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Formulate a Financial Plan

Know Your Net Worth

Manage & Minimize Debt

Accumulate Assets

Budget to Live Within Your Means

Understand Investing Basics

Plan for Retirement

Insure People & Property

Deal with Financial Advisors

Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions


Because doctors are relatively high-earners I recommend you avoid the deplete-your-nest-egg-on-your-death-bed model and instead strive to attain what I call a CMP. No, that doesn’t mean comprehensive metabolic panel. CMP in our context stands for Critical-Mass Principal.

A critical-mass principal is a nest egg large enough that you can live off the income it generates without drawing down the underlying principal.

Not only does this allow you to avoid the anxiety associated with watching your nest egg dwindle, you can bequeath that principal to your children, grandchildren, or favorite charitable cause.

It’s relatively easy to estimate your critical-mass principal. Suppose you use budget forecasts to estimate that you’ll need an income of $120,000 annually in retirement. You wish to be conservative by assuming your principal will be invested in very safe US Government Treasury bonds yielding 3% per year.[1] Then a CMP of $4 million will do the trick: 3% of $4 million is equal to $120,000.

Which begs the question: Is a $4 million nest egg attainable?

In my personal finance lectures I show that a responsibly managed annual household income of $200,000 can realistically lead to a nest egg of over $4 million.[2] As most physician households command higher gross earnings,[3] nest eggs in the four to six million dollar range are attainable.

The assumptions required to reach the $4 million plateau are:

  1. A thirty-year investment horizon. Assume you are 37 years old and planning to retire at 67
  2. Retirement plan contributions of $33,000 annually. This includes your contributions and the employer match
  3. Compounded annual returns of 8% on retirement investments
  4. 30-year fixed mortgage payments on a home initially valued at $300,000 with average annual property value growth of 3%
  5. Your budget allows you to service student debt and mortgage payments


Over 30 years, a retirement plan with annual contributions of $33,000, growing at 8% annually, accumulates to a future value of $4.0 million. The $300,000 home appreciates at 3% to about $730,000. By retirement the mortgage and student debt are paid off. If we use a more conservative investment growth rate of 6%, the retirement plan totals $2.7 million.

A dual-income household in which each person earns $200,000 and the initial home is valued at $600,000 can achieve twice these numbers, which is to say retirement plan totals of $5.4 million at 6% or $8 million at 8%, plus a home valued at $1.45 million.

Reasonable challenges are: is the $200,000 budget realistic? Does it account for inflation? Can I pay off student loans, put money aside for retirement, pay off a mortgage, secure insurance, invest in 529 college savings plans for my children, etc., all on top of regular household expenses?

In response I direct you to a sample $200,000 budget in the Resources section of this site. It allocates $19,000 to retirement plan contributions ($14,000 in matching funds are assumed from your employer), realistic mortgage payments for a $300,000 home purchase, annual student loan payments of $24,000, and $5,000 contributions into children’s 529 college savings plans. The budget reflects excess cash of $10,000, which is available to address the aforementioned challenges. Furthermore, in reality you can expect your income to rise over time. In my future projections I assume your annual income remains fixed. Some of your wage increases will likely neutralize inflationary effects.

Yes, higher payments may be required to service a larger amount of student debt. Yes, if the employer match is low, more of the assumed $33,000 would have to come from the household. Yes, if children attend private schools, additional costs annually could be in the tens of thousands of dollars. Keep in mind, however, that the budget already accounts for basics such as food, clothing, transportation, utilities, etc. Any additional (after-tax) income above the $200,000 level is available to make student debt payments, support private school tuition, set aside more money for retirement, pay off a larger mortgage, or increase 529 plan contributions.

Clearly, lots of refinements could be made to all these assumed numbers, including the earnings, expenses, taxes, etc. My point is to show that a critical-mass principal of $4 million is attainable. Where exactly your household lands is entirely up to you. 

There are many online resources on retirement planning, including major investment companies such as Vanguard and Fidelity, as well as (formerly the American Association of Retired Persons), among others.

These resources include a variety of calculators for estimating your retirement cash flow needs, healthcare costs, etc., which can be found at the Resources section of this site.


Related Links:

Vanguard Retirement Plan Calculator

Kiplinger Retirement Savings Calculator

AARP (formerly the American Association of Retired Persons)


[1] At time of writing, yields on 30-year maturity Treasury Bonds are close to 2%. This is unusual. It’s anticipated that in future higher rates will restored. You can, of course, opt for higher yielding corporate bonds at any time. 

[2] See the Hypothetical Wealth Accumulation spreadsheet in the Resources section of this site.

[3] According to Medscape’s Physician Compensation Report 2019, primary care physicians earned an average of $237,000 while specialists earned $341,000.