise I quit funding pretax accounts about 7 years ago when I realized I had way too much money in those accounts. Required minimum distribution plus the Social Security Administration was going to kill me tax-wise.
I had always bought post tax stocks beyond funding the traditional IRA’s. Learning how to tax loss harvest early in my life, I have plenty of loss to apply against capital gains. I need to empty as much as I can from the traditional IRA and Roth convert it until I hit required minimum distributions at 70.
So what I did was cash in 60 months of living expense from my post tax stocks, mixed it with about $100K cap loss from my harvest, and paid zero tax for that 5 years of living expense. My only tax will be what the Roth convert generates.
If the Trump tax cuts pass, I should be able to free up $114K per year at 12%. I still have $400K of capital loss left, which will be very useful. I have about twice as much in post-tax money as pre-tax money. Nobody recommends this but I find it very useful.
If I want a car I just slice a piece off the post-tax roast, mix it with some capital gains loss, pay no taxes and have a nice life. You heard it here first. I put the 60 month’s of cash into VWSUX (gotta love that name- Vangaurd Short-Term Tax-Exempt Fund Admiral Shares) which is a municipal bond fund so it pays something anyway.
I am happy with my professional management. It’s a straight fee, about 0.5%, but I get access to a better efficient frontier than the Bogelhead 3 which means a little more gain and less volatility. I have access to funds used by portfolio managers which are optimized for efficiency. They are NOT actively managed and are cheap. If I kick the bucket my wife will be properly be taken care of. If you pay 0.5% but make back 1.25%……
I’m waiting to 70 for Social Security since I need zero income to maximally Roth convert. The guaranteed 8% growth is groovy and if I die my wife will max out that annuity. When I reach 70, I will have to re-evaluate my cash flow, essentially retire again based on required minimum distributions and Social Security. 1st world problems!
I’m not recommending any of this, it’s just what I did. There are many things I would do different now that I’m a smarter man. My wife is younger so she has a 45 year horizon. We sweep a little less than 3% and Big-ERN’s spreadsheet says I could safely do 3.9% with Social Security, so I ain’t fretting anything except the EMP. Hope this narrative is of some value, it’s a little counter cultural to the typical FIRE boilerplate.
Rule #8 Don’t quit too soon, this isn’t a race it’s your foundation to your future
Made the scene
Week to week
Day to day
Hour to hour
The gate is straight
Deep and wide
Break on through to the other side
Jim Morrison Jan 1 1967
Ed. There you have it. One docs experience in life. I know it was long but it is nice to see how someone’s life has led to a comfortable retirement. Here are the rules broken down:
#1 be open to change
#2 When life hands you lemons make some hard lemonade!
#3 Save early, save a lot. Don’t buy crap like Porsches or Mercedes. Marry a girl who knows her way around a wok and is willing to put up with your BS.
#4 leverage what you know. If what you know generates a lot of dough why screw around playing with yourself being a tycoon? Medicine is way too lucrative.
#5 Being the boss is good, a real headache but good none the less.
#6 Watch your volatility. Don’t just start adding stuff to your portfolio by guessing. Did you know VNQ has a volatility of 25%? VTI is only 15%
#7 Know who you’re going to whom you’re going to sell. In this town there really isn’t anyone to sell the ownership shares so don’t buy.
#8 Don’t quit too soon, this isn’t a race it’s your foundation to your future