Trialing FIRE during a pandemic?

With the ongoing COVID-19 pandemic in Q1 and Q2 2020, many businesses have been forced to furlough or even lay off employees.  The government is slowly implementing rollouts to help medical practices weather any lost business, but none of this is likely to be sufficient to replace the revenue that was lost before worldwide economic disruption.  Many employed physicians are taking salary cuts, owing to the essential cessation of elective treatments and office visits until further notice.  The bottom line is that everyone is getting hit hard, except for maybe those essential businesses that are jam-packed with customers.

Disrupting the routine
Many physicians are being furloughed by their employers simply because there isn’t enough work to be done.  Are people having fewer hospital admissions?  While the real answer to this conundrum probably isn’t too straightforward, this change has been tough both financially and psychologically.  Just ask anyone who recently retired from their jobs after several decades of grinding away.  How do they fill their time? How many hobbies can one simply adopt and how can someone just switch gears suddenly? 

We can always play pretend until the real thing happens

Getting furloughed is a huge problem if you are dependent upon your job for income and survival.  Just speak to anyone who has ever been laid off and has a family to feed and debt to be repaid.  For this reason alone, all new medical graduates should strive to build a financial buffer in case income stream is disrupted.  This also means that even if their first job out of residency doesn’t live up to their expectations, they need to strategize a Plan B while maximizing their savings.  It is always best to develop good financial habits before financial turmoil.

Transitioning to early retirement
If you have been furloughed and are nearing financial independence, now is the best time to test the waters.  You’ve saved up your entire career thus far, but how are you going to pay your bills? There are plenty of options to withdraw from your net worth, but ultimately it depends on how you can minimize your tax bill:

  • Early withdrawal from 401k or IRAs
  • Cash out dividends only
  • Sell stocks or bonds
  • Real estate income 

This is not a one-size-fit-all game plan. Some people have a spouse who may have income or provide health insurance coverage.  But if you are furloughed, now is the time to assess your exit strategy.  
Pandemic simply an impetus to improve financially?The fortunate aspect of being in the medical field is that we are always needed.  Broken bones need to be repaired.  Heart disease needs to be treated.  The bulk of healthcare will re-emerge when the dust settles.  We might end up practicing medicine in an entirely different manner, our incomes might go down, but we still possess a useful still.

Those doctors who are furloughed or taking a pay cut during the pandemic will hopefully be brought back and be busier than before.  But just remember that getting your job back is no excuse to ignore your finances.  Consider all of this a wake-up call.  Use this opportunity to get yourself in a stronger financial situation. 

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