Tune in to this episode with Dr. Cobin Soelberg to hear about financial independence for doctors, the 4% rule, the FIRE movement and making your money work for you.
“I’d see residents, as soon as they graduate, they’d buy the Mercedes or they’d want to get a big house and (they’d be) really digging themselves into these holes and feeling stuck. Feeling like the only option was to work more.” -Cobin Soelberg, M.D., J.D.
Today’s conversation is all about how much is enough and financial independence. Cohost Dr. Jen Barna talks with Anesthesiologist, Financial Planner and Attorney, Dr. Cobin Soelberg. Tune in to this conversation to hear about the 4% rule, the FIRE movement, and some solid ways to get started making your money work for you so you can get on the path to financial independence.
As a practicing anesthesiologist with legal and financial training, Dr. Soelberg has a unique expertise and understanding of his colleagues’ clinical pressures and the financial worries that keep them awake at night. Dr. Soelberg helps his colleagues destroy their student loan debt, protect their income and assets and create a retirement plan that would make you jealous!
Cobin Soelberg, M.D., J.D. is a Certified Financial Planner candidate and owner of Greeley Wealth Management, a financial planning firm, run by a physician for physicians. He is the treasurer of his private practice anesthesiology group located in Bend, Oregon.
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Podcast produced by: Amanda Taran
Please enjoy the full transcript below
Dr. Cobin: I’d see residents, as soon as they graduate, they’d buy the Mercedes or they’d want to get a big house and really digging themselves into these holes and feeling stuck, feeling like the only option was to work more.
Jen: Welcome to DocWorking: The Whole Physician Podcast. I’m Dr. Jen Barna, and today’s guest is Dr. Cobin Soelberg. Dr. Cobin Soelberg is a practicing board-certified anesthesiologist as well as an attorney, founder, and principal advisor of Greeley Wealth Management in Bend, Oregon. Dr. Soelberg, I’m so excited to have you here with me on DocWorking: The Whole Physician Podcast, because in addition to all of these perspectives that you bring, you’re also one of our trusted resources at DocWorking. Cobin, welcome to DocWorking: The Whole Physician Podcast.
Dr. Cobin: Thank you so much for that introduction, Jen. That was very sweet.
Jen: It’s great to have you here and I’m really interested in talking about a subject that you addressed recently in a blog post on DocWorking. Back on November 24th, we published a blog post about the concept of “how much is enough?” I think that with all of the stress that physicians face, particularly with a huge debt burden, and as a proponent of really wanting physicians to get into the mindset of reaching financial independence, because I think it does buy so much freedom to have that peace of mind, the flip side of that coin is how much is enough? I’m curious if that’s something that you often discuss with your clients, or is that something that is much further along, or is that something that you start with at the beginning?
Dr. Cobin: It’s such an interesting question, Jen. It’s one of those issues that comes up all the time for my clients. In my job as an anesthesiologist, I’m also the treasurer of our group. So, I have access to everyone’s financials. I know what they’re all investing in as a trustee of our cash balance plan, and our 401(k). A really good friend of mine in the group, I asked him the other day, I’m like, “What’s enough for you? Because every time someone gives up a call, every time someone gives up work, you’re one of the first people to respond.” I said, “I want to talk to you because I’m a little bit worried about how much you’re working.” I think it comes up in a lot of different ways.
Part of the reason I was excited to write that post is, I think, as physicians, we have one speed, which is fast. We only know how to work harder from all of our training through med school and residency, it was always more. That was the answer, was more. So, if you don’t know the answer to this for yourself and for the goals that you’re trying to achieve, you keep working harder, you keep working more, you keep picking up more call, I really do think that’s, A, for many people, it’s unnecessary and B, it’s a recipe for burnout. So, I think it is important to think about from the very get go.
Jen: That’s a really great point about the foot on the accelerator really is the only speed we know, the fastest speed. First of all, I would love to hear a little bit about what made you decide to become a financial advisor, speaking of pedal to the metal.
Dr. Cobin: Stepping back, my whole journey through medicine has been a little bit nontraditional. In the sense, I was a philosophy major in college and I really enjoyed that sort of learning and continue to read in that genre even today. One of my philosophy professors encouraged me to think about law school in addition to med school. [laughs] I took a three-year leave of absence after my second year of medical school to get a law degree out in Philadelphia, and then came back and finished my clinical rotations.
Looking back, it’s funny, because to me, doing the financial planning piece feels like a culmination of a lot of different areas of my life which, for the longest time, sort of felt disconnected and disparate. So, when I started my career as an attending, I was in an academic institution and very quickly, my teaching became– it wasn’t clinical teaching, it became teaching personal finance topics to the med students and the residents, and a lot of it would be like, “Hey, what are you going to do with your student loans? How are you going to pay those off?” Literally, the answer I got every single time, except for once and it really did shock me almost to the point that I fell over was, “Oh, I don’t even pay attention to those. I just keep deferring them. That’ll take care of itself when I’m attending and make attending money.”
I’d see residents, as soon as they graduate, they’d buy the Mercedes or they’d want to get a big house and really digging themselves into these holes and feeling stuck, feeling like the only option was to work more. Yes, as physicians, we certainly make really healthy incomes, but as an attending, there’s a lot of bills that come along with it, whether that’s disability and life insurance, whether it’s all the credentialing activities. So, I started teaching the med students and residents, like I said, and then the surgical residents would look over the drapes during the case and say, “Hey, what are you guys talking about? Can you come talk to us about that?” So, I started doing grand rounds all throughout the hospital for different departments, and then started speaking at other med schools throughout the country and residency programs. So, that was pretty standard.
I think there’s a lot more physicians who are interested in talking about those issues. I was fortunate to be doing a lot of these lectures with a good friend of mine, who is a CFP as well and is a financial planner. He happened to work for the University at the time and helped med students with their loans. He said, “Hey, are you ever interested in doing something like this because I think physicians could really use someone who understands what they’re going through and understands the stress of medicine, and also understands the finance piece?” He saw it even worse. He saw the med students who were just accumulating massive amounts of debt, because for them, it was play money. About two years ago, I got credentialed and registered in the state of Oregon to be a financial advisor. It was right at the beginning of COVID, and that extra time away from clinical practice allowed me to do that, and it’s been fantastic.
To me, the most fun part, the numbers are interesting and show people that they can achieve independence. But what’s even better than that is actually diving into their purpose, their why. “Why are you saving?” Without an answer to that question, it’s just this nebulous goal with really no emotional weight to it.
Jen: We really have a meeting of the minds in terms of feeling that it’s critically important for physicians to have in mind the concept of financial independence, which I think, especially as a young physician, could really be a game changer. I wonder if you could talk a little bit about what financial independence is?
Dr. Cobin: Sure. I do remember that first phone call we had, Jen. I wanted to reach out and hug you for all that you’re doing for physician colleagues. I remember what I said to you. I was like, “Wouldn’t it be so great if we worked in a hospital where no one there had to work financially? They worked because they wanted to and what kind of environment that would be?” When you think about financial independence, if you’re really looking at what that definition is, you look at basically covering all your monthly and yearly expenses from investments. Your investments can be broad. They can include real estate, which I know a lot of physicians are interested in. They would certainly include your traditional retirement accounts that you think about like a 401 or your Roth IRA. But the idea is those investments are earning income each year, whether that’s 7%, 8%, 10% a year, whatever they’re returning, and you’re spending a certain amount, and once the return on your investments is higher than what you’re spending, you’ve reached financial independence.
Jen: Perfect. So, to me, the concept of getting into a safety zone is really the first goal for physicians because just as you said so eloquently a moment ago, if physicians can get into that zone of safety where they’re not working because they have to, but they’re working because they want to, it can help us to get that energy back and that focus of why we’re doing this in the first place. I think it’s easy to lose sight of that when you have all of these other burdens, especially financial burdens, when someone’s graduating with a huge amount of debt, and then taking on expenses that can be overwhelming or certainly can make you feel trapped into a scenario where you have to earn the income, because you’ve got such a huge overhead and so many bills to pay. Do you counsel people on how to avoid that at all or is that something that comes up at all? I’m just curious.
Dr. Cobin: Avoiding debt you mean or avoiding lifestyle creep?
Jen: Yeah. Let’s talk about lifestyle creep.
Dr. Cobin: In many cases, by the time someone comes to me, usually something’s going on, they’re like, “I need to get this under control,” whether their student debt payments are just out of control or they realize they’re spending too much. Part of the reason I really enjoy doing some of the lectures to med students, is even if I could reach like 1 out of 10 and be like, “Think about saving, not increasing your spending, getting out of debt before you start ramping up the house and the car and all these other things.” Usually, by the time I’ve gotten through them, they’re definitely spending more money.
But the idea is as residents, we are all used to living on substantially less income and it’s not that you can’t spend more once you become an attending. But even if you double your spending, that still leaves, depending on your specialty, anywhere from 30% to 60% of your income that you could be building wealth with. When I say building wealth, especially for a young person attending, that would include debt repayment, paying off student loans, credit cards, anything like that that you may have, and saving for retirement. Later in your career, you should just be focused on building retirement and other types of savings.
Yeah, I do think it’s an important thing. The thing I’ll say about that is that it’s much easier, if you can just slowly give yourself a little bit more year by year. It seems like a nice little bonus every year. When I have conversations with someone, I’m like, “We need to cut your spending by $5,000 per month or $10,000 per month.” That’s no fun. It’s not fun for me and it’s certainly not fun for my clients because they feel like something’s being taken away from them. That’s a very natural feeling if you look at the psychology of it. So, it’s nice when I can work with really young physicians right out of the gate and we can build strong financial habits from the get go. It’s much easier, fun, and they get it quicker, and they get out of debt quicker, and then you can start doing a lot more of what you want.
Jen: Let’s talk about something called the 4% rule. Is that the same thing as the 25 times your income that people sometimes talk about when they’re talking about–?
Dr. Cobin: How much to save?
Dr. Cobin: Yeah. I think it’s interesting because in the last couple of years, there’s definitely been an explosion of the FIRE community, the financial independence, retire early community. Those two things can be separate. The financial independence part, I think there’s plenty of people in medicine who are financially independent and still choose to work and do it on their own terms, and I think that’s wonderful. But it comes from a study where they basically looked over a 30-year retirement and they looked over a 50- or 80-year period and looked at different 30-year time periods, and looked at how much to take from your retirement accounts, and whether you end up hitting zero at any point in that. That’s where the initial idea of the 4% rule came from. The idea is that you take your annual spending and multiply it by 25, and that gets you to the 4%.
Now, the problem with that, especially in retiring early crowds, is they’re looking at a 30-year retirement. They aren’t looking at a 40- or 50-year retirement. When you listen to a lot of economists, they’ll project that future growth is not going to be as high as it used to be. The big issue is that 4% doesn’t take into account taxes. When I think for many physicians who have significant savings and pre-tax accounts, taxes, they’ll be less than what we’re paying as working physicians, but still going to be a big bite.
With all that said, I do think it’s helpful, at least as a starting point because it forces you to do a couple of things, Jen. It forces you to really sit down and look at what you’re spending per year and what you want to spend per year, those can be different things, and extrapolate out what that looks like.
As a physician, your expenses of taxes go down, your expenses of saving for retirement go away, the conferences, the credentialing, all those expenses go away as a physician. So, our spending tends to drop fairly significantly compared to what we’re spending during working years. But I do think it’s a nice starting point, if nothing else. It can give you something to shoot for.
Jen: You bring up a great point in terms of, you may not be aiming to live on the same salary that you’re currently living on.
Dr. Cobin: Correct.
Jen: And certainly, to get into a safety zone, you could aim to have 4% generate, for example, a resident salary, or twice a resident salary, or something like that. So, you could potentially aim for that safety zone first, which to me seems more achievable and doesn’t seem so far away that it just is overwhelming.
Dr. Cobin: I really do love that, Jen. I think there’s a couple of different stages in everyone’s financial journey. For most residents going into attendinghood and prior practice, most of them have a net worth that’s negative. They owe more money than they’re worth. So, that first stage is paying off debt and just getting to a net worth of zero, which is a great feeling. Then, the next stage would be paying off that non mortgage debt, getting rid of those student loans. But after that, if really the next step is you’re looking at retirement and truly walking away from medicine as a profession totally, that seems like so far away and it doesn’t have that emotional pull.
In the last couple years, it’s funny, because there’s all these different retirement communities. One is like Fat FIRE. If you want to live on a ton of money, and be flying private everywhere, and live on your boat, but there’s also a lot of talk about Coast FIRE. The idea is that, you save aggressively early in your career. Once you get to 50% or 60% of your gold, your money actually does the heavy lifting. There reaches a point where the amount that your retirement accounts earn each year is more than you’re saving every year. So, that just accelerates that whole process.
I think what I love about that concept is thinking back to where we started, it allows you to take your foot off the accelerator a little bit. If you want to keep working, 100%, you can. I have a three-month-old at home, and my goodness, I want to spend all the time at home with them. And thankfully, we’ve put ourselves in a position where I can actually work one or two days a week less, because we’re reaching that point where our accounts are doing more of the heavy lifting. So, it’s like, well, if my money is going to be working for me when I’m sleeping, when I’m hanging out with my baby, when we’re on vacation, let’s let it. So, I actually really liked that concept.
Jen: Congratulations to you for being in that position. I think that’s really a goal worth aiming for anyone who’s listening. Yeah, I am very fascinated with the FIRE movement. For physicians, I really see it as I call it, the FIORE movement for us, because I put the O in there for the option, financial independence with the option to retire early. Because I think that once you’re in that safety zone and you have the option to retire, I think it’s such a mind shift that you may actually not choose to retire. There are so many ways, it’s not just black and white, pedal to the metal all the time or not at all. There’s so much in between that we can do as physicians. So, if you can just get yourself into that safety zone as soon as possible, then you have so many options to sort out.
Do you find that a question that young physicians bring to you is whether to pay off all the debt first and then begin saving? What’s your recommendation for people who are in the situation where they have a very large amount of student loan debt and they are not sure where to begin?
Dr. Cobin: Yeah. I think especially starting out, that’s probably the most common question that I get from graduating residents or new attendings in part because it’s overwhelming, and you want to make a good choice, and you want to set yourself up for success. What I’ll say is each person’s situation is unique depending on the amount of debt they have, depending on if they have a partner that’s working. Typically, you need to do a combination of both. For some people, it will make sense to refinance with a private lender and get a lower rate. Some people are going to be going for a service loan forgiveness. So, they’ll keep doing what they’re doing as long as they’re in a 501(c)(3) job, but you need to do both.
Part of the reason you need to start getting money into retirement savings is the first five or seven years, where you really start pumping money into your savings accounts, the only thing that matters is your savings rate. The market could do whatever, but when you’re essentially starting from zero, you need to get money in there so that if the market goes up 30% like it has the last couple of years, it actually makes a difference. If you have $10,000 in there and it goes up 30%, that’s nice, but it really is not moving the needle.
Warren Buffett said it, “One of the seven wonders of the world is compound interest.” I think for so many of us, the interest has been working against us with our student loans. This is an opportunity to let your money work for you. One of the things is always coming up with a plan. That’s a lot of the work that I do, is coming up with a plan that allows us to both, get money into retirement accounts, and pay off debt, and do that in a way that still allows you to enjoy your life.
Jen: Dr. Cobin Soelberg, thank you so much for joining me today on DocWorking: The Whole Physician Podcast. I’m looking forward to having you back again. There’s so many topics that we’ve touched on here and I’d love to go into more depth on those with some future conversations.
Dr. Cobin: Thank you so much for having me. I always enjoy talking with you.
Jen: Likewise. We will talk again soon.
Jill: Are you distracted with dreams of retirement even though it’s a long way off or are you living from one vacation to the next? Does it feel like your day is filled with dreaded duties instead of fulfilling work? You may need an experienced physician coach to walk you through a system to help you find joy and meaning in medicine again. You want somebody who has a lot of experience working specifically with physicians, and who has a track record of helping doctors get content and happy at work again.
Amanda: I’m Amanda Taran, producer of DocWorking: The Whole Physician Podcast. Thank you for being here. Please check us out at docworking.com and please don’t forget to like and subscribe. Thank you for listening.