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  • Midwestpeds
    replied
    Originally posted by GIMD View Post

    I'm not sure where you get the 3% added profit from since if that was true, there would not be any discussion. The website you cited showed that a 100% equity portfolio compared to a 80/20% portfolio would give you an additional 0.5% gain per year over the past 50 years while in the worse 5-year period you may risk losing an additional 10%. 0.5% compounded annually is still significant over a long period of time so it's up to you to decide if it's worth the potential downside risk. I mentioned I-bonds because it makes alot of sense in this high inflation environment, but more importantly, I want to point out that you are almost completely tilted in equity and diversification may be beneficial for your portfolio whether it'd be in I-bonds, real estate, or other investments.
    Thanks for clarifying! i must have interpreted it incorrectly. Do you or anyone else here use firecalc.com ? i don't plan on retiring very early, but thinking around 55, and this definitely seems possible based on this calculator. If anyone has any thoughts on this calculator would be much appreciated. Thanks.

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  • Tim
    replied
    Originally posted by holeinone View Post
    First time poster. This thread is fascinating to watch. My wife and I are both in psychiatry and expecting individual incomes around 250k once we leave training next year. I hope we'll be in a similar position in about five years after student loans, getting into a house, and some gaps in earning to having 1-2 more kids. My question is - how does everyone calculate savings rate when there is a mix of pre-tax and post-tax contributions? We plan to max out 401k with 4% employer match then will be saving in backdoor Roth + post tax brokerages. For example, would we value ~50k of 401k+match contributions as equivalent to 50k saved into post tax accounts? Thanks
    See entry Main Forum Post tax. Just the amount deposited.
    BD Roth and taxable are both post tax.

    Regarding 20% retirement. Disagree to an extent with FLP. Mostly semantics. Most docs need a taxable, my take is this is should be a separate account.
    On top of that you will need to accumulate or spend money for all types of things and a prudent person will also accumulate wealth. I have no problem using a taxable for non-essentials. Cars, vacations, 2nd house, kids lumpy expenses, new roof, etc. You can even keep EFund invested once it’s big enough. Student loans and house down payment keep the balance down at the start, it is still wealth accumulation. There is room for additional savings in the 10% range.

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  • fatlittlepig
    replied
    At these high income levels the amount you spend shouldn’t necessarily increase in direct proportion to your income.

    Leave a comment:


  • Nysoz
    replied
    Originally posted by fatlittlepig View Post

    In my opinion someone making 400k should be saving more percentage wise than someone making 100k. Common sense.
    Sometimes we miss the forest for the trees. On an average physician salary, saving 20% sets someone up for success. It's just an easy guideline to say and a nice round number. Sure it's way easier to save a larger portion of your salary with higher pay. Average Americans making $60-100k are lucky to save 10% of their salary.

    $200k salary saving $40k a year or $3333 a month. Do that for 30 years and average 7% in the market gets you to $3.8M.

    $400k salary saving $80k a year or $6666 a month gets you to $3.3M in 20 years, $7.5M in 30 years

    Once someone pays their future selves that 20%, they can spend the rest on whatever they want. Pay off loans, save more to reach FI sooner, or *gasp* spend it to enjoy life.

    My wife's family is with us and her dad is a retired pharmacist that worked for the VA for 30 years. 2 years into retirement, he's had an MI and a stroke. We were walking to the beach and he's very unsteady on his feet and can't stand in ankle deep water without almost falling over. So yes, saving money for retirement is super important, but you have to enjoy life while you can before you can't.

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  • JBME
    replied
    Originally posted by holeinone View Post
    First time poster. This thread is fascinating to watch. My wife and I are both in psychiatry and expecting individual incomes around 250k once we leave training next year. I hope we'll be in a similar position in about five years after student loans, getting into a house, and some gaps in earning to having 1-2 more kids. My question is - how does everyone calculate savings rate when there is a mix of pre-tax and post-tax contributions? We plan to max out 401k with 4% employer match then will be saving in backdoor Roth + post tax brokerages. For example, would we value ~50k of 401k+match contributions as equivalent to 50k saved into post tax accounts? Thanks
    roth dollars are more valuable than pre-tax dollars for sure. Tax diversification (pre-tax, tax-free, sometimes-tax (i.e. capital gains tax)) but the forum rightly tries to keep this simple. 20% of gross goes to retirement. Include match in the denominator and the numerator.

    So for you, you make $500k gross. You get a 4% match so that's $20k total. So total comp now is $520k. You need to save 20% of that, so $104k. You each max out a 401k ($41k) plus you get your match ($20k) plus your backdoor Roth ($12k). Assuming you don't have access to any other retirement accounts like 457, 401a, or the megabackdoor Roth within either of your employer 401ks, you need to save $31k each year in taxable to get to $104k. Only 12% of that will be tax-free, 30% will be capital gains, and so 58% will be pre-tax and uncle sam does own some of that 58%.

    But even so, if you do this 20% thing, you should be financially independent in 10-15 years. It seems like a long journey but I've been on here since 2017 plugging away. We weren't starting fresh then...had $300k save for retirement then. It was $1.3m at the end of 2022 just 5 years later. Had just turned 40 years old and plan to still work at least for 10-15 more years

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  • Sigrid
    replied
    Originally posted by fatlittlepig View Post

    In my opinion someone making 400k should be saving more percentage wise than someone making 100k. Common sense.
    So you do disagree with the guideline? You think the percentage should scale with income, rather than being a flat rate? Can you explain your reasoning?

    I'm not trying to be contrary, I'm trying to figure out if you and I have a fundamental philosophical difference or if there's something I'm missing.

    Leave a comment:


  • GIMD
    replied
    Originally posted by Midwestpeds View Post
    Agree that on the time line estimates by historical data. However, I have never been able to understand why one would choose an 80/20 portfolio over a 100 stock portfolio, since the 100% may give you about 3% more growth if you look at long 50 year data and even in the worst year the 100% stock will be down by only 10% when compared to 80/20. The odds would be in my favor if I choose the 100% stock, if I don’t sell low and in the worst case scenario I would only come by 10% below on a given year when compared to 80/20 but profit by a 3% more compound interest rate. ( https://www.wealthmeta.com/calculato...ion-calculator). Personally I feel that the bond allocation sort of makes you feel better with not good odds of maximized benefit.
    I'm not sure where you get the 3% added profit from since if that was true, there would not be any discussion. The website you cited showed that a 100% equity portfolio compared to a 80/20% portfolio would give you an additional 0.5% gain per year over the past 50 years while in the worse 5-year period you may risk losing an additional 10%. 0.5% compounded annually is still significant over a long period of time so it's up to you to decide if it's worth the potential downside risk. I mentioned I-bonds because it makes alot of sense in this high inflation environment, but more importantly, I want to point out that you are almost completely tilted in equity and diversification may be beneficial for your portfolio whether it'd be in I-bonds, real estate, or other investments.

    Leave a comment:


  • fatlittlepig
    replied
    Originally posted by Sigrid View Post

    Genuine question - do you disagree with the oft-quoted "20% of gross" guideline? If so, why?
    In my opinion someone making 400k should be saving more percentage wise than someone making 100k. Common sense.

    Leave a comment:


  • CordMcNally
    replied
    Originally posted by holeinone View Post
    First time poster. This thread is fascinating to watch. My wife and I are both in psychiatry and expecting individual incomes around 250k once we leave training next year. I hope we'll be in a similar position in about five years after student loans, getting into a house, and some gaps in earning to having 1-2 more kids. My question is - how does everyone calculate savings rate when there is a mix of pre-tax and post-tax contributions? We plan to max out 401k with 4% employer match then will be saving in backdoor Roth + post tax brokerages. For example, would we value ~50k of 401k+match contributions as equivalent to 50k saved into post tax accounts? Thanks
    Your savings rate is amount saved/invested divided by total compensation. Your total compensation should included your employee matches.

    Leave a comment:


  • Sigrid
    replied
    Originally posted by fatlittlepig View Post
    I'm just saying that if I were in his position, I would feel behind (but that's just me). If I were him, I would live off half and save/invest the other (at least until he had a much larger nest egg.) He seems to be a smart guy, he'll figure it out.
    Genuine question - do you disagree with the oft-quoted "20% of gross" guideline? If so, why?

    Leave a comment:


  • holeinone
    replied
    First time poster. This thread is fascinating to watch. My wife and I are both in psychiatry and expecting individual incomes around 250k once we leave training next year. I hope we'll be in a similar position in about five years after student loans, getting into a house, and some gaps in earning to having 1-2 more kids. My question is - how does everyone calculate savings rate when there is a mix of pre-tax and post-tax contributions? We plan to max out 401k with 4% employer match then will be saving in backdoor Roth + post tax brokerages. For example, would we value ~50k of 401k+match contributions as equivalent to 50k saved into post tax accounts? Thanks

    Leave a comment:


  • Nysoz
    replied
    For the new members and lurkers here, it's also good to realize we're a forum of financial minded physician nerds. We, as a whole, represent the top 1-5% of all physicians in savings and net worth.

    Comparing numbers here may seem like you're behind, but instead view it as where you could be. Compared to the average, you're doing well by just being here, taking an interest in your finances, and (hopefully) willing to take constructive criticism (which is sometimes blunt). So feel free to ask questions for clarification and education. Don't take criticism/suggestions personally and realize we try to mean well with posts. Also realize that personal finance is personal and not all financial plans are a one size fits all.

    Leave a comment:


  • Midwestpeds
    replied
    Originally posted by Dogtor View Post
    FWIW we have very similar stats, although my husband is only 33 and I am 34. We also only began really saving significantly in the past few years despite being 9 years out of school (internship, very low paying first few jobs, paid down 180k in student loan debt and bought a house), also have 280 in retirement, and received a similar mixed bag of reviews.

    I’m new here too and also don’t really feel like I know what I’m doing, but your numbers seem reasonable to me with the possible exception of the 529s. We have three kids and are contributing 400/kid/month. No state benefits since we are in TX. Planning on 150K per kid by the time they go to college, although we have heavily pushed 529 donations with family for all birthdays and holidays so far (NY makes this easy) so we may stop contributing if we hit 150K early.
    thanks, makes me feel better to know where I stand. The 529 has been an interesting discussion. Based on my contribution and current saving I expect to have about 200k for each kid. Based on returns of 6% capital gains tax of about 15%, I would save about 22,500$ in taxes if I use 529. Definitely a good chunk of change. My state tax benefits would be on top of this

    Leave a comment:


  • Midwestpeds
    replied
    Originally posted by GIMD View Post

    Looking back at the US market history across any 30-year timeline, I think what you said would be true; a 100% equity portfolio will have higher returns than let's say a 80/20 portfolio. However, if you pick any 20-year timeline in history, I'm not sure this would be true. There are examples of stagnation in other countries like Japan that went through 3 decades of negative real return. It also depends on your risk appetite. With an aggressive portfolio, at some point in your investing career, you will experience a 50% drop in market value like what happened during the financial crisis so you will have to be ok with that and not panic sell. That would be too much for me to stomach but you may be different.
    Agree that on the time line estimates by historical data. However, I have never been able to understand why one would choose an 80/20 portfolio over a 100 stock portfolio, since the 100% may give you about 3% more growth if you look at long 50 year data and even in the worst year the 100% stock will be down by only 10% when compared to 80/20. The odds would be in my favor if I choose the 100% stock, if I don’t sell low and in the worst case scenario I would only come by 10% below on a given year when compared to 80/20 but profit by a 3% more compound interest rate. ( https://www.wealthmeta.com/calculato...ion-calculator). Personally I feel that the bond allocation sort of makes you feel better with not good odds of maximized benefit.

    Leave a comment:


  • Dogtor
    replied
    FWIW we have very similar stats, although my husband is only 33 and I am 34. We also only began really saving significantly in the past few years despite being 9 years out of school (internship, very low paying first few jobs, paid down 180k in student loan debt and bought a house), also have 280 in retirement, and received a similar mixed bag of reviews.

    I’m new here too and also don’t really feel like I know what I’m doing, but your numbers seem reasonable to me with the possible exception of the 529s. We have three kids and are contributing 400/kid/month. No state benefits since we are in TX. Planning on 150K per kid by the time they go to college, although we have heavily pushed 529 donations with family for all birthdays and holidays so far (NY makes this easy) so we may stop contributing if we hit 150K early.

    Leave a comment:

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