retirement

The FINANCES behind retiring from medicine at 37

I originally wrote this article as a guest blog for the site http://www.physicianonfire.com/ last month.  The physician author of this blog specifically requested I write on this topic as his site deals with financial independence and retiring early (FIRE).  I am now posting here since I have had requests from readers to share the financial decisions that allowed me to retire early from a medical career. Please let me know if you have suggestions/thoughts, or what has worked for you in the comments below.

Usually, when I tell people I retired from my physician career at age 37 they respond with shock.  Some look at me like I am the most foolish person they have ever seen.  Some with disdain (“all that medical education wasted”).  Some doubt that my future will be secure without having a steady paycheck.  However, as it is only my close friends/family I discuss this with, they mostly respond with sincere happiness as they understand this is a life choice I made after much deliberation and know that it is the right decision for me and my family in pursuit of the life I want to lead.  There are many factors that led to this decision and I have written about some of it in previous articles Retired at 37: Breaking Up With a Career in Medicine.  However, this article focuses on the financial aspect.

Finances can be a tough subject for physicians.  We are notorious for being poor money managers.  Most of us don’t have the time or desire to commit to understanding personal finances in detail. Who has time to learn about 401K’s, the stock market, and budgets while learning about anatomy, pharmacology, and immunology while in medical school?  Or while working 80+ hours per week in residency?  Besides, we won’t be earning an attending physician paycheck for years.  By the time we earn a real paycheck we are so exhausted by the delayed gratification of our 20’s that we want to splurge a little, right?

I don’t proclaim to be an expert by any stretch.  However, I found the freedom that comes with financial independence to be life changing and something that should be attainable for all physicians. I am not here to encourage everyone to retire in their 30’s from medicine, but to gain financial freedom.  I hope you can continue practicing medicine into your 60’s (if this is what you want), but to not feel trapped in a situation when encountering unsustainable job structure, illness, divorce, etc.  Of course, finances did factor into my decision to retire.  I have 3 kids and wouldn’t stop working if I needed a steady paycheck to support them. Luckily, some decisions along the way helped me not to rely on this paycheck moving forward.  There are many different paths to financial independence.  Here are some steps that led me down my path to financial freedom and ability to retire early:

  1. Kept medical school loans to a minimum. Yes, you do have control over this. Most people outside of medicine are shocked to find out that medical students are essentially able to get loans for as much as they want.  You can determine your own “living expenses” and someone will be ready and willing to give you this loan as medical students are typically good about ultimately paying it back (although years down the road and with a ton of interest).  I was lucky my parents paid for my undergraduate studies but medical school was on my own.  I probably started my “frugal” mentality at this time.  My husband, who I was dating at the start of medical school, would often make fun of me for my bare cabinets with canned green beans and ramen noodles as my main staples.  Of note, he also had loans from undergraduate school that we had to factor in as well. Don’t worry, we didn’t eat like that forever!
  1. Started paying off loans immediately after forbearance ended at the maximum amount we could, not the minimum required.
  1. Lived well below my means. We continued living in my residency townhouse for a while, even after accepting an attending job.
  2. Looked for job with high earning guaranteed right from the start. Many positions I was offered entailed low salary the first few years and then potential for partnership and jump in salary but not until 4-6 years down the road. This was downright scary to me.  What if I didn’t like the job? What if they never actually promote to partner?  The writing was on the wall for private practice in ob-gyn with soaring malpractice premiums and it seemed unsustainable to me for most of these private practices.  I wasn’t willing to take the chance. I had also heard that many people may leave their first job after 2 years.  So, I figured why not at least get a large salary those first two years while I get a better feel for the landscape? Luckily, my job did not have a non-compete agreement, so I knew I would have options if I decided to leave (I actually stayed with my first job as I was initially very happy with my choice out of residency- this lasted for about 7 years).
  1. Maxed out yearly contributions to retirement vehicles. 403B during residency, 401K with new job (which also had a pension that vested after 5 years), and started a Roth IRA. I had to devote some time to learn about what all of these things are and why they are important! Investing is key.finance
  1. 529. My first child was born in residency, but I did not start a 529 at that time as wanted to maximize retirement account yearly contributions first. Once those were being maxed out, I started 529 for oldest child and then when subsequent children were born funded those too.
  1. Lived off one income. I feel this one factor made the absolute most difference!! Certainly not all, but most of my colleagues are in a dual income household.  We always lived off one income (mine) and paid off loans with the other.  This always forced us to live within our means. This may be hard to accept initially as many physicians feel that the delayed gratification never ends, but trust me it’s worth it! I do have to admit, our one splurge was a nice vacation every year.  “Work hard, play hard” is my motto and I probably wouldn’t have made it without those necessary times of respite to recharge. Travel is one of my passions.
  1. Got Creative. For those who have a partner who does not have a career in medicine, there may be options opened for them since a physician job is very secure.  You will always be able to find work as a physician and it is quite unlikely you would lose your job. In addition, health benefits are common with employed physician jobs and therefore you can take a big burden off your partner to worry about this.

–          This can free up some room for ingenuity with your partner if their job allows for different payment structures. Commission based jobs with a low salary and no health benefits may be unsustainable for someone supporting a family. However, if you use the idea of living off one person’s salary (your physician salary) and allow your partner to get creative it can really pay off.  Employers may jump at the opportunity for this type of pay structure which would have very little risk for them but could have huge potential upswing for the partner.   We chose to take this risk. We couldn’t have done it without the stable physician salary/benefits component.  It was possible my husband would make barely anything certain years or alternatively, make large sums depending on the work flow.  Nothing was guaranteed to last and so any windfall that came from his work was immediately placed into debt repayment or kid’s college funds.

When starting out of residency at my first attending job, I planned to continue to practice medicine until my 60’s, cutting back on hours if needed, but I assumed my love for medicine would keep me wanting to work indefinitely. Several things changed my mindset, including financial independence.  Once I knew I didn’t “have” to work, I started to view my career a little differently.  Maybe I wasn’t honest with myself previously with how the stresses of on call nights, sleep deprivation and increasing administrative workload was negatively impacting my life and health. It sometimes feels like you are on this treadmill that keeps going and you don’t have the time or energy to ever stop and think about what you are doing and if you are leading the life you envisioned for yourself.

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Once financially independent, it became my choice whether or not to work.  The frustrations of salaried work in ob-gyn, the negatively changing healthcare climate, and missing time with my young children was weighing on my mind.  I wanted (needed) out for myself and my family.   However, I needed a push to get off that treadmill and realize what was going on.  “Luckily” for me I had a major health scare that also occurred at the same time that I reached financial independence.   Decision made.

Now, the choice can be mine if I decide to ever return to medicine.  I’ll never close that door completely, although I don’t see it in my future if you ask me now.  There is so much out there I am still excited to explore.

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24 thoughts on “The FINANCES behind retiring from medicine at 37”

  1. Excellent decision 🙂 and I am proud of you even though I don’t know you but I feel like I do and that we would be friends:) I am also a doctor and was specializing in my passion. OBGYN in South Africa, but got pregnant and an HIV scare from a needle stick injury and everything changed. I am 35 with two kids aged 3 and 4 and we live an hour/ hour and a half drive from nearest hospital so I have taken to a small / tiny private practice which I have opened seeing as I am the only doctor in this town ! But I literally see like 4-6 patients a day and I only charge the ones who can afford to pay me . It is so rewarding. I am home 1pm or 2:30 latest and only work mon- fri so I feel as if I am retired indeed !! Compared to how I worked on the public hospital sector !
    Like you I saved every penny along the way and would only spend on a once yearly holiday with my now husband 😋We haven’t had the balls to take the kids on holiday yet.. a car trip is challenging enoUgh’!

    Anyways, just wanted to say hi and that I love your blog and GO FOR IT! Life is short x
    Hope your health issue that you mentioned is temporary and that you will be well as ever soon
    Warm regards,
    Irene

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  2. Love reading your posts and you are definitely an inspiration. As I embark on my 4th yr journey of applications to residency I am beginning to plan to pay off my loans asap and put as much income as I can into them. I don’t have maxed out loans but I have a substantial amount and even though it’s scary, I know we’ll be ok. I agree that all doctors and physicians should learn about finances and financial planning. I have been blessed with this knowledge through family and my husband and I have a good investment fund running since I was born. This year we have moved in with my mom to hopefully save some money and return part of the loans for 4th yr. I don’t know what I want to do post residency but I definitely want to be prepared for anything. Keep up the good work and I hope your health issues are solved and you can enjoy your retirement

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  3. Irene, Thanks so much for the thoughtful response. I love hearing about how others have made a career in Ob/Gyn work for them as there are indeed many rewarding facets. It sounds like your rural population is very lucky to have you! From your response, it seems a typical full time OB/GYN job is just as demanding in South Africa as in the US!

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  4. Jani- you are way ahead of your fellow medical students. Your financial habits are going to give you freedom down the road to select the perfect Ob/Gyn job for you. Thanks for reading and best of luck!

    Liked by 1 person

  5. Yes, I agree totally..I retired at 45 from my solo practice and everyone laughed at me..Then I came back to work part time and people again laughed at me…Finally, a hospital decided to end it all for me through a sham peer review process for raising my voice against harassment and discrimination. Medicine and my relationship with it is sweet and sour. I like helping my patients but do not like the corrupt and litigious system.

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  6. I commend you for your financial fruitfulness during residency! My husband and I always maxed our Roth IRAs during residency but didn’t come close to maxing out our 403b. That is truly impressive! It’s amazing that you are financially free at 37 after funding your own medical education!

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  7. Elizabeth, thanks for your comment. It looks like you have started some great financial principles by adding to your Roth IRAs during residency! I truly believe its all about saving/investing and living well below your means. As boring as it sounds, there is no magic bullet or easier way to be financially free!

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  8. Im so glad other people are talking about this. I started to sense even in residency that medicine was not what I thought it would be & the culture of self sacrifice and self care last seemed paradoxically inappropriate in medicine. My husband and I are both doctors (anesthesia and ER) and we paid off 300k in student loans in 2.5 years living in a modest but nice home with 2 recliners and a bed , that’s it during that time. We traveled frequently. I also started a small business which still doesn’t generate enough income just yet for us to really walk away but with paying off all our debt (cars, loans , etc) except the mortgage we went per diem and gained an incredible amount of control back. We are still working on our business and god knows when we can fully retire but at 2 days a week for me I feel so much better and don’t miss not one penny that I might earn selling my life away. Thank you for writing this as sometimes we feel there are so few other doctors out there who are considering a very early retirement. God bless you!!

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  9. You are not financially independent. It is dependent on your husband. This is called marrying well.

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  10. Christen, thank you for your comment. Wow, you paid off an amazing amount of loans in 2.5 years. That is far faster than I was able to accomplish it! Thank you for sharing so that others can see it is possible too.

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  11. To “anonymous”: We have reached financial independence as a couple. Meaning, he could also retire from his job tomorrow. However, he personally is not ready to stop working and enjoys his job. Therefore, he may work a few more years. He is also enjoying the freedom to know that if desired, he can stop working also. So in that sense, I believe it is reaching financial independence and not requiring any income from either partner. Hope this clarifies.
    I am not offended by your comment as perhaps others had the same misunderstanding as well. Although, I do wonder if you would have made the same remark if the article had been written by a man.

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  12. Clearly this is an opportunity bestowed upon only a tiny percentage of the US population and an even smaller percentage of the world population. I’ve read several KevinMD essays like yours. You all won the genetics lottery and worked really hard, so you should take advantage of your opportunities. No disagreement there.

    But I’ve never understood the temptation to make it about some larger struggle against the system or the profession or the man. You simply had the opportunity to “retire” early and continue living an upper middle class lifestyle and you took it. That’s pretty much it.

    My spouse and I both physicians and they will probably soon make the same decision. But I just don’t get the temptation to malign the profession on your way out. Why not just say, “I am really lucky that I have total freedom over whether I work again or not, yet I still get to live a very comfortable life. If you need me, I’ll be pushing my jogging stroller around the local park. Deuces.”

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  13. I think this is a great article but with limited audience applicability: namely, an audience with a working spouse or partner. I agree you both achieved independence as a couple but therein is the key: you were/are a dual working couple. This allowed you to live off of one income and use the other to max out loans and retirements. I spent several years in that same situation but with divorce rates at over 50%, it is, sadly, not a surprise that I am no longer in that situation nor have I been for a long time. (A second income is sufficient reason to marry again). My only suggestion is that the specific audience that can utilize this foundational reason of success should be identified early on in the writing. just a suggestion and in the meantime, I am very happy for you, your husband’s and your family’s success!

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  14. To Rory Jones: I can appreciate your comment. I agree that it is a privilege to be in this position, albeit one that I worked very hard for. I can also see that some people may work very hard at their profession but not be allowed the same opportunities as there are different earning potentials amongst professions. Paying it forward is of course in my goals. I was specifically asked to write about this topic, and so I did. As for maligning the profession, I am simply speaking my truth about my own experiences in the hopes it may shed light for my colleagues/friends and effect change moving forward for what I still believe to be a very noble profession. It sounds like you may have had better experiences and for that I am 100% happy for you. Hopefully, other people may have gotten more use out of my article than you did.

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  15. To “anonymous”: thank you for your comment. Yes, my article is geared to physicians looking to retire and is specific to a dual income family. Divorce definitely would make things harder and not the scope of this article. However, I believe similar principles can apply to those with one income household. This would require living off 50% of salary. MUCH more difficult for sure. If you are interested in an example of someone doing this, you can check out “physician on fire’s” blog as he is single earner working toward same goal with similar principles. That is the site I originally wrote the article for. Best of luck to you.

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  16. Thank you for sharing your story. I’m glad you were able to pursue a different path when medicine was no longer fulfilling for you. May I ask what your net worth was when you decided to retire from medicine?

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  17. I’m curious how you get your health care. Although I am not a physician, I do have the opportunity to have some more job flexibility but it would come with no benefits. One of the perks of my current job is very low cost and high quality healthcare for my family of 5. My husband doesn’t receive benefits through his job so for now I am chained to my job. Do you get coverage through your husband and what would you do if he retired since you said he is in a position to do so. Health care coverage is the biggest sticking point to leaving my job. Thank you!

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  18. To LiveFreeMd:  thanks for the comment. Although, ‘Im not comfortable giving out my net worth as this is not an anonymous site.  However, we came to the nuts and bolts of what we needed to retire  by creating a huge spreadsheet and figured out expenses, balanced against investment accounts, 529 accounts for the kids, savings, etc. and calculated the number we needed with projected living expenses until 90+ years.  In doing this project, health care was by far biggest expenditure since we had to account for no employer sponsored plan.

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  19. To Natlia: you are completely correct. Health insurance when you retire early is one of the biggest sticking points. Our family will expect many years before Medicare would kick in.  we will be providing this ourselves in the open market exchange. This is by far the biggest expense we will have during our retirement years. (We also have a family of five with three dependent children to think about) I wish there was a better solution!

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  20. Congrats on being able to make your life work
    As a 67 year old still working podiatrist who considers himself extraordinarily lucky to have the opportunities over the past 40 years of practice, I chose a different path. My oldest son joined me in practice 11 years ago and my wife is the office manager as well as a provider.
    So you might say i never leave work or home. Works for me.
    I have time for my grandchildren and my hobbies.
    Did I say that podiatry was my 3rd profession?
    I started as a skilled mechanic, then pharmacy, then podiatry.

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  21. Freddie Edelman: thank you for sharing your path! I love your story. I also believe my story is in no way over, but it is interesting to hear how others lives have taken many turns. Happy to hear you have found a wonderful niche both professionally and personally

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  22. Don’t get a divorce would be good advice too. Male or female, you wont realize what your MD degree is worth until you try to get unhitched, unless you were wise enough to marry up- IE internist with neurosurgeon 🙂

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  23. Marc, you are right- divorce would certainly throw a wrench into anyone trying to reach financial independence for sure. Definitely not in the scope of this article, and a hardship for all involved.

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