Retired from Medicine at 37: The Finances Behind Her Decision
Today’s article is a guest post from Valerie A. Jones, MD, a way early retiree who left behind a medical career at the ripe young age of 37. To learn why check out her post at OB Doctor Mom entitled Retired at 37: Breaking Up With a Career in Medicine. To learn about the finances that allowed her to do this, read on.
I am a 37-Year Old Retired OB/Gyn
Usually, when I tell people I retired from my physician career at age 37, they respond with shock. Some look at me like I am the most foolish person they have ever seen. Some with disdain (“all that medical education wasted”). Some doubt that my future will be secure without having a steady paycheck.
However, as it is only my close friends/family I discuss this with, they mostly respond with sincere happiness as they understand this is a life choice I made after much deliberation and know that it is the right decision for me and my family in pursuit of the life I want to lead. There are many factors that led to this decision and I have written about some of it in previous articles. However, this article focuses on the financial aspect.
Finances can be a tough subject for physicians. We are notorious for being poor money managers. Most of us don’t have the time or desire to commit to understanding personal finances in detail. Who has time to learn about 401(k)s, the stock market, and budgets while learning about anatomy, pharmacology, and immunology while in medical school? Or while working 80+ hours per week in residency?
Besides, we won’t be earning an attending physician paycheck for years. By the time we earn a real paycheck, we are so exhausted by the delayed gratification of our twenties that we want to splurge a little, right?
Obtaining Financial Independence
I don’t proclaim to be an expert by any stretch. However, I found the freedom that comes with financial independence to be life changing and something that should be attainable for all physicians.
I am not here to encourage everyone to retire in their thirties from medicine but to gain financial freedom. I hope you can continue practicing medicine into your sixties (if this is what you want), but to not feel trapped in a situation when encountering unsustainable job structure, illness, divorce, etc.
Of course, finances did factor into my decision to retire. I have three kids and wouldn’t stop working if I needed a steady paycheck to support them. Luckily, some decisions along the way helped me not to rely on this paycheck moving forward. here are many different paths to financial independence. Here are some steps that led me down my path to financial freedom and ability to retire early:
1. Kept medical school loans to a minimum
Yes, you do have some control over this. Most people outside of medicine are shocked to find out that medical students are essentially able to get loans for as much as they want. You can determine your own “living expenses” and someone will be ready and willing to give you this loan as medical students are typically good about ultimately paying it back (although years down the road and with a ton of interest).
I was lucky my parents paid for my undergraduate studies but medical school was on my own. I probably started my frugal mentality at this time. My husband, who I was dating at the start of medical school, would often make fun of me for my bare cabinets with canned green beans and ramen noodles as my main staples.
Of note, he also had loans from undergraduate school that we had to factor in as well. Don’t worry, we didn’t eat like that forever!
2. Started paying off loans immediately after forbearance ended
We paid the maximum amount we could, not the minimum required.
3. Lived well below our means
We continued living in my residency townhouse for a while, even after accepting an attending job.
4. Looked for job with highest earning guaranteed earnings
Many positions I was offered entailed low salary the first few years and then the potential for partnership and a jump in salary but not until 4-6 years down the road. This was downright scary to me.
What if I didn’t like the job? What if they never actually promote to partner?
The writing was on the wall for private practice in ob/gyn with soaring malpractice premiums and it seemed unsustainable to me for most of these private practices. I wasn’t willing to take the chance. I had also heard that many people may leave their first job after two years.
So, I figured why not at least get a large salary those first two years while I get a better feel for the landscape? Luckily, my job did not have a non-compete agreement, so I knew I would have options if I decided to leave (I actually stayed with my first job as I was initially very happy with my choice out of residency for about 5 years).
5. Maxed out yearly contributions to retirement vehicles
3(b) during residency, 401(k) with a new job (which also had a pension that vested after 5 years), and started a Roth IRA. I had to devote some time to learn about what all of these things are and why they are important!
My first child was born in residency, but I did not start a 529 at that time as wanted to maximize retirement account yearly contributions first. Once those were being maxed out, I started 529 for oldest child and then when subsequent children were born funded those too.
7. Lived off one income
I feel this one factor made the absolute most difference!! Certainly not all, but most of my colleagues are in a dual income household. We always lived off one income (mine) and paid off loans with the other. This always forced us to live within our means. This may be hard to accept initially as many physicians feel that the delayed gratification never ends, but trust me it’s worth it! I do have to admit, our one splurge was a nice vacation every year. “Work hard, play hard” is my motto and I probably wouldn’t have made it without those necessary times of respite to recharge. Travel is one of my passions.
8. Got Creative
For those who have a partner who does not have a career in medicine, there may be options opened for them since a physician job is very secure. You will always be able to find work as a physician and it is quite unlikely you would lose your job. In addition, health benefits are common with employed physician jobs and therefore you can take a big burden off your partner to worry about this.
This can free up some room for ingenuity with your partner if their job allows for different payment structures. Commission based jobs with a low salary and no health benefits may be unsustainable for someone supporting a family. However, if you use the idea of living off one person’s salary (your physician salary) and allow your partner to get creative it can really pay off.
Employers may jump at the opportunity for this type of pay structure which would have very little risk for them but could have huge potential upswing for the partner. We chose to take this risk. We couldn’t have done it without the stable physician salary/benefits component. It was possible my husband would make barely anything certain years or alternatively, make large sums depending on the work flow. Nothing was guaranteed to last and so any windfall that came from his work was immediately placed into debt repayment or kid’s college funds.
Financial Independence Changed Everything
When starting out of residency at my first attending job, I planned to continue to practice medicine until my sixties, cutting back on hours if needed, but I assumed my love for medicine would keep me wanting to work indefinitely. Several things changed my mindset, including financial independence.
Once I knew I didn’t “have” to work, I started to view my career a little differently. Maybe I wasn’t honest with myself previously with how the stresses of on call nights, sleep deprivation and increasing administrative workload were negatively impacting my life and health. It sometimes feels like you are on this treadmill that keeps going and you don’t have the time or energy to ever stop and think about what you are doing and if you are leading the life you envisioned for yourself.
Once financially independent, it became my choice whether or not to work. The frustrations of salaried work in ob-gyn, the negatively changing healthcare climate, and missing time with my young children was weighing on my mind. I wanted (needed) out for myself and my family.
However, I needed a push to get off that treadmill and realize what was going on. “Luckily” for me, I had a major health scare that also occurred at the same time that I reached financial independence. Decision made.
Now, the choice can be mine if I decide to ever return to medicine. I’ll never close that door completely, although I don’t see it in my future if you ask me now. There is so much out there I am still excited to explore.
[PoF: What do you think of Dr. Jones’ story? In a number of ways, her story parallels mine. Early retirement wasn’t a goal but became a rather enticing option once it appeared to be a genuine possibility.
While she has had some advantages that you may or may not have (financial help with school and a working spouse), that doesn’t mean you can’t do what she or I have done. It might take you a few years longer, but financial independence can be attained by age 45 or 50 for most physicians, and up to a decade earlier for others.
I want to thank Dr. Valerie A. Jones for responding to my request for this post and for detailing how she was able to put herself in this enviable position. Her original article explaining why she made the choice got my attention, but I still had questions. She did a great job answering them, don’t you think?]