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help with saving for retirement; feel like i'm very behind!

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  • help with saving for retirement; feel like i'm very behind!

    Good morning,

    i'm hoping i can get some guidance here; even if it is simply telling me to see a financial advisor

    i'm 38 y/o dentist. Married. 4 kids. Been practicing for 10 years and unfortunately the first 8 years or so my only focus was on paying off debt. I graduated with $320k in student loans and immediately purchased a practice for around $800k. As of last year i'm officially done with both loans.

    current income fluctuates; but i've build up the practice to where i am in cruise control.

    income last two years is right over $1 million

    debt:
    about $450k left on mortgage (15 year 2.75%). House is worth about $1.4 million
    car loan $74k @ 0.9%

    the building i'm in I will be purchasing in two years for $350k; already have a contract signed

    about two years ago i started panicking that i hadn't saved much for retirement so at that point i started an office 401k plan and started putting money into crypto and a fidelity account to play with stocks. current savings are:

    401k : ~$100k
    Fidelity brokerage account: $290k
    crypto: $100k (fluctuates a lot lol)

    I have investment accounts for all 4 kids (529 accounts i think they're called) which i put $500/month per child in. I also have a prepaid college plan for each kid

    my BIGGEST issue is my wife. she was with me when i was broke and supported me through dental school. She now spends about 10-15k/month on herself. I've talked to her about it multiple times and i think shes finally on board

    what do you guys advice for me to do to start saving aggressively for retirement? i dont see myself doing this for more than another 10-15 years max. Would love to be out sooner but doesn't seem very likely? I'm pretty clueless as to where to start saving.. i've been told IRAs are a good option but that the max is 6500? i keep putting money into the market and i see that money tanking like crazy (dont even get me started on crypto..)

    keep just putting money into the market? any guidance would be appreciated! thanks

  • #2
    You need to work backwards. "Pay yourself first" is the term usually used.

    You're still pretty young, but with a slightly later start you probably want to be saving near 30% of your gross. This is especially true if you and your wife plan on maintaining your current lifestyle in retirement.

    You are obviously limited in the amount you can contribute to your tax advantaged accounts (401k and 403b). If it's available an HSA is another option for another small amount.

    Ultimately, you're going to have to rely heavily on your taxable account. You need to set up an automatic monthly contribution into your brokerage account. Don't worry that the market is down, it just means you're buying at a discount.

    You need to make it so that all of your financial liabilities (mortgage, loans, bills, etc) and goals (whatever % you determine to contribute to retirement) come out first. Whatever is left is the money you can spend. At your current salary you should still have a sizeable chunk of money to play with even after allocating towards all that stuff.

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    • #3
      You said your biggest issue is with your wife. You need to work on that first.

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      • #4
        Agree with 30% to retirement each year. Max out your 401k. You can do backdoor roths for you and your wife. The rest goes to taxable. Stop investing in crypto, that's for fun, not for your future. Invest in index funds and don't look at the balance for a while.

        In 5 years you'll really thank yourself for doing all this.

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        • #5
          You make a ton of money with minimal debt. You can 100% make this work.

          You need to stop screwing around with crypto and put 200-300k into a total stock market fund +/- small value tilt. You make enough that a good fee-only advisor would be a rounding error and probably helpful, both financially and as a mediator for you and your wife.

          What in the world is your wife spending 10-15k/mo on recurrently? I don’t even really understand that. That’s a lot more than we spend in a month on everything. I mean, it’s fine to treat yourself sometime - especially your spouse who supported you - and, honestly, that amount probably wouldn’t even sink you with your income, but common!??

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          • #6
            Immediately start paying yourself first. Draw your wife in as well. You both need to be on the same page. She needs to be paying herself first as well.
            Annual plan:
            Gross $1m
            -Taxes
            -Retirement (30%)
            - future wealth (life style in retirement)
            =Spending (current spending)

            The choice on spending is spending currently or later. The problem is future wealth vs current spending. The goal here is to smooth the spending currently so you won’t have to keep making $1m to support life style. It is in both of your best interest to agree on the spend now vs later.
            With $1m gross, no need to disagree.

            •Off the cuff, use Backdoor roths IRA and a taxable.
            •I would suggest all those debt payments be added to the savings bucket.

            Wealth accumulation rate is retirement + future wealth savings. That % will determine when you can retire with an even spend amount,

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            • #7
              it's not like you've been doing nothing for the past 10 years. You have car debt and you need to get rid of that and not do it again. But you paid down a huge student loan burden and a practice loan. That increases your net worth a lot.

              Going forward, I agree with others that you need to be saving ~30% for retirement. Stop 529 investing for now and prioritize retirement instead. You can always use retirement money to pay for college way down the road.

              You said your wife is on board. That spending is an issue but honestly the crypto investing is just as much an issue to me. You need to read this: https://www.whitecoatinvestor.com/15...er-than-yours/

              You need to pick a reasonable AA with 3-6 funds to invest in. Total market, total bond, and total international to start. No crypto. This is a marathon, not a sprint. Priorities:

              1) Make a plan
              2) Make sure your wife is spending less (but not $0 and if she's really been spending as much as you said you need to give her a long runway so she doesn't resent you....try to go to $3-5k/mo for 3-6 months and then down to $1-$3k/month for 3-6 months and forward.
              3) 30% to retirement. Stop 529s. Pay off the car
              4) If you can save more than 30% after doing 1, 2, and 3 for a year, go for it. Or restart 529 contributions

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              • #8
                I've been going back to basics recently. Here are two links that I think would help you a lot in terms of making a plan and then sticking with it. Both quick reads, then plenty there to go back and review slowly.

                You Need an Investor Policy Statement | White Coat Investor

                How to Write Finance & Investment Personal Statement [Examples] | White Coat Investor

                By the way, I agree with JBME. You have been doing really well with the debt paydown. Now you have amazing cash flow. And you own a huge asset in the practice. Set some priorities and you will be on a great path.

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                • #9
                  It is a lot harder to make a million dollars a year than to save money for retirement.

                  Take the first $25,000 a month and put it somewhere untouchable to yourself and your wife, Pick TMI or what ever, that is not the problem Max out all retirement accounts first and then rest to a brokerage account

                  Fund the 529s

                  Next are the mortgage bills and car.

                  What is left, that's what your wife gets to spend, while you are working.

                  If you can't figure that out, pay yourself a lot less, leave your money in your business account and intermittently bonus to the brokerage account. The out of sight out of mind method.

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                  • #10
                    Curious , is this $1mill by yourself? Or do you employ other dentists. Bread and butter dentistry or more specialized?

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                    • #11
                      Originally posted by CordMcNally View Post
                      You said your biggest issue is with your wife. You need to work on that first.
                      Philosophically, for someone who has birthed children for a spouse, what are they materially entitled too? That's the feel good rationalization I go to when my wife buys a third pair of the same boots. Or they look the same to me. That and the fact that she earns more than me.

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                      • #12
                        thanks for replies

                        my wifes issue is that she feels she was bottled up and sacrificed so much for this family (which she has and i agree with her) that she is now letting loose. I dont mind it, but i think we need to get it under control. Funny thing is she has bought a few hermes purses recently which are actually worth a lot more than what she paid.. so she keeps reminding me that her investments are doing much better than mine!


                        i like the idea of taking the first $25k and putting it directly into my brokerage account. I will probably break it up into weekly $5k deposits for now.

                        i think the key is to have my wife (and myself) write down every penny we spend so we see where it is going.

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                        • #13
                          Part of the problem is that you ultimately need to save about 25-30x of what you spend each year (more for early retirement). If you and your wife have grown accustomed to spending a lot and you can’t cut it back down then the amount you need to save for retirement is really high.

                          I’ve heard YNAB is a good budgeting tool.

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                          • #14
                            A young dentist or physician straight out of training needs to set aside at least 20% of gross income towards retirement. This presumes a typical age 60 or 65 retirement. Student loans, 529s, car payments, mortgage, etc. are over and above this 20% towards retirement.

                            You haven’t been making $1 million per year for each of the last ten years. Likewise, your rent and your practice acquisition loan are business expenses. Your gross income is after making payroll for your staff, rent, utilities, equipment and practice acquisition loans, etc. So don’t beat yourself up if you haven’t saved $200K per year times ten years or a full $2 million since graduation.

                            That said, you’re a decade out of training and you say you only want to work another 10 or 15 years. That means you’re going to need to save considerably more than 20% of gross to retire in only 10-15 years with the same lifestyle you currently enjoy.

                            Selling you practice is not your retirement plan. Selling the building where your practice is located is not your retirement plan. It might be gravy on top, but you need to get a nest egg worth at least 25 times planned annual expenditures in retirement. Right now your wife is spending $10-15K per month. That means you would need $3M to $4.5M to sustain her current discretionary spending, not to mention food, lodging, medical expenses, taxes, transportation, etc. You’re no where close to that number.

                            This is a fixable problem. First, you and your wife need to sit down and seriously discuss how much you want to spend per year when you stop working. Multiply that number by 25 (or 30, or 33 depending on your safe withdrawal rate). Back out how much you need to save per year, over how many years, at what realistic risk adjusted rate of return, to hit that number. Likely that current, and perhaps future, monthly spending will have to come down. The saving rate almost certainly will need to increase substantially.

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                            • #15
                              If you want to retire in 10-15 years and live the same, you should have about $33 million saved up , assuming a 3% withdraw rate

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