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Discuss Latest POF Blog Post: Why FIRE Was This Burned Out Doc’s Only Way Out

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  • Discuss Latest POF Blog Post: Why FIRE Was This Burned Out Doc’s Only Way Out

    When does a fiscally responsible physician dealing with burnout know when it’s time to play the financial independence card? As ... Read more

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    Helping those who wear the white coat get a fair shake on Wall Street since 2011

  • #2
    a lot of these FIRE stories have a running theme of making a plan to FIRE and then if they actually pull the plug they are finding they can actually pull it before they intended to when they came up with the original plan. I made a plan in 2017 and the numbers I have today are where my plan said I'd be in 2023

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    • #3
      Originally posted by JBME View Post
      a lot of these FIRE stories have a running theme of making a plan to FIRE and then if they actually pull the plug they are finding they can actually pull it before they intended to when they came up with the original plan. I made a plan in 2017 and the numbers I have today are where my plan said I'd be in 2023
      Kind of an interesting phenomenon. I wonder if those who plan to FIRE just naturally use more conservative projections? I know I certainly do.

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      • #4
        Originally posted by JBME View Post
        a lot of these FIRE stories have a running theme of making a plan to FIRE and then if they actually pull the plug they are finding they can actually pull it before they intended to when they came up with the original plan. I made a plan in 2017 and the numbers I have today are where my plan said I'd be in 2023
        I’ve thought the same, and my current values are also several years ahead of where I thought I would be at this point, but this has also come at the benefit of an amazing bull run recently. There has to be reversion to the mean at some point one would think.

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        • #5
          Originally posted by MaxPower View Post

          I’ve thought the same, and my current values are also several years ahead of where I thought I would be at this point, but this has also come at the benefit of an amazing bull run recently. There has to be reversion to the mean at some point one would think.
          As a statistician, I'm a believer in reversion to the mean. But will the reversion take 5 years to get to? 10 years? 50? 100? who knows! And while it's been an amazing bull run, we also have the COVID bear. I assume my investments will grow 6% per year and I've been outpacing that a lot since 2017. 6% is what PoF uses in his great series comparing doctors and their income and savings, but 6% is the highest he uses in his charts. I'm not saying he should change...I don't think 6% is unreasonable but I do think it's actually conservative and thinking your investments may grow annually 8-10% for the next 10-20 years isn't quite as looney as I think some suggest or think.

          Me, I'm going to stick to 6%. I'm waiting for the prolonged bear to whack my plan and put me back in my place and show me that, for instance, in 2024 (not a prediction) due to the prolonged bear market, instead of being ahead of where I said I'd be back when I made the plan in 2017, I'm....right where I said I'd be in 2024. Which should be good enough for me.

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          • #6
            I use 4% and am already far ahead of where I thought I would be just a few years ago. If you asked me at the end of march I would not have said the same thing. But with the faster then expected market recovery I am back ahead of projections.

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            • #7
              Originally posted by JBME View Post

              As a statistician, I'm a believer in reversion to the mean. But will the reversion take 5 years to get to? 10 years? 50? 100? who knows! And while it's been an amazing bull run, we also have the COVID bear. I assume my investments will grow 6% per year and I've been outpacing that a lot since 2017. 6% is what PoF uses in his great series comparing doctors and their income and savings, but 6% is the highest he uses in his charts. I'm not saying he should change...I don't think 6% is unreasonable but I do think it's actually conservative and thinking your investments may grow annually 8-10% for the next 10-20 years isn't quite as looney as I think some suggest or think.

              Me, I'm going to stick to 6%. I'm waiting for the prolonged bear to whack my plan and put me back in my place and show me that, for instance, in 2024 (not a prediction) due to the prolonged bear market, instead of being ahead of where I said I'd be back when I made the plan in 2017, I'm....right where I said I'd be in 2024. Which should be good enough for me.
              Interesting that you say that, because I also use 6% for my calculations. I read a bit on Bogleheads and elsewhere to come up with my predicted return based on my 90/10 asset allocation, and that seemed the best. Not overly optimistic, but not pessimistic like some people out there saying 2% or whatever. The biggest danger to me would be calculating on too aggressive of a return. For me it would be much easier to stop working sooner, or have more money if my estimate is bearish, than to have to work longer or have less money if I choose a too optimistic return rate.

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              • #8
                I totally agree the biggest difference/danger is calculating too aggressive (or not aggressive enough, like 2%) a return. If you are making a plan to get to FI in 10-20 years and then coast on that money for 20-40 years after that point, the difference, whether you use 8% or 4% rather than 6%, in the final balance is going to be HUGE due to compounding of course.

                Sure we're not really far along in the journey but when I calculated our balances at the end of Q1 2020, so the low point, we were still ahead of what I projected our final Q4 2019 balance would be when I made the plan in 2017. All of this just makes me feel more and more secure in the careful planning I did. I wonder if it gives me a false sense of security? who knows.

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                • #9
                  Originally posted by JBME View Post

                  As a statistician, I'm a believer in reversion to the mean. But will the reversion take 5 years to get to? 10 years? 50? 100? who knows! And while it's been an amazing bull run, we also have the COVID bear. I assume my investments will grow 6% per year and I've been outpacing that a lot since 2017. 6% is what PoF uses in his great series comparing doctors and their income and savings, but 6% is the highest he uses in his charts. I'm not saying he should change...I don't think 6% is unreasonable but I do think it's actually conservative and thinking your investments may grow annually 8-10% for the next 10-20 years isn't quite as looney as I think some suggest or think.

                  Me, I'm going to stick to 6%. I'm waiting for the prolonged bear to whack my plan and put me back in my place and show me that, for instance, in 2024 (not a prediction) due to the prolonged bear market, instead of being ahead of where I said I'd be back when I made the plan in 2017, I'm....right where I said I'd be in 2024. Which should be good enough for me.
                  I like to be conservative, as I strongly believe it's better to oversave than undersave, especially if you're potentially leaving behind a lucrative career that can be very difficult to return to after a couple of years away from the profession.

                  It is important to note that I use 0% to 6% real returns in the 4 Physicians series -- that is, inflation-adjusted returns. So that top end at 6% is equal to 8% to 9% nominal returns with 2% to 3% inflation.

                  Cheers!
                  -PoF

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                  • #10
                    I am planning for worst case. 50 years life expectancy, 0-4% real returns.

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