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New Book: FIRE Rx: The Pharmacist’s Guide to Financial Independence

Dr. Jeff Keimer, author of the brand new book FIRE Rx: The Pharmacist’s Guide to Financial Independence, joins Tim Ulbrich on this week’s episode. If you’ve heard about the FIRE (Financial Independence, Retire Early) movement before, you know that this is a powerful strategy to build wealth and to put yourself in control of your financial future. Regardless of whether or not you have early retirement goals, achieving financial independence gives you options when it comes to how you spend your time and money. On this episode, Jeff talks about why he wrote FIRE Rx, his FIRE journey, how to calculate how much you need to retire, three reasons pharmacists should consider pursuing FIRE, and how FIRE can change your relationship with money.

About Today’s Guest

Jeff Keimer is a retail pharmacist practicing in Vermont. He began his career in pharmacy while still in high school back in 2005, and he graduated from Albany College of Pharmacy and Health Sciences with his PharmD in 2011. Jeff is a frequent contributor to the Your Financial Pharmacist blog.

After jumping headfirst into the FIRE movement back in 2016, he and his wife were able to conquer their student loans, paying off over $105,000 in nineteen months. Since then, they have been able to set themselves on a course to be financially independent well before most people would even consider it a possibility.

Along the way, Jeff engrossed himself in all things personal finance and found that he has not only a passion for finance, but also of writing; and through that writing, it’s his sincere hope that he can serve his profession by helping enrich the financial lives of its members.

In addition to this book, you can find more of Jeff’s content on the Your Financial Pharmacist blog. You can connect with him on Facebook via the Your Financial Pharmacist Facebook group.

Summary

This week, Tim Ulbrich welcomes Jeff Keimer, PharmD to the show to discuss his new book, FIRE Rx: The Pharmacist’s Guide to Financial Independence. Jeff shares why he wrote the book, his FIRE journey, how to calculate how much you need to retire, three reasons pharmacists should consider pursuing FIRE, and how FIRE can change your relationship with money.

FIRE Rx: The Pharmacist’s Guide to Financial Independence is broken down into three parts: the why of FI and how it applies to pharmacists, how to achieve FIRE, and uncertainties surrounding FIRE. Tim and Jeff walk through each of these areas in their discussion. Jeff shares a number of reasons why pharmacists should consider pursuing FIRE, whether or not they intend to actually retire early, and explains how your relationship with money can be positively affected when seeking FIRE.

Jeff explains a practical method to creating a goal post for retirement, elaborating on the 4% rule and how to calculate how much you need to retire. Jeff and Tim close by tackling some of the greatest concerns when retiring early including health insurance and outliving your nest egg.

Mentioned on the Show

• Live Oak Bank: Loans and Financial Solutions for Pharmacies
• FIRE Rx: The Pharmacist’s Guide to Financial Independence by Jeff Keimer, PharmD
• The FIRE Prescription: How to Retire Early as a Pharmacist
• Debt Free Story Q&A with Jeff and Alex Keimer
• Join the Your Financial Pharmacist Facebook Group
• YFP 104: Jason Long’s FIRE Journey
• YFP 111: How One New Practitioner is on FIRE
• YFP 188: Playing with FIRE: An Interview with Scott Rieckens
• Mr. Money Moustache
• YFP 196: How Cory Uses Improv to Create a Better Healthcare Experience
• Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez
• I Will Teach You To Be Rich by Ramit Sethi
• How Much You Need to Hang Up Your Coat: All About the 4% Rule
• Determining Withdrawal Rates Using Historical Data by William P. Bengen
• The Shockingly Simple Math Behind Early Retirement by Mr. Money Mustache
• Order Your Copy of FIRE Rx: The Pharmacist’s Guide to Financial Independence by Jeff Keimer, PharmD by May 22 and Get 20% Off

Episode Transcript

Tim Ulbrich: Jeff, welcome to the show.

Jeff Keimer: Great to be on. Thanks for having me.

Tim Ulbrich: Hard to believe this is your first time on the podcast. You’ve written a number of great blog posts about FIRE, investing, one about your debt-free journey that we have featured on the YFP website, and we’ll certainly link to that in the show notes. But today, we’re going to be digging into your new book that is available to order called “FIRE Rx: The Pharmacist’s Guide to Financial Independence.” And I’ve been really excited about getting this book out. It’s been a process, it’s been a couple years in the making, and excited to get this into the hands of many pharmacists that I think will find great value from your writing. So before we get into the book, give us a little bit of background on your pharmacy career and what you’ve been doing as a pharmacist.

Jeff Keimer: So I started in pharmacy actually quite awhile ago. I was still in high school back in 2005 when I started working for if you remember Eckerd Drug before they got bought out by Rite Aid. I worked for Rite Aid all throughout college and then took a position with a company called Kinney Drugs up here in Vermont. It’s just a regional drug chain. And yeah, been working as a community pharmacist ever since.

Tim Ulbrich: Small world, Jeff. I interned for Eckerd Drug when I was a pharmacy studen. At the time coming back home in the summers in Buffalo, New York, we had Eckerd Drug and I worked with them before that buyout happened with Rite Aid. So good memory. I think we’re dating ourself a little bit, by the way, when we talk about Eckerd Drug and some students and others are listening like, what are you talking about? You know, for those that are listening and if you’ve been a part of the YFP Facebook group, you likely have seen Jeff’s name pop up who has been really active in that group in commenting, providing some great input and advice. And I think, Jeff, folks may be wondering, especially those that have interacted with you in that group and obviously see that you’re knowledgeable not only on this topic but other areas of personal finance, you know, how did you get interested in personal finance? Was this a topic that always was one that was of interest? Or did something happen out of necessity that brought you into this world and I guess rabbit hole when it comes to personal finance?

Jeff Keimer: So I think I’ve always had kind of an interest in finance in general, maybe not in the application of it if you run my Q&A and how I was in my early years as a pharmacist, I definitely did not act like I was really interested in personal finance or whatnot. But I’ve always taken an interest in finance in general, especially investing. Then once Alex, my wife and I, we started getting down this FIRE rabbit hole, I really got into a lot more, really got to understand a lot more of the concepts. It really played to a wealth of my interests, especially as you get later on down the ways and you’re figuring out different ways to be able to solve your financial issues or invest better, sometimes it can be kind of a game, which really appeals to me.

Tim Ulbrich: So was it you driving this forward? Was it Alex driving this forward? Was it both of you — pun intended — really that caught on fire with the FIRE concept? Tell me more about for the two of you in your personal journey how you guys really made this commitment towards financial independence and why that was a priority for you and your family.

Jeff Keimer: So I think starting off, like I mentioned before, I got out as a new practitioner, really was not good with money, kind of spent every dime in sight just on ridiculous things. I think I spent $5,000 in a year on craft beer or something. But she was really — she gave me the push because she came from a much different mindset than I did when it came to money and particularly saving and really kind of establishing that financial position of strength. You know, as time went on with our relationship, I had a really pretty bad balance sheet. And she did not. I kind of got the hint that I needed to really kind of move myself in that direction, kind of get my house in order and up to her standards first. That’s really where we started. The whole foray into FIRE came later, after we got married. That became kind of a journey I took the lead on, but she was supportive at first and then really kind of came on board and got really excited about it as time went on and we made progress towards it.

Tim Ulbrich: We’ve had a few pharmacists as guests on the podcast like Jason Long on Episode 104, Jared Wonders on Episode 111, who have shared their own FIRE journey. We also had Scott Rickens, author of “Playing with FIRE” on Episode 188. But with that being said, I don’t want to assume that all of our listeners are familiar with FIRE. I shared with you before we hit record, you know, often when I’m speaking with a group of pharmacists and I introduce the concept of FIRE, many folks I find have not necessarily heard of that term before but once I have a chance to explain a little bit more about what is financial independence all about, what is the FIRE movement or community all about, I can see there is certainly an interest that is piqued and folks that are interested in, hey, I want to learn more and see whether or not this is a path for my own personal financial journey. So before we dig more into the weeds on FIRE and the strategies you talk about in the book, give us the high-level definition or overview of what exactly is FIRE.

Jeff Keimer: Basically, FIRE is an acronym. It stands for Financial Independence Retire Early. And I think that the acronym really kind of is in some ways self-explanatory. But what it actually is in practice is that you reach a stage in your personal finance journey where you reach financial independence, meaning the money that’s — your money is basically generating for you, not the money that you’re having to work for. But the money that’s being given to you in the form of dividends, capital gains, things from investments or income from rental properties or a business that you own that you’re no longer having to really work the day-to-day, from basically that is covering all of your living expenses that you have in a year. So you basically, you don’t have to work for money anymore, which then leads people into the retire early concept, in which case they may decide to totally stop working for money. Then that can be far ahead of what people normally consider to be retirement at say 65. You have some people in the space inspires really kind of a large community now that’s really cropped up over the years. You have some of the more famous names in the space. First one I was introduced to was a guy named Pete Adeney, who goes from — he goes by the name Mr. Money Mustache on his blog. And he retired in his 30s. So you know, when most people kind of hear that for the first time — and I know when I heard that for the first time, that’s when I got hooked because I was like, who is this guy? Like how do you do this? This sounds really ridiculous.

Tim Ulbrich: Tell me more.

Jeff Keimer: Tell me more about how you get to a point where you can call it quits in 10 years. But you know, the interesting thing about FIRE is like you can do whatever you want. It’s really retire early is an option. Financial independence is really what I think most of the movement has kind of squared itself around because then you have the option to do the retire early if you want or you can do something else.

Tim Ulbrich: And I think that right there, right, the option to stop trading time for money — and I’m with you, Jeff. As I heard about the movement, learned a little bit more, certainly don’t claim to be an expert myself , and like we’ll talk about here shortly, there’s a variety of options and paths that one can take, certainly not a only-one-route to do FIRE. But FI resonates with me as a goal that all of us should be considering, you know, and what that means for us. It may be something different depending on our personal situation, our income, our expenses, where we live, all of those things. RE maybe, maybe not. You know, I think there’s a lot of things that would go in that direction that would help someone make that decision. But many pharmacists invested a lot of time and money to get their degree, many pharmacists love the work that they’re doing, and so they may not have that goal of RE. Or perhaps it might not be that they have a goal of retiring early but something life throws at them requires them to pivot away from their work income, and they’ve put themselves in a position towards FI to be able to make that adjustment. So we’re going to dig into even more of that, but I want to make sure our listeners, you know, as we have this conversation, don’t necessarily hear us talking about FIRE and are making an automatic assumption that every pharmacist needs to aspire to retire in their early or mid-30s but rather we’ll talk about some of the tenets and principles of FI and of course that RE is something that some may choose and many others perhaps not. So being passionate about FIRE and financial independence for your own personal journey is one thing. Deciding to invest the time to write a book is another thing. And you know and I know that there’s a significant amount of time and effort that can go into this. So why, Jeff, did you feel the need, besides me hounding you a little bit of hey, I think this would be a great topic for pharmacists and would love to see us have more information in this area, why did you feel like it was necessary to invest the time to write a book that would help pharmacists better understand this path towards FIRE?

Jeff Keimer: Yeah, I never thought about writing the book until you asked me. You said, “Hey, would you like to” — I think we were originally starting and thinking about maybe a short audiobook or something like that. Then it morphed into more of a full form book. And initially, I’ve got to be honest, you know, you said, “Would you like to write a book?” I thought, I think that’s kind of a cool thing to do. I’d like to — maybe that would be a fun little thing to be able to say, “Oh yeah, I wrote a book.” But you know, as time goes on, that can kind of get you in the door doing something, but you have to kind of have a reason for why you actually want to beat something, and especially with writing a book, I mean, that’s the longest thing I’ve ever written. You’ve got to have something in the background. And I was thinking to myself, really I mean, as I was writing the book and kind of thinking about in all the writings that I’d done for the site as well, why I do this. And I think that what it boils down to is different people have different ways that they want to serve their profession in general. And I looked at this as like, people try to play more to their interests in how they want to do that, if they want to do that at all. And to be honest, on the clinical side of things, wasn’t — never really been a huge interest of mine. I really enjoy the role that I play in the profession as community pharmacist, being able to talk with people, help them through their problems and get better outcomes that way. But you know, some of the more clinical-minded or even legislative-minded things that you get into, haven’t really sparked too much of an interest in mine. But finance does. And I think that finance really is a — it represents an interesting problem that needs to be solved for our profession, particularly as I see it kind of going forward because as a profession, I mean, we do need a lot. We need to do a lot, you know, for our profession moving forward to be able to direct it in the ways that I think most pharmacists would like to see it. But financial burdens placed particularly on new graduates who, in my mind, are in a really good spot to be able to try and affect change in our profession, really can be a major hindrance to things actually moving forward. What I see with — through my writing is you know what, if I can help any of these people get to a point where finance is really not such a burden on their shoulders, they might be able to actually get out from the behind the bench and do things that might be more beneficial to our profession on the legislative end, clinical ends, or even on an entrepreneurial end because we really do need — in our profession, we do need to explore different avenues for our services as pharmacists to really evolve our profession as time goes on. And unfortunately, a lot of times when — I’m sure you’re an entrepreneur yourself — the beginning stages of a lot of ventures, you don’t make a lot. It can be very difficult financially. And it’s one thing to kind of come at that sort of a thing coming out of high school or coming out of college with minimal debt, it’s a whole different thing coming out of college —

Tim Ulbrich: That’s right.

Jeff Keimer: And you have $100,000 maybe plus of student loans. And your minimum payment is similar to a mortgage without actually having a house. That, to me, like if you can really kind of help fix that part of the problem, I think that there’s a better chance — not a guarantee, but a better chance that our profession will be able to do the things that it needs to do without as much of the weight of the financial burdens that we have already.

Tim Ulbrich: Yeah, and Jeff, I shared this with you when I read the first draft. What would that have been? Back in probably late fall of 2019. I think you’ve really done an incredible job of taking a topic that can feel overwhelming, especially when you get into some of the weeds on investing options, considerations, you know, and so forth and really did a nice job of breaking that down in a way that was easy to understand, it’s very conversational — for those that like reading blog posts and other things, I think you wrote it an a way that is not intimidating. It’s easy to follow. And it gives people the space to explore this topic and apply it to their own personal situation. And that is something I love because we know that when it comes to putting a financial plan together, whether you’re working with a financial planner or you’re doing it yourself, everyone’s plan is inherently unique to your own personal situation, to your own goals, to your family situation, to where you live, to all of these other factors, whether you have debt and how much, and things you’re trying to aspire to do. And I feel like you really gave the space for folks to be able to make some decisions and really just understand the options, the pathways, spark some interest in what this is all about, and then hopefully, they can take that information and begin to apply it to their personal situation where it makes sense. So as far as I know, this is the first FIRE book specifically as it relates to pharmacy professionals — if someone else wrote one that we don’t know about, they can tell me that I’m wrong on that — and I really believe the book is full of valuable information that lays really a strong foundation for pharmacists that are interested in learning about FIRE and how they can set out on the path to achieve it. In the book, you go into detail about paths to FIRE, withdrawal rates, savings rates, budgeting, debt repayment, investing, portfolio considerations, and the list goes on and we’ll talk about some of those in more detail. And one of the highlights for me is we sent this book out to some pharmacists in the YFP community before it was available to order, and the feedback we received was really amazing. Cory Jenks, who we had on in Episode 196 said, “This book takes the hours and hours of reading and self-education and condenses it to a simple, easy-to-read book that has something for anyone along the journey to FI.” And I would certainly agree with what Cory said there. So let’s dig into the book a little bit further. You wrote the book “FIRE Rx: The Pharmacist’s Guide to Financial Independence,” and you broke it up into three parts: Part 1: The Why of FI and How it Applies to Pharmacists, Part 2: How to Achieve FIRE, and Part 3: Uncertainties Surrounding FIRE. So in Part 1, the Why of FI and How it Applies to Pharmacists, talk us through the three reasons that you think pharmacists should at least consider pursuing financial independence.

Jeff Keimer: The three reasons I really tried to lay out there is first and foremost, it’s defensive. Second, it’s doable. And then third, as I kind of got into on my little soapbox over there, it’s good for the profession I think. So going to that first point, defense, where I don’t think that there’s really a whole lot of pharmacists out there in the profession that look at the state of things right now and think, oh, the gravy train is going to keep going and whatnot. You know, you hear stories every day about — you see a lot of them on the Facebook group too, posting about how tough the job market is, people are going in and getting the offers that they’re finding are really — they’re scary. I mean, they’re like a fraction of what I started at 10 years ago. There’s a lot of pressure in the marketplace right now in terms of pharmacists’ salaries and then also again, on the student debt side, that side keeps going up. Defensively, pursuing financial independence in particular at a really just basic level, I mean, you don’t even need to achieve financial independence to be able to get benefits from the techniques and the things that you do in the pursuit of it anyway.

Tim Ulbrich: That’s right.

Jeff Keimer: Because what it basically boils down to is just — I mean, it’s just good financial hygiene. So you’re getting rid of debt, you’re de-risking your whole financial situation, and really kind of building yourself up into a position of strength where you can really kind of take whatever life throws at you. Now, that could just be what a lot of us — most people kind of experience, you could just have things come up in your personal life, say the kid needs to go into the hospital or you need to go in the hospital, some kind of financial hardship there that you could absorb. Or it could be something more in the lines of the profession. So I remember last year, remember reading one day, one of the major big box stores laid off about 1,000 pharmacists or something like that. That’s a major thing that goes on. And it’s a possibility. And I think for many, many years, our profession really didn’t — we didn’t really have to think about that. I know when I first went into pharmacy school, something like that really was not on the radar or really in anybody’s mind, especially when — we called them fifth years because I went through a six-year program, but you know, the P3 students, second semester, you saw a lot of new cars in the parking lot because people were getting five-figure sign-on bonuses.

Tim Ulbrich: Yep. I remember that.

Jeff Keimer: But I mean, yeah, it basically — it boils down to for defense, it’s a good idea to really even just kind of get into this anyway because as a profession, I think every single pharmacist really needs to be thinking or have in the back of my mind, hey, it might be a possibility that I’m not going to be making more in the future, which is kind of a weird concept if you want to stay in the profession. And I would imagine most pharmacists do want to stay in the profession because we went to school for a reason, and we wanted to be pharmacists for a reason. The second thing after going that doom-and-gloom section, that it’s doable. I think currently, a lot of pharmacists, the doom-and-gloom scenario, while it’s certainly difficult in a lot of markets, that’s not the same — or not saying that every market is this kind of situation where it’s really difficult. So for a lot of pharmacists, particularly ones that are practicing now, and especially if you’re still making that good paycheck, I think financial independence is perfectly doable. You have a strong income to be able to drive it towards financial goals. It does take a lot of discipline, takes some knowledge, but you can do it relatively easily compared to a lot of your peers that might have graduated, people like let’s say you went to high school with. They might have graduated in a different field. So I think that it’s, as a pharmacist, you know, even though we kind of get down on it, most of us still do make very good money compared to what a lot of people, especially straight out of college, would be making. And then the last bit, again, I think it’s good for the profession. You know, if you go down this path and even if you get close to financial independence, you don’t even need to get to full financial independence, but even getting there close, we can remove some of the risk to your career if you need to do something to be that, you really want to get out of a situation that you’re in, maybe you did start working retail after college but you really didn’t want to do that from the beginning, which it’s very much like a thing where if you’re in a position that you don’t necessarily — if you didn’t want to be there in the first place, it could be a bad fit and could be difficult for you for a long term. So if you wanted to contemplate a switch, sometimes having that — being in a position of financial strength can be very beneficial to you and really kind of remove a lot of the risks surrounding moves there. Also, I mean, if you wanted to pursue entrepreneurial work, let’s say start a consulting business or something like that where it’s not clear that you’re going to be making the kind of salary that you were making as a dispensing pharmacist from Day 1, and you probably won’t. But if you’re in a position of financial strength, you can tackle that challenge far easier and far more responsibly I would say than someone who doesn’t have that position of financial strength.

Tim Ulbrich: Yeah, I agree with all of those, Jeff. And the one that resonates with me — and I mentioned this to you as you were writing is that last one. I really — I’m bullish on the opportunities we have. I’m an optimist by nature, but in terms of where we can go as a profession, but I also recognize that $175,000 of debt and dependence on a six-figure income with that type of debt is really golden handcuffs to folks taking risks. And I think that is risk both internally, you know, I think folks, if you’re really saddled with debt or don’t necessarily have a good financial foundation or position, you’re probably not likely within your job to propose new ideas or strategies or take some risks or push back where needed, let alone look for other opportunities that may be out there that are a better fit for you or that also could help us advance as a profession. So I believe firmly a big part of why we do what we do at YFP is if we can help offload some of the financial burden of one’s individual situation, you know, what does that mean for their career as a pharmacist? Or what does that mean for other things that they may want to pursue and may want to do? The other thing, Jeff, I like in Part 1 that you talk about is an FI mindset. And you know, my question here is what part does mindset play in pursuing FIRE? And what are your core ideas on how one can establish an FI mindset or perhaps recalibrate the current mindset that they have if it’s not in line with that?

Jeff Keimer: The concept I like to get through on the FI mindset part is really, when you decide to go for financial independence, you really have to fundamentally change your relationship with money. And what I mean by that is that instead of viewing the money that you bring in simply as the stuff that you’d pay for goods and services with, you really need to think of money in terms of time. There’s a great book, it was written many years ago by a lady, Vicki Robin and her husband, they equated money to a concept they called life energy. And basically, it was when you’re spending money on things, let’s say you’re buying a pair of jeans or you’re buying the latte or whatever, you’re giving money for those things. But in reality, if you’re having to work for that money, what it is is that you’re exchanging the time value of your work, your life energy, for whatever that thing is. Now, most of the time, like the small purchases here and there, that’s really — they can add up, but it can be immaterial in the long run. But for some of the big things like let’s say you want to buy that brand new $50,000 car, you take out a car loan, you do that stuff, what you’re doing is you are committing a lot of your life energy to buying that car. Like it’s not a just oh, I can get this. It’s like no, no, no. You are committing your life to servicing this debt for whatever that you’re spending the money on. Now, the change that gets made is when you have a look at how money, particularly when you start investing it, can beget more money. Then it’s like, alright, so I’m going to have this money and then I can save that money and then it can then buy me time. It can buy my life energy back, which I think is — that’s really the cornerstone of the FI mindset that you need to have is that you’re essentially, instead of expending your life energy, your time, for things and stuff, you’re really just kind of buying back into yourself and making your — getting yourself time back that you wouldn’t otherwise have. Once you really kind of understand that, really kind of engrain that — I mean, I’ll tell you, it is kind of an addictive concept because you end up finding yourself saving money and looking for ways to save money and do things that you ordinarily wouldn’t do because you kind of feel like, I’m doing this, this is, you think of it as miniscule, it’s like, oh, that thing’s going to get me 15 more minutes back of my time or something like that. You know, that’s kind of silly. But it kind of explains the point a little bit.

Tim Ulbrich: I think too, Jeff, you know, sometimes when folks hear that, they may think, oh my goodness, like the frugality of that and I’m scraping for pennies, but I think what happens, at least what happens for me when you talk about that concept of the connection between time and money is that you start to change how you value certain things. So again, I’m speaking for myself, but I think this may be true with others as well. If you’re going to make an investment in an experience, you’re going to make an investment in something else versus an investment in something that maybe doesn’t mean as much to you — and Ramit Sethi talks about this idea in the book “I Will Teach You to Be Rich” of like find the things that like have meaning and value to you, and figure out how you’re going to invest and prioritize in those and find the things that you don’t care about and stop spending money on them. And you know, I think that that has been really an important thing when I think about mindset — and here, we’re talking about mindset around FI — is like it really helps begin you to shape and be more I think self-aware of when you’re spending money, you’re not just making that transaction but you’re starting to think a little bit about like what value do I get or do I not get from this transaction? And is it worth it or not based on the time? And sometimes the answer is yes, and sometimes the answer is no. And I think it just helps grow that awareness and it allows us to pause, stop, think about things and really evaluate it in a little bit more detail. Now, Part 2 of the book is really the meat and potatoes. And you did an awesome job in this section, How to Achieve FIRE, and we’re just going to scratch the surface here with a couple things. But one of the things you talk about in Part 2 is you dive into safe withdrawal and the 4% Rule, which you also talked about on the recent blog post on the YFP website titled “How Much You Need to Hang Up Your Coat,” all about the 4% Rule, and we’ll link to that in the show notes. So just give us a high-level overview of what the 4% Rule is and why that is significant as folks may be getting to think about this question of how much I need.

Jeff Keimer: So in a nutshell, the 4% Rule refers to a tool in financial planning to be able to judge when a traditional let’s say traditional portfolio of stocks and bonds can really fund your expenses in perpetuity. So where it comes from, it comes from a study done by the financial planner William Bengen back in the ‘90s. And what he found was that in looking at retirement cohorts from many, many years in the past, he found that the absolute lowest that a retiree could safely withdraw from their portfolio and not run out of money — and his study was over the course of 30-50 years, depending on which study you want to look at. But in a nutshell, basically it’s he said 4% was the lowest, the worst case scenario that if you retired and then you took out 4% of your portfolio Year 1, and then Year 2 added the inflation according to Consumer Price Index to that initial 4%, so on, so on as the years go on, you keep up with inflation, you wouldn’t run out of money. And 4% was that worst-case scenario. Now, it sounds like a little wonky, but what ends up happening is you can take that 4% figure and take the inverse of it, which is 25.

Tim Ulbrich: Right.

Jeff Keimer: And then once your investment portfolio reaches 25 times your annual expenses, you can — in theory, I would say — declare yourself to be financially independent because there’s a strong probability that in the future, you are not going to run out of money should you just decide to draw down on your portfolio like this. The really powerful thing about the 4% Rule and the whole concept of a safe withdrawal rate is not really in the technical details behind it but it’s giving you a goalpost that you can work towards.

Tim Ulbrich: That’s right.

Jeff Keimer: I remember it was kind of a seminal moment like in my FI journey that when I read Mr. Money Mustache’s post, it was like “Shockingly Simple Math to Early Retirement,” something like that. But it laid that out, and I said to myself, oh, OK, so my retirement number, how much I need is not just this totally nebulous concept where somebody’s like, ‘Well you might need like $5-10 million. We don’t really know. You just need a boatload of money.’

Tim Ulbrich: Plus or minus $3 million.

Jeff Keimer: Yeah, just keep saving and once you get to 65, we’ll figure it out from there.

Tim Ulbrich: Yep.

Jeff Keimer: But this actually gave me something more concrete to work with and say, ‘OK, alright, that’s a goal. And I can achieve that.’ But the other interesting thing too compared to a lot of the traditional financial planning advice is that you tend to see in some of the guidelines out there for how much you need to retire, as it’s a multiple of your income, which many people would argue with me about this, but your income is I think less in your control than you really think it is. There are a lot of forces way outside your control that affect this thing, be it market forces, so pharmacists are seeing that firsthand with supply and demand of licensed professionals. But it could just be some exogenous event in the market that, you know what, you lose your job. Sorry. Or you had a good idea, but now there aren’t too many customers for your idea anymore. A lot of things can happen with your income that are outside of your control. However, with the 4% Rule, it frames the question of how much you need to retire and how much you need for financial independence in terms of your expenses. Now, some of these may be a little bit outside your control, but you have way more control, at least in my view, of how much you spend versus how much you bring in. So I think it’s much more powerful — it’s extremely powerful in the regard that it really takes the whole notion of your financial destiny, your financial independence, out of the hands of whatever’s going on externally in the market and putting it much more in your hands, giving you much more influence over that equation.

Tim Ulbrich: That’s great stuff, Jeff. And I like how you described that calculation towards the FI number as a goalpost, right? It’s a starting point and I think so often, we talk about retirement as I hope I can retire. I wish I can retire. Maybe I can retire at this age. And I think really starting to dig into some of the numbers and taking more control and ownership of what that might look like of your financial plan, rather than being reactive. And as I mentioned in Part 2, this is just one of the many concepts you talk about. You also talk about in Chapter 5, your savings rate, in Chapter 6, you go into a FIRE approach to debt, in Chapter 7, you talk in much more detail about FIRE investing, in 8, investing efficiently and then and finally in 9, which is a question folks probably have often is it’s great if I save it and now I need to pull it out, so how do I, as you say in Chapter 9 titled “Jail Break Your Stash,” so what’s the strategy of actually withdrawing those funds when you need it, which I think is a question for many pharmacists if they’re familiar with more traditional tax-advantaged retirement accounts and they think of things like age 59.5 or greater, well what’s the strategy if there’s early retirement? So certainly covered in much more detail in the book. Jeff, I want to wrap up here with a question about what you address in Part 3 of the book, which is some of the uncertainties surrounding FIRE. And I think is one that folks hearing this for the first time might begin to think of all the objections to why early retirement may not be a good idea. And this might be, well what about health insurance? What about other things where I’m dependent upon my income to be able to have some of those types of things? So there are considerations, potential drawbacks. What are some of the big uncertainties that you see related to FIRE that folks should be aware of?

Jeff Keimer: So I think the big one that a lot of people think of right off the bat has to do with health insurance, which to be honest, I don’t think it’s as big of an issue or will be as big of an issue as people think because I mean, health insurance is something that you can — it’s going to cost more in most regards. Now, there are some tricks that you can get around it. You can take a look into other forms of health coverage like Health Ministries or some people decide to work part-time for a company that offers health insurance benefits in retirement. Or they just, they don’t stop working, they just kind of work for the health insurance benefit. But I think, I mean, that boils down to you’re probably going to have to pay for it. That I think is the thing that comes top-of-mind for a lot of people, especially when you say, ‘Hey, you’re going to retire at 40 years old,’ and most people, like a major consideration is like, ‘Well, I’m not retiring until I get Medicare.’ It can be less of a burden than people think, but I mean, it’s still definitely out there. The other thing too that’s kind of an uncertainty is outliving your assets too, which kind of goes back a little bit to that 4% Rule, and that’s why when we were talking earlier about it, you said it’s a goalpost. But it’s also just kind of a guideline. Like it’s also not set in stone that it’s going to happen. I mean, it’s still very much a concern that you are going to outlive your money. And there are certainly things that you could do to address that, which we talk about in the book, not the least of which, I mean, surprise, kind of along the same lines as health insurance, is just save a little bit more and give yourself a buffer. The other thing — and I think that the really, probably one of the most important in terms of uncertainties to FIRE is let’s say you do want to consider retiring early. What do you do from there? That’s the major question that, you know, if you’re going to be looking at this thing, it’s the thing that you should be thinking about throughout the whole journey.

Tim Ulbrich: Absolutely.

Jeff Keimer: And you know what? I mean, the good news is you don’t need to figure it out before you start. And honestly, I think it’s a stupid exercise to even try to do something like that because this is not going to be — pursuing financial independence or the early retirement, it’s not something that you’re going to be able to say, ‘Alright, I’m going to start doing this and then two years from now, we’re going to be there. And my life two years from now is probably going to look very similar to the way it does now.’ I would say when people go after this thing aggressively, 10-15 years might be more realistic for that. When we started ours, that’s kind of the timeframe we were looking at for it. But even at those kind of time frames, I mean, you don’t know what your life is going to look like 10-15 years from now. You really don’t. My son was born six months ago. And being a new parent, I don’t — I didn’t know ahead of time really what that’s going to look like. I had maybe some idea of what that looks like, but I didn’t understand what it was going to look like. So I think that as you’re making these plans for the future, I mean, it’s something to think about. Like what do you want your life to look like after FI? How or is pharmacy going to fit into that life after FI? For some people — you know, I know for Jason Long when you had him on, it really didn’t. But I think for a lot of other people that are in the profession, it will in some shape or fashion, whether that’s even something as simple as you know what, I want to work per diem for the pharmacy or the hospital or something like that. Or it could be you know what, I have reached financial independence and one of my goals for this was to do more outreach work for the profession, and I’m going to do that. These are the things to think about during the journey because, I mean, I definitely think it’s worth it to consider. And that I would say, most of the other problems that people kind of throw around — I like this term, it gets thrown around actually in the cryptocurrency communities a lot, it’s called FUD. It’s an acronym. It stands for Fear, Uncertainty, and Doubt. And a lot of the FUD surrounding FIRE really, I mean, it’s all math. Health insurance, saving for college in the future, even like long-term care, all of these are math problems that you can solve.

Tim Ulbrich: That’s right.

Jeff Keimer: But the big uncertainty, but it’s kind of a good uncertainty is like, well, now that you have all this time, what do you want to do with it? And how do you want to construct your life after this? That’s really the big thing I think a lot of people need to think about too as they’re going on with the journey in terms of any kind of uncertainty surrounding the FIRE movement.

Tim Ulbrich: That’s great stuff, Jeff. And I love how you wrap up the book when you say, “When I think about the whole concept of FIRE, I don’t really see it as a mad race to the end of work to live a life of leisure. I see it as being a tool that can help people live their best lives. Nothing more, nothing less. And what you’ll get out of it is up to you.” So Jeff, great work. We really have just scratched the surface on the book “FIRE Rx: The Pharmacist’s Guide to Financial Independence.” Congratulations on your efforts. I think it’s going to have a significant impact on many pharmacists out there. Appreciate you taking the time and the effort to put the book together and looking forward to getting it into others’ hands. So Jeff, again, thanks for the time coming on today and your efforts in putting together the book.

Jeff Keimer: Thanks for having me on.

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