Dual Income No Kids (DINK) 9


What is a DINK?

DINK is an acronym which stands for Dual Income No Kids. I had no idea what this meant until a high school friend used it to refer to one of our other high school friends:

“Hey, how’s [our other friend] doing?”

“Oh, he’s married now. No kids though.”

“Oh what!? Couple of DINKs huh?”

“…?”

He then went on to explain it meant Dual Income No Kids, and I guess it implies that they had a lot of excess income. According to Wikipedia, this term is from the 1980s during the “height of yuppie culture”. Apparently, the term “Yuppie” has its own history as well.


So? What’s your point, what does this have to do with Finance Fridays?

Well, most of what I talk about for Finance Fridays makes a few assumptions. These assumptions are that you are young physician (or other professional) with extended schooling, a certain amount of debt, with plans to work for approximately 30 years. That last part is variable, depending on whether you want to Retire Early. Which I went over on the How To and It’s Easy? posts.

However, there is also the implied assumption that you will eventually have a family, since I talk about insurance, child care, 529s. etc.


So what if that was never part of your plan?

I shouldn’t ignore my readers who don’t have children and don’t plan to have children, right?

While many things stay the same, priorities are a little flexible.

Story time:

I have a colleague who is 3-4 years my senior. He is a radiologist and his wife is an anesthesiologist. They don’t have and don’t plan to have children. More so than that, they had little, if any medical school loans. Both of them were partners in their respective private practices, each putting away the max allowable of $53k a year. So every year, they were putting away $106k in pre-tax money and living off the rest. With a reasonable mortgage, no loans, and two physician income, their lives were very different from mine. However, they were not necessarily overly materialistic, they placed a lot of time/money into fishing, something they both enjoyed a lot. They both had some fun toys of course as well, mainly nice cars. However, I would venture to say most of their money went into maintaining and using their boats for fishing.

And that’s ok.

Putting away $106k a year is a lot. Let’s bust out the compound interest calculator and plug in 1, $8833.33 ($106k/year), 30 years, and 7%:

In 30 years, they will have $10,012,847.18. That’s a pretty comfortable retirement.

What about 20 years? It’s $4,345,524.42. That’s doable if you plan to retire early and can scale back spending.

Remember, retiring 10 years earlier means you have less money and it has to last approximately 10 extra years.

So overall, their plan is fine if they want to retire in 30 years.


But why would they do that? They could just save more money and retire earlier!

Now you’re getting it! You’re right. They could probably put away $50k more a year, or maybe even a $100k more a year by scaling back spending, and retire early.

Let’s bust out the compound interest calculator and plug in 1, $16,666,67 ($200k/year), 30 years, and 7%:

In 20 years? It’s $8,199,595.92 That’s a much more comfortable early retirement. This would convert them into DINKERs: Dual Income No Kids Early Retirement

However, there is another option of:

Pay off their mortage, both work part-time, scale back spending, and still put away the $106k a year… and spend more time on their boat(s) while they’re still young…


Which one do you think they did? Which one would YOU do?

Of course this would be a personal preference.For me, I would probably chose to save more money earlier and retire earlier. However, I don’t really fish. I don’t own a boat and I probably never will. He does keep trying to convince me though. “You live in Hawaii!”

For my DINK friends, who live in the Northeast, you can really only fish about half the year. So why not work (most of) the half year where you can’t fish, and work less during the half year that you can fish? They set out to find jobs that would allow for this kind of weird part-time schedule, and so they chose this option.

They are able to maximize their time on the water fishing, maintain their lifestyle, and will probably still retire early. Maybe not 20 years, but maybe 25.

However, in order to make this change, they liquidated a bunch of other toys (nice cars, etc.) and put more money away. They prioritized experiences (fishing) over material things (nice cars, etc.)

The house was paid off, and now they spend about 50% of their time doing what they really love, which is fishing. He even writes a few articles for some of the magazines out there for fun.

That’s their dream, and they’re living it.


TL;DR

Dual Income No Kids + Two Physician Income is a recipe for:

DINKERs – Dual Income No Kids Early Retirement

Buy experiences, not things.

 

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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About Sensei

A young attending physician trying to navigate the mine field that is life after medical school…


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9 thoughts on “Dual Income No Kids (DINK)

  • Physician on FIRE

    I think you know what I would do. 🙂 Not necessarily plan to retire early, but build up enough reserves to make work optional, i.e. become financially independent.

    We’re a SICK family. Single Income, Couple Kids… I just made that up this second, but it’s true! Oh, and in a couple three years, we’ll be even SICKER.

    Cheers!
    -PoF

  • Dinna Schwiering

    Do you have any advise on how to save up for college fund for my kid if I start putting away money now? I can save 2500 every year to put away for college fund but how will I grow this within 18 years?

    • Sensei Post author

      My apologies Dinna, for some reason I was never alerted when you posted this comment.

      I would advise you to use a 529. Click here and scroll down to: “How can I save money for college for my kids?” I’d recommend reading all of those posts on 529s.

      The long and short of it is that you put away money into a 529 and it grows tax-free over 18 years. $2500/year is ~ $200 a month, which is great. If you get a decent rate of return, let’s say 7%, then you stand to save ~$80k over the 18 years. This may not cover the full college tuition, but it will certainly help, especially if your child has other help, like scholarship(s).

      Thanks for your comment. If you have any more questions, feel free to ask.

      Sensei