018: Why Living Abroad Is a Wealth Strategy for Physicians

Discover how physicians can significantly reduce expenses, increase wealth, and enjoy greater flexibility by practicing remotely and leveraging geographic arbitrage. This episode breaks down the full financial calculation, real numbers, and practical strategies to transition into location independence without waiting for a multiple million-dollar portfolio or retirement.

Key Topics:

• How geographic arbitrage drastically lowers living costs without sacrificing quality of life
• The actual expenses of physicians in major US cities versus abroad
• The rule of 25 for financial independence and how geoarbitrage reduces the savings target
• Tax considerations for US physicians living abroad
• Retirement strategies outside of traditional employer plans like Solo 401Ks
• The health and longevity benefits of reduced burnout and sustainable work hours
• Real-world examples comparing traditional US-based physicians and remote practitioners
• First steps to analyze your current expenses and potential savings from geoarbitrage

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Transcript

SPEAKER_00 0:00

Most physicians think they need a lot more money saved before they can practice remotely from abroad. Today, I want to show you why that number is probably smaller than you think and why a physician making $150,000 remotely can actually be building more wealth than a physician making $350,000 inside the hospital. I'm going to walk you through the math, geoarbitrage, tax efficiency, and what your income is actually worth when you control where you live. And if you want to build the income structure that makes location flexibility your reality, book a one-to-one freedom call. The link is in the show notes. Let's get into it. You're listening to Doctors Abroad, the podcast for doctors who want to build remote income and create location independence. I'm Dr. Christine Gointh, founder of Nomad MD. I've exceeded my hospital income while working part-time and living abroad. And on this show, we break down how to make hospital income optional. Let's get started. Most of us assume that practicing remotely from abroad requires a certain financial threshold, a number we haven't hit yet, a savings target, maybe it's two, five, eight million, that feels quite out of reach, an income level we probably haven't built to yet. And so we put it off this idea of location flexibility to some future time, some future version of ourselves. And what I want to show you today is that the number you think you need is probably smaller than you believe, because most physicians have never run the full calculation. They've calculated income without calculating what happens to their expenses, their taxes, and their wealth picture when they strategically change where they live, especially when they really just want to be free to live and travel anywhere they want. And so this episode is that full calculation with real numbers. And nothing I share today is financial advice. I am not a CPA, but I am sharing what I have learned, what I do personally, and what I help my clients do, and what's worth exploring with your own CPA. So let's start with the numbers most of us are working from. The average employed physician in the US earns somewhere between $250,000 and $400,000, depending on specialty. And most of us, especially those living in major metropolitan areas, are spending a significant portion of that: mortgage or rent, student loans, car payments, private school, the lifestyle that accumulated over years of delayed gratification. And so when we think about practicing remotely from abroad, the calculation that we run is around income. What do I need to earn to maintain this? But that calculation is missing a critical variable. Most physicians living in major U.S. cities are spending 150,000 to 200,000 or more per year on basic lifestyle needs: housing, food, transportation, health care, child care, and education. And it's not because that is an extravagant lifestyle, it's because that is simply what those things cost, right? In a typical US city. Change the location and the entire financial picture changes with it. So geoarbitrage is the practice of earning income in a strong currency while living somewhere with a lower cost of living. It is not a new concept. People have been doing this for many, many years, but most physicians have never applied it to their own financial planning. And here is what it looks like in practice. A physician living in a major U.S. city might spend, like I said, $150,000 to $200,000 a year on those basic, you know, lifestyle costs. That same physician living in Colombia, Portugal, Mexico, South Africa, Brazil, or many other countries might spend $40,000 to $80,000 a year with a personal chef, a cleaner, a driver, childcare, support 24-7, and more time than they've had in years. The same quality of life, and in many cases, a higher quality of life for a fraction of the price. And it's not because their lifestyle shrank, it's because the cost structure of where they live changed entirely. And here is what this means for timing. You do not have to wait until your remote income fully matches your current hospital salary before you start practicing from abroad. So you are not earning less. You are actually starting your life of freedom and flexibility sooner. And because you are keeping more of what you earn and spending less to live extremely well, you are actually building wealth faster in the meantime than you would be staying in the hospital, waiting until the number in your portfolio feels big enough. In financial independence circles, there is a concept called the rule of 25. The idea is simple to be financially independent, which generally means to never need to work again. You need roughly 25 times your annual expenses saved and invested. At that point, you can withdraw 4% of your portfolio annually to cover your expenses indefinitely. Now run those numbers at a US physician lifestyle of let's say $175,000 per year in expenses, and you will need $4.375 million saved to be fully financially independent. That is a long runway for most physicians. Now run the same numbers with geoarbitrage. If your annual expenses are $70,000 instead of the $175,000 per year because you live abroad and you are still living well, still living the lifestyle that you want, now you need only $1.75 million. That is less than half of the previous portfolio target, not because you're living worse, but because your money goes further where you currently live. Your lifestyle did not shrink. A physician bringing in $150,000 per year in remote income, working 10 to 15 hours a week and living somewhere where their expenses are $70,000 a year, is keeping more of what they earn than a physician making $350,000 a year in the US and spending $280,000 of it, right? That physician earning $350,000 a year is technically building wealth, but they are working 60 plus hours a week, burning out, and have no flexibility over where or how they live. The physician earning $150,000 remotely while living well abroad is in a structurally stronger position, not because they earn more, but because the gap between what they earn and what they need is wider and they have time on their side. So that gap between what you earn and what you need, or basically how much money you keep, is literally wealth, because wealth is not made by how much you earn, but by how much you keep. And geoarbitrage is how you widen that gap without working more, but instead by actually working much less. And so I want to talk about taxes too, because this is another layer of the wealth strategy that most physicians have not spent a whole lot of time exploring. Before I left the US and established my life abroad, I worked with several CPAs that specialize specifically in expat taxation or taxation for U.S. citizens who live abroad. And what I learned changed how I thought about my income entirely. U.S. citizens living abroad are still required to file US taxes. That does not change. But there is a provision called the Foreign Earned Income Exclusion that allows qualifying Americans living abroad to exclude a significant portion of their foreign earned income from U.S. federal taxes. In 2026, that exclusion is $132,900 for individuals and combine a maximum of $265,800 for spouses. To qualify, you generally need to meet one of two tests: the bona fide residence test, meaning you have established genuine residency in another country, or the physical presence test, meaning you have spent at least 330 days in a foreign country during a 12-month period. Now I focus and qualify for the physical presence test as a nomad who lives abroad, but your CPA will determine which applies to your situation. What this means practically is that if you qualify, a meaningful portion of your remote income will likely not be subject to U.S. federal income tax. Combined with the fact that many states do not tax income earned by nonresidents who have established domicile elsewhere. And the picture starts to look very different from the tax situation of an employed US-based physician. So if you do not have a CPA who specializes in expat and self-employed physician taxation, this is worth finding. And through working with me, I can connect you to CPAs who understand this space specifically. I also want to address something that I hear often. Won't building income outside the hospital mean leaving behind the 401k match or the retirement stability that was supposed to be part of the employment plan. What do I do about my retirement savings? Here is what the full picture actually looks like. Most employed physicians are contributing to a defined contribution retirement plan, either a 403B or 401k with some potential employer match. Now that is real money and it matters, but here is what else is happening inside the institution. You are generating $2.4 million per year in revenue for the institution. You are doing it at the cost of your time, your health, and your flexibility. And the net contribution to your own wealth is a fraction of what you are generating. Outside the institution, the same expertise generates income that flows directly to you. The retirement accounts available to self-employed physicians, for example, the Solo 401ks, actually allow for much higher contribution limits and more flexibility in your investments than most employer plans. And so the tax advantages can be structured much more favorably. And because you're keeping more of what you earn, you have a lot more to invest and you naturally grow your wealth quicker. And there is something else that doesn't show up in the financial calculations that I think matters enormously. The physician who burns out at 52 and can no longer practice is not building wealth past 52. The physician who is working 10 to 15 hours a week, whose health is intact, who is not under chronic stress, who actually enjoys what they do, that physician can work into their 60s and 70s if they choose to. The compounding effects of working an additional 10 to 15 years at a sustainable income in a place where that income goes further is significant. Your longevity in this work, if it's the work you love to do, is a wealth strategy in and of itself. And location independence protects it. We touched on this in episode 13 when we talked about health as a financial asset. It is worth saying again here. And let me make this concrete with a comparison. Physician A is earning $350,000 per year in hospital employment in a major U.S. city. After federal taxes, state taxes, living expenses of $200,000 per year, they are saving approximately $50,000 to $70,000 annually. They're working about 55 to 60 hours a week. They have four or five weeks of vacation per year. They have little to no flexibility over where they live or how their schedule runs. Physician B, on the other hand, is building her remote practice. Currently, she's earning $200,000 per year, a combination of telemedicine and consulting, and she's working 20 hours per week. She lives in a country where her annual expenses are $70,000 a year. She utilizes the foreign earned income exclusion. She has no state income tax. She is saving $80,000 to $100,000 per year, more than physician A while working a fraction of the hours and living in a place that she loves. Same profession, same specialty, dramatically different financial outcomes. And it's not because physician B earns more, though eventually she will, right? But because she is keeping more of what she earns due to where she lives and how her income is being structured, and due to starting sooner on the life that she wants rather than waiting until later. That is the wealth strategy. It's not about earning less, but structuring smarter, starting before the portfolio number feels perfect. And I want to leave you with something practical. Before you talk to a financial advisor or a CPA about any of this, and perhaps you should, there are a few things worth getting clear on first. What are your actual annual expenses right now? And not what you think they are, but what they actually are. What would your expenses be living in a country where your money goes further, where you can afford more help, more experiences that you love, more time for less. Not a budget you'd resent, a life you'd actually want. Run that number. And then what is the gap between those two numbers? That gap is the beginning of understanding what geoarbitrage could do for your financial picture. The physicians who do this work, who actually run the numbers honestly, consistently find that the financial case for location independence is stronger than they assume. Okay, so I hope this one changed how you think about the financial picture of practicing remotely from abroad, because the number you thought you needed to make this work is probably smaller than you believed. And the wealth you can build by combining remote income with geographic arbitrage and tax efficiency is more than most physicians have ever calculated. If you want to build the income structure and location strategy that makes this your reality using your specialty, your income target, and your transition timeline, book a one-to-one freedom call. The link is in the show notes. Next week, we are talking about health insurance because it is one of the first practical questions that comes up after you understand the financial case. What do I do about health coverage? That is exactly where we're going next. And if today raise some questions about how to actually build the remote income that makes this picture possible, how to get there while you are still employed, and how to accelerate the timeline, episode 13, is remote work financially secure, goes directly into that. It pairs well with this one. Thanks for listening to Doctors Abroad. If this episode was helpful, share it with a colleague who's been thinking about building more freedom and flexibility in medicine. And if you're ready to make hospital income optional, book a one-to-one freedom consultation at thenomadmd.com. I'll see you in the next episode.