FIRE Advice

[G]

In “retirement” I’m less worried about the drop in income than I am about the potential drop in quality in the dating market.

Well...I refuse to date someone at work again and the friends of folks at work is also a fraught situation.... Or even worse the friends of wives of folks at work. UGH!

[Dont_know_mind]

With sincere respect, you need help. I’m not sure it’s even the kind of help I provide.

No offence taken Johanna.

Did you mean I need help because I had a mid-life crisis where I wanted to give up medicine to be an underwear model ?

Or help with the irrational belief that I could (with a few bad mistakes) go back to zero?

I tend to think within most strengths is a weakness and often vice versus.

[jfoxcpacfp]

Or help with the irrational belief that I could (with a few bad mistakes) go back to zero?

This one. Fortunately, you recognize it for what it is!

You are very kind.

[wfpbFI]

I would greatly appreciate any and all advice on our current situation and path forward.

Two DDS couple with 3 young children
Current Income just over 1,000,000 annually
own practice and real estate together - (practice value ~1.5mil (fully paid off) building 1.5mil - owe 730K 10 year fixed at 3.5%)
own house outright valued at 1.8 mil
MCOL area with high property taxes
~500K in simple IRA, Roths from early days and $1.4mil in Vanguard brokerage (97% stocks currently) - $1.9mil total invested
only debt is the practice office building - student loans and two practice loans paid off

In 2020, we spent $80,000. This was low as we had a new construction house with minimal property taxes that we will pay this year and no vacations due to COVID. I would expect spending $120-140K after tax dollars would be plenty for us. We have about $50K in each kid's 529 account and will continue to contribute each year.

We hope to continue to save $500K minimum annually for the next few years.

The million dollar question is "When can we begin our exit?" Should we attempt to diversify into RE sooner rather the later? According to FIREcalc, 4 years from now, we should be good to go. $240K pre tax spending with our current savings rate has a 100% success rate for 60 more years of life after selling the practice and building.

We are upper 30's so would most likely find some sort of income producing side gig after all the kids are in full time school. Maybe real estate? We have read a lot on the topic but have yet to dive in mostly due to current extremely inflated home prices in our area and also not wanting to add more to our plate.

Four more years of work is doable for us if that's what it takes. We have considered adding a third DDS and lightening our current load sooner, but we can't decide if this will increase or decrease our headaches. In the past, adding employees/growing has been difficult and takes more of our time that we are willing to give right now with the three little ones. We would like to be laser focused on treating our current patients to the best of our ability and keeping our current staff happy while doing everything we can to contribute all of our extra income to retirement savings.

That being said, anything we can do to make the exit earlier, we would certainly consider. We feel it is a high stress, production based job that we would love to close the door on. We appreciate everything dentistry has given us and the financial freedom we have achieved earlier in life than most, but the ultimate goal is to be able to live the life we choose.

I'm not sure how much advice I can offer, but I am basically in your shoes a few years into the future. I too am a dentist (early 40s) with a high production office that I am "closing the door on". I have someone coming in with plans to buy me out (just under 1.5m) in the next few months if everything keeps progressing.

My net worth is a bit higher, but I don't own the building and won't have rental income from the new DDS. Our annually spending has been 100k plus or minus 5k the last five years (76k from Mar '20 - Mar '21 Covid year). When I've done my planning I make a chart with different spend levels of 100k, 120k, or 150k just to compare. For me, when I set "our number" goal I felt comfortable with 4.5-5m, well funded 529s (2 kids), and not counting the sale of the business. Which from a FIRE standpoint this may be extra cautious, who knows?

Sounds like you are at about 2m and another 4 years would put you over 4m (market dependent) with your savings rate. For me that would be enough, but it's a personal decision. There are also so many undiscussed variables here too.

More importantly I'm emotionally done with dentistry. I probably burned myself out the last couple years. There was a short time when I realized I reached FI that I thought "this is great, I can pick what I want to do and refer what I don't, schedule a day off now and then, not feel pressure to produce, etc", buy that didn't last long and I went back into working too hard, it seems that's how I'm built (in or out). When Covid forced us to close for 2+ months it turned out to be very eye opening for me from a non-finacial sense. I really enjoy spending time with my family, taking care of myself more, being outside daily, and living with less stress. More time at home to help my wife out around the house and with the kids made us both happier. Three months back after covid shutdown ended I told my DDS partner I'm going to sell and move on.

Some of the other responses here sound very similar to what the few people in my life that know my plans have said to me; "How could you give up such a good income? , Just cut back your hours. , It would be hard to go back to work again. , What if some thing happens? , What will you do after?" They are all good questions and you should probably be able to answer them at least to yourself. For me at least there are so many others things I'd rather be doing, and my wife is on board.

You have so many options and it sounds like you've done really well already. Good luck with your decisions, I hope you "live the life you choose".

[Fullhouse11]

With sincere respect, you need help. I’m not sure it’s even the kind of help I provide.

You are my favorite moderator.

[MidwestDDS]

I'm not sure how much advice I can offer, but I am basically in your shoes a few years into the future. I too am a dentist (early 40s) with a high production office that I am "closing the door on". I have someone coming in with plans to buy me out (just under 1.5m) in the next few months if everything keeps progressing.

My net worth is a bit higher, but I don't own the building and won't have rental income from the new DDS. Our annually spending has been 100k plus or minus 5k the last five years (76k from Mar '20 - Mar '21 Covid year). When I've done my planning I make a chart with different spend levels of 100k, 120k, or 150k just to compare. For me, when I set "our number" goal I felt comfortable with 4.5-5m, well funded 529s (2 kids), and not counting the sale of the business. Which from a FIRE standpoint this may be extra cautious, who knows?

Sounds like you are at about 2m and another 4 years would put you over 4m (market dependent) with your savings rate. For me that would be enough, but it's a personal decision. There are also so many undiscussed variables here too.

More importantly I'm emotionally done with dentistry. I probably burned myself out the last couple years. There was a short time when I realized I reached FI that I thought "this is great, I can pick what I want to do and refer what I don't, schedule a day off now and then, not feel pressure to produce, etc", buy that didn't last long and I went back into working too hard, it seems that's how I'm built (in or out). When Covid forced us to close for 2+ months it turned out to be very eye opening for me from a non-finacial sense. I really enjoy spending time with my family, taking care of myself more, being outside daily, and living with less stress. More time at home to help my wife out around the house and with the kids made us both happier. Three months back after covid shutdown ended I told my DDS partner I'm going to sell and move on.

Some of the other responses here sound very similar to what the few people in my life that know my plans have said to me; "How could you give up such a good income? , Just cut back your hours. , It would be hard to go back to work again. , What if some thing happens? , What will you do after?" They are all good questions and you should probably be able to answer them at least to yourself. For me at least there are so many others things I'd rather be doing, and my wife is on board.

You have so many options and it sounds like you've done really well already. Good luck with your decisions, I hope you "live the life you choose".

Thanks! This feels like validation of our thoughts. Do you have plans for after dentistry in regards to passive income? Or are you fine just knowing that you have saved enough? When talking with a select few trusted advisors, it always seems the response is "but you are so young - how will you know you have enough?" Our numbers goals are very much in line with yours. And good work to you! That is awesome especially considering a one dr family vs two.

And yes, my brain can never ever turn it off. I wholeheartedly believe it is what has made us successful but also is my (our) biggest detriment.

[wfpbFI]

Thanks! This feels like validation of our thoughts. Do you have plans for after dentistry in regards to passive income? Or are you fine just knowing that you have saved enough? When talking with a select few trusted advisors, it always seems the response is "but you are so young - how will you know you have enough?" Our numbers goals are very much in line with yours. And good work to you! That is awesome especially considering a one dr family vs two.

I don't have any special plans for passive income after I stop "working", I suppose I'm fine believing we've saved enough. I feel comfortable that our current expenses already constitute a really low withdraw rate. Many people seem to like owning realestate, but when the opportunities have arisen I've always asked myself is it worth more than Market returns while doing nothing (6% ish). But that is just me, and there does seem to be good investments in realestate when done right.

I spent so much time on the "do we have enough?" question that I almost don't care anymore. So many blogs and forums (uhhh other forums) going over this in different ways. I've run so many calculations with spreadsheets, TVM Calculations, online calculators, tax strategies, etc, that I'm at the point that I believe we'll just make it work.

I'll renew my license this August which keeps it active for the next 3 years. I don't plan or desire to go back, but this gives me an absolute worst case scenario fall back option in the beginning. I don't believe I'll have a hard time staying busy, but I'm sure most people say that too.

[doctorbone]

Is there a higher burnout rate in dentistry? It seems like a lot of dentists are really stressed out about their patients. My wife is a part time dentist but she stresses about her procedures (implants, extractions, and gum graft, etc). It really is a love/hate relationship. She loves dentistry in general but she hates the stress.

[Minnesconsin]

Is there a higher burnout rate in dentistry? It seems like a lot of dentists are really stressed out about their patients. My wife is a part time dentist but she stresses about her procedures (implants, extractions, and gum graft, etc). It really is a love/hate relationship. She loves dentistry in general but she hates the stress.

This. I go to bed thinking about my surgeries and I wake up early thinking about my surgeries. My senior partners seem to have advanced to a point that they no longer do this to themselves, but I am nowhere near that yet. It is this stress that gets me thinking about cutting back when I am eventually FI, even though I know I have a great job. Anyone have some pearls about how to effectively deal with this because I want to be FI, but I also want to work a full, meaningful career, without the heart attack at age 50.

[Eye3md]

wfpbFI, I like the way you think. When I’m at work, the stress catches up with me, and it makes your whole life more tense. Like you, I loved the closed down time of the pandemic. It’s amazing how chilled out I felt during that time. Nothing bothered me. I’ve got the money to be FI so I did not really worry about the impact on my practice.

What will you do about health insurance if you retire in your 40s?

[wfpbFI]

wfpbFI,

What will you do about health insurance if you retire in your 40s?

We'll just have to pay for health insurance privately, I do now already expect I run it through the business. However I include the cost in my yearly expenses for planning purposes.

We've been doing a high deductible HSA for a while now (just under 11k premium for family of 4 at my age, and roughly 2-3k of med expenses per year). I plan to continue to do the same in retirement
and to keep funding our HSA account, though in "retirement" I plan to use my HSA funds to cover expenses.

I am however trying to determine whether utilizing the ACA subsidy cliff or Maxing gains harvesting at low tax bracket makes more sense. We typically have about 60-70k in dividends from taxable, and the bulk of the funds from the practice sale will be going into some fixed asset, unfortunately also in taxable (only place to put it). We are kind of setting up an equity glide path with the sale money as it helps us feel a little more comfortable with today high market valuations. So I have a few decisions to make soon.

[Eye3md]

We'll just have to pay for health insurance privately, I do now already expect I run it through the business. However I include the cost in my yearly expenses for planning purposes.

We've been doing a high deductible HSA for a while now (just under 11k premium for family of 4 at my age, and roughly 2-3k of med expenses per year). I plan to continue to do the same in retirement
and to keep funding our HSA account, though in "retirement" I plan to use my HSA funds to cover expenses.

I am however trying to determine whether utilizing the ACA subsidy cliff or Maxing gains harvesting at low tax bracket makes more sense. We typically have about 60-70k in dividends from taxable, and the bulk of the funds from the practice sale will be going into some fixed asset, unfortunately also in taxable (only place to put it). We are kind of setting up an equity glide path with the sale money as it helps us feel a little more comfortable with today high market valuations. So I have a few decisions to make soon.

It's a lot to think about. Once I retire, I'll probably have close to 1.2-1.5M in real estate and surgery center assets to I'll get from my practice. At first, I was like "woohoo, this is awesome, another 1.5M to add to my retirement portfolio". But then, I realized "crud, I've gotta pay capital gains, or regular income tax, on these varied assets" and will not be getting 1.5M but a smaller portion of that

The health insurance dilemma is what bothers me the most. I'll probably use COBRA for the 18 months it is available to my family. After that, I'll look into the private and ACA marketplaces. With us having pre-existing conditions in the family, I worry about coverage.

[wheels]

You guys are crushing it! Nice work! I'm always envious of two doc incomes.
I'm in a similar situation as you and wfpbFI. Also I am dentist and mid 40's. I've been struggling with the work life balance for the past 6 years. I tried the associate option and failed three times. I think if you have the personality to deal with an associate and be able to just let go of some control, it’s a great option. I just have learned that is not me. I'm sure if I kept at it, I may find the right fit but the clock is ticking away. I have also tried cutting back on PPOs, raising fees to reduce workload and well we are just as busy. Collections have skyrocketed though. So now I am working away 5 days a week with patients.
Having an associate was loads of work to get them selected, onboarded, mentoring, monitoring quality, meeting regularly, dealing with staff issues, etc. Sure I got some time away with the family, but it certainly came from lots of work and stress. Not to mention several redo cases. I know my work life balance is way out of whack now, but from a work perspective, I am in a good groove. The staff are super happy to have just me to deal with, patients are happy, it’s just working really well. My wife is very keen on selling the business and moving on with a new phase of life. I agree, its time, we have plenty saved up, but it is still hard to walk away from this ridiculous income. We have spent so much energy to create this income stream and a great work environment, it is very hard to give it up. I will most likely sell in the next 6-12 months and plan to continue on as an associate 1-2 days per week. That sounds dreamy to just come in a few days a week, do the dentistry, and walk away at the end of the day. Not to mention still have some good income. Major downside is the loss of control, and perhaps this will be too much for me to deal with. If so, I'll be fine if I don't have a paycheck from dentistry.
If I wanted to remain a practice owner, I would probably bring in a really good consultant and just focus on really streamlining the business. Go completely out of network, raise fees, reduce work week to three 10 hour days, shed some patients.
When it comes down to it though, I really just want more time with my family and friends, enjoy new experiences, and to have time for the sports I love. I also feel the clock counting down on my body every day. I have unfinished business in athletics that I just can't do to the level I want in my 60's.
WfpbFI brought up a good point about considering taxes on your practice and building values. There will be a very big tax hit on the practice sale. I always consider my net worth with after tax dollars on these assets. I’ll plan to hold on to the practice building until I have another investment of equal quality and hopefully be able to do an exchange.
We already buy our own health insurance so we have a good idea for what to budget for in the future. Well within the budget thankfully.
I’ve dabbled in real estate as well with direct investing, syndications, funds, etc. It has all worked out pretty well, a few hiccups along the way. I may have been better off just putting it into index funds though.
I do struggle a bit with the one more year syndrome and thinking of some extravagant purchases like a nicer home, second home, nicer car, etc. Just a constant juggle between the value of your time and what brings happiness. Luckily I have a high baseline happiness and it doesn’t take much.
I’m happy to chat more about this if you want. Just message me. I could go on forever talking about all the pros and cons. Best of luck.

[Eye3md]

wheels, thank you for your input because its sure nice to see someone else having the same thought process, as myself, regarding missing the high income, when to retire, enjoying family, friends, and athletics while we are young, etc...

[jfoxcpacfp]

You are my favorite moderator.

You made my day (night) .