I have been thinking about early retirement for a while now. Eight years, in fact, ever since one of my partners retired early and put the idea in my head.
The closer I get to financial independence, the more I am thinking about what I would like to do. My planning is complicated by the nature of my work: being a primary care physician isn’t solely shift-work. If I am gone for 2 weeks out of the month, or for 3 months at a time, someone still needs to take care of the patients when they call in with problems.
Shift-work (hospital medicine) is a little easier if I want more days off, but comes with other challenges, like the expectation to put in long hours for many days in a row.
I decided to walk through some of the different flavors of FIRE (Financial Independence, Retire Early) and see how they might work out for me, as an Internal Medicine PCP.
This list has been lifted and adapted from 15+ Types of FIRE and what they mean. I didn’t list all 15, because I am too old for some (Fast FIRE), and for others (think Disney FIRE or Boat FIRE) I just have different goals.
Lean FIRE
This is where you cut costs by a ton, so that you can live on a much smaller nest egg.
It’s pretty clear to me that Mr. PiN and I aren’t interested in this sort of plan. We like keeping the house warm in winter and cool in summer, taking showers without a timer, etc.
Also, the older you get, the more you realize that things can get expensive (medical care, anyone?); and if the money gets tight when we are 70, we probably aren’t going to “just go back to work.” Especially not if I haven’t practiced medicine for 15 years.
FIRE
Traditionally (I can’t believe I am writing about tradition and FIRE in the same sentence), this describes saving up a million dollars, and living off it for the rest of your life. At 4%, that means living off of $40,000 a year, which is a nice amount for many, many people in the USA.
Though, using a handy-dandy online calculator, $1 million in 2011 (when Mr. Money Mustache started writing) is now $1.25 million today.
So FIRE in 2022 probably means you live off of $50,000 a year, which sounds more comfortable.
Nevertheless, I have been living off of a rich-doctor’s income (said partly in jest, and partly without any irony at all) for over 15 years. I haven’t disclosed how much I spend every year, but I will say that it is over $50,000.
Fat FIRE
Now we are talking!
Normally, as a PCP, I want to keep people lean and avoid obesity. However, for myself, I find I much prefer the idea of Fat FIRE. This is for people who want to spend a little more freely in retirement, and usually translates into $100,000 a year in spending. Though again, through that handy-dandy calculator, $100,000 in 2018 (when Physician on Fire wrote about Fat FIRE) is now about $112,630 in 2022.
Again, I won’t say how much we spend now, but I will say that I love the idea of having plenty of money available for fun things, and not so fun things (emergencies).
The issue is that you have to save a lot of money to reach Fat FIRE. Like $2.5 million (or $2.8 million in 2022 dollars). And that’s just for spending. Because of the graduated tax system, when you are going to retire with so much income, now you need to talk about taxes. Which may push your savings goal even higher.
It’s not impossible to save that much money if you are a physician, but if you are a PCP–especially one who came late to the FIRE party–you might not be retiring all that early if you want to Fat FIRE.
Barista FIRE
The idea with Barista FIRE is that you leave your high-stress, high-paying job before you quite have enough money to retire in the style to which you would like to become accustomed. You know, health insurance and a little spending money.
The plan is to work somewhere like Starbucks, which provides benefits (and free coffee every month!) for not too much stress.
Unfortunately, it appears Starbucks isn’t the low stress workplace it seemed to be 10-15 years ago.
And the thought of making $11-14 an hour and working at least 20 hours a week isn’t as exciting as it was 20 years ago.
Maybe if I had an interest in something else–something that would really be fun, and truly low stress (while providing health insurance)–this would be appealing. I’m thinking about those doctors who chuck it all to become white water rafting guides. But I don’t know that it’s for me.
Plus, to be honest, I do get a little status stroking from being a doctor.
If I were serving coffee to my former patients at the local shop, I am pretty sure I would be squirming inside (or feel the need to explain why I’m working there, instead of being a doctor). Would they think I lost my license? Was fired? Did something very, very bad?
On the whole, I don’t think I would pursue Barista FIRE in my current community.
Coast FIRE
This is probably more of what I am thinking of doing, though Slow FIRE and FIOR probably have some overlap.
Coast FIRE can happen when you save hard for retirement early in your career.
Let’s say you have been dutifully socking away 20% of your salary ever since you went into practice at age 30. Now, at age 45, your retirement funds (whichever accounts you have designated for retirement) total $800,000 (number stolen from Retire By 40’s post on maxing out your 401K). Using the investment calculator at Investor.gov, if you never add a dime but invest it at 6%, by the time you are 65 you would have $2.5 million.
If you think that would be enough for you, then once you turn 45 (or maybe 46 or 47 to be sure), you could cut back at work, a lot. No need to contribute to your retirement accounts. You would pay a lot less in taxes, as your annual income drops (you might drop as much as 2 tax brackets).
For me, that would probably mean dropping from full time (or almost full time) to 60%.
When I am having a tough day, or a tough week, I think about all the ways this could play out:
I could take an extra day off per week. But I would have to figure out how to deal with phone calls and patient e-mails.
I could cut back on my hospital weeks, by a bunch. Of course, that would mean more clinic time, and more phone calls and messages.
I could quit my job altogether and pursue locums tenens, working just a few months a year. Or a few weeks a month. Of course, that would involve getting to know a whole new system (who to refer to, how to use the computer system). And I am suspicious that I would end up with a job that I don’t want.
As you can see, I am pretty set in my ways and not quite ready to make the leap.
I am working my way up to it.
Slow FIRE
I might be doing some of this right now. I think this might be one of the more appropriate FIRE plans for doctors who aren’t totally burned out.
Instead of cutting expenses to the bone: drive a beater forever! The only vacations allowed are car camping! No, wait, you aren’t allowed vacations; you have to hustle!
Ahem. Let me recover.
Instead of cutting expenses to the bone and socking away mountains of cash every month into your investments, you take a little more lenient approach. You take a nice vacation, or two. Upgrade the car when the loans are paid off. Etc.
You probably can’t do all the things–new cars and expensive vacations and private schools and the big house and… You are a PCP, after all, and not earning surgeon money. (Though even surgeon incomes have limits.)
However, you can splurge a little, in targeted ways, while still putting away a good sum towards retirement each month.
Over the past 8 years, in addition to paying off my house and putting money away for retirement, I have also: bought a brand new car, helped my step son graduate from college debt-free, and enjoyed a number of overseas trips (before COVID hit). I may save money in other areas, but I haven’t given up all treats to chase early retirement.
Maybe this means you will have to wait 15 years to be able to retire after discovering FIRE, instead of 10. Maybe you will even have to wait 20 years.
You will still be able to retire early if you choose. In the meantime, you get to enjoy some of the money you have been working hard to earn.
FIOR
The Financial Independence, Optional Retirement plan.
Perfect for the old-time doctor who is thrilled to keep practicing medicine into their late-80s, 90s, or even 100’s. Or even only into their 60s or 70s. You know, taking care of your original patients’ children and grandchildren, where going to work is more like seeing old friends.
I don’t know if I will want to practice medicine quite that long, but I’d love to feel excited enough to stay.
I do find that as I see my nest egg grow, I am more picky about the “extra” I am interested in doing at work. However, I do feel more free to pursue projects (little ones) that sound interesting.
Ideally, once I hit “my number” and feel I am free to retire, I can choose to keep practicing. Only I can do more of the fun stuff (seeing nice patients) and less of the awful stuff (squeezing in 32 minutes of visit and 8 minutes of documentation into a 15-minute slot). Maybe I could work part-time and not worry about health insurance benefits or taking call.
It’s an open question what I can ask for once I make it clear I don’t actually need the job at all.
I’m not there yet, but I am eager to see what it’s like.
Are you pursuing a particular flavor of FIRE? Which one? What will you do once you get there?