First Year of Retirement with Physician on Fire – Podcast #204

Physician on Fire has been retired from medicine for a year and a half. Granted, the pandemic kind of screwed up a lot of his plans, but we can get an idea of what this early retirement life looks like. We discuss that loss of identity as a doctor and what he says he does for a living now. Does he miss work? Is he happier? What are they doing about health care? How will they leave wealth to their children? We also talk about the psychology of changing from the accumulation phase to the withdrawal phase and what his asset allocation is now as well as what it would be like to return to practicing medicine. Many think about an early retirement. This episode will give you a picture of what it could look like for you.

This podcast is sponsored by Bob Bhayani at drdisabilityquotes.com. He is an independent provider of disability insurance planning solutions to the medical community in every state and a long-time White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage to make sure it meets your needs or if you just haven’t gotten around to getting this critical insurance in place, contact Bob today by email [email protected] or by calling (973) 771-9100.

Of course, he’s referring to all the croupiers on Wall Street that take little cuts out of your portfolio all day long.

Are you a non-traditional med student and think you’ll never be free of those loans? Think again. This psychiatrist finished training at 50 years old and had her loans paid off 3.5 years later. She took the WCI advice to live like a resident to heart. She sees debt as a great evil that keeps people down and is now so relieved to have it gone. Tips for living like a resident can be found in this post.

Brought to you by Laurel Road. At Laurel Road, we’ve always been committed to serving the financial needs of doctors, and we’re taking that commitment to the next level. Laurel Road is a brand of KeyBank N.A. Member FDIC and Equal Housing Lender. NMLS # 399797

Leti and Kenji’s real estate course is open for enrollment. If you’re interested in direct real estate, meaning you want to go buy the properties yourself, or you want to become a real estate professional, transition out of medicine and into real estate, anything like that, this is the course for you. It’s on sale through April 4th. You can get information here. If you buy the course through our link you will also receive a signed copy of the Financial Bootcamp Book and the Physician Wellness and Financial Literacy Course – Park City for free.

Our guest this episode is Dr. Leif Dahleen of the Physician on Fire, and we took questions for this episode from our Facebook Groups. We recorded this right after we finished WCICon 2021, so we discuss our investments in bronze funds and answer some silly questions to start, like, who would win a 5k race or an arm wrestling match between us, before jumping into more serious questions.

Is less of his identity tied up in being a doctor now that he has stopped practicing medicine? He said it was a big part of his life but he didn’t have much of his identity wrapped up in it before so it was a fairly easy transition. They did move to a new town and, as they meet new people, one of the challenges is what to say when people ask him what he does. He tells them he runs a website.

How does the reality of retirement compare to the theory of it? The theory certainly didn’t include a pandemic that canceled all their travel plans, which included a cruise taking them through Hawaii, Guam, South Korea, Japan, and different parts of China. 

What about finances? This is the big worry people have when they retire and then the market tanks. Leif retired in August, and, come middle of March, the market tanked. How did that feel knowing that he had punched out of his career and his portfolio took a big hit?

Is Leif happier now that he has retired? He said he is better rested, less stressed, and life is good.

What is his asset allocation now that he has retired? He is still 70% stock, 20% real estate and alternatives and about 10% bonds/cash, same as he was before retirement. He has not had to dip into his retirement savings yet as he has the income from Physician on Fire. He did not think about doing a bond tent due to his earned income sources.

It’s a bad combination to be withdrawing from your portfolio at the same time it is falling in value.

People do struggle with this. Since Leif has earned income still coming in, he isn’t in the withdrawal phase yet.

This is a really hard issue for a lot of retirees. Our parents struggle with this. We help them with their portfolio, and they mostly live on a pension and social security, but that’s primarily because we can’t talk them into taking any money out of their portfolio. Every few months we are giving them a hard time saying if there’s anything that would make you happier, go spend some money on it. We tell them either fly first class or your heirs will. It’s hard to make that switch from saver to spender.

He is planning to leave a chunk of money to charity. They have a donor-advised fund that the boys will be the beneficiaries of the ability to gift from that. This is something we have spent a lot of time thinking about lately, how much do we want to leave to the kids? Warren Buffett’s philosophy was to leave enough that they can do anything they want, but not nothing. He didn’t actually put a dollar figure on that, but most of us can think about that and put a dollar figure that seems right for our situation on that. We suspect our kids are probably going to inherit a minority of our wealth, putting a whole bunch of it into a charitable foundation at death and maybe put our kids on a board of that foundation to distribute it. We are probably going to write up a will, trust, estate plan, etc., for them to get some money about 40, some money about 50, and the rest at 60.  Maybe even put requirements on what they have to do to get it. We want to balance ruling from the grave with not enabling bad habits. It is a little bit of a hard balance to do.

One listener asked if his wife would hire a financial advisor if he died. Leif said she reads everything that is published on his website and that includes the writings of all the WCI Network partners, so she has a pretty decent fund of knowledge right now.

One of the reasons we decided to simplify a little bit with our real estate holdings and some of our alternative investment holdings is for this reason. Our mutual fund portfolio is very simple. Here it is. This is where it’s all at, very straightforward. But you know what? If you have 25 different syndications all over the country, sending you K-1s, maybe you’re not doing your spouse a favor to leave all that behind. That is definitely one reason we prefer funds to investment properties, whether they’re syndicated or not. Imagine if your spouse isn’t really into direct real estate investing and you leave your spouse 12 properties. They might not appreciate that so much.

What is Leif’s family doing for health insurance? What tens of millions of Americans do, buying it through the ACA exchange, but with no subsidy.

This enables him to still fund an HSA. But maybe they need to raise HSA contribution limits to match the highest deductibles.

One listener asked for our thoughts on prepaid tuition plans versus 529s for kids’ college savings. Leif said,

Every one of those prepaid tuition plans is different. Sometimes if your kid goes out of state, all you get is the money you paid in. You don’t get any gains or interest applied to that at all. After 20 years can you imagine you put all this money in and then you get nothing out of it? You have to look really carefully at it. There are 10 or 15 529 plans that are all very good.

first year of retirementLeif always said he would hang on to his credentials, his medical license, and things he would need to jump right back into practicing medicine. But the longer you are out the more difficult it gets to return. After two years, getting covered for malpractice can be challenging, just having the skills and being fresh. But he has not had much of an inclination to go back, enjoying this newfound freedom quite a bit more.

One listener asked whether Leif ever considered international locums work as a transition to retirement, a potential way to incorporate slow travel while still working, international locums or maybe volunteer mission work.

One of the reasons I keep working in my practice is because what if I want to do mission work later? If I punch out and just do White Coat Investor stuff now, five years from now I’m going to be worthless as far as going back. It closes the door. I just hate closing doors. But I don’t know that it’s something I think I’m sure to do. I think it’s just something I might want to do. I just don’t know what the 55-year-old me is going to be like, or the 65-year-old me is going to be like. It’s hard to guess. And so, I keep that door open.

We hope you enjoyed this interview with Physician on Fire. If you are interested in FIRE, what encouragement would Leif give?

Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr. Jim Dahle.
Dr. Jim Dahle:
This is White Coat Investor podcast number 204 – First year out of medicine with Physician on FIRE.
Dr. Jim Dahle:

This podcast is sponsored by Bob Bhayani at drdisabilityquotes.com. He’s an independent provider of disability insurance planning solutions to the medical community in every state and a long-time White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies.
Dr. Jim Dahle:
If you need to review your disability insurance coverage or to get this critical insurance in place, contact Bob at drdisabilityquotes.com today. You can email him at [email protected] or by calling (973) 771-9100.
Dr. Jim Dahle:
So, this is great. We have just wrapped up. As we’re recording this, it’s March 6th and this isn’t going to run until April, but we’re excited to do it. And the reason why is because we’re just literally driving here. We just got here from WCI con 21. So, I have Leif Dahleen still in town with me sitting next to me. If you’re watching this on YouTube, you can see his awesome mug here next to me.
Dr. Jim Dahle:
But we’re actually recording this together in person, which is really fun. So welcome to the white coat investor podcast again.
Dr. Leif Dahleen:
Thank you, Jim. Happy to be back.
Dr. Jim Dahle:
Let’s share our quote of the day before we get into this too much. This one is from one of our favorites, Bill Bernstein, who said, “A portfolio is like a bar of soap. The more it’s handled, the less there is”. And of course, he’s referring to all the croupiers on Wall Street that take little cuts out of your portfolio all day long.
Dr. Jim Dahle:
So, thanks for what you do. It’s difficult work that you do. It’s hard work, and a lot of you are doing it on off hours, nights, weekends, holidays, through a pandemic, whatever it might be. So, if nobody’s thanked you today, let me be the first. Thanks for what you do.
Dr. Jim Dahle:
Special thank you to those of you who came to WCI con this year. We had a really great time. What’d you think of the virtual conference, Leif?
Dr. Leif Dahleen:
Well, it was so much more than a virtual conference. There was a lot of interaction. A little bit onsite, but everybody that was watching the talks was in the chat, in the Q&A, we got live questions, we were able to answer for them. It was really fun and I was really impressed with the whole production. It felt like we were on a television studio because essentially, we were. It was something.
Dr. Jim Dahle:
Yeah, it was pretty interesting. I mean, we had a director, we had three cameramen. We had somebody running the teleprompter, sound guy, video guy, makeup guy, you look really good getting your makeup on, by the way.
Dr. Leif Dahleen:
I got a lot of makeup, but I don’t know, Cindy needs to get some of that stuff. Yeah, I feel like lost without my anti-shine.
Dr. Jim Dahle:
We need some knockdown here. We’re going to have a real YouTube channel. We need some knockdown. So that’s your new job Cindy. But yeah, it was a really good time. Everything went off so flawlessly compared to last year when a pandemic started in the middle of the conference.
Dr. Leif Dahleen:
Yeah, it was nice to have 12 months of heads up on that this time.
Dr. Jim Dahle:
Yeah, for sure. And Chrislyn did a fantastic job planning it. I mean, that’s her whole job is to have that conference go flawlessly and she really knocked it out of the park. So, we’re very happy with how it went.

Dr. Jim Dahle:
If you missed it, it has been packaged up by the time you hear this, it will have been packaged up as an online course. I think we’re going to call it CFE 2021, and you can get like 57 hours of content in it. It’s going to be awesome. I can’t remember the price. It will be there on the page. Maybe it hasn’t even been set yet but…
Dr. Leif Dahleen:
If you pay in bronze coin.
Dr. Jim Dahle:
Yeah, if you pay in bronze coin, there’s a discount. So, we’ll have to explain the bronze coin for those who weren’t there, but it’s still good for the CME. So, you can use your CME funds to pay for it. It’s 17 hours of CME, I think it’s good for. Also, Dental CE. So, check that out. You can find that at whitecoatinvestor.com.
Dr. Jim Dahle:
Another course that’s being promoted right now, Zero to Freedom Through Cash Flowing Rentals. This is Leti and Kenji’s real estate course. If you’re interested in direct real estate, meaning you want to go buy the properties yourself, or you want to become a real estate professional, you want to transition out of medicine and to real estate, anything like that, this is the course for you. It’s on sale through April 4th. You can get information about that at whitecoatinvestor.com/rental. So, check that out if you’re interested in a pure real estate course.
Dr. Jim Dahle:
All right. So, bronze coins. Where did bronze come from?
Dr. Leif Dahleen:
This is no joke, right? I mean, it is, but it’s April Fool’s Day that this is going to be live, I believe. It was the game of telephone essentially. Someone asked a question about replacing the bond funds in your portfolio. And someone read that out loud to the person running the teleprompter, and it became bronze funds on the screen, which was then read by Adrian, our lovely host, who doesn’t have the same financial knowledge that you or I or Allan Roth, the guest that she was interviewing has, and the two of them went back and forth on bronze funds. Why would you want a bronze fund? But now we all want bronze funds and we’re putting together a deal. So, look for more on that in the coming up episode.

Dr. Jim Dahle:
Yeah. You can take a look at the YouTube video. If you haven’t seen it either. We’ll put it up on the YouTube channel of the little skit we did afterward. Just making fun of the moment. It was pretty funny, but that’s what you get I guess when you hire a host who doesn’t necessarily have a financial background. She did a fantastic job hosting the conference, but it was a little bit difficult, I think, to add live that moment. And Allan didn’t quite catch on what she was asking which made it really fun.
Dr. Leif Dahleen:
And it gave us something to joke about. Still beating that dead horse.
Dr. Jim Dahle:
At any rate, it’s great to have Leif here. Cindy posted a question in both of our Facebook groups, asking people what they want me to ask you during this podcast, what they want to hear from you. You’ve been now a year and a half retired from medicine.

Dr. Leif Dahleen:
Yes. August 12th was my last day of work in 2019.

Dr. Jim Dahle:
So, how’s it been? It’s been a year and a half now, granted the pandemic kind of screwed up a lot of your plans, but what are your thoughts a year and a half into this? What do you think?
Dr. Leif Dahleen:
Yeah, I always say that would I’d hang on to my credentials, my medical license and those things that I would need that I could jump right back into it, just in case, because then at one and a half, two-year mark, it starts to get to where it’s difficult to get back. Especially after two years, getting covered for malpractice can be challenging. Just having the skills and being fresh. Well, I’m not fresh anymore, but I haven’t really had much of an inclination to go back, I’ll be honest. I enjoyed the job for what it was, but I’m enjoying this newfound freedom quite a bit more.

Dr. Jim Dahle:
Do you feel like less of your identity is tied up in being a doctor now than a year and a half ago?
Dr. Leif Dahleen:
Not really. I mean, it was a big part of my life, but mainly I didn’t have too much of my identity wrapped up in it before. And so, it was a fairly easy transition for me, but now it’s something that I used to do. I mean, one of the challenges is you meet new people. I’m new to town where my wife and I have moved.

Dr. Leif Dahleen:
And so, what do you do? And it’s like, “I run a website”. And that’s a vague enough answer where people they might be, “Okay”. They don’t want to care to hear no more, but it might pique their curiosity if they ask more questions follow up “Well, yeah, it’s about personal finance, retiring early, which is what I did from my other career”. Then we can kind of get into the whole, “I used to be an anesthesiologist” and that’s kind of a fun conversation to have too.

Dr. Jim Dahle:
Very cool. All right, what about finances? This is the big worry people have when they retire and then the market tanks, right? You retired in August, come middle of March, the market tanked. At WCI con last year, I remember the market went down 9% on the first day, went up 9% on the second day, went down 12% on the third day. I mean, this was just at the conference. And I think by near the end of the month, it was down a third. How’d that feel knowing that you’d kind of punched out of your career and your portfolio took a big hit?

Dr. Leif Dahleen:
Well, thankfully I had worked another four to five years, I think five plus years after realizing we had at least our baseline financial independence. And I wanted to build that big cushion so that if another 2000 or 2008/09 happened and we lost half our money, we would still be in a position where we could call ourselves financially independent.
Dr. Leif Dahleen:
And so, “surprising” isn’t the word. I knew it would happen. I wrote a blog post about a year before that saying that I had a life goal to lose a million dollars. And by that I thought, well, maybe someday I’ll have eight figures and a 10% correction would be losing a million dollars. Well, it might take 15% since I’m not 100% stock, but a normal drop would lead to a loss of a million. I didn’t think it would happen within a year of retiring. But when it did, I was like, “Hmm, I need to update that blog post”. I mean, that was like the biggest consequence, “Oh, it happened. All right. So, we’ll bounce back”. And it happened much quicker than I thought. I didn’t think we’d be back there to break even yet. And it took three months.

Dr. Jim Dahle:
All right. Well, let’s dive into some of your questions. You guys submitted a lot of questions here. Some I think may have been a little more injest than others. Here’s few from Victor Mango, who would win between you a game of one-on-one basketball? Are you a hoopster?

Dr. Leif Dahleen:
No, he’s taller. I wrestled in high school. I know you were a hockey guy, so it might just be 0:0 but I don’t know, I would not win, I’ll tell you that.

Dr. Jim Dahle:
Yeah, I’m not much of a basketball player. I can make layups though. So, if you can’t make layups, I may win.
Dr. Leif Dahleen:
You got me. Yeah.
Dr. Jim Dahle:
Yeah. All right. How about a 5k race? You’ve been out running?

Dr. Leif Dahleen:
Not in a while, but I did a lot last year.

Dr. Jim Dahle:
I don’t know. We might have to actually run this one. He might take me on this one. I think the last time I actually timed the 5k was more than 10 years ago. It’s been a while.
Dr. Leif Dahleen:
I was 22:30 last spring when I was training in Spain.
Dr. Jim Dahle:
He’s going to win the 5k.
Dr. Leif Dahleen:
Okay. I wanted to get one. So, I’m glad I got that.

Dr. Jim Dahle:
All right. Mountain climb. Which one would win a mountain climb? I guess I get that one.
Dr. Leif Dahleen:
I’m staying at the bottom. So yeah.
Dr. Jim Dahle:
Arm wrestle? I don’t know, but what I found out its one of the things you started doing when you retired and you haven’t missed a day, right?

Dr. Leif Dahleen:
Yeah. I’ve been doing push-ups and sit-ups.

Dr. Jim Dahle:
So, tell them how many pushups do you do every day?
Dr. Leif Dahleen:
I usually do this in the morning. I do 40 pushups, 10 air squats, 40 sit-ups, repeat three more times.
Dr. Jim Dahle:
Wow. So, I don’t know. He may win the arm wrestle.
Dr. Leif Dahleen:
I don’t think so.
Dr. Jim Dahle:
That’s an impressive number. I started bench pressing again this winter.
Dr. Leif Dahleen:
Oh, good.
Dr. Jim Dahle:
So, I can bench press, not my maximum that I’ve ever had. I put up 240 lbs the other day, I’m very proud.
Dr. Leif Dahleen:
I can’t do it.
Dr. Jim Dahle:
When I was deployed, I put up 250 lbs. That was when I was working out two hours a day. And you’d never think I liked, but that was 10, 12 years ago.
Dr. Leif Dahleen:
It’s good to still be in shape. Very cool.
Dr. Jim Dahle:
All right. Good questions, Victor. Disappointed that was the best you could come up with, but good questions. All right, next one comes from David Graham. You may have just answered this. What does he say when someone asks, what do you do for a living?

Dr. Leif Dahleen:
Yeah, yeah. “Run a website” seems like just kind of the vague answer that if I say I’m a blogger people are like, weird. So, I don’t know.

Dr. Jim Dahle:
What’d you say before when people asked you that, before you retired?
Dr. Leif Dahleen:
What did I say? Oh yeah. I would say I’m an anesthesiologist.
Dr. Jim Dahle:
Yeah. A lot of times I’d tell people I work at a hospital. And sometimes they’d ask what I do there. But when I was in the military, I said I was a military officer and then I didn’t get any of the funny doctor questions.

Dr. Leif Dahleen:
I played coy, like in residency, I would just say I was an orderly or something, but I’ve been in small enough towns that you’re not going to be able to be disingenuous.

Dr. Jim Dahle:
Yeah. All right. So, the next question, this one comes from Bill Yount. Thanks Bill, by the way, for everything you do. How does the reality of retirement compare to the theory of it?

Dr. Leif Dahleen:
Well, the theory didn’t include a pandemic, so it’s been a bit of a reality check to have all of our big travel plans canceled. But I did get a couple of months in Mexico with my family in the fall of 2019, a couple more months in Spain. That was really great. And then we’ve been hanging out in Northern Michigan ever since.

Dr. Jim Dahle:
Now, what were your plans? What were your plans after the pandemic in 2020? I know you love to do slow travel, go stay someplace for a couple of months with your wife and your two boys. What were you going to do before the pandemic?

Dr. Leif Dahleen:
We had a slow boat to China book, a cruise that was going to take us through Hawaii Guam, South Korea, Japan, different parts of China.

Dr. Jim Dahle:
Homeschooling the boys.
Dr. Leif Dahleen:
Yeah. We’re going to be there for, by there I mean, I don’t know where, we didn’t have everything booked, but wanted to maybe see Vietnam, Cambodia, possibly shoot down to Australia, New Zealand. It was kind of a blank slate for five months and then another cruise back. But obviously none of that has happened, but it’s still been good. I mean, I’ve had all these habits, like we were talking about the push-ups and sit-ups. I also go on these daily walks. I’m trying to learn Spanish and I’ve got the freedom to do these things without ever having to miss or skip a day. And I can kind of fill my time the way I want to.

Dr. Leif Dahleen:
Our family has had a lot of close together time and maybe a little too closer than this small kind of home base that we purchased as our primary home that we didn’t think we’d be spending nearly as much time at. But we’re buying a new house. We’re going to close about a week from the day this air. So, we’ll have a little more space very soon.
Dr. Jim Dahle:
So, tell them about the new house.
Dr. Leif Dahleen:
Yeah, we’ve been looking for a lake home and we found a place with two and a half acres. It has a nice mid-century home from 1960 on one side of the road, which is across from the lake, but then we have an acre on the lake. And I think we’ll be able to build our latest dream home, whatever that dream is. A pretty nice modern, but not overly huge 6,000 square foot home.

Dr. Jim Dahle:
It’s not going to be the one that you built at a residency.
Dr. Leif Dahleen:
No, that was our dream then. And that’s not our dream anymore. We’ll have the empty nest, at least in the back of our minds when we build one, because my kids are 10 and 12. We want to have a nice place now, but we don’t want to build just something that requires a lot of maintenance.

Dr. Jim Dahle:
But you’re not building until the price of lumber comes down.

Dr. Leif Dahleen:
It’s like 30 some bucks right now. It used to be six or eight.

Dr. Jim Dahle:
It’s crazy. Okay. So, you said you learned Spanish. How many days have you been that you haven’t missed on Duolingo?

Dr. Leif Dahleen:
503.
Dr. Jim Dahle:
And you’re not like paying a friend to get on there when you’re not there.
Dr. Leif Dahleen:
That’s a great idea. VA’s that would do that.

Dr. Jim Dahle:
I think Cindy’s daughter and my daughter had some sort of arrangement to try to do that, but apparently one of them forgot and let the other one down. It was a little bit of a sore point, I think.
Dr. Jim Dahle:
All right, let’s take the next question. This one comes from Timothy who actually submitted a bunch of questions. Maybe he’s stalking you a little bit. I don’t know, but he’s got some questions. Where do you want to be in 5 years or 10 years?

Dr. Leif Dahleen:
Oh, that’s a good question. Five years from now, we’ll have kids in high school and so we want to be at their events at their matches and games and recitals and whatever else they have going on and just kind of be focused on what’s best for them. 10 years from now, what will be different? That’s the empty nest that I mentioned earlier, and that’s when we’d like to be back to traveling like we had in mind for these few years before high school.
Dr. Leif Dahleen:
But then it will be just my wife and I, and the slow travel then will be really easy when we’re only booking places for two, as opposed to finding family-friendly larger places for four. I can see us spending our summers maybe spring through fall at home in Michigan and leaving for warmer climates around the world for a few months, six months a year.

Dr. Jim Dahle:
Still planning on keeping The Physician on FIRE, going indefinitely?

Dr. Leif Dahleen:
I guess that’s kind of a year-by-year thing. But I enjoy it right now and I’d see no reason for that to change anytime soon.

Dr. Jim Dahle:
But now that you know how to retire from something, I guess you’re at big risk to retire at any moment.
Dr. Leif Dahleen:
That’s kind of the thing. Like it would be nice to figure out ways to dial back. And it’s been great to watch you and see how you’ve found a whole lot of really good help, like Cindy, who is here with us today and actually helps me on Physician on FIRE too. So, yeah, we’ll see how I can find the right balance. I need to have something in my mind or in my life that keeps me productive and engaged and the blog has been great for that. I interact with people every day in a virtual way, which we’ve all gotten comfortable and gotten used to here during the pandemic. So yeah, I imagine I’ll still have that.

Dr. Jim Dahle:
Not just going to do more pushups.
Dr. Leif Dahleen:
By then I hope to be doing four sets of a hundred.
Dr. Jim Dahle:
All right. So, the next question comes in from, I hope I’m not butchering your name, Pulse Abby who actually had three questions for you. But I think the only one we haven’t answered already is are you happier than you were before?
Dr. Leif Dahleen:
I think so. I think I’m better rested, more well rested. I think there is less stress in my life. I wasn’t super stressed at work, but I think I internalized it. So, I was probably more stressed than I realized. And yeah, life is good. I can’t complain.

Dr. Jim Dahle:
Okay. Here’s another question from Timothy. He’s got some asset allocation questions for you. And the way he phrases it, it made me laugh. You still 10% bonds, bro?
Dr. Leif Dahleen:
Yeah, dude. Yeah, well, I kind of lumped bonds and cash together. I think my spreadsheet calls for like 8% bonds, 2% cash, but I’m heavy on cash because we’re about to buy this house. And yeah, I’m about 70% stock, 20% real estate and alternatives and about 10% bonds/cash. And that’s just one fund. I have the Vanguard total bond fund index fund.

Dr. Jim Dahle:
And that’s about where you were before you retired.
Dr. Leif Dahleen:
It is and I’m not a great test subject because I’m not yet dipping into my retirement savings because I do have this Physician on FIRE side gig, if you will.
Dr. Jim Dahle:
Yeah, but you didn’t think about doing a bond tent or anything where you cut back your allocation years ago.
Dr. Leif Dahleen:
If I worked to get out of all earned income sources then I might dial back the allocation or dial up the bond allocation that would be. But in my given current circumstances, I’m just not at a place. And it’s really the five years after you retire that are the most important for sequence of returns risk. Those two years or so before are important, but not nearly as important as the returns you get right after you retire. And until you’re dipping into retirement savings, then you’re not in a place to really build that tent.
Dr. Leif Dahleen:
And I’m sure not everyone understands what do we mean by bond tent, right? That means you increase the bond allocation, decrease the stock allocation, to help mitigate the damage done by a stock market downturn. And once you’ve gotten through the most important years, which are the years that could be the most damaging to your portfolio, if there was a big bear market recession, depression, then you can actually help your portfolio last longer or have a higher ending value decades later by increasing the equity/stock allocation. But you need that like bump of higher bond allocation, that’s when the tent goes up, back down. There you go.

Dr. Jim Dahle:
Good explanation. Sequence of returns risk.
Dr. Leif Dahleen:
Yeah. Avoid that.
Dr. Jim Dahle:
It’s a bad combination to be withdrawing from your portfolio at the same time as falling in value.
Dr. Leif Dahleen:
That’s selling low. You don’t want to sell out.
Dr. Jim Dahle:
Exactly. All right. Okay, what about debt? He wants to know about your debt. Do you have any debt?
Dr. Leif Dahleen:
Just what I put on a credit card month to month, but of course that’s paid off automatically every month. And no. And we’re choosing not to take out a mortgage, which I have looked at. It might make sense to take out $500,000 and use that money to invest. But a couple of things you’re doing, one is the origination fees and all the fees up front for closing costs when you get a mortgage.

Dr. Jim Dahle:
Aside from the pain of filling out the underwriting.

Dr. Leif Dahleen:
Oh yeah. And when you’re not employed and you can’t show them W2 income, that makes it more challenging, but you might have $10,000 or $20,000 in extra fees upfront. It takes a while to get that back. So, I’m debt-free.

Dr. Jim Dahle:
All right. A question from William Fenton. What percent of your investments or equities at the current time…? I think you answered that 70%.
Dr. Leif Dahleen:
Yes.

Dr. Jim Dahle:
All right. So, we got that one. The next one is from Charles. The psychology of changing from the accumulation phase to the withdrawal phase. It’s actually a huge hurdle to overcome. Well, I’m not sure that’s a question.
Dr. Leif Dahleen:
No, he is right.
Dr. Jim Dahle:
That’s like a comment. I think a lot of people do struggle with that. I don’t know that you do.
Dr. Leif Dahleen:
It is nice to still have money coming in, I’m not going to lie. So, if I didn’t, I know from all of the reading I’ve done and all of these studies that others have done before me, many of which we learned about and discussed at the conference this weekend, that with a 2% withdrawal rate, that’s kind of where we’re at, I can expect unless World War III comes in and the U.S. is obliterated or something to have a rising portfolio, given our current spending throughout a retirement most years. So that will help. I think having a year with no income and seeing that, “Gosh, our investments went up much more than we spent” would be a really reassuring thing, but we’re not there yet.

Dr. Jim Dahle:
I think this is a really hard issue for a lot of retirees. My parents struggle with this. I help them with their portfolio and they mostly live on a pension and social security, but that’s primarily because I can’t talk them into taking any money out of their portfolio. And every few months I’m giving them a hard time saying if there’s anything that would make you happier, go spend some money on it. And I tell them either fly first class or your heirs will. And you know what? For the first time they just took my advice and they actually bought first class for the first time in their lives. So, I’m very proud of them for spending some of their money.

Dr. Leif Dahleen:
It’s hard to make that switch from saver to spender and we’re just very slowly coming around to make that. Get to be okay with spending money that we wouldn’t have maybe 10 years ago.
Dr. Jim Dahle:
Yeah. I think it’s a really hard thing for a lot of people to do. And I wonder if even though maybe it’s not the optimal strategy in retirement, if you run all the numbers out to annuitize some of your money, buy a SPIA or something. But I think people would treat the money coming from the SPIA different than they would from a portfolio withdrawal.
Dr. Leif Dahleen:
They might invest it.
Dr. Jim Dahle:
That’s true. You can always invest it.
Dr. Leif Dahleen:
We have $15,000 coming in every month. We better save $5,000.
Dr. Jim Dahle:
We better save something.
Dr. Leif Dahleen:
Yeah. Let’s find a real estate investment.
Dr. Jim Dahle:
But I would bet that most people would look at that and it would feel a little more permission to spend. I think people with rental properties feel a little more permission to spend than someone who actually has to sell stocks or sell shares of a mutual fund.

Dr. Leif Dahleen:
Yeah. You can automate that too easily enough.

Dr. Jim Dahle:
Do you have any plans to buy any annuities down the road?

Dr. Leif Dahleen:
No plans do, but never say never.

Dr. Jim Dahle:
All right. So next question. This one again from Timothy who asks, how are you planning to give wealth to your children? If at all.

Dr. Leif Dahleen:
I hope it is long ways off that they would get the bulk of my wealth anyway. We are putting money in 529 plans. And they’ve got a healthy six-figure balances already. So, that’s one way we’re going to pay for their college, keep them out of debt. And there should be enough there. If we continue to contribute, which I believe we will at least to get the maximum Michigan state income tax deduction, which is worth $425 a year, when we put $10,000 in between the different two accounts.
Dr. Leif Dahleen:
I haven’t done any UTMA. I have not started the Roth IRAs as you have done for your kids.
Dr. Jim Dahle:
Get those boys a job. Send them out. Most of the lawns are 10 and 12.
Dr. Leif Dahleen:
Yeah, they can do it. So that may be something that we’ll look at. I would like to see them build their own wealth. I don’t want to start the $15,000 a year. No questions asked, this is your allowance kind of thing when they’re young, because we’ve both read The Millionaire Next Door. We’ve seen that economic outpatient care can be detrimental. The kids rely on that and there can be resentment and all sorts of things. So, I would like to see by the time they would inherit my wealth and assuming I remain healthy, they would already have some of their own.

Dr. Jim Dahle:
So, how much wealth are they going to inherit from you? Are you planning on leaving at all, leave some to charity? Are you trying to maximize how much you leave to them? Or do you have a different philosophy?
Dr. Leif Dahleen:
The money’s going to the kids. But I think that we’ll redo a will here once we’re kind of settled in one home and look at leaving a chunk of that to charity. And we do have several hundred thousand dollars in a donor advised fund. We kind of treat like an endowment gift from it every year. There’ll be the beneficiaries of the ability to gift from that, the designated whatever the term would be. They will be able to donate that money. Obviously, no one can get it back but they will be the successors there.
Dr. Jim Dahle:
Yeah. This is something Katie and I have spent a lot of time thinking about lately is how much do we want to leave to the kids? And Warren Buffett’s philosophy was to leave enough that they can do anything they want, but not nothing. And I kind of liked that. He didn’t actually put a dollar figure on that, but I think most of us can think about that and put a dollar figure that seems right for our situation on that. And so, I suspect my kids are probably going to inherit a minority of my wealth. This all assumes, I live for a while and continue to earn money.

Dr. Leif Dahleen:
We need some compound, some compounding to happen.
Dr. Jim Dahle:
But I don’t really feel great about leaving 40% of it to the government.
Dr. Leif Dahleen:
Exactly.
Dr. Jim Dahle:
I feel a lot better about putting a whole bunch of it into a charitable foundation at death and maybe put my kids on a board of that foundation to distribute it. Maybe they learn something from that and I’ll leave them some money. But I think the way we’re probably going to write up will trust, estate plan, et cetera, is probably for them to get some money about 40 some money, about 50 and the rest at 60. And maybe even put requirements on what they got to do to get. We want to balance ruling from the grave with not enabling bad habits. And it’s a little bit of a hard balance to do.

Dr. Leif Dahleen:
We’re fortunate enough to have an estate tax “problem” that we’ll probably try to give money away during our lifetime so that we won’t have to figure out what happens at death because we’ll be under that. And then maybe the kids can inherit what we do have, which would be less than the estate tax exemption.

Dr. Jim Dahle:
Maybe you are under it, depending on what happens with it, right? They’re talking about cutting it in half. Maybe they cut it even further. You never know. Okay. Next question here. If you were to die, how would your family finances work? Would they have an advisor?

Dr. Leif Dahleen:
That’s a good question. My wife does read everything that is published on my website and that’s everything I’ve written quite a bit that you’ve written, our partners, Passive Income MD and Physician Philosopher. So, she’s got a pretty decent fund of knowledge right now, but I think she would benefit from a) me completing the legacy binder, which we’ve started, but haven’t finished. And probably at least a one-time financial plan or an hour rate person she could refer to with questions and we know where to find those. We’ve got a list on our website, just like you do on yours.

Dr. Jim Dahle:
Yeah. Cool. So, one of the reasons I decided to kind of simplify little bit our real estate holdings and some of our alternative investment holdings is our mutual fund portfolio is very simple. Here it is. This is where it’s all at and it’s all right there and very straightforward. But you know what? If you got 25 different syndications all over the country, sending you K-1s, maybe you’re not doing your spouse a favor to leave all that behind to the spouse.
Dr. Leif Dahleen:
We can simplify that too. We put a pretty good size investment in one fund and that sends money to our checking account, monthly or quarterly. And that’s great. The more you can automate and just have it money showing up every month while you know she’s going to be okay.

Dr. Jim Dahle:
Yeah. That’s definitely one reason I prefer funds, investment properties, whether they’re syndicated or not. I mean, imagine if your spouse isn’t really into direct real estate investing and you leave your spouse 12 properties. They might not appreciate that so much.
Dr. Leif Dahleen:
No, no. She would put them all on the auction block.

Dr. Jim Dahle:
All right. Next question here. Antillean Flores asks, how are you ensuring adequate health care for you and your family? What are you doing for health insurance these days?

Dr. Leif Dahleen:
Yeah, that’s a really common question that I think we both feel quite often and the answer is we do what tens of millions of Americans do when we buy health insurance every year. We got ours through the ACA exchange, no subsidy, but that was really the only options I look to see if there were off exchange options in the small county we live in and there really aren’t. And the prices were the same, whether I bought it through healthcare.gov or through Blue Cross or Priority Health. I think it might’ve been the options.
Dr. Leif Dahleen:
And so, yeah, we bought a plan. It’s just under a thousand dollars a month for our family of four, very high deductible, I think $13,500 or $13,600 out of pocket. And we pay the $11,000 plus in premium. So, it could cost us $25,000 a year really worst-case scenario if we had a year in which we had a lot of healthcare costs and met that deductible, which is pretty rare for our family at this stage.
Dr. Jim Dahle:
Are you still putting money into an HSA?
Dr. Leif Dahleen:
I am. Yes. The plan we chose is HSA eligible being a very high deductible health plan.
Dr. Jim Dahle:
But to hit that deductible, that’s two years of HSA contribution. So, you go through in one year.
Dr. Leif Dahleen:
Yeah, yeah. True.
Dr. Jim Dahle:
Maybe they need to raise HSA contribution limits.

Dr. Leif Dahleen:
Right. You can match the highest deductible.
Dr. Jim Dahle:
All right. Dominic Lung had the same question about health insurance. So, I think he answered that. his next one comes from Sonja. Thoughts on prepaid tuition plans versus 529s for kid’s college savings or a combo of each. Sounds like she’s in Texas, but I think we can talk about this generally.
Dr. Leif Dahleen:
Right. I’m not familiar with that particular plan. I don’t love anything that kind of narrows down your options. Now I know typically when you have a prepaid tuition plan, if you end up not staying in that state or not choosing a public school, you’ll get credits and be able to apply that to a certain dollar amount at a different school, but it gets more complicated. And there are conversion rates that might not work out in your favor. I’m guessing they probably wouldn’t.
Dr. Leif Dahleen:
So, if you are somehow very certain that a) your child is going to be college material, b) that you won’t leave the state you’re in, c) that you and them will both be okay with a public school. I mean, that’s a lot of ifs then might be a reasonably good idea. But I think just going with a general 529 plan that you manage, that’s just money in an account that can be used at any institution nationwide and even some institutions worldwide to cover tuition and fees and room and board and all of that. That’s to me, the better way to go. And I did have that option when my kids were born in Michigan. They had a prepaid plan and the standard 529. We went with the standard 529.
Dr. Jim Dahle:
Yeah. Every one of those prepaid tuition plans is different. Sometimes if your kid goes out of state, all you get is the money you paid in. You don’t get any gains or interest applied to that at all.
Dr. Leif Dahleen:
That’s what I was saying.
Dr. Jim Dahle:
And after 20 years can you imagine you put all this money in and then you get nothing out of it?
Dr. Leif Dahleen:
I think half of the money in our 529 is in there. $150,000 a piece right now. It’s half of it is earnings. Half is what we put in.
Dr. Jim Dahle:
So, you got to look really carefully at it. I don’t think either one of us have looked specifically at. Texas has prepaid tuition plan. Texas is a great place to go to school though. Whether undergraduate or med school, those are the cheapest med schools in the country are in Texas. And there’s obviously lots of institutions. It’s just a big place.
Dr. Jim Dahle:
So maybe the Texas one, isn’t a terrible one to use, but you got to really look at the details what happens if your kid doesn’t go to a Texas state school? What happens if they don’t go in state at all? What happens if they don’t go to college? What happens to that plan and really understand it and then decide whether you want to try to transfer that risk to the state of Texas or whether you just want to take it yourself with a standard 529 plan.
Dr. Jim Dahle:
And obviously in Texas, you don’t have to use the Texas plan, right? There’s no state income tax break you’re going to get from it. I think I did a 529 post recently. Your state is one. Michigan has the best plan in the country. Not by much though.
Dr. Leif Dahleen:
I know there’s 10 of them.

Dr. Jim Dahle:
There are 10 or 15 plans who are all very good. Your usuals, Utah, Nevada, New York, California. Although the one thing you got to not like about California is, they hate their own residence.

Dr. Leif Dahleen:
Oh, I know. Yeah. If I live in California, I’m probably not choosing.
Dr. Jim Dahle:
Yeah. It’s like, come on, give us a little more of a break. I don’t even think they give you a state tax break for a 529 contribution at all. And then what was the other? Oh, California and New Jersey hate your HSA too.
Dr. Leif Dahleen:
Oh, yeah. You don’t get the state tax in there either.
Dr. Jim Dahle:
You don’t get a state tax deduction. I think you actually have to pay on the games every year in your HSA on your state taxes in California and New Jersey. So, boo California government on that sort of law. Knock it off.
Dr. Leif Dahleen:
Nice weather.
Dr. Jim Dahle:
Yeah. Nice weather. A lot of fun stuff, some terrible loss. All right. This one from Marie. Talk about the risks of retiring early from a medical career position. Reentry and training is a real and serious thing that physicians should understand. We’re talking about getting back into medicine. What thoughts did you have or what precautions did you take before punching out that would allow you to retrain and reenter if necessary?

Dr. Leif Dahleen:
And sorry for butchering your name, Marie. We really don’t know. But yeah, that’s a tough one. So, I did renew my license in November. Minnesota state license is the only one I kept and I kept PALS, ACLS, BLS. I did most of those within my last year of work so that they would be good for one or two years beyond that. And I figured doing that would carry me to the point where if they expired and I still wasn’t interested in going back, kind of there I’m kind of done. But if you do go two, three, five years, you will very likely have to do some remedial training.

Dr. Leif Dahleen:
There are reentry programs that you can pay to be a part of, to be supervised, to shadow other physicians and be shadowed. But it is time consuming, costly, and it might be difficult to find a set up that would accept you and that would be accepted by your state medical board and your hospital and the privileges that they would be granting.
Dr. Leif Dahleen:
And so, think long and hard first before you take the leap that I did and then keep a toe in the water. I think my PALS expired. That’s Pediatric Advanced Life Support about a year after I left. And I had to decide, do I do a one-day refresher course now and pay for it and put in the day, or I do I wait and see if I need it and just do a two day after I let it expire? And I kind of did the cost risk benefit ratio in my mind, like, well, I think I’ll just wait and see, and I can do the extra day if I need to get that back, because I figured at that point, my odds of going back were less than 50%.

Dr. Jim Dahle:
All right. Last question for you. And this one comes from Victoria, who asked, did you ever consider international locums work as a transition to retirement? I see it as a potential way to incorporate slow travel while still working. So, international locums or maybe volunteer mission kind of work.
Dr. Leif Dahleen:
That’s a great question, Victoria. I actually did look very seriously into working in New Zealand. I had a buddy that I worked with when I was a locum at the VA hospital in Pittsburgh, Dave DeVeer. He had done several stints in New Zealand and really enjoyed his time there. When I looked into it and I thought it might be kind of my last hurrah, maybe do a year there.
Dr. Leif Dahleen:
Between the exchange rate in New Zealand to U.S. dollars is about 67 cents to the dollar and being paid about maybe half. Well, now I realize I can work an extra three or four months in the U.S. and make as much money as I would in a year there. And I wouldn’t have all the hoops to jump through. There were some specifics to anesthesia where you’re covering the ICU over there typically, and that’s something I haven’t done since residency.
Dr. Leif Dahleen:
And I just realized it’d be a lot easier to work another three or four months here and then earn the same amount that I would in a year there. And then I could go and spend a few months or more in New Zealand, Australia. Tasmania and enjoy my time more if I didn’t have a job there. So, I think it’s a cool idea. And I think it’d be really neat experience and something that you’d have to talk about at cocktail parties forever. I know you’ve attended a lot of cocktail parties, Jim. But no, it’s not something that I entertained once I really looked into the details.
Dr. Leif Dahleen:
I did do a little bit of volunteer work. I did a couple of missions with One World Surgery down in Honduras. Those were really fulfilling. I got to bring my family and my wife and kids got to interact with the kids that are living on this ranch where the surgical center is. It was a really neat thing, but I was hoping it might rekindle something in my career that would make me say, “Oh, I need to stay in this job”. And it really didn’t. It was just something that I was happy to do for a week. I was pretty exhausted when it was over. I felt good about what we did, but it didn’t make it this calling that I needed to remain in my job.
Dr. Jim Dahle:
Now, it’s interesting that you bring that up because one of the reasons I keep working in my practice is because I’m like, well, what if I want to do mission work later? And if I punch out and just do White Coat Investor stuff now, five years from now, I’m going to be worthless as far as going back.
Dr. Leif Dahleen:
It does take this option away.
Dr. Jim Dahle:
It just closes the door. And I just hate closing doors, I think. But I don’t know that it’s something I think I’m sure to do. I think it’s just something I might want to do. I just don’t know what the 55-year-old me is going to be like, or the 65-year-old me is going to be like.

Dr. Leif Dahleen:
It’s hard to guess. And so, you keep that door open and that’s good.
Dr. Jim Dahle:
Somebody out there looks at you, they admire you. They like your work. They want to do what you did. They want to FIRE five years from now. What encouragement can you give them?
Dr. Leif Dahleen:
Encouragement? I would just say do everything you can to make the job that you have right now, one that you like and enjoy. And the best job is one that you don’t want to retire from. But if that is your ultimate goal, I obviously tell people to save as much as they can. And the short-term investment returns don’t matter as much as your savings rate. Setting money aside for the future is really what you need. Once you accumulate a nest egg that gets into the seven figures, then investment returns matter as much or more as how much you’re actually saving each year.
Dr. Leif Dahleen:
But I’ve been happy with the decisions I’ve made. And I don’t really have any particular regrets. So, keep the toe in the water. Don’t close all doors the day you walk out, see what happens.
Dr. Jim Dahle:
Awesome. Well, Leif Dahleen, The Physician on FIRE, thank you for being here in Utah. Thanks for coming out to the conference this weekend and being on the podcast today.
Dr. Leif Dahleen:
Thank you for hosting me. Thank you for inviting me into your home. It’s a lovely home. I got to see the before and after of the massive remodel and it is an amazing place to live. So, congratulations.
Dr. Jim Dahle:
Yeah, after this we’re going to have to go slide down the fire pool.
Dr. Leif Dahleen:
Oh yeah, I already did once.
Dr. Jim Dahle:
All right. Well, this podcast is sponsored by Bob Bhayani at drdisabilityquotes.com. He’s been a long-time sponsor of the White Coat Investor. One listener sent us this review. “Bob and his team were organized, patient, unerringly professional and honest. I was completely disarmed by his time and care. I’m indebted to Bob’s advocacy on my behalf and on behalf of other physicians and to you for recommending him”.
Dr. Jim Dahle:
Contact Bob at drdisabilityquotes.com today. Email [email protected] or call (973) 771-9100 to get your disability insurance policy in place today.
Dr. Jim Dahle:
Don’t forget about those courses we have going right now. We have our CFE 2021 that’s recorded from the conference. We also have the Zero to Freedom Through Cash Flowing Rentals. That one is on sale through April 4th at whitecoatinvestor.com/rental for that one.

Dr. Jim Dahle:
Please leave us a five-star review and tell your friends about the podcast. We had a review come in from Ryan a while back that says, “I hope this email finds you well. I’ve been a long-time follower of your blog, reader of your books and listener of your podcast by educating us on personal finance matters. You’ve single-handedly transformed my entire family and extended family’s financial future. For this I cannot thank you enough”.
Dr. Jim Dahle:
Well, that’s very kind of you. I’m not sure it was single-handedly on my account. As they say, you can lead a horse to water, but you can’t make them drink and you clearly drank it and have implemented in your life. So, congratulations on your success.
Dr. Jim Dahle:
So, head up, shoulders back. You’ve got this and we can help. We’ll see you next time on the white coat investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.

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