Case 3: The Four Physicians


A Tale of 4 Physicians is a favorite post of mine by @PhysicianOnFire, who has returned to the theme several times to explore the impact of some common lifestyle choices and events.  You should at least read the original post to get some context for the plans we explore for each doctor below.

The four physicians have the same gross income, but varying levels of saving and spending.


Each physician has a goal of financial independence, following the 4% rule at their preferred level of spending.

  • Dr. A:  $2 million ($80k/year spending)
  • Dr. B:  $3 million ($120k/year spending)
  • Dr. C:  $4 million ($160k/year spending)
  • Dr. D:  $5 million ($200k/year spending)

Special Considerations

Typically, someone will set a goal and based on their financial situation will try to figure out what they need to save to reach their goal.  In this example though, each doctor has established a savings rate and wants to know what their future will look like.

That is: Given my target goal and planned savings, when will I reach financial independence?

Let’s assume their plans start the day they turn 30 years old.

Balance Sheet

Each physician starts out exactly debt free but with nothing saved for retirement.  They all make the same $300k per year, which we’ll assume merely rises at the level of inflation.  So the balance sheet, for our purposes, starts with a net worth of exactly $0.

Make A Plan

Based on their spending choices, Physician On Fire breaks down the monthly retirement contributions each doctor makes:

  • Dr. A: $12,750 per month, a net savings rate of 63%
  • Dr. B: $9,583 per month, a net savings rate of 47%
  • Dr. C: $6,417 per month, a net savings rate of 31%
  • Dr. D: $1,667 per month, a net savings rate of 9%

The author looks at 2%, 4%, and 6% real returns, so we’ll adjust the model for 6% stock returns and 2% bond returns and test three portfolios:

  1. 100% stocks (6% returns)
  2. 50/50 stocks/bonds (4% returns)
  3. 100% bonds (2% returns)


Dr A

Dr. A is the star of the show, so let’s see how her retirement plan looks with 100% stock allocation:

Figure 3.1: Dr A’s Path to Retirement – 6% Average Real Returns

Dr A is saving so much money that the best and worst case scenarios almost don’t matter to her.  The market could tank horribly, or dramatically exceed expectations and her retirement age shifts just a bit, anywhere from the expected 38.7 years (best) to 43.4 years (worst).  She could put her money in a sock drawer and still retire at Age 43.

There’s a deep and profound lesson here that I think is worth repeating:  Your Savings Rate is vastly more important than your asset allocation for all but a vanishingly small number of people.

You’ll see the same lesson repeated if we compare the 100% stock allocation above with 50-50 and 100% bond allocations:

Figure 3.2: Dr A’s Trajectory with different stock allocations

Here’s a zoomed in view of Figure 3.2:

Figure 3.3: Dr A’s Trajectory (Zoomed In)

Amazingly, even in the 10% Best Case Scenario, where a robust market provides excellent returns, Dr A’s retirement party is delayed by only 11 months when she shifts her allocation from 100% stocks (6% return) to 100% bonds (2%) return.  With expected or worse than usual returns, the differences in allocation become negligible to her retirement plans.

The Four Doctors

Now let’s just consider the 100% stock allocation and compare across Drs. A-D.  Recall that Drs. B, C and D are saving at lower rates and seeking higher account values to reach financial independence.

The picture can get a little complicated, so let’s first look at the median expected scenario and then we’ll superimpose the best case and worst case scenarios for each doctor:

Figure 3.4: Drs. A-D projected retirement savings for 100% stock allocation (6% return)

Dr. D jumps off the graph because he doesn’t have a realistic plan: he has half a chance of reaching financial independence if he maintains the status quo, gets good (6% real) returns on an aggressive asset allocation, and works until he is 90.  Dr. D has a net savings rate of 9%, which isn’t nothing, but it’s simply not good enough to maintain his expensive lifestyle in retirement. I fear his situation may be worse than the display above projects: He seems like a prime candidate to go deeply into debt in order to finance his dream house(s) and expensive hobbies.  And if he goes through a few divorces or market downturns, he may need to work another lifetime to catch up.

Let’s look at the above figure with our 10% best and worst case scenarios superimposed:

Figure 3.5: The four doctors with their 10% best and worst cases superimposed, and 100% stock portfolios at 6% average real return.

While Dr. A may have to work three more years in the event of exceptionally poor investment returns, Dr. D’s career is extended by generations.  In the best case, Dr. D can reach his retirement goal around Age 71.  However he’ll have to work another 40+ years if instead we look at the 10% worst case scenarios!


These are four high earners with identical starting conditions whose financial lives diverge dramatically.  Many people think they are like Dr. C.  They’re saving at a pretty good clip and if everything goes to plan they should be able to retire in their late 50’s.  But it’s a lot easier to slide towards Dr. D than it is to move towards Dr. A, because for most people it’s a lot easier to move up in house, car, and lifestyle than it is to curtail or reverse those desires.  This is a website dedicated to planning, but the lesson of The Four Doctors is that ultimately your saving and spending patterns are going to drive your retirement age, and not the other way around.  If you must spend like Dr. D, at least do yourself a favor and live beneath your means for a few years first.

What do you think?  Which doctor most closely resembles your retirement plans?  Share your thoughts in the comments below.

7 Replies to “Case 3: The Four Physicians”

  1. I went the Dr. B route and achieved FI just as the PoF model predicted. We’ll see what the future holds. This is an interesting look into that. I’m morphed a bit into Dr. F the fifth doctor now with part-time work. Maybe you will analyze that one later?

    1. That’s an excellent suggestion! It seems like quite a number of financial bloggers only regret not moving to part time sooner, I know Mister Money Mustache recently wrote about his experience quitting the 9-5 and how he immediately had all the work he could get with his carpentry skills.

      Did you wait until you reached your (4% rule) FI number before going part time? How did you decide it was time to scale back your hours, and do you plan on working part time for a long while?

      Thanks for sharing the idea, it would be fun to analyze.

      1. Yes, I did wait until I reached FI before cutting back to a three-day a week schedule. That isn’t the only way to go though. Financially I could have done it sooner. I would encourage people to do it sooner if they have the option. FI isn’t required if you plan to have continued income. The timing was more for my own personal reasons. I started feeling the stress after 20 years of a medical career. I was enjoying the administrative work less and less. I still liked the work, but not 60 hours a week and didn’t have a burning financial need to sacrifice the other parts of my life any longer.

        1. I did exactly the same . Got to FI and then cut back to a 3 day week as a MD. Now no longer have to save – just work enough to live and when / if I wish to stop my financial situation will be strong as I am withdrawing at 0% while I still work . I could have actually stopped eatlier as I planned to work part time anyway

    1. Stay tuned! I have an upcoming post for a physician with over $100k remaining in student debt, similar to the case you’re suggesting. Though I’m no fan of debt, it was a lot easier to analyze because there’s very little uncertainty about the return on investment for debt payments – it’s just the interest rate on the loan. It really comes down to cold, hard math. If you have something more you’d like to see, feel free to drop me an email; I’m always looking for more subjects to analyze. Thanks!

  2. Great analysis. I am like WealthyDoc. I am somewhere in between Doc A and B. The money that you save in your 30s is more valuable than that you save later on. I have been FI since around 45. I went to 3 days per week at 56. Health insurance is a wild cardthak keeps many of us working.

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