A Physician's Guide to Retiring at 45

MAY 19, 2016
Physician on FIRE
Physician on FireI have met at least two physicians over the years who told me they planned on retiring at age 45. We humans seem to like to measure things in multiples of five, and 45 is probably the earliest milestone age that a physician can realistically and comfortably retire. 

The first of these two physicians was a pediatric chief resident who worked with me when I was a third-year medical student. He had at least 15 years to go but already had the perfect sailboat chosen to sail the ocean blue. Another was an anesthesiologist I worked with a few years ago when I was doing locum tenens work. He only had a few years to go before reaching the milestone, but he also had an affinity for Porsche vehicles and his first baby on the way. My guess is he may need a few more years, but I hope for his sake he proves me wrong.

Retiring at 45 ain’t easy for anyone, regardless of profession. It's especially tough when you're in debt up to your eyeballs and you get your first decent paycheck sometime around age 30. But, with proper planning, it can be done. Depending on where you're at, it's probably too late to do all these things without a fully functional flux capacitor, but anyone can start to take control of his or her finances. So how do you go about retiring at 45?

Don't overspend on college. 

You don't need to go to a prestigious undergraduate school to get into medical school. It's far more important to do well at your chosen school, score well on the MCAT, volunteer and/or do research, and show genuine interest in medicine. And once you're in, the slate is pretty much wiped clean. You're on the same level as your classmates, and almost all of you will go on to earn an MD. 

The flagship public university in my state charges about $7,000 a year in tuition and fees. A select few private colleges now charge over $50,000 a year. Will you have a “better” experience at Tufts University compared to State U? Depends on how you define “better,” but I'll bet it won't be seven times better, and I guarantee it won't give you a sevenfold advantage on your medical school application, if any.

If your parents foot the college bill regardless, your college choice may not play a role in your ability to retire at 45. Conversely, if you actually pay full sticker price for a private college or university (few actually do) and you do it all with loans, you'll be starting medical school with debt that will continue to grow for many years.

Try not to overspend on medical school.

This can be trickier, as most matriculants have fewer options compared to undergrad. Paying in-state tuition at a public medical school may not be an option. You may want to go to a top tier medical school, or may be forced to take what you can get. But, if you have options or can obtain a scholarship, try not to overspend here. If you have no choice, take comfort in the fact that you'll be four years closer to an attending's salary when you finish racking up that massive debt.

Live like a resident (during and after residency).

A resident's salary is pretty close to the average American's salary. Hourly, it stinks, but $45,000 to $55,000 is enough for a decent life in most locales. An apartment in a decent part of town. A used car and gasoline to keep it going. Groceries, the occasional restaurant meal, happy hour on Friday, etc. You won't be saving much and that's OK. In the first few months after residency, you'll be able to set aside as much as you could from scrimping during several years of residency. If you're able to max out a Roth IRA throughout residency, that's awesome. But I wouldn't blame you if you didn't try. Dollars will be much easier to come by soon enough. 

On the other hand, residency is not the time to start living like a full-fledged attending physician. I had friends in residency driving Infiniti, BMW, Mercedes, etc.; a vanity plate doesn't look half as good on a Chevy, am I right? If you want to even think about retiring at 45, you must live like a resident when you are a resident.

Once you finish, you'll be used to working hard and spending little. Keep doing that for at least a couple years. Pay off some loans. Fund that IRA/401(k)/HSA. Sure, reward yourself a little, but keep it within reason. Take a nice vacation; have a dinner at the fancy steakhouse. Buy a case of your favorite wine, double IPA, or single malt scotch. Buy the name-brand Chicken-in-a-Biskits. Upgrade your lifestyle to that of a fellow making $60,000. But hold off on the McMansion and the Humvee. Those can easily erase any hope you might have had of retiring at 45.

Say “Thank You” for the free meal, then walk away.

Savvy insurance salesman have aligned themselves with medical schools and residency programs. You will probably have several opportunities to enjoy some good tapas or strip steak on their dime. By all means, go for it. Free steak is about as frugal it gets, and I've found most of the advice at these gatherings to be pretty good. Of course, the free advice comes with a side of sales pitch. It may be subtle, but the goal is to obtain you as a client. Initially, they may help you with products you should have anyway, like disability insurance and term life. If you need those and have the ability to comparison shop, then the host may be a good resource for you. But don't invest in anything costly that you don't understand (whole life insurance, variable life, etc.). 

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