There is tremendous interest in the physician community about financial independence and early retirement (FIRE). Many of us are burned out, and there are many existing and worsening workplace challenges that we face. These have existed since before COVID-19 times and seem to be prevalent.
I love seeing patients, but I can’t lie and say I don’t think about it also. To be able to practice medicine on my own terms and when I want. That is the dream! I thought I may gain some insight if I input the amounts in my Roth 401k, my 401k and my approximate monthly expenses including mortgage, food/groceries and credit cards – and hoped I would get specific recommendations.
I did not… however, I got some pretty useful generic advice that all of us can follow:
“Congratulations on having a solid foundation for retirement savings! Here is a plan for achieving financial independence:
- Determine your target retirement age and desired retirement lifestyle. This will help you calculate the amount you need to save to support your retirement expenses.
- Estimate your retirement income from sources such as Social Security, pension, and investment income. You can use online retirement calculators to help with this step.
- Use the 4% rule to estimate the amount you can withdraw from your retirement accounts each year without depleting your savings. This rule suggests that you can withdraw 4% of your retirement savings in the first year of retirement and adjust that amount annually for inflation.
- Determine how much additional savings you need to accumulate to support your desired retirement lifestyle. This can be done using an online retirement calculator.
- Consider investing some of your retirement savings in a diversified portfolio of stocks and bonds that align with your risk tolerance and investment goals.
- Review your expenses and look for ways to reduce them. For example, you may be able to refinance your mortgage to lower your monthly payments, reduce your food expenses by cooking at home more often, and pay off your credit card debt to avoid interest charges.
- If you have additional income or windfalls, consider investing them in a taxable brokerage account or other investment vehicles to accelerate your progress towards financial independence.
- Monitor your progress on a regular basis and adjust your plan as needed to stay on track.
Remember, achieving financial independence is a long-term goal that requires patience, discipline, and careful planning. With a solid plan in place, you can be well on your way to achieving financial freedom and enjoying the retirement lifestyle you desire.”
Interestingly, when I asked Google Bard a similar question – it had similar advice – but added:
“Of course, these are just a few possible scenarios. The actual time when you can retire will depend on your individual circumstances. It is important to speak with a financial advisor to get personalized advice on when you can retire and how much you need to save.
Here are some additional factors to consider when planning for retirement:
- Inflation: The cost of living will likely increase in the future, so you will need to factor this into your retirement planning.
- Healthcare costs: Healthcare costs are also likely to increase in the future, so you will need to make sure you have enough money to cover these costs in retirement.
- Social Security: Social Security benefits are not guaranteed, so you should not rely on them as your sole source of income in retirement.
- Inflation and healthcare costs are two of the biggest threats to your retirement savings. By planning ahead and taking these factors into account, you can increase your chances of a comfortable retirement.”
Varun Verma M.D. is a board-certified internal medicine physician, entrepreneur, patient advocate and author. He is the co-founder of Andwise – a platform to empower physicians with