Transcription – WCI – 347
INTRODUCTION
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Dr. Jim Dahle:
This is White Coat Investor podcast number 347 – Living a regret free life.

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All right, welcome back to the White Coat Investor podcast. We have got a great episode. We're recording this shortly after Thanksgiving, although it's not going to run till almost New Year's. But I hope you've had a great holiday season. Ours has been good and will continue to be good between now and when you hear this, I think. But it's an exciting time of year, a time of reflection, and a time of being hopefully with those you care about most. And coming up to the end of the year, it's always a time to be thinking about what next year might look like.

We have some promotions I want you to know about. The main one is we're giving stuff away. We have a buy one get one deal available on all three of our main online courses. We have three main offerings that we have here as far as online courses go with the White Coat Investor.

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So, it's a great option for you. If you buy it now you get our Continuing Financial Education 2022 course, which is also good for CME. A lot of CME actually. Those continuing financial education courses are made using the material from our annual conferences each year. That material is made from the 2022 conference, and you get that totally for free as well as the CME that comes with this.

However, if you don't want the Fire Your Financial Advisor course, or the Financial Wellness and Burnout Prevention course, you have two other options. Another one of our big courses is our real estate course. We call it No Hype Real Estate Investing. If you're interested in real estate investing on the direct side, buying your own properties and managing those, whether it's short term, long term, fix and flip, whatever, or on the passive side, whether it's syndications or funds or turnkey kind of properties, we've got a course that will help you figure out how to do that, where you fit on the real estate spectrum. That's called No Hype Real Estate Investing.

If you buy that course, we also throw in CFE 2022, which is good for continuing financial education. And I suppose since you're getting both of them together, this is probably an opportunity to buy No Hype Real Estate investing with your CME dollars because they're thrown in together. As long as that flies with whoever's approving those expenditures, that is an option for you to be able to get that course with CME dollars.

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QUOTE OF THE DAY

All right, enough of that, our quote of the day comes from Seth Godin. It's one of my favorite quotes. “Instead of wondering when your next vacation is, maybe you should set up a life you don't need to escape from.” And I love that one.

INTERVIEW WITH JORDAN GRUMET

Okay, we've got a great guest today. We're bringing back Dr. Jordan Grumet and he's a great interviewee. If you don't know Dr. Grumet, he has done some work as Doc G. What was he calling his podcast? He was calling it What's Up Next. And he subsequently rebranded that as Earn & Invest I think is what it is. earnandinvest.com. Great guy, great doc.

On his website he says, I was an internal medicine physician in private practice when I discovered the personal finance community through a book called The White Coat Investor. Since then, I left clinical practice to pursue my passion for deep conversations about money and life.

It's not entirely true. He still practices. He's a hospice doc for 10 to 15 hours a week. But let's get him on the line here and talk about what he's been doing lately and some of the things we can learn from him about living a regret free life.

Our guest today on the White Coat Investor podcast is a repeat guest. This is Dr. Jordan Grumet. Jordan, welcome back to the White Coat Investor podcast.

Dr. Jordan Grumet:
Thank you for having me. I think last time I went by Doc G. So, now the real name is out.

Dr. Jim Dahle:
Oh, oh. Well, the big reveal, here we go.

Dr. Jordan Grumet:
The big reveal on the White Coat Investor. Yes.

Dr. Jim Dahle:
Yeah, you may know him from the What's Up Next podcast, which has been rebranded as Earn & Invest. You can get information about that at earnandinvest.com. That's where Jordan has been podcasting these days, but he's been involved in a lot of stuff. I saw him recently at the Bogleheads conference. I think it was Christine Benz who was interviewing there, as I recall.

Dr. Jordan Grumet:
Yeah.

Dr. Jim Dahle:
And he also has a book out, which is pretty awesome, as well. I was going to have the book in front of me, but my wife loves this book. In fact, I was going to make her do this interview, but she got called to Arizona on short notice for her grandmother who recently passed. Basically woke up with a stroke a few days before we recorded this. Took the book with her to Arizona. And so, I don't have it in front of me like I was planning to for this podcast interview. I was just texting her a few minutes ago. I'm like, “Where's the book? I can't find it.” And she took it with her.

But this book is called Taking Stock: A Hospice Doctor's Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life. And it's been a great seller I understand. It's got four and a half stars, 318 reviews already. The foreward is by Vicki Robin, who we had on the podcast not that long ago. Jordan, congratulations on publishing such a well-received book.

Dr. Jordan Grumet:
Thank you so much. It has been a pleasure to take all I've been thinking about all these years between medicine and personal finance and put it together in one place.

Dr. Jim Dahle:
Yeah, pretty awesome. What was it that motivated you to write a book? This is a big step for a lot of people. And the fascinating thing about writing a book, of course, is that once it's published, everyone assumes you're an expert. It doesn't matter how much you blogged or podcasted or practiced or whatever, boy, you got a book even if it's self-published and all of a sudden everyone thinks you're an expert. But tell us about the motivation to write the book.

Dr. Jordan Grumet:
The truth is, I think I've always been a writer. In fact, when I look at my career, I became a doctor, I think partially because my father died when I was eight years old and I wanted to be just like him. And somewhere in my 8-year-old brain, I told myself that if I just became a doctor like he was, it would somehow relieve me from any responsibility. Because little kids think everything going around and happening to them happens because of them.

And so, I set off to be a doctor, but I found myself writing. Even as a teenager then once I was a practicing physician, I had a medical blog. In fact, that's how you and I originally interacted. But I would always fit it into these nooks and crannies of time because I never thought it was that serious of a thing. It was always, “Well, being a doctor is what you do for a living, but you can write as a hobby.”

And once I learned about financial independence and realized that I could pull away from being a doctor, because I was quite burned out, I had to really reassess who am I and what is important to me. And I realized that writing was incredibly important to me. It was a big part of my identity that I had been submerging so long because I spent all my time trying to be a doctor, something that wasn't fitting me. Being an author was something that really was one of those deeply important things to me that I wasn't addressing in my life until I got my finances in order.

Dr. Jim Dahle:
Tell us a little bit – what is your life right now? What do you do for a living or with your days? Tell us what you do.

Dr. Jordan Grumet:
I was at the point in medicine where I was working very full-time. I had my own practice. I was running a business, I was seeing 20 to 30 patients a day. I was going to hospitals and nursing homes as well as seeing patients in the office. And I was at the cusp of burning out. And that's actually when you sent me your book back in 2014, The White Coat Investor. And you wanted me to review it from my medical blog.

And as I read it, I had this epiphany that actually I was doing a pretty good job when it came to the money. In fact, I was pretty much financially independent and I was really, really excited for a moment until I realized that this idea of stepping away from medicine, something that I was really craving because I was getting burned out from doing it, caused me a huge amount of anxiety and panic because I had no idea what I wanted to do with my life or who I was.

That was 2014. Right now we're in 2023. The next bunch of years I had to slowly change my life. I wasn't ready to walk away from medicine even though I could financially. But what I did is I started subtracting out those things I didn't like about my practice.

I owned my own concierge practice and I was getting calls on nights and weekends and running to people's houses on Saturday mornings. The first thing I did is I got rid of my practice and I did just nursing homework and hospice work. Eventually I got rid of the nursing homework and I was left with hospice work and I really love doing hospice work. I realized I would do that even if I wasn't being paid for it.

And so, I continued to subtract. I got rid of nights, I got rid of weekends, I got rid of being an employee and just started being a contractor. I created the job that I wanted that was most fulfilling to me and it ended up being about 10 or 15 hours a week. That left a huge amount of time available where I didn't need to necessarily be making money, but I did have to decide what purpose looks like in my life.

At that point I got very interested in personal finance. In the process of doing all this, I started a financial blog and eventually a financial podcast. And while I was having all these deeper conversations and still treating my hospice patients, it really gave me the idea about writing this book about what the dying could teach us about money and life. Because I was finding some of those more difficult, deeper answers to the financial questions actually from my hospice patients.

I could find out from podcasters and entrepreneurs and real estate people and other successful doctors, they could all teach me how to save, how to earn and invest. But when it came to why we should be doing this or what purpose looks like in our life, I actually found that my dying patients, when they would express their regrets, the things they didn't have the energy or courage or time to do, that really hit home in a lot of my financial conversations.

And that's what the book really became is how can I take all these valuable lessons from the dying and bring them to us, the living. And we're crushing it. When it comes to our finances, we're paying off our debt, we're building up our net worth, we're building businesses, we're doing all these wonderful things, but sometimes we do those things as opposed to start really looking at what we want out of life and who we are.

The question is how to do it all together in concert or in harmony. And that's kind of what led me to what I do now, which is I podcast, I write, I do as much public speaking as I can. And I do a little bit of hospice work, about 10 or 15 hours a week.

Dr. Jim Dahle:
Yeah. This is important for me. I'm probably five years after being financially independent. I have this existential crisis every month of what I'm going to do with my life because I don't need to work anymore for money. And yet I find work fulfilling. And so, I don't just have one job, I got two.

And so, I think it's really important what you're doing, but let's divide it up a little bit. I want to spend most of our time today talking about how to live a regret free life. But before we get there, this is mostly a financial podcast. I want you to pretend I'm a doc who has maybe just heard about financial independence and this concept and you've got five minutes to teach me about financial independence, what I ought to know, what its benefits are, how I get there, etc. What would you tell me?

Dr. Jordan Grumet:
I'd say there are pretty much three big ideas. And they're in this book, and I think they're very straightforward. The first and foremost is before we even think of money, we should think about purpose and identity. Money is a tool. What are we going to use that tool for? Let's think about who we want to be and what we want to do.

Once we start that process, we don't need all the answers, but we at least have some inkling, some idea of where this is all leading to. Once we have an idea of purpose and identity, the next step then is to build a financial framework around that. I think we should all go for financial independence. This idea that we have enough money where we can do what we want in life without worrying about making money to support us further because we already have that taken care of.

And there are really a few main pathways to get there. The way I did is I front loaded the sacrifice, worked really, really hard, saved up as much money as possible, got to a high net worth, and then used that net worth. And I can live off the income from it. That's one way.

Another way is passive income and side hustles. Maybe you can set up things like real estate or some types of side hustles that pay your monthly needs. You make enough money so that you can pay for what you need to do each month. And in a sense, you're financially independent much quicker. You may have to continue those side hustles or continue having that passive income for longer periods of time, but it's there for you.

And last but not least, the third way to financial independence is really what I call the passion play. It's do something you're incredibly passionate about and if you happen to make enough money to cover your needs doing that, you're pretty much financially independent from day one.

Of course, you're going to have to risk mitigate, you're going to need all the right insurances and all those kind of things. But there are really three good ways to get there. If you know what your purpose and identity are, you can then start building your path to financial independence through one of these three pathways.

And then the last step is to help you decide, do I spend now or do I save for later? That is a huge existential question we have. Should we YOLO – You only live once? Let's go have those big vacations and do those important things now. Or should we defer gratification because we want to have a nice long retirement, not have to work?

And so, since we never really know how to really parse out which one of those we should do, I tell people you should ask yourself one major question. “What scares you more? Are you afraid that you are going to die young and die wealthy? Or are you afraid you're going to live long and run out of money?”

I think that's the best proxy for asking you when are you going to die because we don't know. But what scares you most? If you're afraid that you're going to die young, then go out and spend a little more money, save a little bit less and realize you might have to work longer, but you're going to be loving that life you're living.

On the other hand, if you're like me and you're afraid you're going to live long and run out of money, it's okay. Maybe you grind it out and save a little bit of more money, do a little less YOLO right now, and then retire early and do a lot more YOLO later. That's what I'd say. Three ideas. Figure out your purpose identity. After that, build a financial framework around it. And last but not least, ask yourself that important question to decide how much you should spend today versus deferring gratification for tomorrow.

Dr. Jim Dahle:
But Dr. Grumet, what if I don't know what my purpose is? I thought it was medicine, but now that I'm 40, I'm not so sure.

Dr. Jordan Grumet:
I think that's something that a lot of people have anxiety about. In fact, it's called purpose anxiety. And we find that about 91% of people have it at some point in their life. Here's the beauty of this, and what I also learned from the dying.

In hospice, we do something called the life review. It's this idea that once we make sure a patient's symptoms are covered and maybe we get them into the right place, whether they're going to die at home or in a nursing home or where have you, the next thing we start doing is talking about some of their existential crises. And we often can do something called a life review. This can be done by a doctor or a nurse or a social worker or a chaplain.

But it's a structured series of questions where we ask people the important things about their lives. What was important when they were younger? What were some of their biggest accomplishments? What were the biggest failures? What were those important relationships they had? What do they hope to do for whatever little bit of life they have left? What would they like to accomplish in the next few weeks?

All these big huge questions throughout their lifetime we asked them. And then people really get to focus on who they were and who they want to be. And so, that's a pretty long process.

But what I always tell people is there's pretty much a one sentence life review. And that is, if you found out you were going to die tomorrow, what would you regret never having the energy, courage, or time to do? And so, I love to pose that question as a starter in how we think about purpose. If you can ask yourself that question, it removes all the lenses that are put on us, the lens of society, the lens of our family, all the things we're told we should do. Being told you're going to die soon allows you to drop all that and decide who you want to be.

I think that the life review is a really good starting point. There are a bunch of other techniques. And actually in my next book, which is going to be called The Purpose Code, which is coming on in January, 2025, I actually go into a lot of detail about how we connect with our sense of purpose.

The life review is one, another is to think about our childhood wishes and dreams. A lot of times as we grow older, we're told by adults or even by ourselves that that's not kind of what you do to make money or that's not what you do to build the life. But you know who really understands purpose? Little kids. Little kids know exactly what they want to do, they're not worried about how much money they're going to make, but we lose that sometimes as we grow older.

I remember talking to someone who had this exact question and I gave her a series of life review questions and about two months later, she wrote me by email. And the topic of the email was horses. And what she realized after doing her life review, some of her happiest childhood moments were when she was riding horses because she used to compete and do this when she was little. And then she went to college and she got busy in Corporate America and she lived in the city and there was no place to stable the horses and etc, etc. And she really fell away from this thing that really felt purposeful and loving for her. And doing this life review helped her remember that.

And so, then she could start to try to incorporate that back into her life and see if that helped her find a sense of purpose. Your sense of purpose can be big, it can be small. You can have one sense of purpose or many. It can change over time. The important thing is that you enjoy doing these things and they help make you feel fulfilled. And so, that's a bunch of different ways to start looking into that.

Dr. Jim Dahle:
Do you think it's possible to spend too much time thinking about purpose and doing life reviews? I feel like it sometimes makes me anxious, that I'm thinking, “Man, I'm already 48. My life is at least half over. I'm two thirds dead.” And maybe that detracts from my quality of life in some ways.

Dr. Jordan Grumet:
I think it's definitely easy to get overly anxious. And I think we have to take some of that anxiety and fear away. Part of the problem is people really think purpose has to be what I call Big P purpose. What I mean by Big P purpose is you have to change the world or you have to do something outlandish like make a billion dollars or you have to cure cancer. And so, all of those things are so difficult and a lot of times we don't even feel agency to get to those places. So, it makes us feel real anxious.

What I tell people is, what about Little P purpose? And what that is that the things we just enjoy doing regardless of the goal. As opposed to making it this big anxiety causing issue, what if we started thinking about just the stuff we love to do? What feels fulfilling for us in the moment?

Strangely enough, I don't really think you find purpose. I think you create it, but you do have to figure out what some of these anchors are for you. So, if you can find what those anchors are, you can then build a life of purpose around them. And the anchors don't have to be that big. Like for me, one of my anchors was hospice. Okay, that's like a big life changing thing. But you know what? Exercise is an anchor for me. I build time around doing exercise every day. Reading is an anchor for me. I build time around that.

I was thinking about my own childhood and realized I love sports and specifically I love baseball cards. I used to collect them as a kid. So I'm thinking about making that an anchor and maybe I'll get back into that or maybe I'll get interested again in antiquities. Or I used to love searching for old things like whether it's coins or stamps or baseball cards.

If we take some of that stress and anxiety away from it and make people realize it doesn't have to be this big outsized thing, the question is what lights you up? And if we can figure out what lights you up, you can start engaging in those activities. And even more importantly, the bigger thing is when you engage in those activities, you tend to form communities around them and you tend to touch the other people around you.

And so, I just think we can kind of pull some of that anxiety away and start thinking more about how do we want to use our time? Because time is so precious. We can't control it, we can't buy it, we can't trade for it. It passes no matter what we do. So, how can we start filling those time periods we have with much more enjoyable stuff?

Dr. Jim Dahle:
We've talked about financial independence and how purpose plays into that. Let's turn the page a little bit toward wealth. And forgive me, I'm going to share a little bit of a personal story this last week or so.

We spent Thanksgiving down in Vegas. And when a lot of people think of Vegas, they think of the strip and gambling and shows or whatever. Sin City. When I think of Vegas, I think of it as an outdoors person's paradise. We went down there to go hiking and mountain biking and rock climbing and those sorts of things.

I took the whole family. There's five of us down there. And we spent some of the time doing very inexpensive stuff, at least for us. To go climbing for us is very cheap because we have all the gear. I've already got a Parks Pass and it's basically free other than the gasoline.

And other things that were more expensive, we went out to a three course restaurant dinner for Thanksgiving and then went to a Cirque du Soleil show that evening. It was a very expensive evening.

But when we got back from the trip, we got back late Saturday night. And Sunday morning my wife gets this call from family members saying grandma's basically woken up unresponsive and we're taking her to the ER. And she gets there and they intubate her so they can do the work up and they do the scans that you'd expect and find a big huge stroke.

And this isn't necessarily terrible news. She's been dealing with ever worsening dementia over the last few years and is getting to the point where it's bad where you start talking about memory care and those sorts of things. And so it may be in a lot of ways a blessing.

But the first thing I said to Katie was, “You should go.” And to me this has demonstrated wealth in a lot of ways. It's Sunday of Thanksgiving weekend, it's probably the most expensive day of the year to fly. And we don't have to worry about the money of buying an airplane ticket, whatever it costs. We gotta fly her private down there, we can afford to do that.

The wealth financially was there but also a certain amount of time and flexibility. We can look at our schedule for the next few days that Sunday morning and say, “Yeah, we can do this with just one of us here. We can get the kids to where they need to be for the most part. Your job mostly allows you to work remotely.” She's our chief product officer. “And you can do this. Time-wise and flexibility wise, you've got the freedom, the financial freedom to be able to go and be there with your family at this terrible moment.”

And then, finally, the third aspect of wealth that this really brought up for us was relationships. Because I couldn't quite handle everything. The next morning I had a shift in the ER at 6:00 AM and there are six times a month when I have to be somewhere very specific doing a very specific thing.

And I didn't know how I was going to get our 8-year-old to school that morning because she catches the bus at about 8:30 that morning, long after I've left for the shift. But we have a lot of neighbors around and friends and families and other kids that catch that bus. No problem at all. We had our teenager drop her off on her way to school and she hung out with someone else for an hour and a half before catching her bus with her friends.

So, three aspects of wealth there. The financial aspect, the freedom and time as well as the relationships were three aspects of wealth that allowed us that opportunity for Katie. And she was able to be with her grandmother, stay with her Sunday night and she was there late Monday night when she finally passed. And a lot of people just don't have those opportunities. And so, it was very illustrative to me of what wealth really is.

But when you talk about building wealth in your book and on your podcast, what does wealth mean to you?

Dr. Jordan Grumet:
Well, just as you were talking about, wealth is a series of tools that lets us live a good life. And I think we often make the mistake of thinking that money is the only tool. Material wealth. And it is a great tool. Just as you were saying, you found out about a family member in need or that was dying and you could pay whatever it took to get Katie on the plane to make sure she could see her. That's material wealth. That is one of those tools.

But the mistake we often make is saying it's the only tool. We have so many other tools and you mentioned a few of them. Our time. There are times in our life, there are seasons in our life where we have more time or less time. And that time is a huge tool. It's a form of wealth.

We have our communities, we have the people who support us, we have our relationships, the people we love. We have our youth. When we're young, actually our youth is a tool. For instance, we might not have a mortgage, we might not have a family. So, that tool we can use to spend our time doing other things.

We have tons of these tools. And to me, wealth is accruing these different types of tools and then using them to live the life you want to live. And so, sometimes you're going to have a lot of that material tool, money, and you can leverage that to live the life you want to live, to be there at a family member's bed as they're sick. You can use it to go on big vacations, do things you want.

But there are going to be other times, other seasons in your life when you don't have those things and you're going to use your other tools. Maybe it's your free time, maybe it's your communities, maybe it's your relationships, maybe it's your skills. And so, I think the truly wealthy people out there understand that these tools are there to live the life you want to live and realize that regardless of where that one tool, the money, is, you can use those other tools. They tend to live purposeful lives when they have very little money and they tend to live purposeful lives when they have a lot of money.

But I don't want to be Pollyanna about it. You are 100% correct. If you guys didn't have money, it's possible you couldn't have afforded to get her on the plane to see her loved one. That would've been in a sense of tragedy.

But when we look at what that trip actually means, what we realize is that the true wealth was in her relationship with her family member, not in making that last trip to be with her as she died. That is a huge benefit. And we want to be there with the people we love when they die. But the true wealth that your wife and you have is that strong relationship with your family. And that transcends the money. It transcends making that last trip. It's what you built over a lifetime.

Dr. Jim Dahle:
Excellent points. All right, you're a hospice doc, you get to talk to people, Katie's grandma in this case. You would've had to talk to her a few days before, maybe a couple of years before, before the dementia set in really badly. But you get to talk to these people at the end of their lives. What do they regret?

Dr. Jordan Grumet:
Well, I’ll tell you the first thing that they don't regret. Because it's easier to go in that direction. They generally don't regret that they don't have enough money. And they generally don't regret that they didn't work more nights or weekends.

What they do regret is a lot more personal, but we can categorize it. They regret that they never had the energy or courage or time to do the things that were most important to them. And a lot of the time they either never thought about what was most important to them or let society dictate what was most important to them or let their jobs or their career path get in the way of doing those important things.

And so, this I hear over and over again, although the details are different. For one person, it might've been writing a book. For another person, it might've been climbing Mount Everest. For another person, it might've been not repairing that relationship that went awry decades ago.

The point is, there's a gap between the person they are and the person they want to be. And they never got in the arena and fought the valiant fight to become that person. And that's where the regrets really lie. And I think that's where the message about money really comes in is money is a great tool, but you don't want the lack of money be the reason that you don't make that valiant effort, why you don't try to close that gap. Because there's never going to be enough money. There's never ever enough money. When we look at people and we ask how much is enough, it's always double what they have.

Dr. Jim Dahle:
It's so true. I just looked at a survey yesterday, and the average American I think has a net worth of $750,000. And the amount they think they need to be happy is $1.2 million.

Dr. Jordan Grumet:
Yeah. And the truth of the matter is, whereas there probably is enough money and we miscalculate, there never will be enough time. Our life on this Earth is finite and that time is passing quickly. So, we don't really have a lot of time to sit here and ignore those things that are important to us. That's what the regrets really center around, is what was important to you that you didn't pursue because you let everything else get in the way of it.

And I'll tell you, after seeing many, many, many people on their deathbeds, a lot of us have these things and a lot of us ignore them. And so, it's really a good wakeup call that your time is finite and we have to stop letting all these other mirages, all these big things that get in the way that really aren't important to us, but we think they're important to us and we let them get in the way.

For some people, that's net worth. Money becomes a huge mirage and we forget that it's just a tool to help us do what we want to do. And it becomes the goal unto itself and then causes problems. But it's not just money, it's often our jobs. Or our place in society or being an influencer or whatever it is that we think is important but ultimately when we look back on our deathbeds, we're like, “Yeah, that wasn't nearly as important as I thought it was.”

Dr. Jim Dahle:
As you talk to people, do you feel like most people have regrets or that most people don't?

Dr. Jordan Grumet:
I would say that most people probably do have regrets, but it is not uncommon to find very peaceful people at the end of life. Is it 50/50, 60/40? I couldn't give you the exact numbers, but I'd say more than not have regrets. But we tend to die the way we lived.

And so, people often ask me, how do you die a good death? And I say, well, the best way to die a good death is to live a good life. You really have to focus on these things early. And there are some people who really do. I've had plenty of people who look up and say, “I'm ready. It's time.” And those are people who tended to live in the moment enough to realize what was important to them and come to terms with those things.

But it's a rare person who as a young person really looks at their life and says, “Okay, if I were to die tomorrow, what things do I need accomplished? And let's start working on those now.” And I think it should be less rare. I think we should spend a lot more time thinking about those things today.

Dr. Jim Dahle:
And we always hear that you should be in the moment, live in the moment. And of course, that's good advice and we should all try to do that. It's not that easy though, especially for those of us who are planners. We're always thinking about the future and what am I going to be doing tonight instead of what I'm doing right now? How do you live in the moment better?

Dr. Jordan Grumet:
I think it's a matter of knowing who you are. There's some people who live in the moment all the time. The people who are YOLO to the maximum and those people, they kind of know that they should be deferring gratification a little bit more. And then there's the ultra-planners who never let loose and never have fun, and they kind of know, “Maybe I should actually go and enjoy myself a little more.”

I think that big question staring at us really helps. I think all of us need to look at our lives and say, “If I was given a death sentence today and I had days, weeks, or months, would I feel like I accomplished what I needed to accomplish?” And if you are an ultimate long-term planner, asking that question can be very off-putting but very important.

Because at some point you have to realize that while I am planning for tomorrow, tomorrow is not guaranteed and I at least have to spend some time being the person I am today.

I think it's Buddhist philosophy, they talk about Memento Mori, this idea of carrying the idea that you're going to die with you during your everyday events. And so, I think that's really helpful, especially for the really long-term planners, to carry a little Memento Mori with them and realize that yes, we all want to plan for the future. We all want to have a nice long retirement where we have plenty of money, but that can't be at the expense of enjoying yourself today because we don't know how many days we have.

Dr. Jim Dahle:
Memento Mori sounds like a spell out of Harry Potter.

Dr. Jordan Grumet:
It may also be for all I know.

Dr. Jim Dahle:
You wrote this book. What's your favorite part of the book?

Dr. Jordan Grumet:
What's my favorite part of the book? No one's ever asked me that question. That's a good question. I really like the end. Because in the end I get to really sum up kind of everything together. And what I say at the end is, I've said many times in the book that we are dying from the day we're born. Yet it's also important to know that we're living up until the moment we die.

And so, what I really want people is to learn how to have a good life. And the way to do that again, is to realize that since we don't know how much time we have left, we have to learn how to live both today and tomorrow. Living for today is really building that sense of purpose and identity. And the living for tomorrow is then building a financial framework around that that can support you maybe for decades and decades into the future. We really have to do both.

Dr. Jim Dahle:
Let's turn religious for just a moment. There are three big questions in religion. Where we came from? Why we're here? Where we're going? How does this change these subjects we've been talking about for those who believe there's an afterlife versus those who do not?

Dr. Jordan Grumet:
I don't think it changes at all. In a sense, yes, if you're deeply into religion and you feel like the things I do here on Earth are going to build for you a more beautiful afterlife, etc, then yes, it's going to change how you act and what you do and how you use your money and time. But I would argue that, for you then, that is purpose.

The way I integrate religion and faith into my framework about purpose, identity, and then building your financial framework is, for many people, religion becomes a big part of that purpose. And if that's the case, that's totally fine.

What you want to do then is you want to try to build a life in which you can spend a lot of your time living up to the precepts of that faith, which is so important to you, going to services, meeting people, being part of that community, doing good. That is a proxy for purpose. And you can then use that and you build it into your financial framework.

But does it change how we feel about dying and getting our lives in order and doing the things that are important to us? I don't think so. It's that big question. We don't know what happens after you die. It may be you're gone, or it may be that you have a rich afterlife afterwards. I think in both cases you're served if you live a good life, both today and in the future, regardless. So, I think you can't lose if you follow some of these precepts.

Dr. Jim Dahle:
I had somebody refer to me as middle aged this year for the first time. That's the first time that's ever happened to me. I guess I am, I'm 48 years old, you're not much older than me.

As you look back over the financial decisions you've made and the career decisions you've made, what regrets do you have right now? Looking back, the mistakes you've made and regrets you have about how you've lived your life to this point?

Dr. Jordan Grumet:
The truth of the matter is I don't have a lot of regrets. A big part of happiness for me is finding meaning in my past. A lot of times I will look at my past mistakes or my past hardships and instead of looking at them kind of under that victim lens, I often look at them under that hero lens. All those hard things that I went through, all those mistakes that I made, I tend to look at them as I was able to overcome those, and they taught me about life and got me to where I am today. Because I kind of have that outlook, I don't tend to regret a lot.

The other thing is, in writing this book and dealing with hospice, I really spend a lot of time thinking about just that question. If I found out that I had a short period of time left in life, what would I want to do? I'll tell you, I would've really regretted not writing this book.

Writing a book and traditionally publishing a book was one of those big things I would've regretted if I hadn't finally got in touch enough with my sense of purpose and identity to do what for me was very courageous work. Because I had a lot of fear about putting myself out there, a lot of fear about not getting a book deal, a lot of worries that I wouldn't be good enough.

For me, that would've been a huge regret that I've thankfully been able to overcome because I've become very, very clear about what's important to me. But if I had continued on that life trajectory that I was on before and never come to some of these important ideas, I think that would've been a big one.

Dr. Jim Dahle:
Do you think that lesson that you're applying now to your life, looking at the past, to look at yourself as a hero rather than a victim? Can that be applied to us at the end of life as well?

Dr. Jordan Grumet:
I certainly think it can. Again, to me, happiness is meaning and purpose. Meaning is the past. It's how we are cognizantly thinking about what we've been through. And so, those who look at their past with a sense of victimhood, have a lot of trouble being happy today and certainly have a lot of trouble feeling like the future is going to be positive and good.

The first thing we need is a sense of meaning that feels heroic. Purpose is all about the present and the future. And it's much more action oriented. When we're talking about meaning, we're talking about cognition. When we're talking about purpose, we're talking about action.

When we get to the end of the life, we have a lot less time. We don't have as much action. Most of our sense of happiness is probably going to be based on meaning and not necessarily purpose. Although I will tell you some of the people I've seen die kind of the best and happiest deaths, they tend to have a sense of purpose up until they die. Maybe it's waking up the next morning to see a grandchild, maybe it's catching that last Cubs game. Whatever it was that really spoke to their soul, that doesn't just stop when you are told that you are dying.

And so, if you're lucky enough to have some of these passions and the sense of purpose, you get to wake up every morning looking forward to something, feeling that sense of action and purpose up until the day you die. But it is true. As your days get less and less, it's really that sense of meaning that I think brings happiness and that gets all back to that lens in which you look at your past.

Dr. Jim Dahle:
We had a guest on here recently, Stacy Taniguchi. And one of the things he teaches is that you should live a life such that you would be willing to live this life over and over and over again for eternity. What do you think about that advice?

Dr. Jordan Grumet:
Oh, I love it. I love it. And again, this gets back to how you interpret your past. If you look at your past as if it was horrible, and I'd never do that again, it's really hard to think about your future and present and feel good about it.

But I look at all those foibles, those stumbles, the things I did badly, even the death of my father. And I think what a gift that it brought me here today where I could write this book that meant so much to me, where we can have these great conversations, where I can do something like go to the Bogleheads conference and meet all these fantastic people and have these amazing conversations. What a gift. I would do it all over again.

It's the same answer to what would you change if you had to do it all over again? And I'll tell you, even though I made tons of mistakes, I can't imagine being where I am today unless I had those falls. Unless I had those foibles, how would I have learned what I've learned today? I love that. I think that's a fantastic way of looking at your life.

Dr. Jim Dahle:
Jordan, our time is short, but this will be listened to by 30,000 something people, mostly doctors. Is there anything we haven't talked about today that you feel like they should know?

Dr. Jordan Grumet:
No, I think that really sums it all up. Maybe the one thing I'd add is go easy on yourself. We are our own hardest critics and it actually stops us from doing the things we really want to do. You are where you are at this point, no matter how bad it was because that's what you needed to go through to get today. But today is now the time to start doing what you want to do.

So, stop being so hard on yourself, stop lamenting all the things that didn't work in the past and realize that your sense of meaning, your sense of being who you are today comes from looking heroically at that past and then building the future you want. And so, go easy on yourself, realize that you had to go through what you went through to be where you are today.

Dr. Jim Dahle:
All right. Dr. Jordan Grumet, blogger, author, podcaster, public speaker and guru. Thanks so much for being on the White Coat Investor podcast.

Dr. Jordan Grumet:
As always, thank you so much for having me.

Dr. Jim Dahle:
All right, I hope you enjoyed that interview as much as I did. It's always fun to talk to somebody who's thinking about issues that are important to me. We're actually going to be given away a few copies of his book, but they're going to be given away as part of a promotion with our FEW group. This is the Financially Empowered Women group. And if you are interested in joining that group, yes, you have to be a woman. If you're interested in joining that group, you can sign up for that and have a chance at winning those. By participating in the activities there, we'll be giving away a few copies of Jordan's book. For the rest of you or if you just can't wait to get it, you can pick that up on Amazon. We'll have a link in the show notes.

All right. Don't forget about our buy one get one free course sale. Remember, if you buy Fire Your Financial Advisor, Financial Wellness, our No Hype Real Estate Investing or a Continuing Financial Education 2023, you will get CFE 2022 thrown in absolutely for free from now through the 4th of January.

This has got to be maybe our biggest sale of the year. So, if you've been holding off on buying one of these courses that you know you need to take, you need a written financial plan, that's Fire Your Financial Advisor, you're interested in real estate, that's No Hype Real Estate Investing or you're just looking to get some more financial information using your CME money at CFE 2023. Check that out, whitecoatinvestor.com/courses.

Thanks so much for what you do. Your work is important, that's why they pay you so much for it. But with that high pay comes high stress and sometimes a thankless job. And it can be hard at times. I still practice. I know. I have bad shifts just like you have bad days at work and sometimes it's just nice to hear a thank you, isn't it?

All right. Well, we've come to the end, but I do always thank you for sharing this with other people. It does make a difference. Most of the growth we've seen in the White Coat Investor over the years has been one-to-one. Attending telling a resident about it. A resident telling an intern about it. An intern telling a student about it. A student telling an attending about it, or sharing it with your friends. And so, we thank you for doing that, telling others about the podcast and all the great resources available at the White Coat Investor.

It also helps when you leave five star reviews. We had a recent one in from n32728, who said “Life changing. So grateful for Dr. Dahle and WCI. I went through most of residency making the wrong choices but luckily discovered his book and then podcast. Now my wife and I are student loan free and have a written financial plan. I recommend WCI to anyone that will listen.” Five stars. Thanks so much for that great review.

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All right, that's it. Keep your head up, shoulders back. We'll see you next time on the White Coat Investor podcast. Or check us out on Mondays when we drop the Milestones to Millionaire podcast.

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Transcription – MtoM – 150
INTRODUCTION
This is the White Coat Investor podcast Milestones to Millionaire – Celebrating stories of success along the journey to financial freedom.

Dr. Jim Dahle:
This is Milestones to Millionaire podcast number 150 – Physiatrist gets back to broke.

We estimate that 80% of doctors need, want, and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you're getting good advice at a fair price.

If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors at whitecoatinvestor.com/financial-advisors. You can do this and the White Coat Investor can help.

Welcome back. This is the Milestones to Millionaire podcast. We celebrate your milestones, use them to inspire others to do the same. We've all got a list of financial milestones out in front of us, or behind us, depending on where we're at in our financial lives, and it's pretty cool to celebrate them as you tick them off.

Sometimes it goes by so fast and you wish you could go back and celebrate a few of them, but for most of us, each time we hit one, it's a pretty significant accomplishment. Whether that's a net worth number or paying off some debt like student loans or a mortgage, or a car, whatever it might be. Come on the podcast and celebrate with us. We'll use your experience to inspire others to do the same. You can apply at whitecoatinvestor.com/milestones.

INTERVIEW

All right, our guest today is back to broke. Let's get them on the line. Stick around afterward, we're going to talk a little bit about some of the differences between term life and whole life insurance.

Our guest today on the Milestones to Millionaire podcast is Adem. Welcome to the podcast.
Adem:
Thank you, Jim. Dr. Dahle, thanks for having me.

Dr. Jim Dahle:
Yeah, you can just call me Jim, for sure. Everybody else does, including everybody at the ER. Tell us a little bit about yourself. What do you do for a living? How far are you out of training and what part of the country are you practicing in?

Adem:
I'm in the northeast upstate New York specifically. I finished my pain management fellowship June of 2022. I'm currently 14 months or so out of training and I'm an academic spine physiatrist.

Dr. Jim Dahle:
Cool. And tell us what you've accomplished.

Adem:
As of June, July of this past summer, not too long ago, I achieved back to broke status.

Dr. Jim Dahle:
Back to broke. Pretty awesome. The first of many milestones I'm sure you will accomplish. You track your net worth it sounds like pretty carefully.

Adem:
Yes. It initially was started out of a fear of spending too much in medical school as I took out student loans. But I have diligently tracked every expense I've made since medical school and I've tracked my net worth since.

Dr. Jim Dahle:
How much did you borrow to pay for medical school?

Adem:
I borrowed about $255,000.

Dr. Jim Dahle:
Was that all of it? Was that the sum total of your expenses or did you have some money saved up or get some family help or scholarship?

Adem:
No. No family assistance, no scholarship. All just government based student loans for medical school.

Dr. Jim Dahle:
You borrowed the whole wad.

Adem:
Yeah.

Dr. Jim Dahle:
Okay. Did you take out as much as they would offer you or were you careful about how much you took out?

Adem:
No, I took out just as much as I needed. Each month expenses were about $1,500. Rent included. $1,500 to $2,000, somewhere around there. But some years were less, some years were more during medical school.

Dr. Jim Dahle:
It sounds like you were pretty frugal during medical school, but still ended up owing a quarter million dollars.

Adem:
Yes.

Dr. Jim Dahle:
Which is not atypical for docs these days. What other debts did you have from schooling, cars, family, et cetera? At your worst, what was your sum total of your debt?

Adem:
When I finished medical school, I did not have any undergraduate debt. At graduate school I was pretty fortunate my parents paid for that. But at the end of medical school in June, 2017, before intern year, I was negative $255,000. My family member paid $100,000 of that just to save me $100,000 of interest, which was a huge gift. It's a loan, 0% interest loan. I had $150,000 at that point of federal debt and $100,000 of family debt. No cars, no other credit cards and anything like that.

Dr. Jim Dahle:
Okay. All right. Then residency happened. What's a PM&R residency? What is it? Four years now?

Adem:
Four years. I did a medical intern year in the Tri-state area and then went back to the Midwest for residency for three additional years, and then I did a one year additional pain fellowship.

Dr. Jim Dahle:
Okay. So over the course of that five years, what happened with your net worth? You started at minus $255,000. And what happened with your net worth during training?

Adem:
That definitely accumulated, but I actually saved a little bit and I paid off $5,000 and $7,000 loan here and there, and then the pandemic happened and that was the best thing that ever happened, unfortunately, for student loans. For my PGY-3 through my entirety of my first year as an attending was 0% loans interest.

Dr. Jim Dahle:
Very cool. And were you saving for retirement during that time period?

Adem:
Once the pandemic started in March of 2020, I'll never forget when the stock market plummeted. I said this would be the perfect time to start a Roth IRA because I saw it drop 30 some odd percent, maxed out both my wife's and mine. And then we've been doing a Roth IRA since then.

Dr. Jim Dahle:
Okay, very cool. Was your wife working or is she stay-at-home spouse or what?

Adem:
She was working part-time as a therapist, but she was pregnant at the time of COVID when it started. So she became a stay-at-home mother. Now she's recently returned back to work.

Dr. Jim Dahle:
Okay. And what's your net worth look like? What are your debts now? What are your assets now?

Adem:
As of this past August, I paid off all of my federal debt. All $155,136 to pay that off. Now I have $100,000 family debt that I will pay this upcoming calendar year to my family, then I'll be completely debt free. Besides that, no car loans or anything.

Dr. Jim Dahle:
Okay. And how about on the asset side?

Adem:
On the asset side, I have about $505,000 in a 403(b) that I've been maxing out with employer match since I started. $14,000 in a residency 401(k). It was put in 4% that give you 1%. Not very much, but that's all I was able to accumulate during that. $50,000 in a Roth IRA. $10,000 in HSA. $40,000 in a checking account and about $3,000, $4,000 in stocks.

Dr. Jim Dahle:
Okay. It all adds up though, doesn't it? And you put it all together, all of a sudden now you're back to broke. Very cool. Since you became an attending anyway, what's your range of income been?

Adem:
That first half year as a fellow and as an attending, I made about $190,000 and this year I will do about $390,000 to $400,000. Somewhere around there.

Dr. Jim Dahle:
Okay. So you're working pretty hard it sounds like.

Adem:
Yes. Pretty busy.

Dr. Jim Dahle:
Yeah. Very cool. All right, this is no small accomplishment to be back to broke in basically a year out of training. How did you do that?

Adem:
I kept a diligent record of my expenses. I like to know where everything goes. I just made a plan. I made a budget. My wife is more big picture, I'm small micro pictures, and I like to know the details of where everything is going. But we're on the same page. A spouse that is aware of what we're trying to accomplish, get out of debt as soon as we can, max out our retirement savings. And just over time it'll just work in your favor.

Dr. Jim Dahle:
Very cool. Very cool. A lot of people are tempted as they get that attending income to grow into it, to go out and get themselves a Tesla because they deserve it. Dang it, because they've been working hard for the last 15 years, or they go right into a Dr. House or whatever. How did you keep from having a lifestyle explosion?

Adem:
I will admit that first, even in academia, that first direct deposit was crazy to see but I knew that I had a plan in place and I just had to keep reminding myself that was the most important thing I could do for myself by accomplishing that plan and getting out of debt as fast as we can. I understand the allure of investing versus paying off debt. I just knew I would never sleep comfortably if I just kept ballooning expenses. I did treat myself however, and I did purchase a used Toyota Corolla, which was…

Dr. Jim Dahle:
Well, you’re going all out now, huh? What year is it?

Adem:
2017.

Dr. Jim Dahle:
Oh, the people in the WCI Facebook group will be so impressed. Very cool. Well, there's a lot of people out there who are afraid to go to medical school, they're afraid to go to dental school because they look at that debt and $250,000 is more than they have ever earned in their entire life and that is just terrifying to them. What advice would you give somebody else that's looking at borrowing the whole shebang, borrowing the entire cost of their medical education?

Adem:
For those who do that and consider it, I think you have to be pretty confident in yourself that it isn't going to blow up in your face one day or something. You just dug too much of a hole that your 30 and 40-year-old self can't pay out of. There's that old Chinese proverb that is “A journey of a thousand miles starts with a single step.” And I couldn't disagree more. It starts with a plan.

And I remember when I started medical school, I knew how much it was going to cost and I unfortunately fixated on it so much where I was like, “This got to be the first thing I do once I'm done.” And I knew though that I had time on my side, bearing any health issues, thank goodness nothing has happened. That I will accomplish that as long as I just stay true to that. And to me, it was the best decision I've ever made.

Dr. Jim Dahle:
Looking back, did you worry too much? Should you have worried less about getting this paid off?

Adem:
I think I did. I did at first, and then I did take a step back at one point and say, “Okay, if we are just tracking all the expenses and doing things like that, it's a little obsessive.” But it was fun because now I can look at just how much life has costed over the years. But yeah, I did enjoy the ride, but I should have not cared as much.

Dr. Jim Dahle:
Yeah. What's your next milestone that you're heading toward?

Adem:
It's a couple milestones, hopefully. The calendar year of 2024 will be spent paying off my remaining $100,000 balance. We did save up a little bit of a down payment, which we placed on a house, it was accepted, and we’ll hopefully move in in December. And yeah, it's just going to be pay off family and then in 2025 it's going to be all gravy. It's going to be paying for mortgage and paying that down as fast as we can and keep saving, maxing out those retirement accounts.

Dr. Jim Dahle:
Very cool. You're renting a place now then?

Adem:
Correct.

Dr. Jim Dahle:
What are you renting? Is it an apartment, a town home, a house? What are you renting?

Adem:
Apartment. Very small. The only increased standard of living that we've done was I purchased a Toyota.

Dr. Jim Dahle:
Okay. This is the same place you were living when you were in training.

Adem:
We relocated, but it's the same cost of living. Similar from where I was as a fellow to attending.

Dr. Jim Dahle:
Any regrets about that? About not buying a home a year ago?

Adem:
No, none whatsoever. I knew that if I purchased a home, it's going to be expenses that I'm not ready for. And sure, one year ago, interest rates were better. I could have gotten the house that I'm going to move into for less, but I really had to stick to my plan and no regrets whatsoever.

Dr. Jim Dahle:
Somewhere out there is a doc who's like you were a year ago or two years ago getting ready to come out of training or having just come out of training. What advice do you have for that person if they want to do the same thing you've done and become back to broke within a year?

Adem:
Just know that if you have a plan with your student loans, if you have a hefty amount, just follow the plan. Whether it's to go into academics. I could have stayed in academics and did the PSLF. I didn't care to. I knew I could be done with it in a year. Again, I had a unique situation, I had a portion of it paid by family. But if you just follow a plan, whether it's refinancing or PSLF, you're going to do fine. Just max out the accounts along the way. Don't go crazy making purchases. And every month after payment of those of that debt is a surplus really. I don't know what to do with the extra money.

Dr. Jim Dahle:
Yeah, it's pretty cool. I remember getting those first few attending paychecks and it’s pretty wild feeling to go, “Wow, it really actually did pay off to put in my 20s and half of my 30s learning how to do this, now I get a big check every month.” So, of course it doesn't do any good if you don't actually use it wisely. And that's where it comes down to having a plan, like you say. Well, Adem, you've been very successful. Congratulations to you and thank you so much for being willing to come on the podcast and share your success with others.

Adem:
Thanks Dr. Dahle. This was a huge milestone for me talking to you and having this opportunity. You've been instrumental in my personal finance and my family's financial wellbeing, so thank you for everything.

Dr. Jim Dahle:
Well, you've done very well. We might've showed you the path, but you're still the one who had to walk it, so congratulations to you.

Adem:
Thank you.

Dr. Jim Dahle:
All right. I love that interview in that he talks about having a plan. A plan, a plan, a plan, a plan. I beat on this drum all day long. If you have a plan, everything's actually pretty easy afterward. All you have to do is follow it. But so few of us actually run the numbers, actually write down what we want to accomplish with those first 12 paychecks when we come out of our training. But if you will do that, I promise you'll be amazed at what you can accomplish in a year.

It's been said that most of us overestimate how much we can accomplish in a day, but we also underestimate how much we can accomplish in a year. And I think Adem is a great example of that. Look at all he's done in a year. He's only a year out of training and he has practically got medical school already paid for. His net worth is back to zero, no small accomplishment for a doctor. And he is going to start building wealth like crazy. So, he is doing awesome.

FINANCE 101: TERM LIFE VS WHOLE LIFE INSURANCE

All right, I promised you we were going to talk a little bit about term life and whole life insurance. So start very basics. What is term life insurance? Term life insurance or pure life insurance is simply a contract between you and an insurance company. You pay them some money each month or each year. That's called a premium. And if you do that and you happen to die during that term, they will give your designated heir a big fat lump sum of money.

For example, you might be paying a premium of $100 a month, but if you die, your heirs might get a million dollars. And how can they do that? Well, because they have a whole bunch of people like you giving them $100 a month and that most of them don't die. That those who do die, they can pay out that million dollars and still have enough money to pay for all their expenses and the commissions to their agents selling the policies and a little bit of profit leftover for the company. That's the way the proposition works. It's a very straightforward contract.

Now, you can buy these term policies that are year to year. They go up in price every year. You can buy them that they go up in price every five years or you can buy like a level term policy for say 10 or 20 or 30 years in which you pay the same premium every year for those 30 years. And if you happen to die during those 30 years, well, your heirs get a big old fat lump sum of money.

And the idea behind this is that this will take care of those who rely on your income.
If your kids are relying on your income to put food in their mouths, clothes on their back, to pay for them to go to college, and you're not around anymore, well, term life insurance that proceeds from that policy take the place of you financially. Now they can never replace you, but they can replace your earnings. And that's the point of term life insurance. Maybe use it to pay off a mortgage, use it to send your kids to college, use it to create a nest egg for your stay-at-home spouse so that they don't have to work the rest of their life.

But keep in mind, if that's your plan, you need a pretty big fat policy. Certainly seven figures. Lots of White Coat Investors have $2-3-5 million term life policies because that's their plan. They don't want their spouse to ever have to work if something happens to them. Their financial life will be exactly the same with or without the doctor. And that's not $200,000, $300,000 policy. That's going to be a multimillion dollar policy that does that.

Now, as you go along and build wealth and accumulate retirement savings, you actually have less need for term life insurance as you go throughout your career. And you can cancel a policy once you become financially independent. If you have multiple policies, you can cancel them gradually. There's lots of different options you can use there because what you want is the sum of your nest egg plus your term life insurance to equal the amount you need to live the rest of your life or your spouse or partner needs to live the rest of their life without you producing income every month. So, that's term life insurance.

Whole life insurance is a life insurance policy that pays out no matter when you die. A typical term life insurance policy is carried until you're 55 or 60 or 65 whenever you reach financial independence. A whole life policy is carried till death. It still pays out if you die at 65 or 75 or 85 or 95. Theoretically, if everybody keeps this policy to death, everybody is going to get paid out instead of just some tiny percentage like what happened with the term policy.

Now, because everybody's going to be paid out, the policy costs dramatically more. In comparison to a term life policy, a typical whole life policy might cost 10 times as much money. You're paying thousands a month instead of hundreds a month. And in fact, it's not unusual at all for me to run into a White Coat Investor that's got premiums of $20,000 or $30,000 or $40,000 a year in whole life insurance.

The problem with buying these policies is that you probably have a better use for your money. If you weren't paying $20,000 or $30,000 or $40,000 a year in life insurance premiums, you could max out your retirement accounts, you could pay off your loans, you could fund a 529 for your kids. You could build wealth, you could start a real estate empire, whatever. You could retire earlier if that money is not going toward whole life insurance premiums.

That's the main problem with whole life insurance is that it's just really expensive and you can't use that money for something better. And the truth is, it's generally insurance that you don't need. If you're bringing them financially independent at 55 or 60 or 65 years old, you dying at 72 is not a financial catastrophe for your family. It's bad. Everyone's bummed that you keeled over, but you're not like leaving them in the lurch because you've got this huge nest egg you saved up throughout your career. And that can be used to replace that money in their lives.

And so, that's the whole point of using term life insurance instead of whole life insurance. It’s you save all that difference in premiums and you can invest that money. Buy term and invest the rest, you've heard it called.

Yes, there's all kinds of things that you can use whole life insurance for. You can borrow against the cash value in it and use that money for whatever you want. You could invest with it or you could spend it or you could send your kid to college on it, et cetera. But the truth is, for all that stuff, there's generally a better financial product out there.

And so, as a general rule, whole life insurance is a product designed to be sold, not bought. And the reason why it's sold so hard is because the commissions are huge. They tend to be 50% to 110% of an annual premium. If you're paying $30,000 a year in whole life insurance premiums, the person who sold that policy to you might get $30,000 for doing so.

Now you know why they're trying so hard to sell it to you. But very few people actually have a need for a permanent death benefit, a whole life insurance policy. So you better make sure you actually have a need for that. That you understand exactly how it works before buying it. Most people don't need it. I would say fewer than 1% of White Coat Investors have a need for whole life insurance. Most people are going to be better off just buying a good term life insurance policy and investing the difference.

SPONSOR

All right. Speaking of financial professionals, you might also need a financial planner or an investment manager. And I estimate that probably 80% of docs need, want and should use one. Now, if you're here listening to this, that number is probably lower.

But even so, if you want to use an advisor temporarily or even for your entire life, don't feel guilty about it. It's not a bad thing. Just make sure that you are paying a fair price for good advice. That's the key.

If you need help updating your financial planner or just getting one in place, check out our list of recommended financial advisors. These are people who give you a fair price and good advice. You can find that list at whitecoatinvestor.com/financial-advisors.

All right, this is the end of our podcast. I hope you've enjoyed it. We'd like to see you next week. Send us feedback if we're not doing things right, if you'd like to see us do something differently. You can always email me [email protected].

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Keep your head up and shoulders back. You've got this. See you next time on the podcast.

DISCLAIMER
The hosts of the White Coat Investor podcast are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.