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A Costly Education

John Lim

THE PUNGENT ODOR of formaldehyde filled our nostrils. Rows of cadavers lay before us on cold metal tables. The class was gross anatomy and we were nervous first-year medical students. That day marked the beginning of our long, arduous journey to becoming physicians, lasting anywhere from seven to 13 years, depending on the specialty.

Money was the furthest thing from my mind that day. But for many of my peers, financial worries cast a long shadow. They had begun to amass a mountain of debt that would average more than $200,000 by the time they earned their medical degrees. That was on top of any existing debt carried over from college. Though blissfully unaware, I was at a huge advantage because I was unencumbered by student loans, thanks to the generosity of my parents.

I didn’t exactly excel in medical school. Memorizing hundreds of muscles, bones and nerves just wasn’t my cup of tea. I was more comfortable around numbers, which explains my passion for finance. But I’m getting ahead of myself.

After four years staked out in the library and hospital wards, I finally graduated medical school. Unfortunately, a medical degree hardly prepares you to practice medicine. That’s the function of residency and fellowship, which come after medical school and often last longer than medical school itself. I chose to follow in my father’s footsteps and pursue radiology, which meant another six years of training. I completed my radiology residency in San Francisco and fellowship in Palo Alto, which is where I married my medical school sweetheart. Despite the long hours and brutal nights when I was on call, I relished those years. I finally felt like I was making a difference in the lives of my patients.

One night, while on call as a resident, I read a scan of a young girl with suspected appendicitis. The appendix looked okay to me, but the girl’s ovary had an unusual appearance—one which suggested possible ovarian torsion, a twisting of the blood supply to the ovary. This was unusual for a girl of her age. I immediately performed an ultrasound, which seemed to confirm my suspicions. I’ll never forget the tears in her parents’ eyes as I explained what I saw and the emergency surgery that would be required to salvage their child’s ovary. That my actions could send a child to surgery—or send her home and cause her to lose an ovary—left an indelible impression on me. As a physician, I was entrusted with something both sacred and priceless—people’s health.

Over the next six years, I pored over radiology textbooks and learned alongside some amazing radiologists. From a purely financial standpoint, it was an investment in human capital, and a sizable one at that. It cost my parents hundreds of thousands of dollars in medical school tuition, room and board, and it cost me 10 years of my life. But ultimately, the investment would pay handsome dividends, both financially and vocationally.

In 1997, I earned $32,000 a year as a radiology resident. After contributing $9,500 to my 403(b) account and paying payroll taxes, my take-home pay was $1,500 a month. It wasn’t a lot, but I never felt poor. I had plenty to eat and a roof over my head. Besides, most of my time was spent either working in the hospital or studying textbooks at home, and I was surrounded by peers who were doing the same. While my official training was in radiology, I was subconsciously learning a financial lesson of immense value—that you can lead a very satisfying life on a modest income.

Then it happened. A decade after that class in gross anatomy, I finally became an “attending” or full-fledged physician. I landed a job in Southern California with a medium-sized radiology group and started working in earnest.

The transition from trainee to attending physician is absolutely pivotal in the financial journey of any physician. When a trainee becomes an attending physician, his or her income skyrockets. A fivefold or greater bump in income isn’t uncommon. In some cases, this is followed by a second, albeit more modest, boost in income several years later, when the doctor becomes a full partner in the practice. Many physicians immediately grow into their attending salary. Imagine delaying gratification for a decade or more, spending most of your life in the library and hospital. The urge to splurge is powerful. Moreover, you’re surrounded by colleagues who drive fancy cars, live in upscale neighborhoods and go on exotic vacations.

I’ll confess, as a newly minted attending physician, I did my share of splurging. I replaced my beaten-up clunker with a brand-new Toyota Camry, and my wife bought a Lexus SUV. We moved into a two-bedroom apartment with a community pool and tennis courts—a big upgrade from the hole-in-the-wall we inhabited in San Francisco during residency. We also ate out and traveled more. But on the whole, we were slow to upgrade our lifestyle. This meant we were able to save prodigious sums. Our savings rate ballooned, ranging between 40% and 60% most years. Living modestly on a physician’s salary is a financial superpower. More than anything else, this paved our path to financial freedom. What’s more, our relative frugality hardly diminished the joy we experienced. As researchers have discovered, the happiness we derive from money is subject to sharply diminishing returns.

Hatching plans. A turning point in my financial journey occurred a few years into private practice, when I was asked to serve as a trustee for our group’s retirement plans. At the time, our radiology group had a traditional 401(k) plan, a profit-sharing plan and a cash balance pension plan. As trustees, we were responsible for overseeing the three plans.

Our cash balance plan was a lot like a traditional company pension. Participants contributed pretax dollars to the plan. They were guaranteed a future payout based on their contribution history and the plan’s investment returns. Since many of my partners made large contributions every year, the plan quickly grew to a substantial size. While the trustees didn’t directly manage the investments, we oversaw the financial advisor who did.

By the time I became a trustee, our group had been working closely with the same advisor for many years. Many of my coworkers also hired him to manage their 401(k) investments. But I became increasingly disillusioned by what I saw. For example, the DoubleLine Total Return Bond Fund had been a staple of the cash balance portfolio for years. We had a few million dollars invested in that one fund alone. I noticed that the fund had two classes of shares, retail and institutional. For some reason, we were invested in the pricier retail shares. Those shares had a 12b-1 fee equal to 0.25% of assets, while the institutional fund didn’t. This fee went to brokers who sold the fund.

Given our sizable investment in the DoubleLine fund, we were needlessly paying thousands of dollars in extra fees each and every year. When I asked our advisor why we weren’t in the institutional share class, he promised to look into it. Months went by and we heard nothing. After more prodding, he moved us into the institutional shares without so much as an explanation.

On another occasion, our advisor proposed we make sizable investments in a nontraded real estate investment trust and a variable annuity, both inside our cash balance plan. Though our advisor never mentioned it, I discovered that both investments paid generous commissions to the selling broker—namely, our advisor. How much of our cash balance plan did he suggest we put in the annuity? “Just” 50%.

We ended up firing the advisor. These experiences reaffirmed my belief that no one cares as much about your money as you do. Don’t get me wrong: There are many upstanding advisors who do good work, and they can add great value outside of portfolio management. But it’s my view that once you know enough to separate the wheat from the chaff, you should consider managing your own investments. Don’t underestimate the power of compounding: Saving 1% or 2% in fees over a lifetime can really add up.

While I was a trustee for our cash balance plan, I was also an investor. One of the most important decisions I had to make: whether and how much to contribute. Participants could choose their annual contribution amount up to a limit, as determined by their age and years with the group. The amount of money at stake was considerable. The more senior members, for example, could make tax-deductible contributions of $200,000 or more per year. In a high-tax state like California, this was very appealing.

But since a cash balance plan is a pooled account with a guaranteed rate of return—for years, the 30-year Treasury yield was our benchmark rate—it had to be invested very conservatively. If the portfolio sustained a sizable loss, we would have to make up the shortfall. By “we,” I’m referring to the participants in the plan, which was nearly everyone in our group. Because of this, the plan typically kept about 70% in bonds, with the remainder in stocks. Such a conservative allocation was destined to generate modest returns.

The consensus among my partners was that the tax benefits far outweighed these limitations. I wasn’t convinced. Given the enormous money at stake, I ran some numbers. My fundamental question: Should I save large sums in the tax-deferred cash balance plan with its low expected return—or should I pay taxes on my earnings and then invest in a taxable account with higher expected performance?

If I went all-in on the cash balance plan—as many of my partners did—I’d likely retire with a huge 401(k) balance. That’s because, when partners retired or left the practice, their portion of the cash balance plan was rolled into their 401(k). On the other hand, forgoing the cash balance plan meant taking a large tax hit today and investing the after-tax savings in a taxable account. Despite that big tax hit, my spreadsheet showed that the taxable account might beat out the cash balance plan on an after-tax basis. This was chiefly due to the higher expected return for my more aggressively invested taxable account. Ultimately, I decided to hedge my bets, contributing some money to the cash balance plan but also saving significant sums in a taxable account.

Toward the end of my tenure as a trustee, I lobbied hard to add another type of retirement account: the Roth 401(k), which would offer participants tax-free growth but no initial tax deduction, unlike the traditional 401(k) plan we already had in place. Here, we dragged our feet. Though the Roth 401(k) was born in 2006, our group didn’t add a Roth 401(k) option until 2014. I believe this was a serious mistake. While the cash balance plan was popular, given its obvious tax benefits, the lack of tax diversification it encouraged was a major downside.

To get a sense of the problem, imagine the following scenario: You’re a high-earning physician who is also an aggressive saver. You’re able to contribute more than $60,000 a year to a traditional 401(k) and profit-sharing plan, plus another $200,000 or more to a cash balance plan, depending on your age and years with the group. Now imagine doing this consistently, year after year. By the time you retire, you’ll have built an enormous tax-deferred nest egg, with income taxes owed on every dollar withdrawn.

Many of my partners did just that. But they probably saved little to nothing in a taxable account or a tax-free Roth account. This lack of tax diversification could come back to haunt them in retirement. The assumption that they would enjoy a lower tax rate in retirement could prove badly wrong, given the substantial required minimum distributions that must start at age 72. Should income tax rates rise from today’s historically low levels, that would only compound the problem. Roth 401(k) accounts—coupled with Roth conversions—could provide some tax relief in retirement.

Choosing badly. Our practice’s 401(k) plan was entirely self-directed, offering the sort of choice found in a traditional brokerage account. Participants could buy and sell what they wanted, when they wanted. The commissions were relatively low—later to disappear altogether—which reduced the frictional costs of trading. Complete freedom to invest as one pleased, combined with near zero commissions. Investing nirvana, right? Not so fast.

Some physicians hired financial advisors to manage their 401(k) investments—including the less-than-scrupulous advisor mentioned earlier. About half were self-directed. Without an iota of formal financial education or training, many saw fit to manage their retirement nest egg completely on their own, me included. It was like giving a layperson a scalpel and forceps, maybe throwing in a surgery textbook or two, and saying, “Take out the patient’s appendix.”

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The results were predictable. Although I joined the group in 2002, I heard stories of fortunes made and then lost during the late 1990s technology stock bubble. Some portfolios held just five or fewer stocks. Others languished 100% in cash. By the looks of the hyperactive trading in some accounts, you might have guessed we were running a hedge fund rather than a medical practice.

It’s clear to me now that most of us would have been far better served by a menu of fewer but smarter investment options inside our 401(k)—things like target-date funds and index funds. If I could go back in time, I would have made age-appropriate, low-cost target-date funds the default investment within our plan. Smart defaults and free choice can coexist. If plan participants don’t like their default target-date fund, they could switch into other investments. But my guess is that many of my coworkers would have appreciated a gentle nudge in the right direction. The federal Thrift Savings Plan, which I would encounter later in my career, is a model in this regard.

Physicians are a proud and confident lot. Years of academic success and being addressed as “doctor” can go to our heads. Add to that generous compensation and you have the makings of a toxic brew. Physicians—especially male physicians—suffer from supreme overconfidence. We fall prey to the specious notion that we can beat the markets, in our spare time, no less.

I, for one, should have known better. Fairly early in my career, I’d read some of the investing classics—A Random Walk Down Wall Street by Burton Malkiel, Common Sense on Mutual Funds by John Bogle, and The Four Pillars of Investing by William Bernstein. The message was loud and clear: Markets are efficient. Passive investing was the way to superior results. But pride and overconfidence intervened, whispering, “Surely you, John, are not an average investor.” Unfortunately, I believed the lie. Here’s just a sampling of my investment mistakes:

  • Amazon.com. I bought the stock, along with other internet darlings, during the dot-com craze of the late 1990s. Most went to zero. After getting back to even, I sold Amazon for a split-adjusted $2.50 a share. Price today? Even after getting roughed up of late, it still trades above $100.
  • XM Satellite Radio. After reading a bullish article in SmartMoney magazine, I invested in this growth stock. Not long after, the stock began to plummet. After doubling down several times, I managed to turn a small loss into a sizable one.
  • Sears Holdings. Here I followed in the footsteps of wunderkind investor Eddie Lampert, who some were calling the next Warren Buffett. This was by far my largest investing blunder. When Sears finally filed for bankruptcy, I had lost about a year’s wages on this investment alone.

Now that you’ve lost all respect for me as an investor, let me say that I’ve also had my share of investing successes. Amid 2008’s global financial crisis, I made large investments in the big banks that paid off in spades. More recently, I bought aggressively during the COVID-19 bear market of 2020, investments that have paid off handsomely so far.

But on the whole, I sincerely doubt that my investments have outperformed a simple index-fund portfolio. Even if I had marginally outperformed the averages, it wasn’t worth the cost. As any economist will tell you, there are opportunity costs to every decision. How do you place a price tag on the hundreds of hours spent researching stocks and poring over the market, time which could have been spent in other, more fulfilling endeavors? Time is the one commodity that can’t be recouped.

Leap of faith. About four years ago, my life took an unforeseen turn. Our children were approaching their teen years, but we had yet to find a suitable high school for them. This was not for lack of trying. Public school, private school, homeschooling—we had tried them all. The ideal school seemed an elusive dream.

Our parenting philosophy may seem extreme to some, but providing our children an opportunity to thrive academically was our highest priority. My own parents sent me to boarding school in the seventh grade. It was a major sacrifice for them—and a rough few years for me—but, in retrospect, I benefited enormously. Now, it was time to do the same for my children.

Eventually, we found what seemed to be the ideal school—one that grouped students by ability rather than age. There was just one problem: It was located in another state. While our children’s education was of paramount importance to us, we weren’t willing to break up the family so they could attend. If our children were to go to this school, we were moving as a family. By this point, I had been with my Southern California radiology group for nearly 16 years. It wasn’t the perfect job—no job is—but it was an incredibly stable and desirable one by most criteria. On top of that, I had toiled four long years just to become a full partner. Moving meant giving all that up and starting over from scratch.

A preliminary job search had come up empty. Still, I assured my wife that we could afford to move even if I didn’t find a job right away. Years of saving aggressively had put us in a position to make a difficult choice based on our values rather than our finances. While we weren’t financially independent at that point, we were financially secure enough to make a leap of faith. I took great solace in Ecclesiastes 3: “To everything there is a season, and a time to every purpose under the heaven.” It was the season to invest in our children’s education.

Having no job leads, I sent my CV to as many radiology practices as I could find through the internet. I also tried cold calling. Nothing. Either radiology groups weren’t hiring or they were only considering people they knew through personal connections. It seemed like I might be unemployed for the first time in my life.

One day, as I was dictating cases alone in the “reading room”—the term radiologists use to refer to our dark, computer-packed work area—a thought occurred to me. What about a Veterans Affairs (VA) hospital? As a radiology resident in San Francisco, I’d spent a few months training at the San Francisco VA. Rotating through the VA was a godsend for sleep-deprived residents since the patient volume was far lower than at other hospitals. But working for a VA hospital as a fulltime attending physician had never before crossed my mind—until now.

A quick Google search returned an immediate hit. There was indeed a VA hospital where we planned to move. Feeling an invisible nudge, I picked up the phone and placed a call. After being transferred to the radiology department, I asked the person on the other end, “May I speak to one of your radiologists, please?” After what seemed like an eternity, a man picked up the line. It was the chair of the radiology department. Trying to hide my trepidation, I introduced myself and explained, “My family is moving to your town in a few months. I was wondering if you have any job openings for radiologists.”

I heard a pause and then a quiet chuckle. My heart sank. Was my desperation so obvious? “That’s funny,” said the voice on the other end. “Just last week, one of our radiologists gave notice that he plans to leave. So, yes, we have an opening.” He gave me his email address and asked for my CV.

As I put down the phone and sat in silence, goosebumps rippled over my body. What had led me to make that phone call at that moment? Had I called a few weeks earlier, I would have been rebuffed. Had I searched the official government job website, I would have come up empty—the job hadn’t yet been posted. Was it an amazing coincidence or had I just witnessed a miracle?

Over the next month or so, I interviewed for the position and was offered the job. In becoming a government employee, I took a very steep pay cut. But having a job was infinitely better than the alternative—being unemployed. I soon learned that there are wonderful benefits to being a federal employee: an inflation-adjusted pension upon retirement, access to an excellent defined contribution plan—the aforementioned Thrift Savings Plan—with generous matching contributions, and amazing health insurance benefits, to name just a few.

But it turned out that the greatest benefits were nonfinancial. After joining the VA, I channeled my passion for finance into spreading financial literacy. I developed a curriculum for health care staff and trainees, giving monthly talks on personal finance and investing. Later, I taught an elective on personal finance to fourth-year medical students at a local university. It was also around this time that I started writing for HumbleDollar and I finally published my first book, How to Raise Your Child’s Financial IQ: The Most Important Things, which was years in the making.

This latest phase of my life and financial journey are replete with lessons. The first one is immortalized by Robert Frost’s beautiful line in The Road Not Taken: “Two roads diverged in a wood, and I—I took the one less traveled by, and that has made all the difference.” Giving up a secure, well-paying job in midcareer was viewed by many as financially irresponsible. But what I discovered was that the road less traveled is often the most scenic. The educational benefits for our children were well worth the move. But the risk we took also paid off for me both personally and professionally.

The second lesson is that financial security opens up doors. One reason we were willing to leave California was that our financial house was in order. Had it not been, I wonder whether we would have taken such a large risk. In the end, financial freedom is about far more than retiring early and hitting the proverbial golf course. It’s about being free to make difficult choices and follow your true north.

Finally, I’ve learned that we are in far less control of our finances and lives than we imagine. Instead, life is filled with randomness and chance. In investing, these forces can easily conspire to make or break an investment. But they can also bend the course of our lives in unpredictable ways. How many blessings in my life—financial or otherwise—were the result of dumb luck or divine grace? Plenty.

John Lim is a physician and author of “How to Raise Your Child’s Financial IQ,” which is available as both a free PDF and a Kindle edition. Check out John’s earlier articles.

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Jian Xu
Jian Xu
13 hours ago

Great insights from a humble lifelong adult learner! Thank you John. I recently retired from the military after almost 28 years of service. It was fortuitous that Uncle Sam funded all my 13 years of higher education (BS, MS, and MD education). While I never had a student loan, I paid my dues twice over with the salary differential and much travel away from the family. When I was a young officer, I got suckered into the First Command front-load mutual funds. Then I learned a painful lesson with my first home purchase during the housing bubble. Thankfully I have not yet suffered a financially catastrophic divorce that plagues many in our generation. Some lessons cannot be learned from the For Dummies book series, and these I shared with my younger colleagues in both medical school and residency. Cheers to the humble lifelong learners!

Mark Cappo
Mark Cappo
11 days ago

My first comment in 5+ years of reading HD, but need to point out the downside of the TSP. While I was in the navy (~2015), a study came out showing the TSP consistently underperformed its benchmarks by over a percent, in both up and down markets. Despite being a passive fund, you were effectively taking a huge expense hit which is why I immediately rolled over into a vanguard IRA when I got out. It turns out that, like most government programs, because the TSP doesn’t face competition (as the navy couldn’t have chosen a far more efficient vanguard fund, even if it wanted to), there is no incentive to be efficient. Worst, the cost was hidden so most participants who didn’t keep up on the news, had no idea the cost. Coincidentally I had the same experience with military Healthcare, nearly requiring emergency surgery after something as trivial as three weeks of mistreated strep throat. While my Healthcare was financially free, the longterm costs of inferior care were nearly catastrophic.

Last edited 11 days ago by Mark Cappo
johntlim
johntlim
11 days ago
Reply to  Mark Cappo

And I’m sorry for your unfortunate experience with strep throat. Sadly, medical error is as high as the third leading cause of death in America. But medical error is not limited to the VA or military healthcare. This is something the VA takes very seriously and is working hard to improve upon.

MikeinLACA
MikeinLACA
11 days ago
Reply to  Mark Cappo

This comment is nonsense. The TSP is essentially the largest 401(k) in the country. It’s well monitored, super efficient, cost effective, and has minimal tracking variance from its benchmarks. (That said, the modernization rollout in the last month has been a calamity.) None of the major financial firms who watch and advise federal employees about the TSP ever jump up and down like this commenter. Silly.

So too is anecdotally throwing military health care under the bus because of one poor outcome. HD readers are generally far more discriminating and logical than this.

johntlim
johntlim
11 days ago
Reply to  MikeinLACA

The TSP (Thrift Savings Program) is a wonderful retirement plan. It offers up to a 5% match, index funds with ultra low fees, target date funds (called Lifecycle Funds), and automatic enrollment (at the 5% match level). The funds are managed by BlackRock and State Street. It offers both traditional and Roth options. I have no qualms at all about the TSP.

In short, I think most people would be incredibly lucky to have access to such a wonderful retirement plan. About the only thing that I would add to the TSP program as it now stands is a “Save More Tomorrow” component:
http://www.shlomobenartzi.com/save-more-tomorrow

Peter Blanchette
Peter Blanchette
11 days ago

You sound like someone who had very generous parents who understand the value of an education for their children. As someone who entered a very lucrative profession and was wise with his investments you are someone who lived the so called American Dream. Just think of all of those kids out there with thousands of dollars of student loan debt(over a Trillion $ on a macro level) who for reasons of interest and passion did not enter a profession compatible with the debt they incurred. Many of those students may not have been able to enter a profession or career where they have been easily able to(or unable to) pay for those student loans hanging over their neck. This overhang of student debt on society has stilted the lives of millions of Americans and stilted the ongoing growth of the American economy.

johntlim
johntlim
11 days ago

Peter, thank you for your thoughtful comments. I understand that I have been blessed with wonderful parents who sacrificed and impressed upon me the immense value of higher education. No doubt I have been privileged.

Also, you are correct that student debt is a huge problem, especially when one’s career prospects, i.e. earnings potential, are out of line with the debt incurred.

Helpful Neighbor
Helpful Neighbor
11 days ago

Excellent Article! Book of Ecclesiastes – perfect! May God continue to Bless you and your family. Thank you for sharing.

johntlim
johntlim
11 days ago

Thank you.

Margaret Fallon
Margaret Fallon
11 days ago

John, I enjoyed your story immensely, thanks for sharing, most of us have made these financial ‘goofs’ by being too greedy/hopeful and also on the otherhand too conservative. Your willingness to give up a very high paying job & move to put your children’s education first is admirable, but you’ve been rewarded in other non monetary ways which may give more satisfaction than endless piles of money you probably can never spend anyway.

johntlim
johntlim
11 days ago

Thank you, Margaret. I think we shouldn’t be too hard on ourselves about our financial “goofs.” The important thing is that we learn from them.

Randy Starks
Randy Starks
11 days ago

Thanks John for your enlightened story and perseverance. You have come out the better end, secure in your life-style, and did the best for your children without chasing the golden-ring. Now, you are serving those that served us (veterans) and they deserve it not Washington politicians!

Yes, our company waiting too long to offer Roth 401k accounts as well. So, I was not afforded the opportunity to fund a Roth before I retired in 2016. No regrets, maxed out my 401k most years closest to retirement, am now secure in retirement and pay taxes as agreed. I do recommend to the young ones that they go 50/50 between tax-deferred 401k and Roth 401k, so that they can get tax benefits now and later in retirement. It’s a win-win as far as I am concerned unless Congress comes after the money. You just have to bite the bullet, fund them (annual allowed contribution) to the max allowed and live within your means-budget.

johntlim
johntlim
11 days ago
Reply to  Randy Starks

Thank you, Randy. I think that a 50/50 mix between deferred 401k and Roth 401k is very reasonable.

T. V. NARAYANAN
T. V. NARAYANAN
12 days ago

Thank you Dr. Lim for this wonderful article, full of wisdom and elegantly written. Having grown up in rural India and later on migrating to the US, I was also a lucky person. Now in my early eighties, I appreciate the wisdom of the last paragraph about life being filled with randomness and chance. 

My financial journey was much more convoluted. I was not blessed with parents who were well educated. In fact my parents never attended any school, because there were no schools in the village I was born in. But I was lucky that my parents encouraged me to study. They could not afford to pay for my education. But I was again lucky that I got a scholarship in my college studies. Later on I was able to migrate to the US. Getting a Ph.D. in Engineering and getting married to an anesthesiologist was all lucky turn of events.

My financial education was slow. My love of books helped. I was also lucky to have read few books on finance including Burton Malkiel, John Bogle, Jeremy Siegel, Charles Ellis and Fred Schwed among others. I read, perhaps every one of Jonathan Clements’ columns on personal finance in the Wall Street Journal and learned much from it. Now I am reader of columns on Humble Dollar.

On the way I also learned about index funds. That also helped.

T. V. Narayanan

johntlim
johntlim
12 days ago

Thank you, T.V. Your journey is inspiring. I think that those of us with parents that encouraged education are truly blessed. You clearly made the most of your God given abilities. That is what I strive to do and hope my children will someday attain.

Andrew Forsythe
Andrew Forsythe
12 days ago

John, this article is terrific. Your broad knowledge, your modesty, and your willingness to share with all of us are very much appreciated. And you’re a helluva writer to boot!

johntlim
johntlim
12 days ago

Thank you so much Andrew.

johntlim
johntlim
12 days ago

Thanks to everyone for the kind comments. One thing that I failed to mention in my piece is the joy I’ve experienced in treating our nation’s Veterans. They are truly America’s unsung heroes. Despite having experienced unimaginable hardships, they are humble, grateful, and full of hope. It is an honor to treat such wonderful patients. Their sacrifices have enabled us all to live freely in this great country. And they have impacted the lives of countless outside the US, including those in South Korea, where I was born.

I have also been pleasantly surprised by the quality of care that the VA provides Veterans, in many cases surpassing that provided by the private sector. Is the VA perfect? — far from it. But I am proud to work alongside hundreds of dedicated and caring health care providers. And importantly, the VA is strongly committed toward becoming a High Reliability Organization, putting patient safety first.

If you are a Veteran, let me say ‘thank you’ from the bottom of my heart.

Last edited 12 days ago by johntlim
William Perry
William Perry
12 days ago

I am a veteran and the son of a WWII combat veteran and as such I applaud your decision to join the VA, thank you Dr. Lim.
As a CPA I was fortunate in the past to work for a CPA firm that had a radiology group and many of the physicians as tax clients. I recommend your article to physicians starting professional careers.
My favorite Radiologist story that I can tell regards one physician who was burned out from working nights. The physician chose to move to Hawaii and read electronic film during the day for a east coast practice night shift thus allowing for traditional family events.
Tax Tip – For those who have accumulated large balances in tax deferred accounts and have a charitable intent the tax code allows direct IRA to qualified charity distributions upon reaching age 70 1/2 of up to $100K per individual per year. These qualified charitable distributions (QCD) will fulfill the required minimum distribution requirement (RMD) that begins at age 72 under current tax code and will not be federally taxable to taxpayer. The QCD is not deductible as a charitable contribution if you itemize. A QCD may also help you avoid a Medicare IRMAA premium surcharge. There are still tax reporting obligations on the 1040 so the IRS knows that all or part of the distribution is a QCD. The deferred account making the distribution has to be a traditional IRA so if your funds are in a 401(k) account they would need to be rolled to a IRA from the 401(k) prior to making a QCD from the IRA. There are some other less common potential tax traps with QCDs and the law is always changing so you need to be sure your actions avoid any tax trap and coordinate your QCD with your other tax planning to get the best desired tax result.

johntlim
johntlim
12 days ago
Reply to  William Perry

Thank you and your father for your service. And thanks for the tax tip.

As an aside, burnout is a huge problem among physicians, including radiologists. I certainly don’t have all the answers to burnout, but one way to address it on a personal level is to live below your means.

Rick Connor
Rick Connor
12 days ago

Excellent story John. Thanks for sharing the wisdom you have gained, and thanks for helping take care of our veterans.

johntlim
johntlim
12 days ago
Reply to  Rick Connor

Thank you, Rick. Always enjoy your writing too.

Jerry Pinkard
Jerry Pinkard
12 days ago

Wonderful story John. Thanks for sharing. Lots to digest but it seems you were the beneficiary of grace when you cold called for the VA job.

johntlim
johntlim
12 days ago
Reply to  Jerry Pinkard

I have been showered by enormous grace. (And I was pretty filthy when I walked into the shower.)

Bob Wilmes
Bob Wilmes
12 days ago

John your story is a wonderful example of the shared wisdom here at Humble Dollar. I thank you and Jonathon Clements for sharing this knowledge for so many to learn from. I hope you continue to have a long and wonderful career with the VA. As a veteran, I have a younger brother who is an Army veteran and receives a lot of care from the VA for which we are very grateful for.

johntlim
johntlim
12 days ago
Reply to  Bob Wilmes

Thank you, Bob. Jonathan Clements is a shining beacon in what is often a financial wasteland.

Thank you for your service to our country.

Jack
Jack
12 days ago

Thanks for sharing. Many of us became experienced investors by making mistakes. I think physicians are not so different from others but the magnitude of the mistakes is larger. Finally getting a real job at 30 means starting out behind.

johntlim
johntlim
12 days ago
Reply to  Jack

Thank you, Jack. But as Dr. William Bernstein has often said, physicians are among the worst offenders. I believe their hubris is a major reason why.

Harold Tynes
Harold Tynes
12 days ago

The value of tax diversification is rarely discussed. It has real value. The largest expense most have in retirement is taxes so having the ability to time earnings and taxes is powerful.

johntlim
johntlim
10 days ago
Reply to  Harold Tynes

Very true.

R H
R H
12 days ago

Wonderful story John. What always impresses me the most is not financial acumen (there’s lots of that out there), but strength of family, and commitment to children and parents.

johntlim
johntlim
12 days ago
Reply to  R H

Yes. Family and friends are what count in the end, not the size of our 401k.

Carl Book
Carl Book
12 days ago

There are a lot of us that fall into the trap of investing too much in a tax deferred fund.

johntlim
johntlim
12 days ago
Reply to  Carl Book

Agreed. There is probably more debate over Roth vs tax-deferred vs taxable accounts than almost anywhere else in personal finance. To me that speaks toward the countless variables and unknowns that factor into the analysis.

Nagaraj Arakere
Nagaraj Arakere
12 days ago

Wonderful and very perceptive article.

johntlim
johntlim
10 days ago

Thank you, Nagaraj.

Mik Cajon
Mik Cajon
12 days ago

Many thanks for your service to our veterans…great article.

johntlim
johntlim
10 days ago
Reply to  Mik Cajon

Thank you, Mik. Veterans deserve the best we can provide.

Phil Dawson
Phil Dawson
12 days ago

Too much wisdom here to digest in a single reading. Many of us are beneficiaries of amazing grace. Thanks for your diligent sharing.

johntlim
johntlim
12 days ago
Reply to  Phil Dawson

Thank you, Phil.

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