WCI (White Coat Investor) gave a lecture at our associated medical school today, geared towards residents and fellows.
One very important question he asked the audience was along the line of
“what percentage of your income do you plan to build your wealth with during your first few years of attending-hood?”
I have laid out my plan below.
You are welcome to join my dream of building net-worth. I often find goals and dreams (realistic ones) keep me motivated to go through the challenges on a daily basis.
An average radiologist makes 400k/yr in my state. Those who work for VA hospitals make about 290-310k; those who work for the university hospital/academic radiologists make about 300k/yr. The lowest starting salary of a radiologist I heard in 2014 is 250k in my state.
I like to be conservative, so I’ll say that my first attending annual income fresh out of fellowship training in 2020 July will be 250k.
Here’s my take home pay table: for 250k annual income:
|Salary and Tax Illustration|
|Yearly||Monthly||4 Weekly||2 Weekly||Weekly||Daily||Hourly||%|
|Tax Deferred Retirement||0||0||0||0||0||0||0|
|Federal Income Tax||56,749.50||4,729.13||4,365.35||2,182.67||1,091.34||218.27||29.3||22.70%|
|State Income Tax||9,886.74||823.89||760.52||380.26||190.13||38.03||5.1||3.95%|
|Take Home Pay||172,391.76||14,365.98||13,260.90||6,630.45||3,315.23||663.05||89||68.96%|
Most of my expenses will stay the same, a few areas I will increase/add spending includes:
- Mini Wise Money’s education: possible private school, with tuition of 2k/mo
- Mini’s extra-curricular monthly budget will increase to 0.5k/mo
- I will start paying my personal debtor(s) back at 1k/mo
- Household food allowance will increase to 0.6k/mo
- home/car maintenance will become more reasonable @ total 150/mo (we already have brand new roof and new ac in 2014, no other major items to replace)
- i will allow myself and my partner each a personal allowances of 150/mo (I currently have none, lol)
With these “GENEROUS” new/increased categorical spending, our total household spending will be 7k/mo. My monthly take home pay will be twice our monthly household expenses.
This means, I can save 50% of my take home income. How exciting!
With 84k POST-TAX dollars to put away my first year out of medical training, my priorities will be:
- Pre-tax/ Tax-deferred retirement accounts from my radiologist group (as a W2 employee). As this will be pre-tax savings, I will be able to put away more than I would with post-tax savings. I may even get company match; my current hospital offers 4% pre-tax match.
- Possibly my business/self employment individual pre-tax 401
- Back door ROTH IRA for my partner and me
- 529 college funds for Mini
- CD/stocks to save towards down payments for a 2nd/3rd home for my parents/Nana
Jim (WCI) said the secret to becoming a millionaire doctor is to “LIVE LIKE A RESIDENT!” I plan to live more like a resident than an attending for as long as possible. I’m not depriving my family either, my projected budget for 2020 already allows for 40% increase in spending.
I plan to save aggressively, at least until Mini goes to college, which is 5 years after I become an attending radiologist. Then, I will scale back my saving rate to close to 20%… and live a little MORE.
For example, I plan that our first MAJOR family vacation will be to celebrate Mini’s high school graduation in 2025:)
- What is your saving rate as a resident?
- What is/will be your saving rate as an attending?
- How many years do you plan to live as a resident on an attending’s income?