Medicine Doesn’t Need To Be A 30-Year Career
The gist of this post is to put your income into perspective. It’s easy as a physician to view yourself as yet another wage-earner. The employee mentality is highly regulated by the US economy because it is so highly profitable for many industries. The IRS has essentially regulated the age you can retire at, though there are ways around that. Yet, you are not just another wage earner, you are a highly paid entity with job security unrivaled by other industries. Whether you squander that on buying a nicer car, a little more home, a little more vacation and a few more monthly subscriptions is up to you.
Imagine if you had a regular job, an average income and an average employee lifestyle of an American. You would finish high school and do some college perhaps, enter a job, move up slightly in the ranks and end up with a dual household income of $60-70k/yr. This sum is drastically diminished in value by purchasing a home, financing transportation, having too many children and committing divorce. The advantage this person has is that they are likely making income by somewhere around age 22 with only $5k of debt to start out with. After 10 years they make enough financial mistakes that they sort of have your shit down… they set money aside in retirement and by age 55 probably will have their home paid off. They simply cannot afford to upgrade their home so they stay put. They cannot afford to buy new cars, so the older car(s) are kept and maintained really well. Not much money is set aside for the children to go to college which actually helps them out because they qualify for scholarships and loans easier.
In comparison, a physician starts practicing sometime around age 30 with probably around $300k of student loans. S/he still has 10 years of financial mistakes to make before even thinking about retirement. After car purchases, home purchases, home upgrades, expensive doctor vacations and higher tax rates the average physician finds themselves by age 40 worrying, really worrying, about retirement. With multiple scandalous financial advisers waiting to pounce on you, they corner you at your weakest, sell you on some bullshit financial product, and scare you into thinking you need $8 million in retirement accounts. So the doctor still continues to work until age 55 but because they no longer have to take overnight calls, because they are getting the highest income of their life, because they can contribute even more to retirement accounts, they just keep working. Age 60 comes and goes, they don’t even know what it’s like to slow down. Age 65 comes along and health problems finally creep in. With the average life expectancy of a US physician around 73 years of age, that doesn’t leave much room for stress-free (read, job-free) living.
And yet, we all live in the same economy. The middle class worker and the physician are bound by the same geopolitical borders. Physicians do not make a higher-enough wage to make them elite members of society. My best friend from high school has parents who own an absurd number of a certain fast food franchise. Their annual take-home is in the millions and they are barely in that elite level where they can do whatever they want.
So, physicians have one simple and serious advantage. They are able to accumulate net income at a faster rate than the average American. This should mean that they would be able to retire earlier, work less, enjoy more free time and have less stress than the average American. But no, the average doctor is likely more stressed, spread more thin and has less in the bank than they should. Why do we so easily give up this advantage as physicians in America? I certainly did, from residency completion in 2009 until 2012 I wasted $545k of income. Why? Because we just don’t know any better… we live like consumers because consumerism is bred into us from a very young age.
The average doctor believes they should put more money aside for their child, have nicer cars, a bigger house, a vacation home, more monthly elective subscriptions (gym, cable, podcasts, etc.). They spend more on clothes, more on electronics and more on dining out and general entertainment.
Unfortunately, they don’t make that much more that the average US employee that these incremental, yet substantial, increases in spending could be overcome by their income. The 2 main reasons is that they are also responsible for higher student loans and higher taxes. Of course, they also start their careers on average 8 years later than the average Joe/Jane.
Medicine is not like programming a computer, it’s not like rebuilding an engine or doing taxes. The years leading up to it are grueling, for those years alone a human being would need 5 years of mental rest to recover from. The work can only be compared to doing retail work on nitro (those of you who have done retail work know exactly what I’m talking about) except that the expectations are higher, you cannot have bad days, and bad outcomes end with you not sitting in the manager’s office but on a courtroom stand in front of a jury, who doesn’t see the hard-working well-meaning person that you are, but the many zero’s after your annual salary.
The danger lies in upgrading your lifestyle after residency. Once you do that it’s like trying heroin, you aint getting off that train easily. Yet, you could cut your losses and start all over, like my good friend recently did by moving from SoCal to AZ. You can downgrade to a rental or a modest $300k home, let your children pay their own way through school, cancel all those memberships you have, get rid of the $2,500/yr auto insurance. Sell that over-engineered car and get a used Ford, Kia, or combine public transportation with a bicycle. Attack that student loan, pay it the shit out of it and start putting money away towards your financial independence.
My 3.5 readers might be divided on this suggestion. You might love the work you do, you might even be willing to do it for free because you love the art of medicine. I am not trying to take a dump on that gleam in your eyes but those emotions will change, not because the art has changed but because medicine is becoming more and more regulated, more and more industries are making money off of medicine and lobbying for change to suit their needs. And you will, guaranteed, reach a point when you realize that no matter how much more you master the art of practicing medicine, the bottleneck is the bureaucracy, the lawsuits, the inflexibility of the system.
I laid out how a person out of residency could structure their life to be financially independent well before age 40.
My buddy Dr. N. has a $1.5 million dollar house close to the beach, grossing $450k a year. Has no student loans but has a lot of child-related expenses with his 2 kids and wife who isn’t working. He has around $100k saved up. He is my age, 37.
My buddy Dr. G., also my age, makes around $200k/yr gross, has $175k saved up, and $150k in student loans. He is wise to drive a used older car but unfortunately because it’s a fancier car it is costing him money every few months. He is renting, paying around $2,200/month.
My other surgeon buddy Dr. Y. is making $500k/yr, a year older than me, on his second home after losing money selling the first one. Wife isn’t working any more and with 4 kids, $350k in student loans he isn’t making much progress. His home is worth $1.8 million and he owes about that much on it.
Another friend, Dr. S. makes about $150k/yr net from his own urgent care. Because of a recent divorce and 3 children that he and his wife have to take care of and no other assets, he is fairly unsuccessful as well, financially speaking. He is 44 years old now and has another $20k in student loans left.