For an audio version of this post, please click on the speaker icon (top left).
Welcome to this episode of The Doctor’s Bill (Can You Afford It?).
Wonder if you should buy that big ticket item or not?
Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.
[Johanna and I have no current financial relationship]
Disclaimer: This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.
The following are the details from our submission form:
Item/Experience Desired:
Permanent move to Puerto Rico (will continue working – Both physicians)
Approximate Cost:
$75000 per year x 57 years
On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:
A) 10 B) 10
Age:
33
How Many Years Till Planned Retirement?
20 – (will downshift to 0.75 FTE in 3-5 years)
What is your total household income?
$300,000 – currently
What is your % Annual Savings Rate? (savings/gross income)
61%
Primary Home Equity (Market Value-Debt) [For Renter =$ 0]
$0
Additional Real Estate Holdings Equity (Market Value-Debt):
$0
Current Liquid Asset Value (Savings, Checking, Etc.):
$100,000
Retirement/HSA Combined Value:
$450,000
Miscellaneous Asset Value:
$0
Mortgage Balance:
$0
Student Loan Balance:
$0
Additional Liabilities:
Will have to buy home ($300,000) at PR – which is why liquid asset value at 100k
Future College Funding Needed (Today’s Dollars)
$0 – DINK [Dual Income, No Kids]
Future Parental Support Funding Needed (Today’s Dollars):
$0
Additional Future Obligation Support (Today’s Dollars):
$0
Any other pertinent information not addressed?
Would want to know if can move to PR and retire comfortably at 75k per year spending rate.
As this submitter provided an email, Johanna was able to ask additional questions:
1. Moving in 3 – 5 years? Is that when you downshift? Until then, dual-doc household earns $300k total?
Correct.
Moving to PR in 3-5 years at the latest.
Technically we are not downshifting, but the initial medical salary and time commitment due to the economic downturn/situation will have us starting in the lower side of the income side as well as PT work.
Until then dual doc household earns $300k total (Wife is finishing up her fellowship).
2. Annual budget including taxes when you downshift is $75k/yr and you’ll each earn ~$125k (total $250k)? Or one of you will earn $125k?
Annual budget including taxes is $75k/year.
We both will earn 125K total for both of us for the next 5-10 years due to possibility of children (SAHM [Stay At Home Mom]) and part time work with a charity where one or both of us will be donating our time as well.
That is why we feel we need to save up front initially to adjust for any bumps down the road.
3. Future children planned?
Yes.
Currently no children but planning on one in the next 2 years.
Planning on just one for the time being.
4. Will you be taking care of parents after you move? Estimated cost?
Taking care of parents for now will be difficult to calculate.
We may estimate around 10k per year in about 10 years, they are still both young (63/62) with no major chronic heart illnesses at the time.
They have between SS and Savings a pretty comfortable retirement.
5. Does the $75k/yr include house payments, vehicle replacements, travel?
Yes.
We are planning of having a paid of house so no mortgage payments.
Vehicle replacements and travel will be included in those costs.
COL [Cost of Living] is very low where we plan to move.
So given the information above, what do you think?
Are these doctors soon to be Puerto Rico bound or would you put an end to their Puerto Rico dreams?
Click on the Doctor’s Bill Image and find out the verdict:
Open the Bill And Find Out If Can Afford It or Not
After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)
If you would like to submit your own Doctor’s Bill request please fill out the submission form (and remember email subscribers to XRAYVSN will get priority)
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
This is an interesting one. The idea of cutting back and chasing after dreams is super appealing to us. I don’t know that we would ever move to Puerto Rico, but I went into medicine to do mission work. I hope to be able to cut back enough someday to pursue this a large percentage of my time.
For this reason, this one was interesting. I think it’ll require a lot of intentional planning, but could be done.
TPP
Hey TPP. Thanks for the comment. Yeah I really liked this Doctor’s Bill submission too. Sounds like they have a great plan and rationale for moving to Puerto Rico and helping down there gives them the high satisfaction scores of 10 both near and long term. Geoarbitrage played a huge part in the ability to do this.
Hey TPP. I’m the current case study, thanks for the insightful comment.
A little background, we are originally born and raised in PR so we always thought of the idea to give back to our communities, especially after the recent natural disasters have touched our hearts and our minds. All of our family is back home. So definitely helps having been able to bulk up our savings by geoarbitraging as xrayvsn pointed out.
Squared root
If theyre permanent residents of Puerto Rico, maybe keepig their State medical licenses active to do locums/contracting work. That would put extra layer of saefety cushion for potential future changes in cash outlets family plan changes etc. Know plenty that do so.
Great point Ethan. Also as Puerto Rico is a US territory I imagine not much of an issue hopping from mainland to island etc
Yes. As xrayvsn pointed out we are regulated by the same US boards and regulations. We will definitely keep our 1-2 state licenses along with our PR license. Locums and contracting work are definitely a fall back option. Thanks for the input Ethan!
I think this largely is contingent upon the ability to secure jobs paying the salaries that are indicated in the post. If they can be obtained and maintained, it looks possible. Job security for ongoing cash flow in a more limited market would be my greatest concern. As a lawyer, I’m ill equipped to evaluate this key component.
Good point about having a steady salary to rely on. I do feel that the salary they expect seems reasonable for a two doc household although I admit I do not know what the job market there is like. Of course they would be able to supplement any shortcoming with locum work in the US as long as they maintain license (which I think would be a smart thing to do)
We definitely know and have been networking our market, which helps since we have a lot of friends/colleagues there.
Job security is not based in the traditional sense of what we are used to in the mainland US, and we could work a 1099 sort of job with different medical practices within our specialties.
Our 125k anual salary assumption is very conservative for 2 physicians. However we want to keep things very conservative with our financial planning.
Thanks
Squaredroot
My concerns are less financial than practical. What is the physician job market like in PR? Is it stable? Are there concerns for raising children in PR? What is the educational system like? What is the likelihood of this plan failing and the two returning to the ainland? And the associated costs? Where do the parents live? Etc.
Wouldn’t it be better/easier to live on the mainland until the kids are into college and then move to PR?
Great points to consider Vagabond about the practicality of the move. I would hope and suggest they keep their state licenses active for such a situation if the job market fails to provide the money they need. Hopefully there is not a drop off in education etc for the kids like you mention (which the plan would not work if expenses such as private tuition have to be then factored)
It might be safer to simply stay put and visit family in PR, but this person rated the happiness factor as a 10 for both short and long term, so my understanding is that they really want to do this if they can afford it. You docs know better than I how easy or difficult it would be to pick back up and move to the states to work if things didn’t pan out as expected, but I have to go with what I’m given. I’m enjoying all of these comments – thanks for participating! Lots of food for thought… Read more »
Thanks Johanna for jumping in the conversation. I did send an email to the person who submitted this case so hopefully he is aware of the resulting discussion as well as the verdict.
I’m coming out of anonymity Johanna to thank your for helping me out analyzing the case!
Short and long term, going back home is definitely on hour 10 happiness factor. We are still at a point of our lives were we are flexible enough to consider staying stateside until we can get enough financial “cushion” to be able to consider this idea.
Definitely helpful and thanks for the thorough analysis.
Squared root
Thanks VagabondMD, Huge fan of your insight and help on the forums and other podcasts as well 🙂 The physician job market is not very stable but Ok enough to make it work. The healthcare model in PR is very different that the mainland, however it can be made to work, and fortunately we have a good networking system. They recently passed a law: Law 14 in PR which states that for physicians that qualify are only subjected to a 4% income tax for at least 15 years. Note that we do file federal tax. So the economic hit does… Read more »
This is a fun segment that builds audience participation. Reading this write up, I’d be nervous about meeting the goals set out by the couple as well as contemplating the risk of living in PR. The island had no power for multiple months and would give me pause. However, they likely know what they’re going into with eyes wide open, so my concern isn’t likely their concern. Purely financially-speaking, I’d think they could handle this lifestyle change assuming they are able to live within the budget they set for themselves, especially if this move will lead to both short- and… Read more »
Thank you for the kind words. When I first started this blog I had this idea in the back of my mind wanting to implement it. Was very lucky to find a willing partner in Johanna who has been amazing (and very gracious with her knowledge/time) to make this much more informative than if I had to do it on my own (I consider myself a bit financially savvy, but nowhere near her level of expertise). I definitely hear your concerns about leaving the US for any 2nd or 3rd world country and the potential problems that could arise. I… Read more »
Thanks for the feedback Young and the invested.
We have lived at least 25 years in PR, so we are well used to island living and the ups and downs that they carry.
Purely financially speaking, we have been trying to average a solid 55-60% savings rate to get enough compounding this early in our lives.
We definitely live in a LCOL area, where we can live easily on 75k with a paid off house. It does not come even close to the COL at our current state.
Squared root
XRV! These are so much fun!! I think I am an absolute nerd!!! Joanna’s analysis are so amazing. I think this couple is young, planning early and do not seem to be encumbered by children or parental assistance yet. Gee at those stages, my husband and I would do all kinds of odd things. This young couple is very wise to enlist the help of Joanna this early. It looks like with her guidance they can start thinking about various minefileds earlier. Many of us never thought about minefields until they sort of blew up along the way. Best of… Read more »
Thanks MB for the kind words. I was really worried this series would be a flop when I first was contemplating it (thought of it probably 2 weeks into blogging). Got VERY lucky that Johanna agreed to be a part of it because the level of advice given would be nowhere near where it is if it just came from me.
I still am dependent on getting people to submit cases so that we actually can continue this. We have a few in the pipeline but hopefully can build up a reserve.
Thanks for the comment and stopping by
This must be planned as a 40 year retirement IMHO possibly 50 years. A woman has a 30% chance of living to 90, 1.4% to 100. Retirement at age 50 therefore can leave 50 years left to live. I looked at this and found it sustainable to age 90 but the analysis doesn’t take into account some issues that may clean your clock. It presumes SS is solvent and pays out at today’s rate for both physicians. SS is slated to take a 25% hit in 2034 which reduces the payout. It doesn’t take into account what happens when 1… Read more »
All good points to take into account. You are right about the death of one spouse changing the financial parameters considerably. Did not factor in social security reductions in the future as well but that is a likely scenario along with increased tax rates. Lot of moving parts. It still probably would be a greenlight given that there is still a lot of flexibility in their proposal with conservative income #s given and the ability to supplement that further if necessary. But still great points to factor in.