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White Coat Investor Podcast
WCI #395: Navigating the Nuances of Career, Family, and Money with Dr. Lisha Taylor
01:09:14
Today we covering a range of topics with our friend Dr. Lisha Taylor. We discuss topics like what the arrival fallacy is and what to do about it and how you know when you have "enough". We debate if FIRE is the cure or the cause of burnout, then talk...
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- [00:00]
Dr. Alicia Taylor
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.
- [00:16]
Jim Dahle
This is white Coat Investor Podcast navigating the nuances of career, family and money with Dr. Alicia Taylor. First of all, welcome to the podcast, Dr. Taylor.
- [00:26]
Dr. Alicia Taylor
Thank you so much for having me. It's really nice to be here and to see your face and to know that you're healing all of those things. So it's great.
- [00:33]
Jim Dahle
Thank you. I appreciate your kind words. For those who don't know, Dr. Altelisha Taylor has a new podcast out called the Wealth Minded MD as well as an associated coaching business that can all be found. You can get more details about that at WealthMindedMD WCI. Our sponsor for this episode is SoFi. Helping medical professionals like us bank, borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts as well as an investment platform, financial planning and student loan refinancing featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com SoFi loans originated by SoFi Bankna and MLS 696891 advisory services by SoFi Wealth LLC. The brokerage product is offered by SoFi Securities LLC. Member Finra SIPC investing comes with risk, including risk of loss. Additional terms and conditions may apply. All right, first of all, thank you everybody out there for what you do. This is not easy work you do. Sometimes we forget this. I was talking to one of our staff members yesterday who has a sibling who is in residency. They're in the first year of a residency and really feeling the heat and wondering, is this what I should be doing with my life? And I'm like, well, that's because up until this point they've just been preparing and now they're finally doing. And we forget that medicine is not easy. It's hard. And so all of you out there who are doing it day to day, whether you've been doing it for a year, whether you've been doing it for 30 years, thank you so much. Those of us who have needed your services recently, and I've needed a lot of your services recently, it's really very much appreciated. Okay, before we get into your questions, we gotta make sure we let you know about our big sale. Okay? This is one of our biggest sales of the year. It's Our Black Friday sale, it runs the 27th of November. It's through December 2nd. And it's basically 20% off everything at our store and our courses. All you have to do is put in the code. Save 20 gets you 20% off. That could be hundreds of dollars off some of these things. And so make sure you use that. If you've been waiting for a discount to buy a WCI course or you want to buy some swag for your favorite wcier, now's the time. Save 20% off. Okay, let's. Let's get into some questions, shall we? Well, first, I guess we got to do a correction. This is not unusual for us to do corrections on the white coat investor because we screw up a lot. And that's because we talk about complicated stuff. And I would rather get into the complicated stuff and screw up every now and then and have to issue a correction than just keep it superficial and never talk about that stuff. So this one's actually not my mistake. So I'm just covering for some of the other people who've been hosting lately. This one comes from the episode we hadn't saw on student loans recently with andrew from studentloana advice.com as well as Tyler Scott. And Andrew said this about the PSLF buyback program that he talked about in that episode. And the correction is basically that borrowers would be eligible to apply for PSLF buyback once they reach 120 months of qualifying employment, not 120 qualifying payments. So months during the save legal limbo may count as credit towards PSLF buyback. And they weren't as clear as they wish they would have been. And that caused a little confusion. We got a few emails, et cetera, afterwards. So hopefully that is crystal clear now. Okay, let's talk today, since we've got Leisha here, let's talk about arrival fallacy, shall we? Can you define that and. And give us your thoughts on arrival fallacy and why this is so common among docs and other white coat investors?
- [04:16]
Dr. Alicia Taylor
Yeah, so, you know, when I think of the arrival fallacy, I think of this idea that once we get to a certain mark, once we achieve a certain goal, that we're going to experience this exponential level of happiness and that that happiness is going to last indefinitely. And what we've seen time and time again, myself included, is that for a lot of physicians, that just doesn't seem to be the case. You know, a lot of us think that once we start making more money, once our income goes up three, four or five times, that our Life is going to be so much better. And what we experience, what I know I've experienced, is it's almost like once the money gets deposited, it almost gets taken out just as fast because we realize that when we make more money, we now have to pay a higher percentage in taxes. When we make more money, we now need to beef up our emergency funds or we need to save for a house, or we want to upgrade our car or buy a home or send our kids to private school or whatever. And so we've got all these uses for cash and it just doesn't seem like we have enough. And I think for myself, for a lot of my friends, it's surprising. I mean, we can think back to when we were interns making $60,000 a year and you couldn't tell us we weren't going to be rich making 200,000. I mean, we would look at our attendings and they would say, oh, it's not that much. And we would go, they're crazy, right? They just don't manage money. Right. They're just doing something wrong. We're going to be the exception to the rule. And the joke is on us because we now understand what they're talking about. And so I think a lot of doctors are feeling that way. So if I had to summarize it, I would say a lot of doctors sort of overestimate the amount of happiness that we're going to get from the increase in income. And we underestimate the other factors in our lives that really had the biggest benefit or the biggest impact on our happiness. Those other factors being, you know, the people that we work with, whether or not we have the support that we desire at our job, whether or not we feel like we have control over our time or over our schedule, whether or not we can spend as much time with our kids or our family. So I think we over index on the money part and we kind of underestimate the impact of the other things.
- [06:29]
Jim Dahle
Yeah, for sure. Super common. And the timing on this recording is perfect because this morning is 6:14 in the morning. Somebody posted this on the WCI forum. What's your happiness in life after becoming financially free? For those who achieve financial freedom, what is your source of happiness in life? I'm at a stage where I'm just going through the motions at work. I don't need the money made from working. However, I plan to work intensely for several more years to help out my medical partner and to ensure the department is running smoothly. By the time I quit, retire, I'll be in my 40s, but I have no clue what to do afterwards. I'm pondering the next step of life. I thought about either finding a good woman and marrying, being a playboy and living a hedonistic lifestyle, or diving deep into religion and living a monastic lifestyle. I've been talking to various people, watching YouTube videos, reading Ecclesiastes to broaden my perspectives, but I'm still not certain what direction to take. Chasing financial success is a learning in the beginning as there are so many options and possibilities on how to progress. When you start with less than nothing, you know, it's wild and I mean great that you have these choices, right? Great that this is your dilemma. I actually love helping people with first world problems and that's many of what we talk about here at the White Coat Investor for sure. But the truth about money is like you said, right, More money just makes you more of what you are already. It doesn't change you. It just makes you more of that thing. If you were unhappy before, having more money isn't going to make you happy. If you were happy before, you're probably still happy when you have more money. Now. Let's be honest though, more money does solve a lot of problems in life, especially if you know how to spend it, right? I mean, if you hate cleaning your house, guess what? When you have more money, you don't have to clean your house. You can pay somebody else to do it. And does that make you a little happier? Absolutely, it does. So let's not kid ourselves that it doesn't make you any happier at all to have a little more, right? Is it a little nicer to fly first class than it is to fly in economy? Absolutely it is. But don't overestimate how much happiness you can add to your life through things like that. It's a little bit, but it's not as much as most people think.
- [08:33]
Dr. Alicia Taylor
Yeah, I totally agree with you. In fact, it reminds me, I was having brunch with one of my girlfriends, we went to medical school together and I went to fellowship and she didn't. So she's been in attending longer than I have. And I remember we were eating and I was like, you know, this feels different than what I thought it would feel like. And she's like, what do you mean? And I'm like, to be honest, I don't feel rich. Like I thought that, you know, attending the first paycheck, the sign on, but I was like, I, I thought I was going to be living large and I don't Feel rich. And she goes, you don't? And I go, no, do you? And she goes, yeah, I think I'm rich. And I'm, you know, first I'm. There's. There's a lot of feelings going through my mind right now, a lot of thoughts. So I'm like, you know, she's emergency medicine physician like you, Jim. And I thought I knew how much she made, but I'm like, clearly she's doing way better than I thought.
- [09:25]
Jim Dahle
Well, there's a funny thing about emergency medicine, right? How much you make is mostly how much you work, right? I mean, it's mostly trading time for money. Some jobs pay a little better than others, obviously, but if people are working a lot, you can make a lot of money in em.
- [09:39]
Dr. Alicia Taylor
I've learned. I've learned. So, you know, she's like. She's telling me this, and then she's like, but, Leisha, you're rich, too. And that. I was like, okay, all right. I don't know how much you think I make, but it's probably not as much as the number you're thinking in your mind. And she goes, no, no, no, no, no. Like, you can comfortably pay your rent, your bills are on autopay, you don't think about the price of food or groceries, you travel consistently, and you have so much money left over that you can save consistently. You tithe. So, you know, you give 10% to your church, and, you know, you're investing thousands of dollars each month and you're paying extra towards your student loans. She was like, the reason you don is because you're doing all of these other things, but if you weren't doing those things, then you probably would feel as rich as you are. And so I think that for me, it was like a change in mindset of saying, okay, let me stop comparing myself to other doctors that I know make substantially more than me, and try to remember, like, how blessed I really am and that, you know, obviously there are still things that I'm hoping for and believing for and, like, trusting God for and those sorts of things. But, you know, when I think about, okay, you know, I live in a nice place, I'm very healthy, I make more than the average American. I have a decent amount of job security. I've got a family that loves me, I've got friends that add joy and value to my life. So I'm thinking, like, okay, do I live in a mansion? No. Do I have this luxury car? No. But, like, a part of this for me and, like, sort of dealing with this arrival fallacy and dealing with this idea that medicine doesn't feel like how I thought it would feel is me remembering like how blessed I am and like changing my mindset on my own life.
- [11:20]
Jim Dahle
Yeah, I think mindset's a big piece of it. This, this is an issue though, among docs and other high earners. This is very common not to feel rich. I wrote a blog post, I think originally in 2017, we trotted out again every few years, but I literally called it 10 Ways to Feel rich. Because people, they don't feel rich. And the first thing on there was, you know, actually get rich. Because there's a lot of people that think they're rich and aren't, right? Because they confuse income and wealth, right? I mean, a high income is not actually rich, right? A doctor might come out of training and be making $300,000 a year, but their net worth actually minus 400,000. You know, because they got all this student loan, they're not rich yet. So the first thing I tell people is get rich first. Then you can worry about feeling rich, you know, but a lot of it is simply recognizing anxiety, right? You're always going to have, you're always gonna have worries about money. You're always gonna. You know, it's natural for us to look up and not look down, right? We look at people that have more than us and that's the natural thing to do. So sometimes maybe we just need to hang out with a different set of Joneses, you know what I'm saying? We're hanging out with the wrong Joneses. When I was first in attending, we were not living in a very nice neighborhood. We were just off base. And those who have lived near a military base know what just off base means. It was not a nice neighborhood, but we sure felt rich compared to everybody there. Even though I was only making like 120,000 dol as an attending, just because we were not hanging out with a particularly wealthy set of Joneses. And another thing I think it helps is what you mentioned, right? You mentioned that you're a tither. Giving money away is very good for our psyches, right? You're telling your psyche, your id, whatever you want to call it, not a psychiatrist, obviously, whatever you want to call it. But you're sending this subliminal message that you have enough when you're giving money away. And so I think giving money away is a great way to feel as rich as you are. And so that blog post, anyway, you can look it up on the website 10 Ways to Feel Rich. If you're rich and not feeling rich, that's a great blog post to help you reset your mind, your mindset on it. Okay, let's talk about balance. This is a big issue for all docs. You know, I'm trying to balance right now. I'm not playing on any hockey teams because I'm still got a hand in a splint, but I'm coaching two hockey teams. I'm balancing two jobs, you know, family, more volunteer work at church, et cetera. Balance is hard for all of us, but I think it's particularly challenging for young mothers. Right. Because you throw in what's often referred to as mom guilt. Right. How do we balance this, particularly for young mothers that are struggling with this?
- [14:09]
Dr. Alicia Taylor
Yeah. So let me first say I am not a mother, but I have lots of friends who are. And so I'm going to answer this question from maybe their perspective and my conversations with them. You know, whenever. Whenever I'm talking to my friends who have just had kids, which is a lot of my friends. I'm in my 30s, a lot of my friends are in their 30s. So it's sort of this prime time where people are expanding their families, and they talk to me about that all the time. And, you know, it's especially interesting talking to my female physician friends because for them, it's not just I want to spend time with my family or I want to feel fulfilled at work. There's also this guilt of, did I do it all for nothing? You know, I went to medical school, I took out the student loans. I am very highly educated. I went through all this quote, unquote trouble. I went through all of this just to now come to the realization that medicine doesn't fulfill me in the same way. But I still feel this obligation to work because I can technically work, and I have a skill set that society finds useful. So am I wasting my skill set? You know, and so there's. There's all of these thoughts, and one of the things that I tend to say to them, one of the things that I tend to coach doctors on or talk to doctors about is maybe it's not an all or nothing. Maybe it's not a I need to quit my job or, you know, I need to work more, pay for childcare, all of those things. Maybe it is about trying to find some more flexibility in your schedule. You know, one of the things that I was really intentional about when I finished fellowship and I started as an attending is figuring out what things were most important to me. Yes, money is important. I'm someone that used to work in finance. Money is very important to me, but so is schedule flexibility, so is living close to my family. And so for me, I had to make the hard decision because I'm specialized in sports medicine, is do I want to try to make as much money as I can as a subspecialist, or is my priority having the most schedule flexibility? And I was going back and forth on this decision, right? Make as much money, work in an ortho clinic, just crank out patients, you know, make a substantial amount of money each year, or do I work in an academic institution or maybe work part time, that sort of thing. And I decided to work at an academic institution, so I make substantially less than I could. But one of the things that I have that a lot of my colleagues don't have is schedule flexibility. I only see patients 50% of the time, so I'm a full time physician, But I have 50% admin time, right? So for the academic institution, one of the things that was really important to them is not going over budget. As they hired me and I said, okay, well, what we can't come up to in salary, maybe we can make up on the back end in terms of clinical time. And so for me, I don't see patients on Fridays, I don't see patients on Wednesdays, and I don't see patients on Monday mornings, right? And so sometimes I look at my friends who are sports medicine physicians or maybe they're in other specialties, and I go, man, it would be nice to make a substantial amount of money. But then I also look at myself and I go, you know, I still making multiple six figures and I have every Friday off and I have every Wednesday off. And I can do all of these things. And so I'm saying this to say that maybe it's not all or nothing. Maybe it's about creating more flexibility in your schedule and being really good at negotiating and advocating for your case and, you know, figuring out, okay, these are the things that are important to me. Let me also see, what are the things that are important to my employer? You know, one of the things that I'm always helping women on, especially when it comes to negotiating, is sometimes we think we got to negotiate one thing at a time, right? I want a higher salary, so I'm going to try to get that. And then, you know, I want Fridays off or more admin time, so I'm going to try to get that. But sometimes it's better to negotiate it as a package. Because you don't really know what's most important to your employer versus what's most important to you. And had I not negotiated this whole thing as a package, I might not have come to the same conclusion. Right? I might not have gotten the same package. And so for me, when I'm, you know, talking to doctors, it's like, okay, how can we change your schedule? Right? Let's think about what our ideal life is. Let's think about what we really want in life. And let's say, okay, what tweaks could we make in our current schedule that would make that better? And then let's practice negotiating for that, let's practice advocating for that. You know, let's practice putting ourselves in a position to get some of those things that we want. And so I think that that really helps is the schedule flexibility part.
- [18:36]
Jim Dahle
Yeah, for sure. The phrase I often use is optimized for longevity. When you're making a career decision, what is going to allow you to stay in the career longer? Because the biggest financial risk that doctors have is burnout. You know, I mean, 50% of doctors are burned out. Now. That is the risk. You cannot buy burnout insurance. You can buy disability insurance, but you can't buy burnout insurance. So make those decisions in a way that, you know, if you're looking at this, I only think, I can do this three more years. You got to change something, right? Because three years isn't going to cut it for most of us. Most of us are not only three years away from retirement. Right? You've got to figure out a way to make this career work for you longer than that. And whether that's Fridays off or fewer patients per hour or less call or whatever it is, you need to figure that out and make those changes as early in your career as you can. And each time this sort of thing comes up, ask yourself, what's going to make me happier in the long run? Take a long term perspective on it, because in the beginning, you got a million uses for money. You got student loans to pay off. You probably have a credit card you brought out of residency. You know, you still got a car loan or you got a beater car that needs to be replaced. You want to max out your retirement accounts. You know, you want to get into a house. And now housing is so expensive you got to save up some huge down payment. You know, we've all got these great uses for money and we get this short term mindset and forget that a career is two or three or four decades, right? Pace yourself a little bit here, you know, pace yourself, for crying out loud. Okay, let's change subjects. Let's talk about fire. You know, the acronym is Financially independent Retire Early. And the question that I think we're going to discuss today is, does pursuing fire cause burnout or is it the remedy to burnout?
- [20:26]
Dr. Alicia Taylor
Yeah, so I think this is a good one. You know, I think about this all the time, especially when I'm thinking about, like, my own personal situation, because I'm someone who's, let's just say, finance minded, right? As I've got all these financial goals that I want to hit, and I'm trying to hit them as soon as possible, right? I want to achieve some level of financial freedom as early as possible, have more control over my time, do all of those things. But then I've learned that in my pursuit of those things, in my desire to reach financial freedom as soon as possible, I've sort of deprived myself of some of the things that I would enjoy. Going back to my conversation with my friend about feeling rich, right? You know, she's like, hey, if you didn't do all of those things, if you didn't have all of those financial goals, then maybe you would feel richer, right? Maybe it's that I'm still living like a resident. And so it's like, okay, I want to pursue this goal, I want to pursue this financial freedom. I want to have all of these side gigs. But now I'm so tired and I'm so exhausted that I'm thinking about quitting. And so for me, it's been all about finding a job that I would enjoy, right? Having some control over my schedule. Because what's that quote? It's like if you do something you like on a schedule that you can't control, it turns it into something that you hate. And so for me, I've been trying to do something that I like, AKA medicine, on a schedule that I can better control. And then also for me, it's also been about monetizing my passions, right? If I could do something that I love, that also helps people and that also brings in extra income on the side, then it doesn't make me feel like I'm working as much. Because I think for a lot of doctors, we know that we can work more to make more. And so our remedy for not feeling like we have enough is just working more shifts. And although that does solve the problem temporarily, like, you know, this question was it sort of can lead to burnout. So for me it's can I find Another way to make money, a way that doesn't feel like work, a way that still allows me to do something that I enjoy, and for me, that's monetizing a passion.
- [22:25]
Jim Dahle
Yeah. Let's take a question off the Speak pipe here that's on this subject. Let's take a listen to this. Hi.
- [22:33]
Dr. Alicia Taylor
I'm in my final year of residency, and my husband just completed his residency. We have been reviewing our financial plan and making some updates and changes.
- [22:46]
Jim Dahle
We, like many other physicians, don't love.
- [22:50]
Dr. Alicia Taylor
Medicine and would like to become financially free sooner rather than later. With this being said, my question is, where's the best place to put money so that we can access it earlier than the typical retirement age without all of the penalties associated with taking money out early? Thank you. I appreciate it.
- [23:15]
Jim Dahle
Wow. Before we get to our question, so let's talk about the overarching background of this question. Right? This is a doc that hasn't really even started her attending career and already wants out of medicine and is looking for really, what's the fastest way out of medicine. If she had walked in as a coaching client, what topics would you be talking about? Right? I mean, are there other or better remedies to burnout than fire?
- [23:46]
Dr. Alicia Taylor
I mean, okay, so first of all, if she came to me, I would say congratulations, right? First of all, I think she said her husband is done with training and she's almost done with training. Right. I. I know that medicine is hard. I know that training can be grueling. So the first thing is congratulations, right? This is. This is hard work, and she's done it. But I will admit it makes me kind of sad, right? Like, these are two people who haven't, you know, yet started their careers as attending physicians and already, like you said, want out of medicine. And it's a gut check for me, as somebody who, like, works with a residency program is like, what are we doing so wrong in training that two people that are clearly very, very intelligent and obviously once were very excited and optimistic about becoming doctors?
- [24:27]
Jim Dahle
Right? Imagine. Imagine reading. Imagine reading the essays they put in there on their applications to med school. Imagine what they said the day they matched into residency. Right? And now by the end of training or shortly after training, they don't feel that way anymore. Right?
- [24:44]
Dr. Alicia Taylor
Yeah.
- [24:45]
Jim Dahle
What happened? What happened? You know?
- [24:47]
Dr. Alicia Taylor
Yeah. So, I mean, so this is a gut check for me, like, maybe I can add in some more wellness programs. Maybe we can work with the schedule, you know, as somebody who works in medical education. But, you know, another thing I think is what I Tell my residents sometimes when they come to me feeling similar sentiments. Is that okay? I understand that this may not be what you thought it was going to be. I'm going to acknowledge that because I too was in your shoes. However, being an attending in certain, you know, ways is better than being a resident. I tell them, you know, your residency clinic is probably very inefficient. Things tend to get more efficient when you become an attending. Right. There are certain things that you're dealing with now that you may not have to deal with when you're an attending. Right now, you have zero control over your schedule. Ideally, you'll have more control over your schedule when you're an attending. Right now you're probably working 60, 70, 80 hours a week, if not more. You have the ability to not work that much when you're in attending. So one of my things is some reassurance that this is hard. Everyone thinks it's hard and it will get better. Now, how much better depends on what specialty you're in and the job that you choose and that sort of thing. But there is a light at the end of the tunnel. I know it looks like it's flickering and sometimes it doesn't look like it's on, but it is there. It will get brighter. And so giving some reassurance and some sort of hope and optimism.
- [26:04]
Jim Dahle
Yeah, for sure, for sure. Some hope and optimism. I mean, this is. I mean, the first thing I tell a doc when they come to me and say I think I'm burned out. The first thing I tell them is, why don't you cut back to full time? Right? I mean, a resident is working two full time jobs. Of course you're burned out. You're supposed to be burned out, right? Everybody's burned out working two jobs. That's why you can only do it for three or four or five years or whatever. You know, that residency can't last longer because everybody quit, you know. So don't make a decision about your career and how you want your career to look and your financial life to look while you're still in training, working 75 hours a week and taking Q3 call or whatever. You're just not in a position where you can make this decision yet. So don't shape everything else in your life. I mean, I love planning ahead and making financial plans and all that, but don't make that much of a definitive plan while you're still sitting there in residency, because you may feel very differently in two or three years, especially if you optimize your Career for longevity. You know, I think that's just way too early to really be making big decisions like when you're going to retire. I mean, you're still in training, for crying out loud. But let me give a little personal perspective as well when we're recording this. The day after the election, which is also the day before my podcast dropped a few weeks ago that talked about my fall up on the Grand Teton. The first episode of that. That's dropping tomorrow, the day after we're recording this. And it's 11 weeks today from the date I fell on the Grand Teton. And I just went back to work. Three days ago, I just saw patients again for the first time. Three days ago. Eleven weeks is the longest I have gone. Not seen patients since 2001. Right. It's. What's that, 23 years? I haven't gone that long without seeing a patient. 11 weeks. So my partners are now starting to refer to it as my sabbatical. Right. This time I took off. But let me tell you about my shift. I went in there and I'd been looking forward to it. I'd been missing it for weeks, right? Cause I hadn't done any medicine for weeks. I went to one conference and sat in a bunch of lectures, but I hadn't actually seen a patient in over two months. And I went in there and I sat down and I was the most patient doctor you've ever seen. I was the most empathetic doctor you've ever seen. You couldn't believe it. Every patient was thanking me of what a great doctor I was and trying to get me to be their primary doctor because, you know, I'd had this chance to step back to be a patient myself, to miss practicing medicine, to want to get back to fight and work hard so I could get back. And it was a totally different perspective than when I'd worked six night shifts in a row as a resident. And I was totally burnt out because six night shifts in a row suck. It's terrible. You're taking care of crazy, weird medicine and a certain segment of society and a million people want your attention all at once. And it's burnout inducing. So I think step back for a little bit. Maybe if you're feeling this burned out at the end of training, take a couple months off before you start your attending job. You know, start out, you know, not in some crazy call kind of schedule. You know, set it up in a way that you're going to have some career longevity.
- [29:38]
Dr. Alicia Taylor
Yeah, yeah, I agree with that. I Agree with that. I definitely took several months off before I started my attending job, and I think it made things so much better. Like you said, Jim, I was looking forward to seeing my first patient as an attending. I was patient. I wasn't rushing with the patients. And so it was. It was really, really nice. And so, yeah, I encourage all of almost everyone that I, you know, talk to who is ending training to take some time off for that reason, because I don't think that this caller is in the minority. I think a lot of residents, like you said, feel burnt out, feel like medicine isn't what they thought it would be, and are thinking, how long do I have to do this again? Right? And so, you know, taking a couple of months off after training is a good reset. Oftentimes, one of the reasons why people may not do that or may be apprehensive is they're worried about how they're going to pay for health care or having some money during that time. And there are ways that you can get some money, right? You can do some locums, work at an urgent care or something like that to make ends meet. You know, once a week, once every two weeks or something like that. You know, you can activate COBRA at your job. There's different things that you can do to make time for this. But like you said, Jim, I think. I think a lot of residents are going to feel, are feeling burnt out and should strongly consider taking some time off after training.
- [30:47]
Jim Dahle
I think it might help to go back and read your admissions essay. Med school, too, right? I mean, somewhere deep down inside you, and it's been beat up like crazy the last, you know, seven or eight or nine years, somewhere deep down inside you, that optimistic, you know, loving, empathetic person is still in there. They're still in there. And to get them back out might require you not working 65 hours a week. It might require you working 30 hours a week. But I'll bet you can rediscover the joy of medicine. Most people, maybe not everybody, maybe a few people, you just chose the wrong career. And. And either you got to get out of it and go do something else, or, you know, save up enough money and get out in a few years so you can go do something else or just go do something else. You know, hopefully you don't have some huge student loan burden that forces you to practice medicine for a few years if you really, really, truly hate it. But I would hope that we could get most people feeling this way at the end of their training to a point. Where they can enjoy a 10 year, 20 year, 30 year plus career in medicine and find the joy they were looking for, the financial, you know, success they were hoping to get from it as well and make a huge contribution to society. Okay, we got to answer the question too, right? The question is how should I save differently? Thinking about early fire, Well, a lot of people think they should go, oh well, I gotta do, I gotta save it all in taxable, I gotta save it in my taxable account. I don't want to contribute to retirement accounts. I would caution you against that. Almost always you're going to be better off saving for retirement, even early retirement. In retirement accounts, in tax protected accounts, these are accounts where the growth is protected from taxes, right? You don't pay on dividends and capital gains as you get them as you go along and you may get a tax arbitrage later when you pull the money out, but it's also asset protected, right? If heaven forbid, you have a very rare above policy limits judgment against you, you got to keep that money in those retirement accounts, you know, ARISA accounts in all states and IRAs and solo 401ks et cetera, that aren't ARISA accounts in many states they get at least some protection, if not complete protection like we do here in Utah for our retirement accounts. And the other thing to keep in mind, if you have a job offering you a 457, right, there's no age 55 rule, there's no age 59 and a half rule that applies to 457s. You could set up a 457 so it pays out over five years as soon as you separate from the employer. And so maybe that's an account that can grow in a tax protected way that offers some asset protection you can touch before age 55 or age 59 and a half. The other thing to keep in mind is the number of exceptions to these rules are just plethora. There's lots of them, right? You can pay for health insurance without the 10% penalty applying. If you're disabled at all, you can get it out without 10% penalty applying. You can get it out in death. There's the SEP rule, substantially equal periodic payments rule. Basically, as long as you take out the same amount every year from the time you retire at 45 or whenever until you're 59 and a half. Then there's no 10% penalty on that. So you can get to your retirement money earlier than you think you can without that penalty. That's not a reason to just Stick everything in taxable and ignore your retirement accounts. But the truth is, those who are saving enough to retire that quickly, they're probably maxing out their retirement accounts and saving up a big taxable account anyway. So you're going to have a taxable account you can touch and just let those 401s and IRAs ride until age 55 or age 59 and a half. Do know about that age 55 rule though. At 55, you can get access to your 401k, right. If you don't roll it over into an IRA if you separate it from the employer, right. You quit working, you've retired, you can get that at 55 penalty free. You don't have to wait until 59 and a half for a 401k or a 403b. So keep that rule in mind as well. That'll get you four and a half more years that you might not have thought of. What do you think? What would you tell somebody that wanted to save, wanted to retire really early and was worried about those 10% penalties of taking money out of retirement accounts early?
- [34:52]
Dr. Alicia Taylor
Yeah, exactly. So retirement accounts is my number one. I know that this caller said that they wanted to avoid fees and penalties, but as you mentioned, Jim, there are a lot of exceptions to the rule. Right. And so for me, I plan to not work until I'm 65 either. I still utilize retirement accounts and for me, that encompasses three main accounts. So number one, my 403B, that's at my job, right? So I contribute the maximum each year and I get the match at my employer. That also encompasses for me a solo 401K. If you're one in three physicians that have a side gig, that's what the studies show. One in three physicians has a side gig. If you are one of those positions that has a side gig, then you have the ability to open up a solo 401k. And so that's one of the things that I've done, right? So with a Solo 401k, I can contribute more money to retirement accounts in addition to what I already contribute at my jobs, 403B. So with that solo 401K, I can contribute pre tax, you know, 20% of my profit, plus I can set it up to do a mega backdoor Roth and contribute even more money. So for me, it's maxing out my 403B. It's contributing as much as I can to my solo 401K. It's doing my backdoor Roth IRA each year. So I utilize retirement accounts. That's number one on my list. You know, another account that you may want to consider, or this caller may want to consider is an HSA account. So if you've got access to a high deductible health plan at your job, then that means that you can contribute money to an HSA account. What I think a lot of people may not realize is one of their biggest expenses in early retirement is the cost of healthcare. And so utilizing that HSA account can be particularly beneficial. So I put some money in there. You mentioned the 457B account. You know, a lot of physicians, especially physicians that work at non profit institutions, have access to that. And like you mentioned, Jim, it's not a retirement account, but it works really similarly to one and that you can put in pre tax money, allow that money to grow tax free. And then unlike a retirement account, you don't have to utilize all these exceptions to the rules. You can kind of get access to that money as soon as you leave your employer. And so I like those accounts. And you know, one of the things I always tell my friends is don't be afraid of a taxable account. You just, you know, do that one after you've done the other ones. But there's nothing wrong with having money in a brokerage account. So that's just calling Fidelity, calling Vanguard, you know, contributing some money into that account, investing it in some reasonable way, you know, index mutual funds, that sort of thing, and letting it grow over time and then knowing that you have the ultimate flexibility with that account as well. And so that's kind of my waterfall work retirement account, solo 401k, backdoor, Roth IRA, HSA, 457b, and then my brokerage account. So that's kind of the waterfall that, that I would go through.
- [37:29]
Jim Dahle
Yeah. And even if you clean out that entire brokerage account before you get to age 59 and a half, that's okay, right? Because after you get to 59 and a half, all that other stuff is accessible with no penalty. Very flexible. Right. People forget you don't have to wait till RMD age, you don't have to only take out your rmd. You can take out whatever you want out of those accounts, penalty free. If it's pre tax, you gotta pay taxes on it. If it's a Roth account, you don't even have to pay taxes on it. So I think people worry about this question too much, and I agree. Too many people out there worry about using a taxable account. Right. A taxable account can still be invested very tax efficiently. Most of our portfolio currently is in a taxable account and that's a good thing because it usually means you're making enough money that you can save more money than you can put into your retirement account. It's not a bad thing to have a taxable account. All right, let's change the subject. Let's talk about inheritance. And to tee this up, I'm going to read an email I got, which I thought was really good, that came in from a regular white coat investor. I'm a doc in my late 50s and I'm starting to consider retirement in the not too distant Future. I have two young adult children, ages 19 and 23, and I'm interested in finding a way to give them an advanced inheritance. I've worked hard and saved and invested well throughout my career and am fortunate to have more than enough to retire well when I want to. However, I don't see a lot of value in sitting on all this money until I am old and dead. Hopefully a very long time from now. Hopefully my children won't be in a position to need my money in their 50s or 60s, but they're certainly at a period in their life right now where that money would do them so much good. But I don't really know how all of that works given gift taxes, capital gains taxes on my taxable account, et cetera. Curious if you have any ideas of how to provide an inheritance for my children while I am still alive. And I think you've had a bit of an experience with this. You want to share your experience?
- [39:25]
Dr. Alicia Taylor
Yeah. So I, you know, I love this question because it reminds me of a conversation that I've had with my dad. So my dad is in his early 60s to mid-60s. I can't remember his exact age. Dad, if you're listening, I'm sorry, but he's somewhere in that range, you know, and he's made several comments to myself and my two older brothers that he could comfortably retire now if he wanted to, but he likes his job and he says, you know, me and your mom will be well taken care of. You know, I don't even know if I could spend, you know, all of the money that I have now. And of course that made me giddy, right? I'm like, okay, you know, I don't have to worry about helping mom and dad out. That's nice and.
- [40:01]
Jim Dahle
Exactly. That's the number one thing that's what I love about hearing, you know, your parents are doing well and Katie and I are lucky Both of our parents are okay and that's number one, right? I don't have to go and help them, that they have enough for them. Forget the inheritance. I just want, you know, not to have to help them because there are so many docs out there that it's not just their parents they're helping. It's siblings, it's uncles, it's aunts, they're supporting, you know, people moving from another country. And you know, it's a big deal. But I love the, your first point, which is, you know, you don't have to help them, which is great. That's a, that's a great gift. Even if parents can give nothing else to their kids, if they can be self sufficient, that's wonderful.
- [40:38]
Dr. Alicia Taylor
I mean, dad, that might have come off wrong. I do love you. Like, I wouldn't mind helping you if I needed to. I just need to put that disclaimer out there. But yeah, so I was like, okay, he doesn't need my help. The second thing, I was like, ooh, maybe there's something in it for us, right? Me and my two older brothers, we're like, oh yeah, all right, Dad's gonna come through for us. But then to be honest, I got a little sad because similar to this email, I thought to myself, well, my parents are really healthy right now, even in their 60s, and so there's a really good chance that, you know, they're going to live to be in their 80s or 90s or beyond. And so that means by the time they pass away, if they left us an inheritance, we would be in our 50s and 60s. And you know, no one's going to turn down free money, of course, but like, that's probably not going to change the quality of our life. My brothers and I have pretty good jobs, are pretty financially sound, but you know what would change our lives? Getting that money now because, you know, my dad paid for my undergraduate education. I went to Duke University, so that was not cheap. But he did not pay for my medical school. He was like, nope, nope, nope, you need to invest in your own education. So I've got student loans that I'm paying off, right. My middle brother and my sister in law are pregnant with baby number two, right? And so my brother is having this dilemma of now I've got to pay higher childcare costs and so do I switch jobs so that I can make more money. But then in the act of me doing that, maybe I'll see my kids less. My oldest brother, him and his wife are running out of space. In their home. And so they are actively house hunting. And so then getting money now could make a big difference. Right. Maybe they could afford a nicer home in a safer area, in a better school district. And so all of us are like, dad, so you want to give us an inheritance, you know? Right. And don't you want your kids to live a better life than you did? Right. But my dad wasn't buying it. He grew up very poor and he felt like the act of him sort of struggling to make ends meet helped him to develop the grit and the resilience that made him who he is today. And so he's like very against giving us cash. And so we were like, okay, dad, can we come to some sort of, you know, happy medium here? Don't you want to help us out? And so he decided that he wasn't going to give us money, but he was going to give us experiences. And so he didn't have the ability to travel when he was younger. He didn't have the money, he didn't have the time off. But now he has both of those things. And so he's decided that he's going to pay for family vacations. He said, you guys use your money for your financial priorities. You want to pay off your loans, you want to buy a house, you want to, you know, pay for daycare, do those things. But I want to create memories with you all. And so I'm going to pay for family vacations. And so last year we went to Alaska. We did this seven day Alaskan cruise, which was incredible. My aunts and uncles were there. Earlier this year we went to South Africa, we did Cape Town, we did the whole African safari. We flew to Zimbabwe and saw Victoria Falls. You know, we've done Europe, so we've gone to London and Paris and Switzerland and Italy and all of these things. And so for him, he loves it because he gets to travel and he gets to travel with the people he loves the most, which is us, of course. And we like it because we probably wouldn't be traveling as much like this without his help. And so my dad's happy medium right now is paying for family vacations. The other thing that he's done is he said, hey, I don't really want to give you cash, but I don't want you to feel like you're struggling to that degree. And so if you need money, you have to come to me with a business plan. So if we have some idea or something within reason, he says, then we have to tell him what we Want the money for? Tell him the amount, right? Create some sort of plan. And he says that we create the terms of how we're going to pay him back. And he says it's an interest free loan, but if we need something, then we can come to him and get it. And so for us it's been really cool because I think my brother wanted to go to China with his business school class, right? And he couldn't afford the trip. And so he came to my dad and you know, my dad said, okay, I'm going to pay for this trip, but you've got to pay me back. You've got to pay me back over X amount of time, X amount of dollars. And so for us, it still gave us that feeling of like, there's not free money, but it also gave us that security of knowing like, dad's got our back. So that's sort of how my dad has done it. I wish that he would do it the way you're doing your kids, Jim, because I really could use that 20s or 30s fund. But you know what? I'm going to choose to be grateful for what I have.
- [45:11]
Jim Dahle
Yeah. For those who haven't heard about our plan, this is the dilemma, right? You want to give them money when the money is actually useful, and money's not that useful when you inherit it in your 60s. So that's the one dilemma. The second one is you don't want to ruin them, right? You don't want to keep them from developing grit, from developing a career, from learning how to save money and invest and becoming financially literate and financially disciplined and all that. And so the way we've decided to balance this in our plan is what we call the 20s fund, right? So we start saving up for them a UTMA account, which is basically a taxable account. It's a custodial account in Utah. It becomes theirs at age 21. And we got our first kid becoming 21 in about six months. So this is not that far away. That is the mainstay of it. But it's also a 529 and it's a Roth IRA. You know, if they earn any money as teenagers or let them, you know, basically spend their money and put my money into the Roth ira, it's actually the opposite, right? They're spending my money and putting their money in the Roth IRA. But that's their 20s fund. There's a Roth IRA and a 529 and UTMA. And the idea is it's just a whole lot more useful to get money in your 20s than it is in your 60s. So they can use that money for, you know, a summer in Europe or missionary work or a wedding or a honeymoon or a car or a down payment on a house or to supplement an education. Although I think our 529s, you're going to cover that just fine. That's the idea behind the 20s fund. And then even if we keel over tomorrow, they don't get squat until they're 40, right? So they gotta have a career. You gotta, for 20 years, you gotta go fend for yourself. Yes, you're getting this head start, but for 20 years, you gotta fend for yourself before you're getting anything. And even after that, they don't get it all at 40. They get a third of it at 40, a third of it at 50, and a third of it at 60. And my theory behind that is just the three strikes rule, right? If you blow it three times, that's on you, you know, but if you blow it once we got you covered, you're gonna get some more money when you're 50. And so hopefully at 40, when they get that money, they pay off mortgages or, you know, become financially independent or whatever. And at 50, they're, they can be done working if they want to be. And 60, mostly they're just generating. They're just, you know, investing that portion for the next generation. And, you know, so that's the way we kind of thought about our estate plan. And who knows, maybe we change it down the road, but that's how we balance these two things of giving them money when the money's actually useful, along with not ruining them. So I think every doc probably has, with children anyway, has that dilemma they're struggling with.
- [47:47]
Dr. Alicia Taylor
Yeah. So I need to make sure my dad listens to this episode so that, you know, he can replace your 20s fund.
- [47:56]
Jim Dahle
You're already established in your career, you're doing great.
- [47:59]
Dr. Alicia Taylor
You know what, we can easily name it the 30s fun. I have no problem with that at all. So, dad, if you're listening, Jim's real good with money. And.
- [48:11]
Jim Dahle
You know, we probably ought to talk about some of the technical aspects of it here too. The questioner wanted to know, how do the gift taxes work? Well, remember what gift taxes are, right? Gift tax is just using up your estate tax exemption. So anytime you give more than the gift amount, which is $18,000 a year in 2024, you know, $18,000 a year, you can give each person in your life that you want and your spouse can give them $18,000 too. So if it's a married kid, you know, you can get me 18,000, your spouse can give me 18,000. So that's what, $72,000 a year you can give them without filing a gift tax return. But if you give them more than that, you have to file a gift tax return. And what that does is it just subtracts that money from your eventual estate tax exemption. You don't actually have to pay any taxes, you just have to file the return. So no big deal to give them gifts in that respect. If it's less than 72, you don't have to do squat. If it's more than that, you just got to file a gift tax return. As far as capital gains taxes work, you can actually give them your appreciated shares if you want, and they can sell them and pay taxes in their capital gains bracket, which might be 0% depending on how much money they make. So they can, this is the way, like giving to charity, that you can flush capital gains out of your taxable account. And so that can be a smart way to give to kids as well, as far as the technical aspects go. But I think the far more interesting question is how much do you give to them? When do you give it? What are the conditions under which is given? And I think every family is going to solve that a little bit differently.
- [49:43]
Dr. Alicia Taylor
Yeah, I agree with you. I don't yet have kids, but I think for me I'd probably do a blend of what you're doing and what my dad's doing. I like the family vacations. My brothers and I are really busy and it's not just our immediate family. Both of my brothers are married and so their spouses or my sister in laws come too. And so it's really nice. I don't remember the last time I spent 10 straight days with my brothers. You know, aside from, you know, when we all lived in the same house as kids. And so it was really nice to create those memories. You know, these trips and these vacations are things I, I will never forget. And so I really do like that aspect. But you know, similar to how you're thinking, I think my brothers and I are also like, come on, dad, come on, dad. Like, get just a little bit would be great. So I think a blend of both of those things would be great. I love the 529 accounts. I think a lot of physicians are doing that sort of help with college costs or higher education costs for their kids. So I think that's good. I've thought about A UTMA account, even for my nieces and nephews. I think for me, I'm a little nervous about the fact that they could spend it on whatever they want. So, Jim, you have to report back to us. Do you regret it or not?
- [50:51]
Jim Dahle
Well, here's the beautiful thing about it, right? This 20s fund is tiny compared to what they should get at 40, right? So we get a see how they manage money. And if they suck at money, guess what? That estate plan is probably changing and maybe they're getting like a spendthrift trust instead of trusts they'll have access to. And so I love the idea of being able to watch them. And this assumes we live, of course, which, you know, given some of my hobbies, is not necessarily a given. But you know, to be able to watch how they manage that money, that relatively small amount of money in their 20s, I think tells us a lot about what they're going to do when they get a bigger sum of money at 40 and 50 and 60. And that's another thing I really like about how we've set it up.
- [51:35]
Dr. Alicia Taylor
Yeah, yeah, I like that. And I want to give a plug here because I think for a lot of physicians, especially those of us who work at academic institutions, oftentimes one of our benefits at our job is like these law packages. Jim, I don't know if you've heard of them, but it's like you pay like 15 or 20 bucks or so a month and you get access to lawyers and you can utilize these lawyers to set up a trust fund for your kids or a living will or whatever it is. And so this oftentimes is a really good solution. And so if you're someone who's listening to this and you're thinking, hey, I like Jim's idea, then you might want to look at the benefits at your job and just see if that is available to you.
- [52:15]
Jim Dahle
All right, speaking of a plug, let's hear a little bit more about what you're doing lately with this company you've started, this wealth minded MD company.
- [52:26]
Dr. Alicia Taylor
Yeah, I'm so excited. It is a company that I started with my friend and fellow physician, Dr. Brittany Hallford. And our mission is really to help women in medicine not only better manage their money, but also to increase their income. You know, I worked in finance before I went to medical school and everybody thought I was crazy to leave a job in private equity to go to medical school and take out six figures in student loans. They thought it was insane. And I don't regret my choice at all. I love Being a doctor, I love working in medicine, but I've always been looking for a way to sort of blend these two worlds together. You know, my love for finance along with my love for medicine and one of the ways that I've been able to do that is to help doctors get better with money. Help doctors live a life of financial wellness, especially female physicians. You know, we know that there's a gender wage gap. We know that women, over the course of their careers make substantially less than their male counterparts. Obviously, there are a lot of factors at play there, but I really want to help rectify that. And one of the ways that Brittany and I are working to do that is through our new group coaching program called Boost. Boost is a 12 week program that helps women in medicine increase their income inside of their jobs and outside of their jobs. So the make more money at your job part helps women with negotiation strategies so that they can increase their compensation and get more control over their time. The second part, which is make more money outside of your job helps women learn how to monetize a passion and start a profitable side hustle while also leveraging some of those 1099 tax benefits. And so we're really excited about this. If you're a woman in medicine who feels like, you know, you don't make as much as you should and maybe you don't feel as competent when you come to the negotiating table, Boost is for you. If you're someone who does make a large amount of money, but you're looking for ways to sort of transition out of medicine and want to sort of transition into a new career or have a new side hustle, then Boost is for you. And so we're really excited about this. We've also got a free masterclass to help you get started. And you can go to wealthmindedmd.comwci to access that. Again, it's wealthmindedmd.comwci you can get access to that free masterclass. You can also sign up for Boost right there on the site. You know, of course we've got a discount for all our WCI community. And so if you use code WCI300, you can get $300 off that coaching program. And so that's one of the things that I'm really excited about. Of course we've got our Wealth Minded MD podcast and so just really excited for all the things that we can do to help doctors, especially female physicians, get a lot better with money.
- [55:03]
Jim Dahle
Awesome. Now, I know some of you are out for a run or walking the Dog or you're driving to work as you listen to this and it's really hard to remember URLs. So we're going to make this as easy as we can for you. Whitecoatinvestor.com Boost B O O S T will take you to the same place. Whitecoatinvestor.com Boost okay, now you wanted to ask me a question while we were on here a little bit about kind of a complex retirement account situation. Let's talk about that for a minute before we let you go.
- [55:35]
Dr. Alicia Taylor
Yeah, you know Jim, you're like my go to source. You know, it's so crazy because my dad is a tax professional so I kind of think he gets a little jealous that sometimes I like go to you for a question like I'm gon email Jim and so I'm coming to you to say you're like my resource on this. So I have a question about whether or not we really get penalized if we contribute more than the $23,000 to retirement accounts. Let me give you this scenario. So let's say you got a doctor who has two jobs, right? They work at an academic institution for job A. And then let's say they work, you know, some locums or whatever, or not locums. Maybe they just work in private practice for job B. Right? So they've got access to a 403 and a 401k or something like that. Could they theoretically contribute $23,000 pre tax to job A and then contribute another 23,000 as a Roth contribution to job B? Obviously we're only supposed to have only one employee contribution, but what happens if we contribute more? Do we get thrown in jail? You know, is there some crazy penalty or does the government kind of just look the other way? You know, and so I would love to hear Jim's, you know, adv me on how I can maximize having access to two retirement accounts.
- [56:51]
Jim Dahle
All right. Well, there's actually a lot that goes into play on this particular question. The first thing to keep in mind is sometimes you win audit roulette. Right? You just don't get audited and you get away with something. And this happens to a lot of docs out there that I think are taking bogus deductions for their cars and home offices and all kinds of stuff. They're just playing audit roulette and they didn't get audited it. That doesn't make it legal. Right. And there's a lot of things that you might get away with and I think particularly around retirement accounts. I don't think anybody's looking all that closely, let's be honest. And so I think a lot of people get away with stuff they're not supposed to. But let's go over the rules. So you know what the rules are. The first rule to keep in mind is that no matter how many retirement accounts you have, you only get one in 2024. If you're under 50, it's a $23,000 deferral. Whether that's tax deferred or whether that is Roth, you only get one of them. Even if you're access for eight, even if you have access to eight different retirement accounts at eight different unrelated employers, you only get one of those. Okay, it's $23,000. You can split it between multiple people, but it's $23,000. That's it. The other rule to keep in mind is that every unrelated employer has a different 415C limit. So if you're under 50 in 2024, that's $69,000, and that's the total of employee and employer contributions. So if you're maxing out your employee deferral at your regular gig, which is probably what most stocks do, and they get a little bit of a match there, then when they go over to their solo 401k for their 1099 gig, they can only make employer contributions. And that's about 20% of your net profit from that job. And so that's what most people are doing. Now, if you get a customized plan and you can make after tax contributions to it and do an in plan conversion, this is known as the mega backdoor Roth IRA process. You could get a lot in there without making necessarily that much money at the 1099 gig. You know, if you made, if you only made $80,000 there, you could probably put $69,000 of after tax employee contributions and convert it to a Roth ira. So that's one way you get a whole bunch of Roth IRA money. There's one other rule, one little complexity there. If your main gig account is a 403 and not a 401k, and this is very unfortunate, but it's just the way the law is. If it's a 403B and you have a solo 401K on the side, those two accounts actually share the same 415C limit, the same $69,000 limit. So you can't put more than $69,000 in if that's your work situation. Whereas if it was a 401k and a solo 401k. You'd get two limits. So that's really unfortunate, but we had a blog post not long ago on the blog of this fellow, this doc, who had four jobs and a 403B at each of them that was offering him matching dollars. And he was trying to figure out how much money to put into each one to maximize the match. And it turned out he could not get all the matching dollars he was being offered without contributing more than $23,000. And it turns out the way the rule's actually written is you can contribute more than $23,000, you just can't deduct it. And so he could put in like $28,000, get all of his matching dollars, and then theoretically pull that money out if he wanted to, if he got to keep the matching dollars and nobody noticed, or just leave it in there and recognize that he's not going to get the deduction for that money and it was worth it because he got so much money in matching money that it made it worth it. And then the question came up, well, what about Roth money? Right. Because that's already post tax money anyway. And the conclusion we basically came to was that nobody really knows. It's not really outlined there. If that's Roth money, what happens? Exactly. Surely you're not going to get thrown in jail, though, but the IRS may audit you and say you got to pull this money back out of the account with its earnings and maybe pay a little bit of a interest or penalty or something on that money. So when you get into these really complicated situations, it's not always entirely clear. And like I said, I don't think this is being watched very carefully, to be honest with you. So I think most people that make a mistake, they win. Audit roulette. I'm not going to advise you to play audit roulette, but I think a lot of people do win. When they do play, I think it's usually accidentally quite honest. But those are the main rules that are clear that everybody understands. This is the way it works. Don't expect your accountant necessarily to understand that because you might be their only client using two 401ks. But, but those are the rules for, for how to use multiple 401ks. Does that answer your question, Lisa?
- [61:40]
Dr. Alicia Taylor
I think it does. What I'm hearing you say, Jim, is that I'm not supposed to do it, but I probably could get away with it. But, you know, I, I don't, I don't like the idea of doing something that's illegal. So I will try to, you know, make the correct contributions. I just was curious because people ask me this all the time and I was like, I don't know, like maybe you could over contribute. And nothing happened. So I'll stick to following the rules. Jim, that's what you said.
- [62:07]
Jim Dahle
You're talking about putting $23,000 in your 403B and then turn around and put in $23,000 as a Roth employee contribution in your solo 401K.
- [62:16]
Dr. Alicia Taylor
Yeah, yeah, yeah.
- [62:17]
Jim Dahle
That's, that's clearly not permitted. So notice, you may get away with it, you may get away with it for cares, but it's pretty clear you can't do that by the rules.
- [62:26]
Dr. Alicia Taylor
Noted.
- [62:27]
Jim Dahle
Okay.
- [62:27]
Dr. Alicia Taylor
You know, because I work sometimes at the urgent care and I wanted to be 1099, but they wanted me to be employed. It was a battle that, you know, I lost. And so I have, I'm technically an employee at two places. And so I was like, man, you know, that place gives me a match. My main job gives me a match. Is there some way that I could, you know, maximize this opportunity, if you will? And so very similar to. It seems like the blog post that you wrote with the fellow where we're trying to figure out the best way to do this. And I don't think I'm the only physician in this position that has access to a lot of different 401ks. I have taken your advice on. I've set up the solo 401k. I do the mega backdoor Roth each year. And so that's great, you know, let me not be greedy, I guess, and follow the rules.
- [63:10]
Jim Dahle
You can, you can always invest more in taxable. Right.
- [63:15]
Dr. Alicia Taylor
Thanks.
- [63:16]
Jim Dahle
You don't, you don't have to break the rules just to be able to invest more money. But it's true. Lots of docs are getting a hundred thousand, two hundred thousand, even three hundred thousand dollars into retirement accounts in a year. You know, especially if you've got access to a cash balance plan and you're in your 50s or 60s, it's amazing how much tax protected money you can contribute in a given year with the right setup. So. Good question.
- [63:37]
Dr. Alicia Taylor
Thanks.
- [63:38]
Jim Dahle
Well, I think we're getting close to the end of our podcast. I wanted to thank you so much for being so willing to come on and be a friend of WCI and help us have more voices on this podcast, help provide additional perspectives to white coat investors out there, because there's plenty of people out there that are older than me or younger than me or in different part of the country than me or in different specialty than me. And sometimes it's good just to hear from another doc or even another professional that's not a doc and learn from a different perspective. So thank you so much for being willing to come on.
- [64:10]
Dr. Alicia Taylor
Dr. Taylor, thanks for having me. I appreciate it.
- [64:14]
Jim Dahle
All right, as I mentioned at the top of the podcast, SoFi is helping medical professionals like US bank borrow and invest to achieve financial wellness. Whether you're a resident or close to retirement, SoFi offers medical professionals exclusive rates and services to help you get your money right. Visit their dedicated page to see all that SoFi has to offer at whitecoatinvestor.com SoFi one more time, that's whitecoatinvestor.com sofi loans originated by SoFi Bank NA NMLS 69691 Advisory Services by SoFi Wealth LLC. The brokerage product is offered by SoFi Securities, LLC, Member FINRA SIPC investing comes with risk, including risk of loss. Additional terms and conditions may apply. All right, thank you to all of you out there telling your friends about the podcast. Especially if you hear something on it that's applicable to them, just send them a link to the podcast. Tell them how many minutes into the podcast that is. This is a really powerful way of sharing something that can really help somebody else out there. As you know, incorporating this information into your life has saved you much aggravation and hopefully thousands and thousands or even millions of dollars over the years. You know how valuable that can be. Please share it with your friends when there's something that's useful to them. Don't forget we have our Black Friday sale November 27th through December 2nd. 20% off everything. As far as our store goes and as far as our online courses you go, you can go to the store at shop.whitecoatinvestor.com you can get Christmas gifts, anything you like there. T shirts. We got all kinds of swag, we have some yetis and all kinds of fun stuff there. So check that out. The Courses if you've been thinking about taking a white coat investor course like fire your financial advisor that helps you write your own financial plan. Or no hype Real Estate investing. If you've been thinking about getting into real estate, this will help you choose the right way to do that. Or maybe just our continuing financial education 2024 course, right? This one's totally good for CME. There's a version of Hire your financial advisor that's also qualifies for CME that you can Check out as well. But all Those courses are 20% off, off through December 2nd. So check those out as well. All that information, as always is available@whitecoatinvestor.com thanks. For those of you leaving us a five star review, a recent one came in saying truly life changing. To have all this knowledge available to me is life changing. My life, financial and social will never be the same. Now that I have this knowledge, it will be a major player in my financial success. All of this inspired myself and a few others to start a finance interest group in medical school, got us published in academia, and now I'm grant funded developing personal finance curriculae for my medical school. Thank you so very much. Five stars. Well, Rod, thank you for what you're doing. Right? If we had somebody in every medical school out there, every residency out there, giving lectures, developing a financial curricula, I could quit doing this and just spend all my time climbing and canyoneering, mountain biking and skiing. But I'll keep going for a while because I do enjoy helping people. And we do not yet have somebody developing this sort of a curriculum in every residency, every medical school across the country. If you need help doing that, you're welcome to use some of my slides that I've developed. I've got a set developed for both attendings, residents and students. You can find that under the WCI portion of our menu at whitecoatinvestor.com just scroll down to the Financial Educator Award. We give an award out to a financial educator that's a doc every year. But on that page that announces that Financial Educator Award, that's where you can find those sets of slides that can get you started. You can modify them as you need it. Use what you like, use what you don't like, don't use what you don't like, whatever, I don't care. It's just to help you give a lecture. And you will be surprised. It's intimidating, I know, to get up in front of docs and talk to them about their money. But the truth is, and you'll realize this when you get to the end of your presentation, people start asking questions. The level of knowledge out there is abysmal, right? Most of the questions you're going to get are going to be so easy that you can't believe somebody's even asking you that question. So please, get out there, give these lectures, share your personal experiences. You don't have to know everything in order to help somebody. It's just like in medical school or residency. Who gave you the best. You know, the best advice is usually the person who was a year ahead of you, right? An MS.3 giving advice to an MS.2 about what rotations to take, a third year resident giving advice to a second year resident about what kind of jobs to take. You know, it's how it works. You only have to know a little bit more than somebody else to be helpful to them. So thank you for those of you out there doing that work for everybody else, we'll see you next week. Keep your head up and shoulders back. You've got this. We'll see you next time on the White Coat Investor Podcast.
- [68:53]
Dr. Alicia Taylor
The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.