Tuesday, October 8, 2019
Decending into the winter of 2019
The weather has turned. the light is short, the mornings cold, it's wet more than it's dry. I harvested the last of the tomatoes, ripe and green. A season has turned. A member of the family died the other day, my wife's father, a patriarch, after 87 long years on this earth. He left modest material wealth, but had an out-sized impact on his family, among my wife of 20+ years. A transition into or out of this life is a time to reflect on temporal versus eternal values. We are stewards in our time on earth; stewards of our relationships to others, of the material assets we acquire and cultivate, stewards of the efforts we make in shaping the world around us. When it's time to go, we don't even take the clothes on our back, rather leaving it all behind for others to carry on, to pick through, to discard. Much of the material items we collect are meaningless to the next person. A fraction become keepsakes to spouses, children and close friends. A bunch of what we have is completely replaceable, similar if not identical to something collected in the next house down the lane, and the next and the next. They are the tools and accessories of our lives, nothing more.
Financial assets can be closer to eternal, if memorialized carefully. Wills and estates, trusts and directives can influence the world after our passing. In this case, a modest financial estate remains to K's mother to carry her forward. The investment asset allocation is diverse, with both income and growth, equities, bond funds and cash equivalents. It produces far less income than it could, looks more like an entity designed to be passed on to the next generation that used to sustain the generation that collected it. I have raised my concern about de-risking it into investments that have less reactivity to market conditions and produce more real and present cash flow. It will or will not happen, based on steps taken or not taken between the beneficiary and her children. I have said my piece.
The assets held by me and my wife are now 90% professionally managed. It was necessary, although painful to relinquish control, but now I spend more time working on other projects and less time obsessing over whether I have made mistakes in my thinking and strategy. I worried far more about what I did not know than what I knew. I am paying a good piece for the peace of mind, but the reasons for taking that step were sound.
The 72-t provision in the tax code allows one to take retirement distributions without penalty on a sustainable basis over 5 years or until after 591/2, which ever comes later. We're committed until 63 1/2. We'll receive 60k per year. it is dedicated to paying all insurance premiums, paying interest and principal on a secured line of credit, and then paying off consumer debt. At the same time, I now am employed and will be receiving pension benefits, a HSA account and the option to defer compensation if the cash flow allows. In other words, I'm back in the world of the qualified plan. That's a comforting place to be after 2 years where the tide was going out, rather than coming in.
Things are looking up on the employment front. I have been offered a very attractive 1 week/month opportunity to re-enter acute burn surgery in a "turnaround operation" in another state. I have accepted. There will be air-commuting. I just received an official offer to teach at the graduate level starting in July of next year, with the actual curriculum starting in January 2021. I have indicated interest in pursuing that position as well. I will have to drop something, as trying to do it all will have me over-subscribed, but this is akin to improving the quality of a portfolio by ranking holdings according to credit and debt ratings. I am trading lower quality activities for higher quality ones. Quality and pay are not the same. I may accept lower pay for better work. Predictability, health benefits, retirement benefits and doing what I love the best are the markers of higher quality work. Pay is important, but secondary to those values.
I am onto a new value-generation plan with our real estate assets; 2 lots, 1 home, an unofficial accessory dwelling unit, an unofficial cottage, a yurt; the new concept is constructing a compact residence on our second lot, moving in and then refitting the main house into 3 units; basement ADU, main floor dwelling and upstairs flat, extending over new garage. I am guessing that would add another $500,000 in costs to the house, bringing the debt carriage slightly over a million dollars, but in return there would be 4 income producing units in addition to the main house; cottage, ADU, upstairs flat and second house on second lot. one could produce nearly 5k of cash flow per month without much trouble. Carefully curated (single adults, older, stable income, quiet, etc), it could be an idyllic means to enter retirement with only modest carrying costs. We currently carry $2500 of $4000 in mortgage. I would hope we'd carry no more absolute cost and a smaller fraction of the total, therefore adding value as renters pay down the debt. 5-10 years of that and we'd enter true retirement in a much more stable state. That's a fine vision, in my opinion, and we have the help we need to do that work; great architect in near retirement, great builder in near retirement, perfect property, house with good bones. What's not to like?
The Roth IRA is chugging along; all dividend-growth, nothing performing at less than 10% per year and 3-4% DRIP, so the basis is expanding even as the valuations are increasing. I'd like to get back to maximizing the Roth IRA contributions as well as deferred comp, but we probably need more cash flow to do it. At this point I'm not willing to dial back my maker-lab business, which sucks cash at 6-8k/month. it's a huge drag on our spendable cash. It either has to convert to partial self support within another 6-8 months, or I'll begin to squeeze the burn rate. As long as my health holds up, I'll be able to work at the current pace for another 5-8 years easily. that will take our son out of high school, part or completely through college and that'll be a time to consolidate assets and down-size our obligations considerably.
I'm liking the outlook, even if the economy goes south. We're in good shape to survive a down-draft at this point in time.
Sunday, August 25, 2019
So, how's it feel?
3 months into the new strategy;
all I have left in my own management is my Roth IRA, with about $170k in equities. So, I check things far less often. I get periodic account statements from both of my money managers; about what you would expect. Not particularly informative data on the portfolios, have to drill down to see if anything of interest is happening. Most people want that; minimal interaction. I'm an odd duck; I really like the alternative focus of dividend growth, dividend and distribution payments, growth in free cash flow in the portfolio. That's far more comforting to me than watching valuations. On the other hand, I worry less with someone else calling the shots.
Our lives have changed dramatically;
now, I work on the road 13-18 days/month. I'm a glamper; drive the motorhome to the worksite, plug in and set up housekeeping next to the hospital. I get paid to be there, to work over and above the baseline number of hours that come with the contract. I get paid federal mileage rate to get to and from the assignments; about double what it costs in fuel. I get paid a daily housing stipend (average hotel rate in the community), sweetening the locums pot by about 10%. I spend a lot of time on my laptop, corresponding, catching up on reading, waiting for the ER to call. I deal with some loneliness, but more often I like the solitude. My dog, my wife, even my boy, perhaps, are happier to see me after I've been gone a while. And, I make better use of my time at home, knowing I'll be pulling out again soon.
Working 0.8FTE doing rural acute care surgery brings in about 2/3 what I earned as a full time (overtime, actually) burn surgeon. What's sweet is that my time at home is unencumbered by a call schedule. On locums, I'm on call, always. There's no ambiguity about my purpose. Also no commute to the hospital, because I'm there in the parking lot, or very close by in the neighborhood. Full water tank, 20 amps of 110AC power and I'm good for 10 days. At "home" in the RV, there's the radio, CD player, the computer, my ukulele/songboosks, the e-bike, walking. I don't turn the television on.
Our financial situation has turned around dramatically as well. After 6 months of no income and then 8 months of 0.25-ish work for pay, I'm up to 0.8 fte and rising. The pay rate isn't what I could earn as a burn surgeon, but no matter. We're covering expenses and making progress against debt accrued in the transition.
What did that transition entail? in anticipation of my semi-elective/semi-compulsory retirement, we sold the trophy home, bought the rural enclave with it's lodge-style, venerable old and creaky house.
We remodeled the ground floor for the inlaws; 40k expense for 18k/year of household support; pretty nice return on investment in addition to the very important social benefits to them and us of having them under our watch in their dotage. Even in the 9 months that they've been with us, we can see the steady march towards full time assisted living. We put up the yurt for the maker lab (12k+miscellaneous appointments). We put up the tiny-house Cottage for my design studio partner (60k)
The scar treatment business cost 82k in lasers, $3500 in monthly expenses; I think we're about half way to break even, maybe a bit further. I'm certainly not bringing anything home, but the clientele is growing by hook and crook. Lets say it nets me -2k/month.
The maker lab is costing $7k/month, mostly salaries, and some supplies, equipment and IP costs. That's the big sucking sound at the moment, but I can see steady progress towards viable products.
With 10.5k business expenses each month and another 7k in bare necessity household expenses, there's my financial life. I have about 200 days/month worth of scheduled work in locums, should net out about 300k and with huge business tax write-offs, essentially no taxes. I'm about to sign on to a 0.6FTE direct contract that will raise my pay, add benefits and 10% contribution to a pension plan; a major step towards financial stability for us, albeit a bit of a long commute to central Washington for 10 days each month.
We have 60k coming out of IRAs to cover insurance premiums and payment on our secured line of credit, also paying down high interest debt.
Then there's the Untattoo Parlor, the most unexpected gift bestowed upon me by my late friend and protoge, GV MD. I have much to be grateful for to GV, who was a friend to me from the day I met him as an intern, over nearly 20 years of friendship. He was such a positive person, enthused about life and it's opportunities. He was the most encouraging of all my colleagues as I washed out of my high-pressure career. He invited me to join him in a joint venture, co-locating practices and was to also house the maker space and be one of the design studio customers for his hand-joint-replacement practice-to-be. When he abruptly died last year, he left behind a growing side-business in laser tattoo removal. I put my finger in the dike for his business partner/life partner as a stand-in medical director, and 16 months later, we are 30% owners in the business, also taking home salary(kathleen) and medical director stipend (Nathan) as well as collecting some surgical fees for earlobe repairs that come through that business. We count 2k+ monthly against a 16k investment; a huge return on investment, in addition to satisfying part time work for Kathleen. This has made a vast difference in the tenor of our relationship at home, where money stress was causing great tension in the house.
The combo of 1.5k/mo household support from the in-laws, 5k/month in household support from the IRAs and another 1-2k/month from K's hours lasing tattoos pretty much pays household expenses now. My earnings cover business expenses, health insurance and some other miscellaneous costs. God has been good to us, giving us both the opportunities and the health and energy to be able to hold it together through some rough waters these last 2 years.
What do I look forward to? As the laser scar treatment business grows, I'd like to travel a bit less to work. I like locums, don't imagine quitting any time soon, but collecting more work closer to home is a great advantage and I'm working on that. I look forward to seeing the laser tattoo removal business grow, and to co-locating the two laser businesses. It will make a great deal of sense from a labor and expense standpoint. We have every indication that our partner is a solid business partner and we have mutual dependencies that make the combo of these businesses a great fit. I look forward to more activity with my university connections, designing widgets and working to get them into the health care environment. I look forward to more time to do medical missions work in Africa, Haiti, where-ever the opportunities take me. I look forward to watching my son grow and thrive, to renewing the depth and breadth of the relationship with my wife as we get past the many distractions that this huge transition has put in front of us.
While it seems that I've drifted a bit from the primary subject of this blog, in fac, everything we are doing is directly indirectly about securing our financial future, just not solely in the context of salting away more cash in the IRA/ qualified plan realm. We'll get back to that task, but right now we're building value in our wholely and jointly owned businesses. More on all that to come...
all I have left in my own management is my Roth IRA, with about $170k in equities. So, I check things far less often. I get periodic account statements from both of my money managers; about what you would expect. Not particularly informative data on the portfolios, have to drill down to see if anything of interest is happening. Most people want that; minimal interaction. I'm an odd duck; I really like the alternative focus of dividend growth, dividend and distribution payments, growth in free cash flow in the portfolio. That's far more comforting to me than watching valuations. On the other hand, I worry less with someone else calling the shots.
Our lives have changed dramatically;
now, I work on the road 13-18 days/month. I'm a glamper; drive the motorhome to the worksite, plug in and set up housekeeping next to the hospital. I get paid to be there, to work over and above the baseline number of hours that come with the contract. I get paid federal mileage rate to get to and from the assignments; about double what it costs in fuel. I get paid a daily housing stipend (average hotel rate in the community), sweetening the locums pot by about 10%. I spend a lot of time on my laptop, corresponding, catching up on reading, waiting for the ER to call. I deal with some loneliness, but more often I like the solitude. My dog, my wife, even my boy, perhaps, are happier to see me after I've been gone a while. And, I make better use of my time at home, knowing I'll be pulling out again soon.
Working 0.8FTE doing rural acute care surgery brings in about 2/3 what I earned as a full time (overtime, actually) burn surgeon. What's sweet is that my time at home is unencumbered by a call schedule. On locums, I'm on call, always. There's no ambiguity about my purpose. Also no commute to the hospital, because I'm there in the parking lot, or very close by in the neighborhood. Full water tank, 20 amps of 110AC power and I'm good for 10 days. At "home" in the RV, there's the radio, CD player, the computer, my ukulele/songboosks, the e-bike, walking. I don't turn the television on.
Our financial situation has turned around dramatically as well. After 6 months of no income and then 8 months of 0.25-ish work for pay, I'm up to 0.8 fte and rising. The pay rate isn't what I could earn as a burn surgeon, but no matter. We're covering expenses and making progress against debt accrued in the transition.
What did that transition entail? in anticipation of my semi-elective/semi-compulsory retirement, we sold the trophy home, bought the rural enclave with it's lodge-style, venerable old and creaky house.
We remodeled the ground floor for the inlaws; 40k expense for 18k/year of household support; pretty nice return on investment in addition to the very important social benefits to them and us of having them under our watch in their dotage. Even in the 9 months that they've been with us, we can see the steady march towards full time assisted living. We put up the yurt for the maker lab (12k+miscellaneous appointments). We put up the tiny-house Cottage for my design studio partner (60k)
The scar treatment business cost 82k in lasers, $3500 in monthly expenses; I think we're about half way to break even, maybe a bit further. I'm certainly not bringing anything home, but the clientele is growing by hook and crook. Lets say it nets me -2k/month.
The maker lab is costing $7k/month, mostly salaries, and some supplies, equipment and IP costs. That's the big sucking sound at the moment, but I can see steady progress towards viable products.
With 10.5k business expenses each month and another 7k in bare necessity household expenses, there's my financial life. I have about 200 days/month worth of scheduled work in locums, should net out about 300k and with huge business tax write-offs, essentially no taxes. I'm about to sign on to a 0.6FTE direct contract that will raise my pay, add benefits and 10% contribution to a pension plan; a major step towards financial stability for us, albeit a bit of a long commute to central Washington for 10 days each month.
We have 60k coming out of IRAs to cover insurance premiums and payment on our secured line of credit, also paying down high interest debt.
Then there's the Untattoo Parlor, the most unexpected gift bestowed upon me by my late friend and protoge, GV MD. I have much to be grateful for to GV, who was a friend to me from the day I met him as an intern, over nearly 20 years of friendship. He was such a positive person, enthused about life and it's opportunities. He was the most encouraging of all my colleagues as I washed out of my high-pressure career. He invited me to join him in a joint venture, co-locating practices and was to also house the maker space and be one of the design studio customers for his hand-joint-replacement practice-to-be. When he abruptly died last year, he left behind a growing side-business in laser tattoo removal. I put my finger in the dike for his business partner/life partner as a stand-in medical director, and 16 months later, we are 30% owners in the business, also taking home salary(kathleen) and medical director stipend (Nathan) as well as collecting some surgical fees for earlobe repairs that come through that business. We count 2k+ monthly against a 16k investment; a huge return on investment, in addition to satisfying part time work for Kathleen. This has made a vast difference in the tenor of our relationship at home, where money stress was causing great tension in the house.
The combo of 1.5k/mo household support from the in-laws, 5k/month in household support from the IRAs and another 1-2k/month from K's hours lasing tattoos pretty much pays household expenses now. My earnings cover business expenses, health insurance and some other miscellaneous costs. God has been good to us, giving us both the opportunities and the health and energy to be able to hold it together through some rough waters these last 2 years.
What do I look forward to? As the laser scar treatment business grows, I'd like to travel a bit less to work. I like locums, don't imagine quitting any time soon, but collecting more work closer to home is a great advantage and I'm working on that. I look forward to seeing the laser tattoo removal business grow, and to co-locating the two laser businesses. It will make a great deal of sense from a labor and expense standpoint. We have every indication that our partner is a solid business partner and we have mutual dependencies that make the combo of these businesses a great fit. I look forward to more activity with my university connections, designing widgets and working to get them into the health care environment. I look forward to more time to do medical missions work in Africa, Haiti, where-ever the opportunities take me. I look forward to watching my son grow and thrive, to renewing the depth and breadth of the relationship with my wife as we get past the many distractions that this huge transition has put in front of us.
While it seems that I've drifted a bit from the primary subject of this blog, in fac, everything we are doing is directly indirectly about securing our financial future, just not solely in the context of salting away more cash in the IRA/ qualified plan realm. We'll get back to that task, but right now we're building value in our wholely and jointly owned businesses. More on all that to come...
Wednesday, May 1, 2019
Big shift in strategy
What would motivate me to make a big shift in strategy?
longest bull market in modern history is one possible reason. The real reason is simplicity.
May 1st; a traditional day for protest, demonstration, renewal, transformation.
My transformation is two-fold; focus on those things most necessary to make my start-up businesses successful, and live in the present.
I spent 12 years learning to manage my own retirement portfolio. I did a reasonable job of it. I know the drill. But, this is, perhaps, the most complex time in my adult life in a couple of decades. Why? I'm doing stuff for which I don't have prior experience. It's taking a lot of time. I need a break from managing retirement assets. So, our retirement assets are split roughly in half, and placed with two professional managers. It hurts my heart to watch the professional management fees flow out the door, but I am weeding out the majority of my financial reading, spending far less time managing the in-box as the inflow gets simpler and simpler, giving me less distraction as I focus on my businesses. One can only manage so much complexity.
I am truly tired of ruminating over the past and what happened to me. I have an eye on the future, but mostly on the present. What needs doing now? Today, tomorrow, next week.
I have created 4 streams of revenue; The largest is locums, about 0.5 FTE and worth perhaps $14k/month. The next is medical directorships, which together should be worth another $1500/month. A third is the partial retirement distribution at about 5k/month. 20k/month gets us to about 2/3 of what had been our past experience had been. It's far more than we should actually need to survive. However, the laser scar and design studio cost about $8000/month, so we're still scraping along. It'll all work out, I believe. More attention to the present is the key.
longest bull market in modern history is one possible reason. The real reason is simplicity.
May 1st; a traditional day for protest, demonstration, renewal, transformation.
My transformation is two-fold; focus on those things most necessary to make my start-up businesses successful, and live in the present.
I spent 12 years learning to manage my own retirement portfolio. I did a reasonable job of it. I know the drill. But, this is, perhaps, the most complex time in my adult life in a couple of decades. Why? I'm doing stuff for which I don't have prior experience. It's taking a lot of time. I need a break from managing retirement assets. So, our retirement assets are split roughly in half, and placed with two professional managers. It hurts my heart to watch the professional management fees flow out the door, but I am weeding out the majority of my financial reading, spending far less time managing the in-box as the inflow gets simpler and simpler, giving me less distraction as I focus on my businesses. One can only manage so much complexity.
I am truly tired of ruminating over the past and what happened to me. I have an eye on the future, but mostly on the present. What needs doing now? Today, tomorrow, next week.
I have created 4 streams of revenue; The largest is locums, about 0.5 FTE and worth perhaps $14k/month. The next is medical directorships, which together should be worth another $1500/month. A third is the partial retirement distribution at about 5k/month. 20k/month gets us to about 2/3 of what had been our past experience had been. It's far more than we should actually need to survive. However, the laser scar and design studio cost about $8000/month, so we're still scraping along. It'll all work out, I believe. More attention to the present is the key.
Monday, January 21, 2019
Thank God It's 2019
What a hellava year was 2018. I entered 2018 in semi-volunteer, semi-forced retirement. Burnout in all-caps. Silly me, even burned out, I made the common minimizing assumptions that surgeons do when it comes to their own limitations and vulnerabilities; "it isn't that bad, I'll be over it in a couple of months".
I didn't anticipate being out to pasture 10 years before standard retirement age. You don't erase 31 years of imprinting in 12 short months.
I was near catatonic for a couple of months. My first halting efforts and collecting myself and beginning to pick up the good pieces of my shattered career were met with an unexpected tragedy that re-set my course through the end of the year. However, I accrued 2 significant relationships as a result of that tragedy that could figure strongly in my future and they were entirely unexpected. They consist of the medical directorship of two small businesses relating to the treatment of skin with lasers.
I was able, with assistance of old friends and colleagues, to establish two start-up businesses. I was able, with the assistance of savings accrued over years, to achieve a major transition for my wife's parents, bringing them in from a remote community to live in an attractive apartment on our ground floor. By all measures, this has been a resounding success, reducing stress, allowing us to participate in their lives and vice-versa in their final decade together.
Due to the unexpected turn of the screw, one business is sited on my home property, and my business partner is newly domiciled in a "tiny house" cottage on the property, keeping business carrying costs to a minimum for that enterprise.
I was able to find a most ideal sub-let for my laser scar treatment practice, which is wheezing to life in spite of my 58 year-old antipathy for the virtual world in the form of EHR, Fax, LAN, VoIP telephony, and the integration of them all. Best of all, I am coming to terms with managing a schedule internally and slowly losing the free floating anxiety of "where should I actually be this moment?; what am I forgetting?; I must be getting behind on something...". My cell is my pager and it almost NEVER rings. I signed up to do locums and found out that the basic practice of surgery is still the beautiful thing it was when I started, devoid of any obligations beyond caring for patients and the rudiments of documentation. I hate to admit it, but being employed and not an owner of the enterprise makes surgery like going to summer camp. However, were I employed full time by a large corporation, I'm sure all of the S**T that drove me to distraction previously would magically reappear in the form of productivity targets, patient satisfaction surveys, "do more with less".
Money is tight. I eat what I kill. business start-ups are like baby birds; they eat a lot, they tend to poop in the nest (that's the mistakes I have made) and there is no early payback. I spent money in 2018 like a drunken sailor and earned a fraction of what I spent. However, this is a time where the old moniker "it takes money to make money" is absolutely true. The alternative would have been to simply find some uninspiring day-job, bring home a paycheck and lament the loss of the little autonomy I already had in my previous practice.
So, what about the retirement portfolio; it peaked, just like everything else in this country with the "Trump effect" of tax reduction and general economic recovery, then it hiccup-ed loudly in the last 3 months, like every other market based portfolio in America. I tapped my Roth contributions to the tune of about 60k for living expenses in the last two months of 2018 and we're nearly broke in January 2019. So, we tightened our belts, began making hard decisions on priorities, began liquidating non-core assets (there goes the convertible car-toy) and are making plans to survive to either profitability int he businesses or a more modest retirement than we anticipated.
So, we are consolidating all the accumulated qualified plans, supplemental plans from 30+years of employment into IRAs and pursuing the Federal tax code 72-t provision for taking equal and substantial distributions from our traditional IRA retirement assets for 5 years. We're both 58 1/2, so we'll obligatorily take those distributions until we're 63 1/2 under the provisions of the tax code. This is what savings are for; to tide you over in times of transition or into retirement. Our emergency cushion was not adequate to carry us through this profound of a transition, but I think a professional advisor would look at our decisions and agree that they were overall a prudent course of action. If I could hit the reset button, i would have simply tackled some of it in sequence rather than in parallel.
I have decided to move the traditional IRA component of our assets into professional management, with a dividend and growth focus. We will deposit the distribution into a wealth management account, pay all life, disability, homeowners and auto insurance premiums directly from this account before accepting residual distributions for household expenses. This will take a great deal of pressure off of me to generate revenue while my businesses are becoming established. Because of the start-up costs and things like accelerated depreciation on equipment purchases, I will have plenty of tax protection for 2018, 2019 and perhaps beyond. I will be contributing fully to Roth IRAs, essentially moving 12k per year from the tax deferred to the tax free side of the IRA balance in a time when my personal taxes are about as low as they ever will be. This is a MAJOR silver lining in the cloud of reduced earnings during this career transition.
I haven't changed much in my portfolios. I sold some lower performing equities in my Roth accounts to take the previously mentioned distributions. I have slowly improved the credit quality of the portfolio, but only as much as was possible by adding new contributions. I don't tend to sell equities. I have mainly used purchases to nudge the portfolio one direction or another. I have used the brokerage synthetic DRIPS for all holdings. I suspect that the professional managers of our traditional IRA accounts will move to a selective reinvestment program, insofar as I will be drawing down these accounts to some degree anyway, meaning there will be trading activity
I may never "recover" if I were to compare uninterrupted earning power to retirement in my former career, versus what I will achieve on this higher-risk pathway I am on. However, the transition needed to happen regardless, as my spirit was withering in that place and there's no better pathway to an early grave than chronic unhappiness and unremitting stress. I dream a lot more, lately. I have more time for my son. My wife and I are working through the obligatory stress of living in the same space a much greater fraction of the daylight hours now. I had to pick up some domestic chores that were previously excused by my long work hours.
Although 2018 was a singularly complex and stressful year, alot of that stress was the "good" stress of repositioning our real and intellectual assets to better serve our goals, and having laid down a huge "bad" stress of the full time surgical practice. What I didn't anticipate was the effect of "anniversaries" on my state of wellness. Around both the anniversary of the decision to break the partnerships and then the date I turned in my keys, I fell into temporary funks that were pretty significant and lasted about 4 weeks each. I was blindsided by this phenomenon. I'm hoping it won't echo down the years over and over. I have thought on several occasions that it would have been better to set my calendar for a 6 month sabbatical and then pick up the pieces than the way I did it. Woulda, coulda, shoulda....
The blog continues to be a very personal effort, accessible with effort by the public, but without any consistent readership, which suits me just fine...
More to come, when the muse finds me.
I didn't anticipate being out to pasture 10 years before standard retirement age. You don't erase 31 years of imprinting in 12 short months.
I was near catatonic for a couple of months. My first halting efforts and collecting myself and beginning to pick up the good pieces of my shattered career were met with an unexpected tragedy that re-set my course through the end of the year. However, I accrued 2 significant relationships as a result of that tragedy that could figure strongly in my future and they were entirely unexpected. They consist of the medical directorship of two small businesses relating to the treatment of skin with lasers.
I was able, with assistance of old friends and colleagues, to establish two start-up businesses. I was able, with the assistance of savings accrued over years, to achieve a major transition for my wife's parents, bringing them in from a remote community to live in an attractive apartment on our ground floor. By all measures, this has been a resounding success, reducing stress, allowing us to participate in their lives and vice-versa in their final decade together.
Due to the unexpected turn of the screw, one business is sited on my home property, and my business partner is newly domiciled in a "tiny house" cottage on the property, keeping business carrying costs to a minimum for that enterprise.
I was able to find a most ideal sub-let for my laser scar treatment practice, which is wheezing to life in spite of my 58 year-old antipathy for the virtual world in the form of EHR, Fax, LAN, VoIP telephony, and the integration of them all. Best of all, I am coming to terms with managing a schedule internally and slowly losing the free floating anxiety of "where should I actually be this moment?; what am I forgetting?; I must be getting behind on something...". My cell is my pager and it almost NEVER rings. I signed up to do locums and found out that the basic practice of surgery is still the beautiful thing it was when I started, devoid of any obligations beyond caring for patients and the rudiments of documentation. I hate to admit it, but being employed and not an owner of the enterprise makes surgery like going to summer camp. However, were I employed full time by a large corporation, I'm sure all of the S**T that drove me to distraction previously would magically reappear in the form of productivity targets, patient satisfaction surveys, "do more with less".
Money is tight. I eat what I kill. business start-ups are like baby birds; they eat a lot, they tend to poop in the nest (that's the mistakes I have made) and there is no early payback. I spent money in 2018 like a drunken sailor and earned a fraction of what I spent. However, this is a time where the old moniker "it takes money to make money" is absolutely true. The alternative would have been to simply find some uninspiring day-job, bring home a paycheck and lament the loss of the little autonomy I already had in my previous practice.
So, what about the retirement portfolio; it peaked, just like everything else in this country with the "Trump effect" of tax reduction and general economic recovery, then it hiccup-ed loudly in the last 3 months, like every other market based portfolio in America. I tapped my Roth contributions to the tune of about 60k for living expenses in the last two months of 2018 and we're nearly broke in January 2019. So, we tightened our belts, began making hard decisions on priorities, began liquidating non-core assets (there goes the convertible car-toy) and are making plans to survive to either profitability int he businesses or a more modest retirement than we anticipated.
So, we are consolidating all the accumulated qualified plans, supplemental plans from 30+years of employment into IRAs and pursuing the Federal tax code 72-t provision for taking equal and substantial distributions from our traditional IRA retirement assets for 5 years. We're both 58 1/2, so we'll obligatorily take those distributions until we're 63 1/2 under the provisions of the tax code. This is what savings are for; to tide you over in times of transition or into retirement. Our emergency cushion was not adequate to carry us through this profound of a transition, but I think a professional advisor would look at our decisions and agree that they were overall a prudent course of action. If I could hit the reset button, i would have simply tackled some of it in sequence rather than in parallel.
I have decided to move the traditional IRA component of our assets into professional management, with a dividend and growth focus. We will deposit the distribution into a wealth management account, pay all life, disability, homeowners and auto insurance premiums directly from this account before accepting residual distributions for household expenses. This will take a great deal of pressure off of me to generate revenue while my businesses are becoming established. Because of the start-up costs and things like accelerated depreciation on equipment purchases, I will have plenty of tax protection for 2018, 2019 and perhaps beyond. I will be contributing fully to Roth IRAs, essentially moving 12k per year from the tax deferred to the tax free side of the IRA balance in a time when my personal taxes are about as low as they ever will be. This is a MAJOR silver lining in the cloud of reduced earnings during this career transition.
I haven't changed much in my portfolios. I sold some lower performing equities in my Roth accounts to take the previously mentioned distributions. I have slowly improved the credit quality of the portfolio, but only as much as was possible by adding new contributions. I don't tend to sell equities. I have mainly used purchases to nudge the portfolio one direction or another. I have used the brokerage synthetic DRIPS for all holdings. I suspect that the professional managers of our traditional IRA accounts will move to a selective reinvestment program, insofar as I will be drawing down these accounts to some degree anyway, meaning there will be trading activity
I may never "recover" if I were to compare uninterrupted earning power to retirement in my former career, versus what I will achieve on this higher-risk pathway I am on. However, the transition needed to happen regardless, as my spirit was withering in that place and there's no better pathway to an early grave than chronic unhappiness and unremitting stress. I dream a lot more, lately. I have more time for my son. My wife and I are working through the obligatory stress of living in the same space a much greater fraction of the daylight hours now. I had to pick up some domestic chores that were previously excused by my long work hours.
Although 2018 was a singularly complex and stressful year, alot of that stress was the "good" stress of repositioning our real and intellectual assets to better serve our goals, and having laid down a huge "bad" stress of the full time surgical practice. What I didn't anticipate was the effect of "anniversaries" on my state of wellness. Around both the anniversary of the decision to break the partnerships and then the date I turned in my keys, I fell into temporary funks that were pretty significant and lasted about 4 weeks each. I was blindsided by this phenomenon. I'm hoping it won't echo down the years over and over. I have thought on several occasions that it would have been better to set my calendar for a 6 month sabbatical and then pick up the pieces than the way I did it. Woulda, coulda, shoulda....
The blog continues to be a very personal effort, accessible with effort by the public, but without any consistent readership, which suits me just fine...
More to come, when the muse finds me.
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