Podcast: White Coat Investor Dr. Jim Dahle – Top Retirement Lessons

Dr. Jim DahleEpisode 21 of the NewRetirement podcast is an interview with Dr. Jim Dahle — a hockey playing emergency room doctor based in Salt Lake City Utah who runs White Coat Investor in his spare time. We dive into personal finance and retirement issues like how do you know if you’ve saved enough, what’s a safe withdrawal rate, how to bridge the gap for health insurance if you’re retiring early and how to catch up if you find yourself behind.

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Full Transcript of Steve Chen’s Interview with Dr. Jim Dahle

Steve: Welcome to the NewRetirement podcast. Today, we’re going to be talking with Dr. Jim Dahle, a hockey-playing emergency room doctor, based in Salt Lake City, Utah, who runs White Coat Investor in his spare time.
We’re going to dive into personal finance retirement issues like how do you know if you’ve saved enough, what’s a safe withdrawal rate, and how to bridge the gap for health insurance if you’re retiring early, and how to catch up if you find yourself behind.
I was referred to Jim by another one of our podcast guests, Jonathan Clements, who called him a genius. From reading White Coat Investor, I also know that Jim is a fan of another one of our guests on the podcast, William Bernstein.
So, Jim, welcome to our show. I appreciate your time. It’s great to have you join us.

Jim: Thank you. It’s wonderful to be here. I’m not sure I belong in the same sentence as those two, but that’s very kind of you to say.

Steve: Well, they sang your praises. It’s clear you’re getting a lot of stuff done with White Coat Investor. It’s been really interesting reading up on your blog. You have obviously got a ton of great content there, which we hope to share with our guests here.
As we get started, I’d be curious to hear, in your own words, how you’d describe yourself to other people, since you’ve got so many hats on.

Jim: Well, I mean, to be honest, the most important hats are husband and father. I mean, I think most of us can probably say something similar about their relationships that we’re in. My public persona, however, is very much set toward promoting financial literacy for physicians and other high-income professionals.
In that respect, I describe myself as a blogger. I guess I’m a podcaster now. I have a podcast and an author, given that I have a book, but when I first started out, that’s how I described myself, was just as a blogger. I wrote about stuff that I thought was interesting and that I thought would help other people.
I think a lot of people have applied other terms to me since then. I’m not sure I deserve half of them, some positive, some negative. But at any rate, it’s been a fun journey trying to promote physician financial literacy, in particular, across the country.

Steve: Yeah. And what kind of kicked this off and why’d you get started as a blogger?

Jim: Well, I mean, I have to go back a little further than that and kind of describe how I got interested in personal finance and investing because this is kind of unusual for somebody with my background.
When I went away to college, I was interested in science. I majored in molecular biology, got into medical school. Went to medical school. Really had no interest in any sort of business classes or finance or investing or anything. Even after I matched into an emergency medicine residency. So, at this point, I would have been 28 years old.
Finally started earning my first real paycheck at 28 years old. It wasn’t a huge paycheck, but it was my first real paycheck. And just realized, for those first few years, both before and after I started earning a paycheck, that every interaction I had with a financial professional seemed to go sour. I felt very taken advantage of.
Now, the actual sum of money I lost was not very much, but I didn’t like the way it made me feel. I decided I was going to start learning this stuff on my own. So, I started reading books. I live next to a used book store. I’d go over there. I read a ton of books. A lot of them were terrible, quite honestly, but I found a few good ones.
Then started interacting on the internet, reading blogs and interacting on forums. After a few years of that, I realized I was doing a lot more teaching than I was learning. Nobody else was teaching this stuff to doctors. I kind of got sick of typing the same thing into the internet over and over again and decided, “Well, let’s start a blog and then I can just post a link to the blog post that answers this particular question.” That, and a desire to kind of do something entrepreneurial, maybe some passive income, was my theory.
It turned out to be anything but passive. Led me to start The White Coat Investor in 2011, which, because there was basically nobody else in the niche, just exploded. I mean, the need was huge for this information among high-income professionals, and so it’s been a really fun journey since then.

Steve: Wow! What percentage of doctors do you think you reach right now on this topic?

Jim: I don’t know a percentage of doctors but it’s definitely higher and higher each year. Among younger doctors, I would say the majority has heard at least of The White Coat Investor. They may not know me personally or connect me with it but I would say the majority of younger doctors and a much smaller fraction of older doctors.
I think just because I tend to focus a little bit more sometimes on younger docs and they’re a little bit savvier on the internet. I just think this sort of stuff kind of spreads a little bit faster in that population than it does among older docs and maybe have already decided and set themselves into their financial path and aren’t really looking for more information about it.

Steve: Hmm (affirmative). Yeah. I’ve gotten involved and I’ve talked about from the past, there’s a group out here in next-generation personal finance. It’s all about bringing personal financial education into secondary schools where it’s not mandatory. There’s a guy, Tim Ranzetta, that’s kind of leading the charge there. In fact, that’s where I met up with William Bernstein and Jonathan Clements at a conference here in San Francisco.
But yeah, they’re really trying to bring that to high schools and sounds like there’s the same problem exists with doctors. Just kind of surprising that …

Jim: Yeah. For sure. You’d think these people that are smart enough to get into medical school, learn all this stuff would be able to handle finance but it just turns out they’re totally different fields, and each has their own language. Just because you’re smart in one doesn’t make you smart in the other, it turns out.

Steve: Totally. Yeah. I was reading your blog. I’ve definitely seen this out there as well that there is a lot of … Especially doctors that are really high-income earners but they don’t have huge asset bases that you would expect. If you see someone making a few hundred thousand dollars a year, you kind of think, “Oh, this person’s, you know, going to have millions of dollars.” Many of them don’t have that and they’re not necessarily on track to get there.

Jim: It’s nice of you to say it that way. I’d call it pathetic. I mean, it’s pathetic to go through 30 years of a physician-like income, maybe a couple hundred thousand dollars a year, maybe more and has a net worth under $500,000 in your sixties. The statistics tell us that about 12% of doctors have a net worth under half a million in their sixties. That’s everything. That’s their house and car and everything. It’s pathetic. So, I’m trying to really help that bottom quartile that is really struggling. That’s basically anybody that gets to their sixties and still isn’t a millionaire is a bottom quartile as far as physicians go.

Steve: Wow! Yeah. Well, that’s a good cause. I’m glad you’re out there helping that whole demographic.
I’d love to dive into kind of some of the top lessons you’ve picked up along the way here. I was reading your blog. I’d love to hear, kind of in your own words, what’s your prescription for getting wealthy?

Jim: Well, I mean, this is one of those things that’s simple but not easy. It’s kind of like weight loss that way, but getting rich is pretty simple. You make a lot of money. You don’t spend a lot of money. You take the difference between those two and you invest it in some reasonable way. Then, you make sure you don’t lose your money, to litigation or to things that you can insure against, those sorts of problems, divorce, and other losses. That’s basically the formula. It’s really no more complicated than that. If you try to make it more complicated than that, you probably end up shooting yourself in the foot.
But for a doctor, the key is what I tell the young docs. This doesn’t work so well if you’re already 55 but what I tell the young docs is when you come out of residency, just keep living that same lifestyle, like a resident. A typical medical resident’s making 50,000 or so. If you can come out of residency and just spend like 50,000 a year while earning 200 or 250 or $300,000 a year, there’s a huge difference between those two, even after tax.
You can use that to build wealth. You can use it to pay off your student loans very quickly. You can use it to save up a down payment on your dream house. You can use it to max out your retirement accounts and catch up to your college roommates when it comes to building a nest egg.
But I don’t tell people to do that forever. I tell them to do it for two to five years. I call that life like a resident period but if a doctor will do that, they can screw up almost everything else in their financial life and still be okay.

Steve: Yeah. It’s a great way to frame it up. Also, it has some nice incentives for you if you can come out, keep … You’re already living pretty cleanly and keep it lean. I think if you position people. “Hey, you know, do this for, you know, five years, save a bunch of money.” You may need to save a lot less money or stop saving money much deeper in your career versus what most people do, which is they go along through life, they hit 50 and they’re like, “Holy smokes. I’m not quite ready yet,” and they get super serious about saving but they don’t have the time value of money on their side, the compounding effect.

Jim: For sure. That’s a huge advantage of starting early but the bigger advantage, I think, is just avoiding that jump into your income. It sounds weird to non-doctors but this is really hard to avoid inflating your lifestyle massively with your income when you walk out of residency because a typical doc goes from 50,000 to $250,000 and their spending usually goes right along with it.

Steve: Hmm (affirmative). It’s almost like being a pro athlete. Suddenly, they’ve been living pretty frugally. Suddenly, they get this windfall and they also feel like it’s going to last for a long time so why not splurge? I can totally see why the behavioral finance side of this kicks in. It’s hard to manage that idea, the desire to spend more money, right than …

Jim: Yeah. The comparison to athletes is appropriate. You can throw entertainers and artists in there as well but basically, these are all people whose financial income is not based on their financial acumen. It’s based on some other skill or talent they have whereas a small business owner, by the time he gets a physician-like income, he’s probably got a pretty good handle on finance and business and that sort of stuff. So, I think he’s much more likely to be able to manage that money well than typical artist or entertainer or athlete or physician.

Steve: Totally. I’d love to ask a little bit more about your portfolio. It looks like it’s evolved over the years. It looks like you had, like some of our other guests, maybe some bad guidance early on that got you into high fee, high friction costs investments but I’d love to just hear in your words what your portfolio looks like and how you arrived at it and also how you stick with it, given the ups and downs of the market.

Jim: Well, I mean, I suppose my initial portfolio was what the commission salesmen masquerading as a financial advisor put me into. There were high load, high expense ratio mutual funds.
I wasn’t in them very long. Luckily, I stumbled on, I think it was Investing For Dummies by Eric Tyson within a year of starting investing so I really didn’t lose a lot of money there but enough to learn a lesson for sure.
Basically, since that time, my portfolio really hasn’t changed much. There have been some very minor tweaks in it but for the most part, we’ve followed the same investing plan since 2004, 2005-ish. It has served us very well. We’re now multimillionaires and essentially financially independent.
So, I can’t complain about where it’s taken us but our current portfolio, if you look at the big divisions, it’s about 60% stocks, 20%, and 20% real estate. About a third of our stocks are international stocks. We have a little bit of a tilt in the portfolio to small value stocks. Then, we have various holdings in the real estate category, but it’s not a terribly complicated portfolio. I made a few changes a few years ago to simplify it a bit but the overall asset allocation didn’t change dramatically at that time.

Steve: Hmm (affirmative). And do you rebalance yourself or do you outsource that to a robo or some other mechanism?

Jim: Yeah. I do it all myself. The difficulty, particularly as a doc is you end up with a whole bunch of different investing accounts. I’ve got three 401(k)s for me, one for my wife. We’ve each got a Roth IRA. We’ve got a joint brokerage taxable account. There’s a defined benefit plan through my partnership. That’s not counting the health savings account and all the 529s and all that kind of stuff.
So, there’s really no robo that’s going to handle that. You’re either paying for a full-service advisor to do that or you learn how to do it yourself. It turned out, we started investing when we had a four-figure net worth. It’s really the same game when you get to five figures and six figures and seven figures. It’s just more zeroes. So, it really doesn’t bother me to move around hundreds and thousands of dollars as needed because it’s exactly the same way I did it when I was moving around a few thousand dollars. So, we’ve just been doing it ourselves and just haven’t felt the need to hire somebody to do that for us.

Steve: Yeah. I think that’s one of the issues that the robos have is that if someone shows up at the robo front door and if they have no money, it’s totally clean, it’s relatively straightforward, but if they have a lot of existing positions that might be in tax-advantaged accounts or something like that, if you try to start liquidating these to reposition them, you’re creating all these tax effects that make it not a simple thing to take on.

Jim: Yeah. Quite honestly, I think there’s a pretty narrow niche of people for whom robo advisors are right. I think it’s a pretty small step to go from using a robo advisor to doing it yourself but I think going from a full-service advisor to a robo advisor is a pretty big step if you’re actually going to be doing things right.

Steve: Totally. Yeah, and I think people are also taking a close look at fees everywhere. So, I mean, it’s happened with all the funds and people going ATFs and try to bring their fund fees down, their asset fees down.
Then, the same thing with advice. People are looking for ways to cut those costs. I was talking to Karsten Jeske, the Early Retirement Now guy. He’s like, “Hey, can I build a synthetic robo? It’s why I don’t have to pay the 25 basis points for them to do the rebalancing for me,” which starts to be bigger numbers as you get to larger asset bases.
So, I wanted to touch really quick. One thing is interesting to me is this idea of evidence-based investing. I know it stems from evidence-based medicine and so forth but any quick thoughts on how you view that and how it plays into what you’re doing?

Jim: I’ve got two thoughts on it. Number one, I think it’s important that people actually look at the evidence. For example, a lot of people think you can pick a winning mutual fund manager by looking at past performance. The evidence is basically can’t do that. You look at the evidence and the evidence is that the best predictor of future returns is costs. It’s not a perfect predictor by any means but it’s the best predictor we have.
So, I think it’s important to understand some of the things the evidence does us, towards some of the things like factor investing with a small in value tilt and that kind of stuff.
But I also think it’s important to realize that investing is not physics. When you look at the amount of data we actually have, it’s really only three or four independent 30-year periods. So, don’t put too much faith into the evidence. We don’t know that the future’s going to look exactly like the past. We don’t know that we’ve actually seen the worst-case scenario yet. Maybe the Great Depression was not the worst-case scenario for stock investing.
So, I think it’s important to look at the evidence, yes, but also understand the quality of the evidence and its limitations.

Steve: Sure. Yeah. I definitely have that sense sometimes when I … I like the FIRE community a lot and a lot of things there that they stand for but I think there’s definitely a deeply-held belief there that things will always come back in pretty short order. I think that’s what is their view. In some countries like Japan, you see the Nikkei go down by a lot and stay down for decades. We haven’t experienced that here and, I mean, obviously-

Jim: There’s nothing that says we can’t.

Steve: Totally.

Jim: I mean, it could happen. I think part of that is a lot of the FIRE community is fairly young. If you’re in your forties in the FIRE community, you’re considered an old man. So, these people have not been investing through any sort of downturn that took a long time to come back. Some of them weren’t even investing in 2008. Even if they were, which is my first real big bear market, it snapped back pretty quick. If you think that’s normal, you might think, “Oh, well, no big deal, you know? I’ll just ride it out for a year.”
But, if you look back at 2000, 2002, it took quite a bit longer. If you go back to the 70s, you can see that it can take many, many years sometimes for the market to come back and that’s in the most economically successful country in the world. So, I think it’s important to be humble about what we know and what we can expect in the future.

Steve: Oh, I think we’re definitely aligned on what William Bernstein has to say about studying history and really paying attention to the lessons there because it’s easy if you just look in the near-term history, you might feel better but, yeah, like you’re saying, look back a couple decades or multiple decades and you start to see different patterns.

Jim: Yeah. Bill is certainly pessimistic about future stock returns but he has been for quite some time, quite honestly. Some of his predictions of what they would be in the next decade or two have been a little on the low side. So, maybe he’ll eventually be proven right but it turns out that none of us, including the wisest among us have a very clear crystal ball about what the future holds.

Steve: Totally. Yeah. That’s for sure.
I’d love to move onto some retirement-focused topics and since that’s kind of the main area of interest for our audience, how do you think about what kind of income you need in retirement?

Jim: Well, I think the easiest way is to look at what you’re spending now, and actually look at those expenses and see which of them are still going to be there in retirement and what new expenses there are going to be.
I think there’s no way to really avoid getting into the nitty-gritty here. I mean, everybody wants a rule of thumb but you need 70% of your current income in retirement or whatever but I don’t think there is a rule of thumb. I think you actually have to sit down and see what you’re spending and kind of project going forward what that’s going to look like. I don’t think there’s any other way around it.
But, I think most doctors and high-income earners who do that will discover that they don’t need nearly as much as they think they need. For example, look at all the expenses that go away when you retire. You’re going to be paying much less in income tax in most situations. You’re not going to have any payroll tax. You no longer have to save for retirement so for a really good saver, that’s a huge expense off the table. The kids are hopefully out of the house and independent so you don’t have to save for college for them. You don’t have to pay for their food. You don’t have to pay for all their activities. You’re now financially independent so you can cancel your disability and life insurance, and so there’s a lot of expenses that go away.
Now, a few of them might go up like travel and health care and that sort of stuff but overall, I think a typical physician probably only has to replace 25 to 50% of her pre-retirement earnings in order to have the same lifestyle in retirement.

Steve: Wow! Yeah. Wow! That’s definitely lower than what the general rule of thumb is given by the financial services industry which is, “Oh, you need to have, you know, 70, 80% of your pre-retirement income.”
But I think one thing I like to call it is, in general, financial services are focused on telling people, “Hey, you need to save a huge amount of money, an unlimited amount of money. You know, just as much as you can and plan for really high costs,” because that’s in their interests because most of the financial services make money on you. The more assets you have, the more money they make because they make a strip of it, so it’s great to hear it from a different perspective.
One quick comment on the children thing. I think I’ve seen some data that 20% of young adult kids end up living back in your house for some period of time, and 60% rely on the parents for some amount of financial aid, so-

Jim: Wow!

Steve: Yeah. There are some scary numbers out there right now but …

Jim: I think you should use those statistics when you go to teach your children about money. My kids have been hearing for years that when they’re 18, they get their own car and their own job and their own apartment and they’re out the door. So, I think that’s their expectation. To be honest, if they’re like I was coming out, we wanted to be independent of our parents. So, we work very hard to keep them from moving back in and playing video games all day in the basement.

Steve: Nice! So, another topic. How do you know when you have enough?

Jim: Well, I mean, that’s a tricky topic. The truth is, very few people I think end up with barely enough. I think there are some people like me that end up with far more than enough. I’m in my 40s. I’m still working. I’ve already got enough so I’m clearly going to have way more than enough by the time I’m done working. I think that’s a minority for sure but some people, it’s just not an issue because you’re going to have plenty.
Then, there are some people that are never going to get to enough. They’re basically not going to have enough. They’re going to have to scale back their lifestyle when they retire. It’s going to be spending less money on vacations, driving not as nice of a car, whatever they spend money on, they’re going to be doing less of it. It’s going to be what they can take from their savings plus Social Security, maybe a pension and that’s it.
So, I don’t think there’s a lot of people that are right in that range of enough, quite honestly. I think what ends up happening a lot of the time is they just adjust their lifestyle to what they have, which isn’t that crazy of a concept. If you think about it, that’s what you’ve been doing your whole life anyway is adjusting your lifestyle to what you’re earning. It’s not that crazy to do in retirement as well, so I don’t think enough has to be some hard-fixed number.
That said, I think the best rule of thumb is the most basic one, the 4% rule. If you assume you can only spend 4% of your nest egg in any given year, that number’s going to start you in the right neighborhood as far as withdrawal rates. If you reverse engineer that equation, it basically tells you-you need 25% of what you spend as a nest egg. What you spend, minus any guaranteed sources of income like a pension or Social Security. So, I think that’ll get you into the right neighborhood, so if you’re spending $100,000 from your portfolio, it’s a $2.5 million portfolio. That’s what you need.

Steve: Right. Yeah. 25 times. Yup. Yeah, that’s what the FIRE community goes off of as well.
One thing also I like to call out about income and retirement is that and Michael Kitces says that “You know, really, when you look at people’s spending in retirement, there’s about a 1% decrease in real costs,” so adjusted for inflation annually. So, if you every decade, your costs might drop 10% because you kind of slow down and travel less, whatever. You’re just a little bit less active over time. That totally adds up over time.

Jim: Yeah. I’ve heard people describe it as the go-go years, your first few years in retirement when you’re traveling all over the place. Your slow-go years, maybe as you move into your seventies. You’re still going but not at nearly the pace. Then, in your eighties, your no-go years.
So, what I think you see is a lot of spending at the beginning. Then, it kind of levels off. Then, toward the end, as you might need some help with long-term care and more health care expenses, your spending goes back up. That’s kind of the pattern I’ve seen. It obviously varies for everybody but clearly, this idea that you’re going to spend more and more every year is probably not the case.

Steve: Right. I’d love to shift gears a little bit and talk about health insurance because one thing we’re seeing is more and more people are having a gap between when their kind of traditional career stops and Medicare kicks in. Then, there still obviously costs around Medicare as well but what do you suggest to people that are looking to bridge that gap in health care or health insurance?

Jim: I actually kind of chuckle at this question. The reason why is because I never get a question of how are you going to bridge the gap of food or how you going to bridge the gap of housing? When I look at my budget, I got food, I got housing, I got taxes, I got health care. They’re all just expenses. The way you bridge it is you buy it.
I’ve been buying health care on the open market for the last eight years. It sucks. It’s expensive. It’s expensive stuff. There’s no doubt about it but you can buy it. You just go out there and pay for it. So, you need to have enough saved that you can buy it.
Now, are there some things you can do to help? Sure, there are a few things you can do. For instance, the Affordable Care Act, a lot of people are able to get their income low enough in early retirement that they get a substantial subsidy on the policies they buy through the exchanges.
One option that one of my partners has used is to use one of the Christian health sharing ministry kind of options. This isn’t really health insurance but it’s similar to it, in that you can use it to help decrease the burden of unexpected health care costs. The real benefit is it’s dramatically cheaper. Now, it doesn’t cover some things that health insurance covers. So, there’s some risk there but his theory is, if you develop something that’s terrible or some chronic condition, within a few months, you’ll be able to go on the exchange and buy an Affordable Care Act eligible policy and kind of hedge his bets that way.
But the main thing is you just have to have a way to pay for health care between the time when your employer stops paying for it and when you can start getting Medicare at 65. So, I think everyone needs a plan for that but the plan’s probably just as simple as save up a little extra money and buy health insurance.

Steve: Totally. I know you were talking a second ago about HSA plans. It looks like you’re pretty aggressive in taking advantage of every tax advantage account opportunity out there. Do you use HSAs any differently than most people in terms of trying to maximize the returns there, because I know they’re pretty efficient.

Jim: Yeah. I mean, a health savings account is my favorite retirement account. It’s the only triple tax-free one. You get the tax break when it goes in. It grows tax protected. As long as you spend the money when you pull it out on health care, it comes out tax-free then, too.
So, it’s actually where my first dollars go every year when I’m investing. And then we invested aggressively. It’s invested all in stocks for us. It’s grown well over the last six or eight years that we’ve been using one.
Another cool trick with health savings accounts that people don’t realize, other than the fact that you can invest them. A lot of people don’t realize you can invest them, is that you can actually save your receipts and pull the money out later. There’s no rule that says you have to spend the money in the same year you take the money out of the plan. So, you can spend the money now, pull the money out in 20 years and meanwhile, it benefits from a couple of decades of tax-protected compounding.

Steve: Wow! Are there any estate planning benefits to that or can you roll money out of an HSA into a Roth or something like that or does it have to be pulled out and used for health care?

Jim: No. It’s actually terrible on an estate planning side. This is not an account you want to die with. You want to spend this one before you die. Basically, how it works at your death is it goes to your heirs. It’s fully taxable income to them in the year you die. So, it’s worse than inheriting a brokerage account. It’s worth than inheriting a Roth IRA or traditional IRA. It’s the worst thing you can inherit. So, this is something you should try to spend yourself if you can.

Steve: Yeah. I’m actually going to be at a webinar with Vanguard and Schwab coming up. We’re going to be talking about kind of tax efficiency. I think a big thing that’s going to come up for more people that have money is really looking at how are you locating assets, are they taxable accounts, tax advantage accounts or are totally tax-exempt account. Then, thinking about multi-year tax planning, so how do you position assets? What should you try to roll over into Roth versus keep in certain places and in what order do you take things down because there can be a lot of efficiencies that can be gained there.

Jim: Yeah. It can become surprisingly complex and different for everybody, too. For example, somebody who gives a lot of money to charity can flush the capital gains out of their taxable account and basically liquidate those at any time without having to pay much in taxes. For somebody that doesn’t do that, who’s been investing for decades in a taxable account, there may be a real tax burden to liquidating that. So, really just varies by individual.

Steve: Yeah. Well, good problems for people to have. They got enough money.
So, last question topic on this. What do you suggest to people who find themselves behind? So you have those doctors that are 50 or people that you run into that are kind of 50 plus. What are some of the tips you give them to catch it back up?

Jim: Well, I mean, I think when you’re behind, you’ve got a couple of choices. One is to make a dramatic change down the road or make a smaller change now. You’re usually better off making a smaller change now. That may mean spending less and saving more. Most people have something saved. It’s just not enough. So, any change they make can make a big difference.
The other thing that is super helpful if you run the numbers is working longer. It sounds like a terrible solution. I want to retire. I don’t want to work longer but the longer you work, everything works out better in your favor. You got more time for your investments to compound. Your Social Security ends up being higher. You need money for less time because your retirement’s now shorter. You have less sequence of returns risk from your investments performing poorly right when you retire. It’s just a great solution for most people to be able to do.

Steve: Totally. Yeah, and I think that there’s a lot of other benefits to working as well. It’s just, I think for many people, I mean, there’s social, psychological benefits and obviously all the financial stuff and staying engaged and finding purpose but I think for a lot of people, it’s like they want to do work that they enjoy and they find really meaningful just like you found with White Coat Investor in addition to being a physician.

Jim: Yeah, for sure. The truth is, the government wants to help you. Most of these tax-advantaged accounts have a catch-up contribution once you’re 50. You can put an extra 1,000 to $6,000 into the account, in a health savings account, an IRA, a 401(k). They want to help you save enough. So, that’s one option.
Another thing a lot of people can do is they have some sort of asset that’s not really generating an income for them. Maybe it’s a second home and they can start renting that out or sell it. Maybe they’ve got a boat they can sell and invest. And so, I think when you really find yourself, you’re in a bad way, and you’re just waking up to this personal finance stuff, you got to look at everything you have. A lot of times, making moves like that will make a big difference in your financial picture down the road.

Steve: Yeah. Okay, last question here on the personal finance side. Then, I want to ask you some stuff about your business and White Coat Investor but it looks like you’re not a huge fan of whole or universal life insurance. It looks like you like it about as much as Ken Fisher likes annuities. Would love to get you, just to understand kind of your perspective on that.

Jim: Hey, my thought on both of those types of insurance is if you understand what you’re buying, you really understand it and you still want it, knock yourself out. Buy as much as you want.
My problem is mostly in the way it’s sold. It’s sold to people that don’t understand what they’re buying and three years or five years or 10 years later, when they realize what they’ve bought, they’re mad. They’re mad at the person that sold it to them. They’re mad at themselves for having done it. Now, they’re struggling with this decision of whether to keep it or whether to dump it, which is a much harder decision than whether to buy it in the first place, but the problem is this thing can be used in so many different ways, even though it’s not really the best product for any of those uses, that those who are selling it, who are highly incentivized to sell it, with big, huge commissions, can usually find your weak point and use that to sell it to you.
So, I just run into doctor after doctor after doctor that regrets their purchase of it. So, I try to get the message out that this is like getting married when you buy one of these things. Either you’re going to stick with it for life or it’s going to cost you a lot of money. So, it’s not so much I have trouble with the product. I think it’s not the right product for almost everyone including high-income professionals. Certainly, just being a doctor isn’t a reason to buy a whole life insurance policy.

Steve: Mm-hmm (affirmative). Yeah. No, I totally agree with you. On so much of financial services, there just needs to be transparency and obviously a fiduciary responsibility. That would just fix so many problems in this space. If it was consistent across the board and people could clearly see, “Hey, this is how you’re getting paid and this is how much you’re getting paid,” and where your incentives are, that would fix a lot.
So, onto White Coat Investor. So, first, I just want to congratulate you for building the market-leading site in this space. It’s a great accomplishment and I’m glad it’s working out for you.

Jim: Yeah. It was really easy when it was the only one in the space.

Steve: Well, you’ve made some good moves to stay number one. It’s, what they say. It’s hard to stay number one. So, hopefully, that continues, and also on achieving financial independence. So, it sounds like you started making money at 28. What age did you achieve financial independence?

Jim: Oh, I would say probably within the last year or so. We’ve looked at our nest egg. We look at what we spend and said, “Okay. we’re probably there now.” Maybe a year or two ago, if we count the value of The White Coat Investor but it’s such an illiquid, difficult to value enterprise that I was avoiding counting that towards our nest egg but at this point, we just got to kind of realize that that’s where we’re at. I mean, at this point, we’re giving away more each year than we’re spending.

Steve: Hmm (affirmative). Wow! That’s impressive.
So, now that you’ve hit that milestone, has that changed your thinking? I remember when we were kind of warming up to this, I asked you about remaining a doctor and your work at White Coat Investor. Has your worldview changed or what drives you changed?

Jim: I think I worry less about money. I’m much more likely to just spend money willy-nilly now than I used to be, that’s for sure because I’m still working. I’ve got this great income both from doctoring and from The White Coat Investor. I know I’ve already saved enough to reach my financial goals. So, that’s certainly changed my world view in that respect.
I’ve also dumped the parts of my job I didn’t like. I’ve cut down to about half-time so I’m working half the shifts I used to. I no longer work any night shifts. That was a big motivator for me to become financially independent. In our group, the way we distribute the night shifts is we basically let you buy your way out of them if you want to. Those who work them get paid extra. It’s substantial amount more so those with the big mortgage or big student loans or who just like to spend a lot of money, they can work my share of the nights. I’ll work the day shifts.
So, basically, I’ve eliminated all the things I didn’t like about practicing emergency medicine. Maybe not all but most and it’s now a pleasure. I love it. I go in. I see patients. I talk to them. I have a fun time. I see my friends at work there. It’s basically changed that work and the way I think about it in some significant ways, so I think that’s pretty fun in that respect.

Steve: Oh, it’s great to hear. I mean, that is part of how we describe what we’re trying to do. We’re trying to help people first get financially confident and make the right moves and get efficient. Then, ideally, achieve financial independence so that they can … I describe it as unlocking their human capital, so people are doing things that they love and they really want to do, they’re going to do a much better job at it and be happier and then probably make the people around them happier and everything else. So, it’s great to kind of hear that you’ve achieved it and the effect that it’s had in your life.

Jim: That’s absolutely … I agree with it.

Steve: So, yeah. I’d love to just learn a little bit more about kind of what you offer. If you could kind of run through, I know you got the blog and a lot of other things that you’re offering. Maybe I might ask you a couple questions about those things.

Jim: Sure. Well, the first thing that we started in 2011 and I say, “We.” Back then, it was just me. It was a blog. It’s just a blog. It’s still a blog. Three times a week, a post comes out on it. On Mondays and Fridays, it’s one I wrote. On Wednesdays, it’s a guest post.
I also have a couple of network partners. These are other blogs I own part of. The Physician on FIRE and Passive Income M.D., which both have … One has a FIRE focus and one has a passive income focus. I ran a post from one of them on Saturdays.
Then, I also have a podcast and I run the notes from that and publish the podcast each Thursday morning. Then, we’ve also got a newsletter. It’s a free, monthly newsletter. If you sign up for it, you get what I call financial boot camp. It’s 12 weekly emails that help you get up to speed with the rest of The White Coat Investor community.
We’ve got a ton of social media outreach. I’ve got my own forum on the site. There’s a White Coat Investor subreddit. We’ve got a Facebook group, Twitter, Facebook, Instagram, Pinterest. However you like your information, we’re trying to give it to you in that way.
We’ve got videos up on YouTube. We run a scholarship contest. We just finished it for the third year. We gave away over $60,000 in cash and prizes to professional students. We’ve had a live conference. We did it in Park City last March. William Bernstein and Jonathan Clements were speakers there. You could actually buy the video version of that.
We have an online course. It’s provocatively titled as Fire Your Financial Advisor!, which got a bunch of financial advisors up in arms but once they look at the first module and realize it’s basically how to work with your financial advisor, they’re much less upset about it. But yeah, basically we’re trying to package up this information into whatever form people most prefer it in, just so they can learn it.

Steve: Nice. What’s working the best for you? It sounds like the book actually worked pretty well.

Jim: The book’s been a best seller for sure. It’s the best seller in the space but that’s because I cheated. I read all the other ones and stole all the good stuff and put them in my book. No, but really, the reason it’s better is I farmed it out to 20 of my readers, had them tell me all the problems with it, fixed them and then published it. In a lot of ways, it’s crowdsourced. I have to thank my community for that.
What’s working well? Well, the blog still gets a ton of readership. I mean, the website sees nearly a million page views a month so that’s still the biggest part of it, but the podcast is right up there. Our podcasts are getting 10 to 15,000 downloads each, which really surprised me. It was just kind of a side thing we decided to do on a whim. I’m like, “Yeah, we can put some podcasts together. Let’s see how it goes.”
I think people prefer podcasts in my niche. They can listen to it while they’re commuting to work. So, that’s worked pretty well for us as well.

Steve: Yeah. Has the course worked out well?

Jim: Yeah. I don’t know if it’s a best-seller because I don’t know of any other courses or what any courses really sell for but it certainly exceeded our expectations financially but most importantly, it really hit a need for a small percentage, admittedly, of my audience but with a big audience, that’s a lot of people. Just people that can do it themselves but needed a little bit more handholding, a little bit more information than they could get from books and blogs but yet don’t need a full-service advisor.

Steve: Yup. Then, we’re headed the same direction where we think that world needs more ways to get this information and where we try to deliver a lot of it through software, we’re obviously trying podcasting as well but we introduced our own RIA but it’s a flat-fee, fee only. So, we’re doing very specific kinds of engagements and just introducing it but we’ll see how that goes.
So, where do you see White Coat Investor going? Where do you want this thing to be in five years?

Jim: Well, I guess I’d like it to be well-known than it is, particularly among older docs. I think that’ll happen naturally as the older ones become older. I don’t know that I plan to go anywhere. I expect five years from now, I’m still going to be doing this in some form and just trying to promote physician financial literacy. If I think about what kind of events could occur that would make me want to get out, it would probably be something like a financial literacy course being taught in every medical school in the country. I think that’s very unlikely to happen so I suspect I’ll still be here but we’ll have a few more books out, probably a few more courses out. The conference will become a bit more of a regular thing. Hopefully, I can keep it all at a level that makes it manageable on a personal level so that I can keep doing this for a long time. I’d hate to burn out on blogging and podcasting like a lot of people do on medicine.

Steve: Yeah, totally. Well, it’s because you’re keeping it balanced and keeping it in perspective.
All right. Well, look. This has been great. As we wrap up, I would just love to hear any big influencers or sites or things that you love out there that you think would be valuable for our audience that are 50 plus planners, getting ready for this transition into retirement?

Jim: Well, absolutely. We mentioned a couple of them earlier that have had a big influence on me. You’ve heard of the Bogleheads. Well, before I was a Boglehead, I was a Bernstein head. Probably one of the first really good books I read was by William Bernstein that really influenced my financial thinking.
Jonathan Clements is fantastic. I didn’t really find him until later but that’s a guy who really gets it. He writes a blog called HumbleDollar, which I highly recommend you follow and subscribe to. it’s totally free. His book, How to Think About Money, is genius. It really is and to give you a big-picture look at how you ought to think about money. So, I highly recommend those as well.
Other people that are worth checking out particularly if you are high income professional are my two partner sites, the Physician on FIRE, that’s at physicianonfire.com, and Passive Income M.D. at passiveincomemd.com. Some great resources there to help you to reach the financial success you’re looking for and frankly, you deserve.

Steve: Okay. Yeah, that’s awesome. I appreciate that. We’ll definitely link out to those folks when we roll this podcast out.
Okay. Well, look, this has been great. I mean, do you have any questions for me? If not, we’ll just wrap it up.

Jim: I don’t think so. It’s been great having me on. I sure appreciate it. It is great to meet you and spend some time with you and get to know and provide some information for your audience.

Steve: Yeah. I think this will be super valuable. I’ll close up here.
So, thanks, Jim, for being on our show. Thanks, Davorin Robison, for being our sound engineer. Anyone listening, thanks for listening. Hopefully, you found this useful. Our goal at NewRetirement is to help anyone plan and manage their retirements. They can make the most of their money and time.
If you’ve made it this far, I definitely encourage you to check out Jim’s site, White Coat Investor and some of the sites he pointed to, and also our site and planning tool at newretirement.com, where you can build your own plan for free or take advantage of our premium advanced tools and personal support. You can also check out our Facebook group or follow us on Twitter.
Okay. That’s it. Jim, I really appreciate it.

Jim: It’s great being here. Thanks.

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