Military physician - commitment puts me at 12 years in - stay or go

[Re3iRtH]

Hello all,

This is my first post here and I am excited to be part of this community.

I was reading the blog article on whether one should get out at 20 or stay in the military past 20 as a physician. That didn't really apply to me but was an interesting read.

When my commitment is up, that will put me at 12 years in (medical school doesn't count until you hit 20 years I guess).

Would you guys consider staying until 20 years? I am single, and finances are not a problem - I do/will have enough passive income to have incredible flexibility on whether to work or not etc. Do you know any scenario where it would make sense to do 20 when you've already hit 12?

I saw White Coat Investor himself say something on the blog comments along the lines of "At 13 years, I would definitely just stay until 20" paraphrasing of course.

[The White Coat Investor]

Stay is the general rule at 12 years, but there's a lot of variables and you'd have to run the numbers. But it isn't a primarily financial decision anyway.

 

There are exceptions, of course. For example, if you could make $800K as a back surgeon getting out, well, that might be better than staying. But too many military docs don't realize just how valuable that pension starting at 50 is, nor the value of tricare.

[Matas]

I got out at 12. As a specialist surgeon with a young family, I didn't want the continued exposure of deployment. The world has become an increasingly dangerous place, and depending upon your specialty, you could see multiple deployments. I'm proud to have served, and I wouldn't have changed a thing about my time in the army.  I think the decision is more personal and related to career plans than it is financial - you'll do well either way, especially following the financial advice from WCI!

[Re3iRtH]

Thank you very much for commenting. Looks like I have a lot of thinking to do.

My speciality pays roughly $400-500K as a civilian (rad). The geographic limitations/military telling you where to live is the biggest drawback IMO.

A $60K pension doesn't sound like much, but I would love to see the numerical analysis. I would be 45-46 yo by the time I hit 20 years (auto 24 years).

[MochaDoc]

This seems like an exceptionally personal question with very little information provided. Do you want to stay in for another 8 years? You're currently single and childless. Are you planning to remain this way for the next 8 years? Are you census/tax form single but seriously dating with plans to marry within a few years? Have you compared the financial costs and benefits of staying versus leaving? What non-military jobs are you considering, if any? Lots of questions to think about.

[Re3iRtH]

I actually have a few more years until my comittment is up.

I am single and it's been fantastic, I wouldn't mind children down the road. I wouldn't have them for 2-3 years at least.

I have not compared financial costs. My ventures outside medicine have been doing well, and making more or less as a doc isn't much of a consideration for me.

I am considering a 10-12 shift per month tele job, if still available after the military. Or perhaps some other part-time gig.

Is $1000-2000 per year per family member for health care premiums a good ballpark or am I way off base?

Thanks guys!

[CM]

Re3iRtH wrote:

A $60K pension doesn’t sound like much, but I would love to see the numerical analysis.

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Based on a 3% withdrawal rate that pension would be worth a $2,000,000 portfolio (if COLA).

[CM]

Re3iRtH wrote:

Is $1000-2000 per year per family member for health care premiums a good ballpark or am I way off base?

Click to expand...

.

[ENT Doc]

Chances are this will be answered by non-financial factors such as deployment, wanting to meet someone, have kids, dealing with the bureaucratic morass of military medicine, etc.  I know someone with 2-3 years left who is getting out because he can't stand it any more.  Financially that is an asinine move.  But it speaks to how important those other factors are.  However, if just looking at it from a financial perspective, the military pension has pros and cons.  On one hand, it affords you the capability of being more aggressive with your asset allocation - especially since you have other streams of passive income - and gives you a nice cushion of "f u" money.  On the other hand, that pension is taxed at your marginal federal rate, which, given your civilian salary and passive income otherwise, would be quite high.  Many states don't tax military pensions, but that still means you're paying 40% of that 60k in taxes, or netting $36k a year.  If you're doing a 4% withdrawal rate that equates to $900k of equivalent investment net worth.  So the question I'd be asking is could I, in 8 years as a civilian radiologist, generate enough after-tax income + investment gains from that income to equal $900k?  I'll bet you could.

As for Tricare, it's not like you don't pay anything.  And it's not like those costs haven't gone up and will continue to go up as our country comes to terms with its insolvency.  Best thing you're missing out on otherwise is the ability to pass the GI bill benefits to a dependent.  But not sure what this new GI bill offers in that regard.  Good luck.

[mobilehomegurl]

Given the political climate, you'd have to be comfortable with deploying. The deployments are getting longer and unfortunately there are always conflicts around the world. Due to special interests, we're always involved. And it's the risk you take being in the military. Many have got out due to the deployment issue. Those who stay have to put up with the culture and being government property. Good luck with your decision!

[The White Coat Investor]

Deployments aren't getting longer. As near as I can tell no one is deploying at all like we were back in 06-10. Army was going for 15 months out of 36, Navy for 9 out of 24 or so and AF 6 out of 20.

But that was a major factor for me getting out.

[MochaDoc]

Re3iRtH wrote:

I actually have a few more years until my comittment is up.

Click to expand...

How many more years until your commitment is up?

If you're already doing well with income from your side hustle, what's the motivation for leaving a guaranteed 60k per year in pension money plus healthcare on the table to go the civilian doc route? If you get out at 45-46, that's still a good 20 years left to work as a civilian doc making that level of income so you'd have the best of all worlds, i.e., military pension and healthcare, side hustle/entrepreneurial income, and civilian doc income. Seems like you're winning on all fronts.

[Re3iRtH]

5 years on commitment. That is an interesting way to put it. I think the biggest limitations is not choosing where you live (and not being able to stay at a single place for more than 4 years) and inability to predict or dictate the type of work schedule you'll have. Those are the main deal breakers. I have to say I do enjoy the work I am doing in the military overall.

[RadDoc6876]

I did 20 years and retired as a Lt Col (Radiologist) at age 46 and was very glad I stuck it out.  I now have a permanent pension, access to low-cost health care for my family, VA home loan, and GI Bill, all of which we have used.  I was single for most of my career and only married the last 4.  But my wife and I are very glad I have the benefits I now have at age 48.  So many factors to consider that it's impossible to apply my experience to others' but I would recommend questioning these all-too-common assumptions in your analysis:

1. "Deployment=bad."  I knew many docs who deployed and said it's the most worthwhile thing they've ever done, treating gravely wounded 19-year olds who are terrified and need your help, Stat.  A surgical oncologist I know treated many local nationals who had tumors needing treatment they never could have gotten otherwise. Personally I did not deploy but my version of that was being sent to a remote hospital in northern Japan (Misawa) as a solo-Radiologist covering a hospital for 2 years. There was me, one surgeon (yes 1 surgeon), one (1) internist, and some Family Med/Ob/Peds docs covering a hospital serving thousands of people. (I could not be deployed since there was only one of me and 1 -1 = 0.)  I could hardly leave town due to being on call 24/7/365 but I did have some limited Telerad coverage. It was a hard 2 years but we did a lot of great work, survived the Tohoku 9.0 earthquake, and I am still in touch with those great folks. The Japanese called me "Sensei" which was awesome, and it was really the experience of a lifetime. Again I was single and so my experience doesn't mean everyone would feel the same, but it was a great experience for me.  I would encourage you to talk to someone who actually deployed though, and get their perspective and how they managed the experience.

2. "Getting out and going to private practice=good."  A good friend from Residency was a Radiologist and hit 13 years and faced the same hard decision. I advised him to stay in, but his worries over deployment won out.  He's a solid guy and fellowship-trained.  He didn't listen to me and chose to get out of the military and was lured to a private practice which brutally abused him to the point he was failing at work, became very depressed, and quit.  He no longer practices medicine, now stays home to care for their 2 kids, and his wife went back to work.  I think enduring a 6-month deployment would have been far less stressful than what ultimately happened.  Another friend got out at 16 years (eek) with private-practice dollar signs in his eyes--same story, also a strong guy with strong fellowship training, went to a churn-and-burn private practice which worked him 7 days a week for a year then fired him when the hospital ownership changed (or some story like that).  Partners had a meeting over it and cut him that same day.  Luckily he found a good practice in another state and is doing well now, but as of today he would have finished out his 20 years had he stayed in, with lifetime benefits.

I realize these are just anecdotes that don't necessarily apply to everyone. Also I realize these are factors other than running the numbers on salary/benefit comparison. But I often see these assumptions being made by a lot of people and I am just recounting these stories to encourage people to question them.

Also be aware the 20 year all-or-nothing pension system for the military has officially changed to a blended 401(k) (which is the TSP) and pension system.  This came on recently after I got out so I am not very familiar but you should research the details of the system as it will apply to you.

Finally if you do have a number of military years, and are concerned about "losing" credit for that time, I would recommend considering working for the VA, since you can buy-in to the Federal pension system using your military years and they will be credited in the civil service pension system.  The buy-in calculation is done on your base pay from the military which is a small amount...a colleague of mine was former Army with 8 years, had the HR people run the analysis, and in the end he wrote a check to the U.S. Govt for about $12K, which now credits those 8 years toward a federal pension calculated as 1% salary per year.  So on a salary of (say) $250K he just bought a .08x250 = 20K/year pension which can take effect at age 62, for a total cost of $12K.  The actually amount will be higher since he will have about 10 years civil service by that age, so 18%(250)=45K/year.  The key to this is that the same formula applies to everyone...i.e. the (1% x years served x salary) is the same if you're a GS-6 secretary making $35K/year or a cardiothoracic surgeon making $350K. So as a doctor, you have a lot of leverage buying-in to this system based on your just base pay from your military years, then applying that formula against a much larger current salary. Personally I like working for the VA and encourage former military docs to consider it.

A lot of info I know but the only way to learn these complex systems is to talk with people who have been through it so you can make an informed decision - hope all that helps!

[Re3iRtH]

That was very helpful. Thanks for writing it out. I guess I won't count my chickens before they hatch. We will see how the next half decade goes. I might not be fond of my first assignment out of residency (location, not work).. so perhaps my always-rose colored glasses have been splashed a little by mud lately.