How much money do doctors really have?

Previously, we discussed examples of how much wealth an average doctor with aggressive saving strategy can will have after working for five years. There were a few comments that the saving strategy was indeed a bit aggressive, but I think that it is clearly doable. Part of the strategy is to become a good doctor, work hard and hustle, and learning to diversify your income stream.

Medscape recently released a survey on physician net worth, and it provides an interesting snapshot of our profession. Head over to Medscape to read all the details. One graph that I found interesting was the stratification of physician net worth by age:

medscape physician net worth by age

I think this survey reveals a few findings that are reassuring and expected from the profession. The “Under 28” category is not surprising. Most of us are still in residency, and either have a zero or negative net worth. I’m surprised that 4% of the respondents actually had over $1 million in net worth. This demographic has inherited money or other unusual windfall.

Under the age 28-34 category, 12% of respondents already have over half a million dollars in net worth! I’d expect these doctors were unlikely to have incurred student loan debt and have entered specialties with relatively short training periods and moderate to high salaries, such as Emergency Medicine or Internal Medicine. Assuming that the average Emergency Room doctor finishes a 3-year residency at age 28, she will start earning at least $300,000 her first few years on the job. Very few other medical specialties will be able to command such a high salary early on in their working careers in such relatively short amount of training.

What is reassuring is that 12% of doctors before age 40 actually become millionaires. You don’t even really need a working spouse to reach this threshold if you are prudent with your earnings. The White Coat Investor was able to do it with aggressive saving, smart investing, and diversification of income. Imagine that you are a Hospitalist earning a flat $250,000 annually. At age 40, you will have worked 10 years, and $2.5 million in pretax dollars. At a 30% effective tax rate, you have taken $1.75 million home after taxes. If you are very conservative and spend on $50,000 a year, you will definitely have at least $1 million in the bank. Even if you aren’t a frugal, you should still have $1 million in the bank.

Doctors should be able to do well overall. 

Based on the Medscape survey results, doctors are still very well off compared to the general population. The sole reason for this is that we as a profession have a good offense in the form of high income. Even if we may not control our expenses as well as we should, we can still survive. About a third of the survey respondents close to retirement age (60-64) reported a net worth above $2 million. Not bad. The other two-thirds of the group have less. While I don’t anticipate seeing doctors out on the streets, we should be able to do better given our 30+ year high earning career. You can take control of your earnings, spendings, and let your money work hard for you.

(Photo courtesy of Medscape)

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