Physician FIRE: How the FIRE Movement Affects Doctors’ Careers

What is Physician FIRE?

The Financial Independence/ Retire Early (FIRE) movement has gained a lot of popularity in recent years. For those pursuing physician FIRE, it involves aggressive budgeting and saving in one’s peak earning years to be able to retire early, usually in the 40s or 50s, sometimes even in one’s 30s. Achieving financial independence makes people less tied to an employer or paycheck and provides more options in one’s career and life. 

Why is FIRE Important for Doctors? 

• Financial advantages: On the face of it, doctors and physicians have a lot of financial advantages. Medicine is a high paying career and primary care physicians earn an average of at least $250K with some specialities such as cardiology, plastic surgery earning more than half a million. So you’d think it would be easy for doctors to achieve financial retirement pretty easily, right? 

However, physicians face some unique challenges when it comes to financial independence. 

• Late career start: Doctors typically start their careers in their late 20s or early 30s, which can be a challenge for MD FIRE goals compared to  other professions. 
• Debt: Moreover, after about 8-10 years of college and medical school, medical professionals graduate with huge student loans .
• Lifestyle creep: Doctors can also suffer from the problem of lifestyle creep, which can derail a physician FIRE plan. As you start making a higher income after finishing your medical education and residency, it can be tempting to acquire a more expensive lifestyle that matches one’s perceived status as a doctor. And beware of the doctor car syndrome!

Given all these challenges, doctors have to be intentional about how they achieve financial independence. 

The 8-Step Path to Achieving FIRE for Doctors and Physicians

1.Think About the Lifestyle You Want

• Current lifestyle: You need to think about the kind of lifestyle you want now. Are you okay with making the tradeoff to live super frugally for a FIRE MD path so you can achieve financial independence early? Having a more luxurious lifestyle too soon can lead to the ‘golden handcuff’ syndrome.
• Retirement lifestyle: What kind of lifestyle might you want in retirement? Would you like to live in some comfort or even extravagance? In which case, you might plan for a Chubby FIRE or Fat FIRE retirement. On the other hand, if you are willing to live very frugally both before and after retirement so that you can retire early, you could try Lean FIRE. 

2.Evaluate Your Goals

What are your goals that you want to plan for? Goals could include home buying, putting kids through college, travel, remodeling your home and so on. Be clear about the goals that are really important and the ones you can trade off. You may have to make some hard decisions about whether you want to focus on goals such as home buying or putting kids through college and trade these goals off against the desire for early retirement. 

3.Crunch the Numbers With Planwell

Now run the numbers to figure out your FIRE number and how quickly you can retire or achieve financial independence.

You can use Planwell’s app to input your financial details and goals and get an instant financial plan for FIRE.

Here are some scenarios that you can run on Planwell

• Let us say that you are 33, and are earning $280,000 and have monthly expenses of $8000 or $96,000 per year. You have a student loan balance of $50K at 5% interest rate. Plug in your income, expenses, debt situation and % of your current lifestyle that you would like to maintain in retirement into Planwell. You can input your student loan amount as well. 
  • It turns out that you may be able to achieve financial independence at age 54. 
• Now let us say you want to buy a home worth $500,000. 
  • In this scenario, you may be able to achieve financial independence at age 62. You have to decide whether you would like an earlier retirement age of 54 or buy that home next year. 

4.Pay off debt vs invest

The average doctor graduates with $200,000 in medical school debt. Before you get to early retirement, you’d want to make sure that your student loans are all paid off, so that you do not have to worry about debt in retirement.

5.Manage Expenses Wisely

Doctors make a good income; therefore expenses are key to financial independence. Avoid being a victim of the “high income, low net worth” syndrome. The key is to spend money on things that are of interest to you, while being frugal in areas that do not matter so much. For example, if you are not a car enthusiast, it is best to avoid buying an expensive car, just because doctors are expected to drive expensive cars. 

6.Investing

Adopt a disciplined savings and investing approach - essential for those on the Physician FIRE track - by investing regularly through a dollar cost investing strategy. You might consider the Boglehead investing approach, and follow a low cost index fund strategy that emphasizes tax efficiency and low fees while building a diversified portfolio.

7.Consider having a physician side-gig

You can supplement your income by pursuing a side hustle or gig that leverages your medical expertise. If you have an entrepreneurial bent of mind, you can consider founding or working for healthcare startups. You can also do medical surveys or consulting or be a medical expert witness. A lot of doctors also invest in real estate for deriving passive income and growing their net worth through real estate equity. 

8.Think About What type of FIRE You Want

Financial independence comes in many flavors, and there’s no one size fits all. Think about what type of lifestyle you want in retirement and in the present and plan accordingly.

• Standard FIRE: The standard FIRE approach emphasizes early retirement with a frugal lifestyle but leaves room for spending money on things you really care about, such as hobbies, kids or travel. The goal is to be very mindful and intentional about how you spend your money..
• Lean FIRE: is the ultimate minimalist financial independence approach. It emphasizes very high frugality, a minimalist lifestyle and prioritizes financial independence over any kind of spending.  The primary goal is retiring early above all else.
• Barista FIRE: ‘Barista’ refers to working a part-time job in retirement to retire earlier with a lower net worth than a standard FIRE. The term ‘Barista’ is used to denote a part-time job away from the career rat race - such as a barista in a coffee shop. Barista FIRE requires you to accumulate a lower net worth to be able to retire, since you would have a part time job in retirement and perhaps even health insurance.
• Coast FIRE: The Coast FIRE approach focuses on saving aggressively to achieve a high net worth earlier in your career, and then working on a less stressful job or outside the career rat race until the standard retirement age of 65. You would still retire at the standard age, say 65. This way, you can work on a job you are passionate about, but that is a lesser paying job after you’ve accumulated your net worth.
• Fat FIRE: “The Fat FIRE approach involves working very hard early in your career to save up a fat nest egg, retire early and enjoy a very affluent lifestyle in retirement.“

Is It Desirable for Doctors to Retire Early?

There is a key philosophical question that we have to consider: Is it good for society if doctors were to retire early and stop practising medicine?

The reality is that not everyone wants to retire early. Many doctors find their careers fulfilling and would love to continue serving patients. However, there are benefits to focusing on FIRE, even if doctors end up not retiring and continue serving patients.

Financial independence

Even if one does not plan to retire early, it is great to achieve financial independence and know that you are not going to be entirely dependent on any stressful job. Achieving financial independence minimizes worrying and provides peace of mind, with the ability to weather the ups and downs of the economy. You will have ample money set aside for emergencies or any curveballs that life throws at you. 

Money discipline

By being oriented around the “financial independence” goal, you will automatically adopt a lifestyle that enforces financial discipline, including sensible budgeting, debt management and investing. Financial discipline is also about getting rich slowly and consistently while eschewing ‘get rich quick’ and short-term thinking.  

Conclusion

Physicians have the potential to achieve financial independence early, despite challenges such as a relatively late career start and high student loans. With the right plan, MD FIRE or Doctor FIRE goals become achievable without compromising patient care or personal well-being. Planning for FIRE involves careful budgeting and planning along with disciplined and consistent investing in low fees options. 

Planwell can help you plan for financial independence with our fully automated financial planning tool. Find out the earliest age at which you can retire and get your personalized financial plan. Make tradeoffs between early retirement and other goals such as home buying or kids’ college. 

• What is Coast FIRE? Find out how to Coast Your Way to Financial Independence.
• What is barista FIRE? Retire early and work part-time.
• Lean FIRE: The frugal way to achieve financial independence and retire early. 
• How to retire early and achieve financial independence: Tips to retire early and achieve FIRE (Financial Independence, Retire Early)
• How to build a personal financial plan: Before you make a home purchase, make sure to build your personalized financial plan with our 10 step guide. 
• How to Use AI Budget Calculators and Tools to Plan Your Finances: Take advantage of our free FIRE calculator  to plan your finances more effectively.
• 5 Common Money Mistakes to Avoid: Learn about the pitfalls that could derail your early retirement plans.