Nate Reineke (00:12.974)
Hello physician moms and dads, I'm Nate Renneke, Certified Financial Planner and Primary Advisor.
(00:19.121)
And I'm Ben Utley, certified financial planner and the service team leader here at Physician Family. Nate, you know, we always like to start with a little personal anecdote and I have something that is very relevant to the physician world that I've been through. You want to hear about it? Of course you do. Yeah. So, I guess back in, before COVID times, I had a primary care doc that I really loved. He's done a great job for me over all the years.
Nate Reineke (00:35.416)
Yeah.
(00:48.934)
And then when the, you know, the big COVID happened, everything kind of changed and the, my doctor remained the same, but the company that he worked for got bought out by a gigantic mega corporation, as you might imagine. And the care that I've gotten from that physician since then has been good, but let's just say that the experience that I've had with the company that acquired his practice is suboptimal. So.
Nate Reineke (01:16.91)
Mm-hmm.
(01:18.544)
Recently, I tried to get an annual in there and I was told that I needed to schedule my annual 10 months out. so it was just a lot of problems scheduling, some conflicts of interest. I feel like I got up coded twice and I'm really healthy. So I just thought there's gotta be a better way. So one of our clients, as you know, is in direct primary care.
Nate Reineke (01:36.984)
Yeah.
(01:44.06)
which I thought was the same as concierge medicine and evidently it's not. But anyway, I went to that guy, he's in my neighborhood, my area here. And I said, you know, I'm looking for a doc, tell me about it. So he recommended me to a few people. I ultimately came up with a list of six providers and I had an interesting time stopping for these folks. First thing I was stunned by is that you can actually call these direct primary care doctors.
Nate Reineke (01:44.12)
Mm-hmm.
(02:10.371)
and or text them. So I was texting, emailing, and calling the physicians, which I'm not accustomed to outside my workplace, right? So that was different. The other thing I found out is that they all advertise a little bit differently. So all of them had a website. Most of them had a one-page website. Some of the websites talked about direct primary care, but they didn't talk about the physician. Very few of them gave credentials, like anything about their training, like where the intern, resident,
Nate Reineke (02:17.806)
Mm-hmm.
Nate Reineke (02:36.174)
Mm-hmm.
(02:39.311)
Some of them had phone numbers. Some of them didn't. had emails. Some didn't. Some said what they cost. Others didn't. And some of them said that the practice was closed and others didn't. So, the shopping experience was rather jarring. but, ultimately I consulted with a friend of mine who's a doc and you know, as, I like to say, it takes a physician to know a physician. And so he gave me some clues and some tips. And ultimately I wound up with this guy that is just about a mile from my house.
Nate Reineke (03:01.197)
Yeah.
(03:07.111)
His training is fantastic and he is kind of has a couple areas of focus that are interesting to my health as well. But it just made me think about the journey that our clients must go through as they try to find us. know, you know, they tell me when I, when I talked to him in the, in the intro call, they've been to other financial advisors and they never knew what they charged or it wasn't present on their website.
or they didn't know what the procedure was or they didn't get calls back. And now that I've been on the other side of that, it makes me proud that our website is really clear. People tell us all the time, it's clear, it's obvious. And I have been on the other side of this, but having clearly stated pricing, the stepwise process is, I'm just proud of that. And I'm happy that we're doing it right on this side of things.
Nate Reineke (03:49.134)
Mm-hmm.
Nate Reineke (04:04.908)
Right. Yeah, it just makes me think it is a very comforting feeling, which is something to be proud of. But also, you know, it's always strange to me as other people in our industry who don't post their prices, you're like, you're just waiting for the day where someone finds out and they're unhappy. And I think we talk about this all the time is just we want to make sure that people get what they asked, what they expected to get and that we don't frustrate them.
The worst thing in the world is to get someone on the phone that you really like, you made a connection, and then they're frustrated with something that they didn't understand. It's just not a great way to live. yeah.
(04:42.238)
Yeah, right. Or some nasty surprise, right? Something that they weren't expecting that was a negative surprise. you know, I like to, I like to get all the warts out there. figure it's kind of like a marriage and let them know, you know, who we are right up front, because, know, we, we like who we are. We're not going to change. And it works for the other G's like 240 docs that we serve. So anyway, that's a, anyway, I just thought it's interesting to be on the other side of things. And, fortunately.
Nate Reineke (04:55.576)
Yeah.
Nate Reineke (05:04.172)
Yeah. Yeah.
(05:11.742)
You know, I now have a doc and I can text them. It just blows me away. So yeah.
Nate Reineke (05:16.142)
That's, yeah. Okay, well, you ready for some questions?
(05:21.682)
Yes, yes.
Nate Reineke (05:23.374)
All right, the first one is from a nephrologist in Iowa. Says, hi Nate, I'm sure you're getting a lot of emails about the craziness going on in the federal government and the future. I was wondering if we stopped putting $5,000 a month into our Betterment Taxable Account for the short term, like six to 12 months, how that would affect us. And we would put it back in at some point, all of it, like the full 60,000.
I just don't feel great about putting money in a taxable account right now or in the stock market, even though I know it's invested 60 % stocks and 40 % bonds.
(05:53.077)
Okay.
(06:07.989)
Yeah. Well, so there's a lot of things in this question. I like to say that investors only get two emotions, greed and fear. You don't get happiness, you don't get sadness, you don't get joy. You probably get surprise, but greed and fear. mean, either the market's going up and you wish you'd had more money in it, or it's going down and you wish you'd had less money in it.
Nate Reineke (06:15.021)
Mm-hmm.
(06:36.532)
So when this questioner asks, they say, I don't feel, well, you're never gonna feel good about your investments. They're not there to make you feel good, they're there to make you money. And more to the point, when we look back over the last, gosh, eight years or so, and some stocks have doubled, the market has basically doubled, it's not free money. People think of investments as like the easy way to make money and then it's free.
You pay for those investments, you pay for those returns with this worry. That's the cost of it. This is mental labor, right? It's painful to suffer through greed and fear. when you're experiencing those emotions, that's what you're doing. You're buying your returns.
Nate Reineke (07:10.379)
Mm-hmm.
Nate Reineke (07:27.17)
Yeah. Yeah, it's, it's funny because most of the time people know this deep down, like the kind of know that they're supposed to have this feeling when things get scary, but it doesn't change the fact that they're having it. And so, you know, we still hear about it. And I, I would imagine that if I had a financial advisor and I didn't know
I didn't talk to people all day long about it and hear their fears and try to digest them myself. I'd have the same fear despite having an economics degree and like all the knowledge about it. You still experience those feelings, but when you hear it over and over again, you start to really internalize it like this. I think a lot of the confidence that you and I have or advisors have comes from just being around the block. And I get that,
(08:12.596)
Mm-hmm.
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Mm-hmm.
Nate Reineke (08:22.806)
and spades from you. Been around the block for 30 years and it's nice to call you sometimes and be like, yeah, everyone's saying this one's different. I know it's not, but tell me it's not. And you're like, it's not, you know? But the headlines are scary. And I think that I heard someone say one time is pretty good little line. It was like the market is a voracious information eater.
(08:34.1)
Yeah. Yeah.
Nate Reineke (08:52.344)
But by the time you've digested the headlines, Wall Street has already had a full course meal. Yeah. Yeah. So point being, the market has already reacted by the time you're seeing it on the news.
(08:58.686)
Wow, that's great. I've never heard it put that way.
(09:08.695)
That's right. It's what the investment wonks call priced in. The securities prices have already been adjusted to reflect that. just one nanosecond after the news came out, the prices responded to it. And what I find fascinating is this is long ago, A, when I watched TV, B, when I watched cable TV, and C, when I watched CNBC. So this has been 20 years ago.
Nate Reineke (09:13.762)
Probably stand, that's right.
Nate Reineke (09:34.871)
Yeah.
(09:38.518)
I remember watching a case against Philip Morris, which became Altria. And I thought, cool. I can see what the case is going to result in, you what the outcome is going to be, and I can go trade on it. Well, that's not how it worked. What happened is the moment that the case news came out, the result of the lawsuit came out, they actually halted in Philip Morris to allow the news to spread throughout the market.
Nate Reineke (10:08.334)
She's right.
(10:08.6)
So, you know, if the market's not getting this fast enough, they'll stop the market to make sure the news gets spread out. But back to the 60-40, so 60 % stocks, 40 % bonds. Years ago, over a decade ago, I was serving a urologist and his wife, and I think they were pretty aggressively invested at that time as like 80 % stocks, 20 % bonds. And they kind of went through the same thing. They're like, oh, things are scary.
Nate Reineke (10:13.9)
That's right.
(10:37.433)
you we should stop putting more cash in there. And I said, you know, I think you're over allocated to equities. said, this is just a, this is just an outward sign that you, don't have the risk tolerance to be able to, to, to handle this. You know, it's just not, it's not in your gut, right? Um, and I said, so how about this? said, how about we back down your risk tolerance? We take down your asset allocation by reducing the amount of stocks and increasing the amount of bonds with that. Would reducing that risk, would that make you feel more comfortable putting the money in? And they said, yeah.
Nate Reineke (10:50.99)
Mm-hmm.
(11:07.277)
And you know, they've been investing ever since then on a monthly basis. And it's the thing that I find is it's not necessarily how, how much return you get. It's how much you save. Right? So if I could teach my kids one skill, not two, I would teach them the saving skill because that rules over the investing school skill. I mean, if you just got that one skill, right. And you never invested, you could make it to the fish finish line. But if you only learn to invest, you never learned to save. You're not ever going to see the finish line.
Nate Reineke (11:28.28)
Mm-hmm.
Nate Reineke (11:37.326)
Right.
(11:37.815)
Right? So the fact that you're saving, the fact that you're on the train and you're investing on a regular basis, that is far more important than seeking a return. So in a case like this, I'd say, it might be 60-40, still too much. Maybe we need to back this down a little bit. And then the alternative to that is more education, understanding better what they're investing in so that they can know how bad things can be or how good things can be.
Nate Reineke (11:51.907)
Yeah.
Mm-hmm.
Nate Reineke (12:03.554)
Yeah, yeah. The understanding of the market without saving is like the knowledge without the execution, right? So the beautiful thing for doctors is they have a lot of firepower to do the saving. So if, I'm not saying this isn't a recommendation on anybody personally, but like if this freaks you out and you don't have
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Right. Yeah.
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Mm-hmm.
Nate Reineke (12:32.622)
the tolerance to own a lot of stocks, you have the ability still to get to retirement. And that's okay, because the worst thing would be that you'd never do the investing in the first place, or guess that would be the worst than being 50 % stocks and 50 % bonds, even though everybody on the internet says you need to be 100 % stocks.
(12:54.938)
Yeah. Yeah. Well, they're wrong for some people. That's for sure. Yeah. And, you know, not having the risk tolerance for something doesn't mean you're a sissy. It just means that there's, there's something about your past, your, your experience, your view of life that causes that to be so uncomfortable as to make it a fail. Right. Uh, this inherent in who you are, but it doesn't mean that you're a wimp. Right. And, and coincidentally, I find that the people that lack
Nate Reineke (13:03.246)
That's right.
Nate Reineke (13:15.032)
Mm-hmm.
Nate Reineke (13:19.704)
Mm-hmm.
(13:23.33)
the risk tolerance to be a hundred percent stocks or over invested in stocks are the very same people who don't spend a lot of money. Right. So they're the ones who have the capacity to save. I mean, our best savers are very conservative individuals. you know, it's just, it's, this one facet is, doesn't define who you are because there's multiple facets to an investor.
Nate Reineke (13:30.734)
That's right.
Mm-hmm.
Nate Reineke (13:45.678)
was right. Okay, the next question is a two-parter. I'll go with the first one first. So, radiologist in Ohio, I was looking through my employee benefits. I see that I have access to a defined contribution plan. What is that and should I take advantage of it?
(14:05.563)
Okay, this one, this is, can take this one. So today, boys and girls, we're going to talk a little bit about retirement plans at a high level. Okay. So there are two kinds of retirement programs. There's defined benefit and defined contribution. Okay. A defined contribution or a DC plan tells you how much you can put in it. Classic example, this is 401k, 403b, 401a.
Nate Reineke (14:14.296)
Yeah.
(14:33.179)
450 said just about anything that starts with a four that looks like retirement is a defined contribution plan because the law limits how much you can put into it. And the employer makes no promises about what comes out of it. Okay. Now the other side of this is the DB plan, defined benefit plan, also known as a pension plan, also known as a cash balance plan, also known as a lot of things, but defined benefit means that your employer is promising you
Nate Reineke (14:46.702)
Mm-hmm.
(15:02.523)
a benefit at retirement. And that benefit is defined by mathematical rules, which is to say they're going to calculate their promised amount for you at retirement. Okay. So that's the fundamental difference in these. guess another difference is the 401k is, is money that you put in defined benefit plan is money that your employer puts in unless you happen to be the employer as a lot of physicians are, in which case it comes out of your column in most cases. So
Nate Reineke (15:31.266)
Mm-hmm.
(15:32.614)
Those are the two differences. The thing that makes them similar is 401k and defined benefit plan, they both allow tax deferral and they both allow tax deduction. So those are the similarities and differences. You could just think of it as like a gigantic, totally deductible IRA where you don't know how much you can put in, you just know how much you're gonna get out.
Nate Reineke (15:58.444)
Yeah. Yeah, those, those are, that's kind of the, that's what we studied. Those are the answers we studied, right? In the, day-to-day experience, it's funny how people internalize the benefit of these plans. So with a defined contribution plan, let's just say 401k, that just feels run of the mill to everybody. Right. And with a defined benefit plan, a pension,
(16:23.387)
Mm-hmm.
Nate Reineke (16:28.896)
most often, right? That feels like an extra special gift your employer is giving you. That's how I interpret physicians' reactions to these things. Like, I'm going to go to the VA and get a pension. And pensions are, they have a lot of good things about them. But the beautiful thing when you put these in a plan, there's plan again, when you put these in a plan and you're looking at a job that has a pension versus a job that does not.
(16:35.195)
Mm-hmm.
Nate Reineke (16:58.926)
There's some glaring differences most of the time. just yesterday I was talking to another radiologist in South Carolina, was trying to decide between the VA and some other job. The VA was going to pay him 400 grand a year. The other job was going to pay 650. Okay. And the big difference was, what about the VA's pension? Right?
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Mm-hmm.
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Hmm.
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Mm
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Mm-hmm.
Nate Reineke (17:27.702)
And so the reason I think most people feel good about a pension is that your employer is taking all the risk. With a defined contribution plan or 401k, you are taking all the risk and you actually have to save the money.
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Mm-hmm.
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Okay, so here's an interesting thing I want to jump in about these defined benefit plans or pension plans. Okay, so let's say that this is you and your company and you've established a defined benefit plan. Radiologists are a perfect example of this. Best situation I ever saw was four radiologists who didn't have any other employees, right? So they made quite a bit of money, they were in advanced age, so they could put a bunch of money in these. I mean, six figures, right? Deferring taxes.
Nate Reineke (18:12.109)
Yes.
(18:14.746)
Because the employer is making a promise about what comes out of this defined benefit plan, typically these things are invested very conservatively, which is to say they're mostly bonds, maybe 10%, 20 % stocks, so they grow slowly. So we have a very gifted planner on staff, that's Chelsea Jones. One day she sat down and she ran out of spreadsheet and the question was, given that this defined benefit plan grows
Nate Reineke (18:35.758)
Mm-hmm.
(18:43.78)
more slowly than other investments would, does it make sense for everybody to have one of these? Right? Because the tax benefit is obvious. There's what we call a tax arbitrage, and I'm not going to get into it, but suffice it to say that the closer you are to retirement, the more sense a defined benefit plan makes. And so she asked the question, what's the balance point between this low return and this great tax benefit?
Nate Reineke (19:02.776)
Mm-hmm.
(19:09.278)
And we found that there are some physicians who should not be in a defined benefit plan at an early age if they have to put their own money into it. Right? So if you work for the VA, absolutely just get into the plan. don't, I don't even think you have a choice, but if you're debating about whether or not to set one of these up for yourself and, or, or you're opting into one that's invested conservatively, then you have to be careful because they're not right for everyone. Right? It depends on how old you are. If you're, you know,
Nate Reineke (19:17.646)
That's right.
Nate Reineke (19:32.984)
That's right.
(19:36.733)
10, 15 years away from retirement, it's a slam dunk. But if you're further away from retirement than that, and it's conservatively invested, you might be better off paying your taxes and getting a higher return in some other vehicle.
Nate Reineke (19:39.864)
Mm-hmm.
Nate Reineke (19:48.558)
That's right. That's right. And that's the kind of math I did yesterday. It was, you're going to make an extra $250,000 a year over here. And you can look at that and say, I could live it up and buy a bigger house. Or you could look at that and say, how much do I need to save to replace this pension? And surprisingly, it's not the full 250, right? But you know that these places with pensions, they are giving you this huge benefit.
(20:11.965)
Mm-hmm.
Nate Reineke (20:18.382)
you know, the econ world, you would expect them to pay you less. Right. But how much less? And it's not $250,000 a year. So he was actually going to make have a much better retirement if he chose to save more and make more. so pensions sound great. And oftentimes, like you said, it's a W2 employee who just already works at the VA and it is great.
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Mm-hmm.
(20:36.179)
Yeah.
Nate Reineke (20:45.55)
But if you're faced with the decision, you kind of have to ask yourself that what you just said and just know that you're taking the risk. And another thing about pensions is, you know, they die with you. So, you know, if you're, if you care about legacy or any of that, it's, it'd probably be better to have your own money. That doesn't, you know, cause a pension is essentially, you know, it morphs into an annuity. That's right. That's right. So.
(20:58.654)
You
(21:09.79)
The pension stops when you stop breathing. Yeah. So I'm going to, I'm going to throw one more, one more nugget in here for, or Pearl, I guess, since we're talking to docs. So in the, in the example you gave the $400,000, $650,000 person working for the VA. Um, you know, some of these pensions are underfunded, which means that they may not, they may not actually pay as promised. They might break their promise because the employers guarantee these things. Well, recently.
Nate Reineke (21:18.67)
Mm-hmm.
Nate Reineke (21:24.813)
Mm-hmm.
Nate Reineke (21:30.542)
That's right.
(21:39.848)
The majority of one of the houses of, it was either Congress, one of the houses of Congress, either the Senator or Representative, I'm not sure which one, but they voted as a majority to do away with or reduce Medicaid. Okay. So that's a government benefit or a government entitlement program. It is not inconceivable that they could at some point vote to do away with the pension system.
So, you now in this new realm that we're dealing in, weighing that 400,000 versus the 650,000, you know, I think you just have to discount some of the value of that pension for the fact that it might be cut off or taken away or stolen. I've never had to have to think that thought before, but that seems to be part of the reality that we're coping with now.
Nate Reineke (22:26.988)
Mm-hmm.
Nate Reineke (22:35.226)
you know, maybe some pie in the sky thinking that they'll figure it out on Capitol Hill. but let, let's say, it wasn't in danger because it's the VA and it's, it's America and all that. And it's perfect. there's still a chance that you just leave the job. You know, I've written countless plans where I wish I could, you know, make it an, just the biggest bullet point possible. How do I make something more?
(22:49.29)
Yeah. Yeah.
Nate Reineke (23:05.12)
important on a page and then a bullet point, but it simply says that the success of this plan is highly dependent on this pension. And so, yes, and they sort of explode your, not explode, they put glitter all over your retirement plan and software because the software assumes it's guaranteed. Yeah.
(23:13.716)
Yeah, it's a big deal. Pensions are a big deal. Yeah.
(23:29.896)
Now I'm have this brickel glitter of my kombucha when I drink because you're saying plan.
Nate Reineke (23:34.156)
Yeah, so the software thinks it's guaranteed and so you're like, I'm great. It's not always the case. mean, my step grandfather had a pension. He worked for a logging company. Everyone used to have pensions. You know what happened? The logging company went under. And that's why you don't see pensions all that much. The employer is taking the risk and sometimes they can't handle it.
(24:01.598)
This, the way, is how we got the ERISA. There was a company that made a promise, and they broke their promise, and everybody got mad, and they formed ERISA to protect these petions.
Nate Reineke (24:13.902)
Yeah. Okay. So, same radiologists in Ohio said we just received a large gift from our parents of $1 million. How much should we put towards the new purchase of a home? I'm sorry. Purchase of a, toward the purchase of a home of $1.3 million. We are just getting started. So I think there are 34 and we are about to have a child.
(24:39.201)
So you got a million dollars in your hand, $1.3 million mortgage, baby on the way or newly here, and you're in your 30s.
Nate Reineke (24:52.14)
in their 30s, just getting started at work. This is a very...
This is a question that I feel like when people ask me this, they think it's just going to be very easy to answer. And I think that that stems from most financial advisors saying, definitely stick it in the market. You know, because that's how they make money. That's not how we make money. So it's actually more complex than that. And I think the reason it's complex is because both are good ideas. Putting money in the market is a good idea. Paying off your house is a good idea. So usually what I'm doing
(25:06.731)
Mm-hmm.
Nate Reineke (25:31.278)
when I'm answering questions about mortgages is trying to find something to tip the scales. And for me in this situation, they have a high earning power as well. For me in this situation, I'm looking at taxes. looking at, you know, I actually try not to factor in past performance too much, because that is a dangerous game. But if you're looking at sort of taxes, tax opportunities, let's say.
(25:41.324)
Mm-hmm.
(25:51.702)
Yeah. Yeah. Yeah.
Nate Reineke (26:00.526)
and mortgage rates, then first in this particular situation, something that jumped out at me was you should probably put enough down to avoid a jumbo loan.
(26:10.828)
Definitely.
Nate Reineke (26:11.726)
Right? So $1.3 million house. I didn't, I don't recall the zip code, but you're probably putting about roughly 50 % down.
(26:21.484)
Yeah. No, no, it's not. It's obvious to me why you should avoid a jumbo, but it's not obvious to everybody else. What's, what's up with, why don't we want a jumbo and what's a jumbo?
Nate Reineke (26:22.316)
Right? So no need to.
Nate Reineke (26:28.45)
Yeah, so
Jumbo loan, they come up with new amounts every year. But there's a certain amount where the powers that be that have decided this is riskier than normal.
And risk translates to a higher interest rate. Just like when you take risk in the stock market, if you take more risk, you should expect a bigger return. The bank wants a bigger return too.
(26:56.676)
So this is my understanding of this and you're a mortgage dude, is that the, what do they call that? The conforming, the conforming amount is the amount that Fannie or Freddie or government agencies will, will insure against. Right. And so the amount above and beyond that is not going to be backed by the government. And so as a result, it's going to have a higher. Injury rate. So long story short, you don't want to jumbo because the rates are higher. Right. Okay.
Nate Reineke (27:05.975)
Yes.
Nate Reineke (27:13.464)
That's right.
Nate Reineke (27:24.236)
The rates are higher. Yep. And so no need to get the highest rate possible when you got a million dollars in cash laying on your kitchen table. And then beyond that is I heard New Child and I remember thinking, you know, maybe they should put a huge amount toward this loan because, you know, rates are kind of high and all, you know, all that stuff. And I thought I woke up the next morning thinking about these people. It's funny because I told them that in the next call I had with them. I don't know if I thought that was funny or weird, but I just thought,
(27:40.035)
Mm-hmm.
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Mm-hmm.
Yeah.
Nate Reineke (27:53.422)
I would feel something would not be right about not putting a bunch of money in a 529. Right? Brand new baby. Yeah, go.
(27:59.588)
Yes, yes. Oh, my turn. So asset protection, right? So you put it in a 529, it's hard for creditors to get to it. So that's one. And then as you always beat the table, pound the table about is the tax-free growth of a 529, right?
Nate Reineke (28:17.262)
That's right. The hardest part about saving for college is this thing called sequence of returns. When you're invested in the beginning, you're taking risk, probably roughly the same amount of risk you do in retirement accounts. But when you finally get some money in these accounts 10 years later, all of sudden you're buying a lot more bonds. To be able to eliminate that risk,
(28:42.168)
Mm-hmm.
Nate Reineke (28:47.704)
sequence of returns risk would be a beautiful thing. And not to mention the cash drag that comes from saving for college, you could completely get rid of that. So sometimes people want to pay off their mortgage. And if you're later in your career, it makes sense. You want to get rid of that thing off your balance sheet. But in my eyes, most doctors see saving the 529s as a requirement in their budget. So it's on the cash flow. Like it's there. It's not going away.
(28:51.043)
Mm-hmm.
Nate Reineke (29:17.324)
And so, know, up front loading college is sort of like paying down this debt that it's not a real debt, but in your mind, you're paying for this thing. Just like you got paid for your mortgage. So.
(29:28.984)
This is particularly difficult time to answer question like this because the US market at least is highly valued compared to where it's been historically. It's expensive, right? And mortgage rates are high relative to where they've been in the last 10, 20 years at just about 7%. So it's tough because if you're
Nate Reineke (29:38.114)
Yes.
Nate Reineke (29:50.35)
Mm-hmm.
(29:54.66)
If you're popping a bunch of money in the U S market, your future expected return should be pretty low. And in fact, it might be lower than that 7 % that the mortgage is costing. So, yeah, maybe, maybe ride the fence, maybe a little for college, a little for mortgage, you know, uh, a little invested and definitely enough money in the mortgage to avoid PMI, right? So that principal mortgage insurance, and that'd be 20 % down. So that'd be, that'd be 260,000 of it right there. And I would think.
Nate Reineke (30:03.694)
That's right.
Nate Reineke (30:15.552)
Yes.
(30:24.486)
Uh, and there's another limit, you know, you can only deduct the interest that's attributable to the first three, excuse me, first $750,000 worth of mortgage interest. So, you know, it seems, it seems like they'd use, you know, you put enough down on the house so that your resulting mortgage gives you fully tax deductible interest. That also wipe out the PMI that probably leave you with about half mil that you could do other things with.
Nate Reineke (30:34.168)
Mm-hmm.
(30:52.793)
Boy, a half mil, that's enough to just absolutely clobber most needs for college. You could have college done, because that's the one thing you can't wait for. If the markets don't go well, you can wait for your retirement, but you can't wait for college. Yeah.
Nate Reineke (31:05.998)
That's right. Yeah. I like to pretend like I don't know what's going to happen with the stock market because I actually don't. So, you know, writing. So writing the fence isn't always bad. mean, we won't know for 10 years which decision was right. And so do a little bit of both and usually works out pretty good. OK. Last question. Family medicine doc in Washington. I am 46.
(31:15.105)
You're a big man to admit that.
(31:24.409)
Yeah, right. Yeah.
Nate Reineke (31:35.714)
We just had another child. I'd like to retire in 10 years. Will that create any problems with my plan? Yeah. Life tends to create problems with money then.
(31:43.557)
Yes.
(31:49.146)
Yeah. Yeah. Yeah. And never the other way around. Right. I was quoted, this is years and years ago. was either, was either the times New York times, the wall street journal. said, money is like a magnifying glass. It never solves problems. just makes existing problems bigger. So there's always, yeah. So 46 wanting to retire.
Nate Reineke (31:52.268)
Yeah.
Nate Reineke (32:10.754)
Very true.
(32:14.938)
But I think this, did you say in the, in the prep that they wanted to retire when they're 56?
Nate Reineke (32:19.81)
Yeah, in 10 years. They were hoping to retire in 10 years.
(32:21.702)
10 years. Yeah. So they got to save a lot more for college because you have this event horizon risk. I like to call it, which is where, you know, you retire after your kid goes to college and that's tricky, especially if your child goes to graduate school. And when they're this young, you have no idea whether or not they're even going to go. And, know, they, they might be a brilliant student. They might want to go into the junior college. And, you know, you want to be there for them when that happens.
Nate Reineke (32:42.392)
Mm-hmm.
(32:51.88)
Just sounds like the impact is that they just have to save a lot more for retirement, excuse me, a lot more for college.
Nate Reineke (32:57.72)
Yeah, that's right. it's your options are to wait it out, probably work or put even more into college. And the real problem there isn't that you couldn't do it or that it would be wrong to do it. It's it's feels it feels impossible to save that much for college. If you have a big college goal to prepare for that within 10 years, you have to be making, you know.
a lot of money to prepare for, let's say, private school with only 10 years.
(33:29.179)
Yeah. And I mean, you're, cutting out eight years of growth, right? That's in college world. That's basically a double, doubling period for your investments. Yeah. So that's, that's pretty tight. Yeah. Maybe 56 isn't the best retirement age. know, maybe there's, maybe there's a reason to push that out a little bit, depending on circumstances. mean, I don't know if this is a psychiatrist or an ER doc, but, actually you said family practice, right? yeah. Yeah. Depending on where they're at, that could be a meat grinder.
Nate Reineke (33:32.899)
Yeah.
Nate Reineke (33:37.697)
Mm-hmm.
Yeah.
Nate Reineke (33:51.384)
Yeah, yeah, medicine, yeah.
Nate Reineke (33:57.624)
Yeah.
(33:58.537)
You know, going back to the comment that I made at the top of the show, so I'm not sure why more physicians don't go into direct primary care or concierge medicine. One of the concierge docs in our town has a cap of 300 patients, okay, compared to 3000 average census for most physicians. right, 300 patients are just $200 a month, all right.
By my math, that's 200 times 300, that's $60,000 a month, that is $720,000 a year. And let's assume that you just take fully like a third of that, and you throw it away for overhead or cost of medicines or whatever it is, that's still a half million dollars for primary care with a census that is one-tenth the size of the average census. And you know, the direct primary care docs,
Typically charge 100 to $125 a month, at least in my town. You know, if you had a census of 400 people, that's $40,000 a month. That's a half million dollars a year in gross revenues. Maybe you shave off 10 or 20 % of that. You're still left with three or $400,000 of take-home pay. So it's a very powerful model in terms of physician lifestyle. Now I'll admit that the downside is what it does to public health because you're cutting out 90 % of people who can be served.
Nate Reineke (35:11.054)
Mm-hmm.
(35:23.41)
So that's something you have to square with your conscience. But if it's about money, or perhaps if it's about money versus your family, there are other options for those docs that are stuck in the meat grime.
Nate Reineke (35:34.048)
And if you struggle with that, with your conscience, mean, you can... The beautiful thing about kind of running your own shop is you get to decide how you run it. And you could charge less, you could serve less people, you could work less and make less money. Like you can do anything you want. I think, you know, it's interesting, you know, working in a small business, there's a million problems all the time. And doctors are bright enough
to solve those problems, but they just weren't trained that way. So I'm always curious, like what problems could you solve if you went out on a limb? And I see some physicians do that, but not a lot. Most people we talk to, W-2 employees. So yeah, that would be very interesting to see family medicine doctors go and do that.
(36:30.335)
Yeah. Yeah. so I guess I'll, I'll, I'll start taking us out with that. So on that topic, if you're somebody who's listening to the show and you're interested in getting into direct primary care, concierge medicine, and maybe you have a non-compete, right? Maybe you have to wait a year before you can serve people in your area. that's a costly time, right? That's the time we start to pay your mortgage. You still have to send your kids to private school, right? All that stuff you have to wait. And then it's that ramp.
you know, for a year or so before you get your patient census all full. Can you afford that? I don't know. But it'd be really cool if you had a financial plan that would tell you whether or not that was possible, whether or not you and your family could make that transition. And guess what? Nate and I are financial advisors. We write real financial plans. They're very reasonably priced. All our prices are clearly disclosed on our website. So if you or somebody you know, it feels like they're kind of stuck in the medical meat grinder, check out physicianfamily.com.
and maybe reach out to us. Click the get started button and schedule a time to chat. If you're not ready for that, pivot, just go to physicianfamily.com forward slash quiz and take our retirement well check. Until next time, just remember you're not just making a living, you're making a life.
(38:04.98)
Are we clear?
Nate Reineke (38:06.094)
I'm hoping so. Hold on.
Nate Reineke (38:14.272)
It make sure you have a stable internet connection. I have a stable internet connection.
Nate Reineke (38:40.394)
Ooh. Can you hear me?
Nate Reineke (38:48.462)
It says...
Nate Reineke (38:52.662)
Everyone else is still being recorded. Refresh to try to resolving this issue.
(38:58.345)
I'm going to terminate my connection if that's okay.
Nate Reineke (39:02.318)
Okay, why don't you try that.
(39:04.171)
Okay, I'm logging out. I'll call you too.
Nate Reineke (39:06.094)
Okay.
