MtoM #172: Family Doc Gets $500,000 Into Retirement and Finance 101: When You are Most Likely to Retire and Why

This is the White Coat Investor Podcast, Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom.

This is Milestones to Millionaire podcast number 172. Family doc gets $500,000 into retirement.

The White Coat Investor is proud to introduce our no Hype Real Estate Investing course which will provide the framework for developing further knowledge and experience as you progress in your real estate investing career. We call it an introductory course because there's always more to learn. But this is no short, superficial course. There are over 200 lectures and videos adding up to more than 27 hours of content by over 15 different instructors.

We think it just might be the.

Best real estate course on the planet. Continue your wealth building journey today with the no Hype Real Estate Investing course@whitecoatinvestor.com courses. You can do this and the White Coat Investor can help.

All right, welcome back to the Milestones to Millionaire podcast. This is where we highlight your accomplishments and use them to inspire others to do the same. We have a new course out here at the White Coat Investor. We actually have two new courses. They are the student and the resident courses. They are basically intro courses to the fire your financial advisor course. And in fact if you buy the student course, you get that price amount that you paid for it off the resident course when you upgrade to the resident course. And if you buy the resident course, you get the total amount spent on the student and resident course toward your full fire your financial advisor attending level course. This sale goes through June 7th and starts today. Obviously you can get 20% off all of our courses, including these new ones by using the code launch20. Also for you residents out there, we have a resident webinar this week, May 29th at 6pm Mountain. You can sign up for that at White Coat Investor. This is similar to what we do for students every year. But this is information tailored just to you. Because I can't come to every residency in the country, but if I could, this is the talk I would give you now. Andrew Paulson, our student loan guru and I are both going to be working together to give this webinar. When we did it for the students this year, we presented for just over an hour. We stayed for almost two more hours answering your questions and we'll stick around and answer as many of your questions as we can this time as well, please come to the webinar.

It's totally free to you and we'd love to have you there. That's whitecoatinvestor.com resident.

All right, we got a great Interview today. This is one of our great docs out there that's building wealth rapidly. Let's get him on the line. But afterwards, stick around. We're going to talk for a few minutes about the times in your financial.

Life when you're more likely to to retire and why.

Our guest on the Milestones to Millionaire podcast today is Colin. Colin, welcome to the podcast.

Thank you.

Glad to be here.

Tell us what you do for a living and how far you are out of training.

So I'm a family medicine doctor. I'm about eight years out of training at this point.

And you recently hit a milestone. Tell us what milestone we're celebrating with you today.

So I hit half a million dollars.

In my retirement account, which is pretty exciting for me.

Yeah, that's a lot of money for only eight years. I mean, you divide $500,000 by eight, that's pretty substantial. I assume there's some growth in there too, not just all contributions, right?

Yeah, well, you know, the market's been.

Doing pretty good recently, so that probably.

Helped a little bit. But yeah, I mean, I work at a multi specialty private group and you know, I'm part owner of that, so.

You know, it's enhanced because of my own contributions. Plus we get profit sharing, which helps in that growth.

Very cool.

So tell us how these retirement accounts fit into your overall financial picture. How much debt do you have? How much do you have in assets that aren't in these retirement accounts, et cetera?

Sure. So I maybe took the less traditional approach than most people of just hammer out your debt as fast as humanly possible. And part of that was I decided.

That I was going to work for a for profit institution, which meant that.

Debt forgiveness options just weren't going to be a realistic thing for me. So I kind of went the other.

Route and actually was able to get.

Some family members to pay off my debt for me and pay them instead at a reduced interest rate.

So that was pretty helpful.

I have actually been aggressively paying down.

My student loan debt.

I went to osteopathic school, which most.

People are aware is relatively expensive.

So I think I came out at.

380,000 is what I hit when I.

Was actually done with training.

And I think right now I still owe about 80,000, so almost gone and about a year and a half left of maybe paying that off, and then.

We'Ll be in a lot better position.

Yeah.

And any other assets besides the retirement account, house or taxable investing or some sort of other investment?

Yeah, I mean, we do. So I just looked this up and.

Did my calculations because, you know, I.

Do keep track of my net worth, stuff like that. So I think as of like yesterday.

My numbers were about 800,000 net worth total.

So, you know, we do have a house. I live in the Midwest, which we have cheaper cost of living, pretty good ratios for income to cost. So that helps a lot too.

We do have one car payment.

My other vehicle's paid off.

We do have a boat because I.

Like those sorts of things, even though I know that's not always the greatest choice.

In fact, it's never a great choice.

I'm a boat owner.

I confess guilt here, but it's never a good financial choice.

No, it's not. But it's pretty fun too. So I do have a couple of rental properties that I own with a friend as well.

That's been a recent endeavor into real.

Estate and plan on pursuing that further.

Once I have a little bit more.

Money to throw on when I pay.

Off my student loans here.

So what kind of boat is it?

I have a surfboat. It's a heyday.

Very cool. Very cool.

I've seen them. They're kind of a blocky construction.

Yes, they do the job lower end for those types of things.

You know, they get quite pricey, but still costs enough.

Yeah, a lot of moving parts on a surfboat.

So what's your best trick?

Well, you know, I actually wrecked my knee skiing a couple years ago, so I'm not really allowed to do anything stupid anymore. My wife says I can't go upside down and do things after that incident. So I used to be pretty aggressive when with wakeboarding. And now surfing is kind of the.

Old man version of that.

And less injuries associated with that.

Yeah, it hurts a lot less when.

You catch the front edge anyway.

Right. You just kind of sink usually.

All right, well, tell us how you did this. I mean, this is no small feat to have that much money in retirement accounts. A half million dollars is a lot, and it takes time because the contributions are only so much each year. Now a lot of people are like, oh, I don't make that much money. I'm only a family doc. I'm a pediatrician. I do PM&R. I do preventive medicine, whatever. What has your range of income been doing family medicine in the Midwest over.

The last eight years?

Yeah. So, man, when I started, I think I was just over 200. And over the course of the last eight years, part of it was because I was on a salary guarantee until.

I became a partner at our clinic. And Then that helps because then I started acquiring profit sharing.

Not only that, but just ramping up practice patient numbers.

I mean, we kind of eat what we kill at our clinic, so kind of get paid on how much you see. So in that model, as I've ramped up over time, I just about hit 400 last year. And then on top of that, we.

Do have profit sharing incentives.

So if the clinic does well, then more money ends up going into retirement accounts for me.

I maxed out.

I have a Roth 401k that usually as I was the whole debate of.

Which one you put it in, pre tax or Roth. But all the profit sharing stuff is taxable. So I figure I like to have.

A pot of money that I can.

Access without paying taxes on it someday.

So I keep dumping it there for that reason and I do that and.

Max that out as early as I can without ever seeing it. So it goes straight, straight into that pot until I hit my max and then the rest of it at the end of the year starts coming back into my paycheck.

So that's worked out well.

So what do you think your savings rate has been? What's the range of your savings rate.

Do you think if you had to estimate it over the last eight years?

I honestly admit that I haven't always done the best job at this coming out. We bought a house and houses in.

The Midwest are different from, you know, the coasts and anything in the mountains.

But, you know, we bought a house for about the same cost as my debt was at about $380,000 and that's kind of gone up over time.

So with that our cost of living being low, I do what I can.

To try to save. But most of our savings is the.

Stuff that is about maybe that 10%.

Out of my actual salary that is actually saved.

And the other chunk of that comes from all the profit sharing stuff that.

Really I can't touch anyways because it's.

Just all dumped into my retirement account.

Some good lessons there. Lessons not only on geographic arbitrage. Move to a different part of the country, get paid more and have lower spending and maybe have a lower tax.

Bill than if you're sitting in the Bay Area.

I was interacting with somebody on the WCI forum yesterday who's contemplating buying a $3 million house.

The mortgage was going to be $18,000.

A month and this was a fairly high income doc. And it was not an unreasonable discussion to have. But even so, the thought of an $18,000 a month mortgage was just something else, right? I mean, if you have an $1,800 mortgage and something happens, grandma can help. If you have an $18,000 mortgage and something happens, ain't nobody can help.

Right? Yeah. So we've been very fortunate in that I don't feel that we're lacking for anything right now, which, you know, I.

Know I grew up in the Midwest and some of my friends in med school who are from California in these places. I remember we used to play this game of how much is that house worth? And it's just a different world from where we live. So, you know, I have a five bedroom, four bathroom house. It's not like a small house, but.

My house in California would be that probably $3 million range.

Probably.

But here I have a mortgage payment.

With almost no interest rate right now.

2.75 locked in for 30.

So I'm in the category of people who've got the debt at low rates right now and throwing the money in other directions.

So my mortgage payment's about $2,000 a month, which probably sounds crazy to those other people.

Yeah, probably does.

Well, there's a lot of cool things here, right? I mean, you're eight years out, you're almost done with student loans, you're building wealth rapidly. Your net worth, it's not quite a million yet, but it will be very soon. Within the next year or two, you're.

Going to be a millionaire.

And yet you were able to practice what you love, which is family medicine. What would you say have been your secrets to success?

I ultimately do what I like and I found a really good practice that was easy to start into some of those offers early on. I think this is something that is.

A big takeaway for young people coming.

Out is that, you know, there's some big numbers that were offered, signing bonuses, things like that, at different practices that you know are the big nonprofit institutions, which is kind of taken over the Midwest. There's just not a lot of people.

That own their own practices around us.

So when you find a group especially.

That is kind of privately owned and you can be part of that, makes a huge difference. And up front, they're not going to give you the same amount of money, but compared to those people now and.

Making substantially higher income and salary.

And I knew that would happen going into this, but took the brunt of that up front, knowing that I was.

Going to spend my time for a.

Couple of years making a little less than some of these people who are.

Getting these massive signing bonuses.

But I knew that I would be ultimately Happier working there too. So that was a big part of it.

Now you're in a five bedroom house. I'm assuming there is a spouse and some kids in this picture or no.

Yeah, I do have a wife and two children who are 9 and 11.

My wife actually has been a stay.

At home mom since I've started. So we have no other income in our family.

Very cool.

It's just the family doc income. That's it?

Yeah, that's it.

And it's amazing what you can do on it. It's great. Pretty awesome.

All right, there's somebody out there. They're a resident maybe. Maybe they're a family medicine resident and.

They'Re sitting on $400,000 in student loans.

And they're going to graduate this summer.

And they're looking at you going, can.

I ever be there?

Can I ever be nearly a millionaire?

Can I have half a million dollars.

In my retirement account?

Am I really ever going to be able to pay off these student loans?

What advice do you have for that person?

I think part of this is just learning. I think that that was a huge thing.

And frankly, I'd like to thank you.

Because your book kind of set me.

Down the path of reading a million.

Other books about personal finance and investing and real estate. It's setting those goals and figuring out.

What you need to do in your life to set aside that money and figure out that you just can't buy that car. Maybe you always want and think when.

You hit those attending salaries.

And I know the old adage is.

Live like a resident, but that's a trap that's really easy to fall into is start spending money on boats and things, you know.

Yeah, well, very cool.

You've been able to accomplish a lot of financial goals and clearly without depriving yourself. I mean, a wake boat is not an insignificant expense.

A five bedroom home is not an insignificant expense.

You're having a great lifestyle and you're.

Still building wealth rapidly.

So congratulations to you and all that you've accomplished.

Yeah, thank you.

We appreciate you coming on the podcast and sharing it with others. Yeah.

Glad we could do it. All right.

I hope you enjoyed that interview as much as I did. It's always good to see a doc building wealth.

You know, we hear all these things.

You can't do it in family medicine. There's no way I can get paid more than the average for my specialty. I can't build wealth.

And you know what? He's shown that not only can you.

Have some luxuries along the way. I mean, those of you who shop.

For wakeboats know what I'm talking about when we're talking about how much they cost. But you can, you know, also be taking care of your finances and keep your financial ducks in a row so you can find that balance. And I love that he demonstrated that for us.

Now, I told you at the top of the podcast, we're going to talk.

About something special today. We're going to talk about four times in your financial life when retirement might.

Be a little bit easier. And the reason why isn't necessarily because you're making more or you have more.

Income or anything like that.

It is that your expenses go down.

At these four periods of time in life.

And the first one, hopefully the first one, although it could be the last one because there's no real age on.

This one, is paying off your mortgage.

And just getting rid of this big rock in your budget can reduce your expenses so much that all of a sudden retirement becomes possible on whatever you have as a nest egg.

To that point, whether you pay off.

Your mortgage at 45 or 50 or 55 or whatever, that is a time when people start going, hmm, this might actually be possible.

So I encourage people to find a way to pay off their mortgage, you.

Know, in some period of time shorter than 30 years after buying the home.

That might involve getting a 15 year mortgage, it might just involve making extra.

Payments toward the mortgage, whatever.

But that's the time when people go, hmm, this might actually happen.

Another big transition point is when your kids get done with college. A lot of us are cash flowing their college or we're saving up for college. Well, once they're out and they're kind of out of the house and on.

Their own, you've taken them off the.

Family payroll, if you will. All of a sudden, it frees up.

A lot of income for you and you don't need as much income from your portfolio in order to be financially independent. Now, that's often a time, depending on.

When you had the kids, that might.

Be sometime in your early 50s is probably the most common time period. Although for some of us, that can be pushed back into late 50s or even early 60s.

Another big transition point happens between age 62 and 70, right?

And you guys know what this is, right? This is Social Security.

All of a sudden, at 62, you.

Become eligible for this additional income.

And that additional income may push you into financial independence. Now, the right answer for most people is to delay that until 70. But even so, even if it comes at 70, you know it's substantially bigger.

Than it would have been at 62. That in a lot of ways can make up for, you know, a smaller nest egg. And all of a sudden now you do have enough that you don't have to work anymore.

The other big date is at age 65, right?

At age 65, you become eligible for Medicare.

Now, Medicare isn't free.

You generally have to buy, you know, Medicare B or Medicare D. But compared.

To what a lot of us have been paying for health insurance or paying via our employers for health insurance, it's usually a pretty substantial discount.

And that reduced expenses can often make you financially independent and able to retire.

Now, one point that you might think.

In life when you might be more likely to be able to retire is.

After a big run up in the.

Stock market and all of a sudden your investments are now worth more than they have been.

But you have to be a little.

Bit careful about that.

You know, it's really the same thing whether you have a lot of assets.

With lower future expected returns or whether.

You have fewer assets with higher future expected returns.

And so when the stock market goes.

Up, you're trading one of those for the other. When the stock market goes down, vice versa.

So I wouldn't necessarily say that in the midst of the world's biggest bull market is a transition when you ought to consider retirement. Really, that decision probably ought to be more predicated on other things than just where we are in the market cycle.

Obviously, if we're in the depths of a nasty bear and you happen to.

Have enough to retire, you're probably going to be just fine. But I think people think about it a whole lot more after a big run up in stocks, and that might be a mistake.

The White Coat investor is proud to introduce our no Hype Real Estate investing course, which will provide the framework for developing further knowledge and experience as you progress in your real estate investing career. We call it an introductory course because there's always more to learn. But this is no short, superficial course. There are over 200 lectures and videos adding up to more than 27 hours of content by over 15 different instructors.

We think it just might be the.

Best real estate course on the planet. Continue your wealth building journey today with the no Hype Real Estate Investing course@whitecoatinvestor.com courses. You can do this and the White Coat Investor can help.

All right, this has been the Milestones podcast. You can apply to be a guest on it. Whitecoatinvestor.com Milestones. We'd love to have you. It's actually kind of becoming a competitive process these days to get on this podcast, but even so, we'd love to get as many people on as we.

Can, and I hope you enjoyed the episodes as much as we enjoy making them.

Until the next one, keep your head up and shoulders back. You've got this. We'll see you at your next milestone.

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.