By Dr. James M. Dahle, WCI Founder
Burnout has reached epidemic proportions with some surveys showing more than 50% of doctors are currently experiencing burnout symptoms. For many of those, burnout is having a severe effect on their personal and professional lives. While not exclusive to physicians, the unique stresses of healthcare have certainly kept doctors among the most burned out of professions. Surveys of the various specialties show that emergency physicians continue to rank near the top as a percentage of practitioners affected.
The symptoms and causes of burnout are well-described elsewhere, but it is clear from years of research that causes are both systemic and personal, and thus, the best solutions will address both aspects. Systemic solutions are more difficult to implement but may be much more effective. Every physician should lend their support to systemic change and solutions to improve the profession and individual organizations wherever possible. However, in this article, we are going to address just one alleviating factor for burnout—financial planning. The good news is that this solution can be implemented immediately and without support from any organization or any co-worker.
Burnout Is Your Biggest Financial Risk
The largest financial asset of most physicians, particularly in their early career, is their ability to work. That is, to exchange their time and effort for money at a relatively high rate. Most emergency physicians earn between $150-$400 per hour. Over a full career, those earnings may add up to over $10 million. This asset needs to be protected. While most of us are aware of the need for disability and life insurance to protect this asset, few of us consider that burnout also puts it at risk. In fact, given its prevalence, an emergency physician is far more likely to leave medicine early due to burnout than disability or death.
Burnout is your greatest financial risk.
All career decisions should be made with this risk in mind. You should ask yourself, “Will this decision make me more or less likely to burn out early?” Optimizing for career longevity is clearly the No. 1 priority. That might mean working fewer shifts, leaving a toxic job, paying someone else to work your share of night shifts, or simply accepting the lower compensation that often comes with seeing fewer patients per hour as an individual or as a group.
Financial planning is the process of aligning your working time and earned dollars with your personal values and goals. It involves setting goals, deciding how much money to dedicate to each of those goals, persistently investing money toward each of those goals in an intelligent manner, and protecting the assets you do have from loss. It is a single-player game—you against your goals—and you do not need to beat your friends or even the market to reach your own financial goals. Doctors with clear financial goals and a written plan to meet them are far less likely to burn out, and should they do so, they are already in a financial position that allows them to do something about it. I am convinced that financially secure doctors are better partners, parents, and practitioners.
Why Doctors Need a Written Financial Plan
Many doctors feel trapped in medicine. This trap often starts in medical school as they begin to accumulate student loans. Approximately three-quarters of graduating students paid for school using borrowed money, with a median amount at graduation currently between $200,000-$300,000. However, many doctors owe even more, and a $400,000 or even a $500,000 student loan burden is no longer unusual. If managed poorly, those debts may still be hanging over your head during your late career.
Even once that student loan mess has been cleaned up, every dollar of that relatively high physician income may be required to maintain the lifestyle and spending habits of physicians and their families. Poor investing habits and personal financial catastrophes, such as divorce, may compound the problem, and by the time they get into their 60s, 25% of doctors are still not millionaires despite decades of physician-level earnings. In fact, 11-12% of doctors in their 60s still have a net worth (everything you own minus everything you owe) of less than $500,000. Needless to say, a nest egg of that size will not provide anywhere near the same lifestyle in retirement that the physician enjoyed prior to retirement.
The main outcome of the financial planning process is a written financial plan. Once this plan is produced, the physician investor no longer needs to think about the answers to questions such as:
- How much can I spend?
- Can I afford to buy X, Y, or Z?
- How much should I be saving for retirement and college?
- Should I put this extra money toward the mortgage or invest it?
The plan answers all of those questions and simply needs to be followed. It is personalized and comprehensive. Most physicians will require the assistance of a professional financial planner to draft such a plan. Expect to pay several thousand dollars to do so and the same amount every year if you also hire the planner to implement the plan. Just be careful that you are not hiring a financial product salesman masquerading as a financial planner. The easy way to tell the difference is by understanding how they are paid. If they are paid commissions to sell you insurance or investments, they are not a financial planner; they are an agent. If they are paid a percentage of your assets, they are an asset manager and not a financial planner. That is not to say one cannot be both, but as a general rule, you will find people put the most effort into doing what they are actually paid to do.
If you wish to draft your own financial plan, you will find the task is not too overwhelming. Many physicians act as their own financial planner and investment manager after becoming financially literate. The process takes some time and effort but far less than it took to practice medicine. There are plenty of inexpensive resources to assist you, including blogs, podcasts, books, online communities, and courses. The key is that if you decide to do it yourself, you must make sure it is done well. You would be far better off paying a fair price for good advice and service than doing a lousy job yourself.
With a financial plan in place, you will find that you rapidly begin to gain wealth by paying off debt, accumulating assets, and letting the magic of compound interest work on those assets over time. By getting your financial ducks in a row, you will be empowered with the ability to make changes in your personal and professional life to ensure career longevity. These may include:
- Cutting back at work
- Taking more vacation
- Having more time to spend with friends and family
- Having more time to spend on wellness boosting activities such as exercise, eating well, and sleeping
- Working a different mix of shifts
- Changing jobs
- Changing professions
- Forcing change at your current job
- Chasing academic pursuits that do not necessarily compensate well
Most emergency physicians following a simple financial plan will reach financial independence by mid to late career. At that point, they no longer need to work for money at all. While some will retire early to pursue other interests, many will discover that they really did not go into medicine for the money and find it is far more enjoyable now that they no longer have to do it.
If you’re a physician who’s feeling burned out, The White Coat Investor can help. With our Burnout Proof MD program, we can assist you in getting back to the place, mentally and physically, that will allow you to be at your best and to make sure you continue forward with your financial plan. End the struggle and remember why you wanted to be a doctor with Burnout Proof MD.
Have you felt burned out, and if so, have you tried to combat it? Do you have a written financial plan? What other steps have you taken to beat burnout? Comment below!
[This article originally appeared in the American Academy of Emergency Medicine's Common Sense magazine.]