By Dr. James M. Dahle, WCI Founder
One of the more interesting surveys out there for physicians interested in personal finance is the annual Medscape Physician Net Worth and Debt Survey. Now I can't promise that this survey is scientifically and statistically rigorous, but it's about all that is out there on this topic.
One of the questions they always ask is “What is your Net Worth?” Many focus on physician salary, but net worth is the most important measuring tool in personal finance. Net worth is “everything you own minus everything you owe.” On the asset side, you count your bank accounts, your investments, your retirement accounts, your home, your cars, your practice, and your stuff. On the liability side, you count all of your debts like student loans, credit cards, auto loans, practice loans, and mortgages.
Total it all up and that's your net worth. I think it's a good idea to calculate your net worth once a year and compare it to where you were at last year and to your financial goals. (Remember personal finance and investing is an individual sport, where you play against your own goals and not each other.)
How Many Doctors Are Millionaires?
A millionaire is somebody with a net worth of $1 Million, not an income of $1 Million. It's important to know the difference. The Medscape survey tells us how many doctors are millionaires. Take a look:
51% of doctors are millionaires. That's good, I guess. I mean, residents are doctors but you don't expect any of them to be millionaires, right? So of course, not all doctors are going to be millionaires.
Doctor Net Worth by Age
The data gets really interesting when you start dividing up the doctors by age. Here is the 2019 data:
I actually prefer the way they used to display the answer to this question, so here's the data from 2016:
The data is similar, they just used to include a < $500K category that I find interesting. The most impressive data from this chart in my opinion is from doctors in their 60s. 1/4 of them aren't millionaires and 11-12% of them aren't even worth $500K. Remember that includes their house, bank accounts, cars, stuff, investments….everything. That's a serious tragedy to presumably earn 20-30 years of physician-level paychecks and have less than $500K to show for it. But today, let's go through every age category and discuss the physician millionaires.
Under Age 28
I never really understood these docs. I mean, I started residency at 28. How is it that 4% of doctors are already millionaires at that age? I can only think of two explanations. First, they received a serious inheritance or second, they are married to an older, much wealthier doc. Most docs in this category have (and should have) a negative net worth! The 2019 data is particularly weird in this group. 4% of docs have $5M+ but none have $1M+? Sounds like a few jokesters responding to the survey to me.
Age 28-34
Most doctors spent at least part of this period in training, and maybe all of it. If you were a non-traditional student, you might not have been out of training by 34. Certainly, I would not expect to see very many physician millionaires in this category, at least among those who earned the money to become so themselves. And that's what the data shows. 8% in one survey and 4% in the other. Not too much to say here, but I am encouraged by the 2016 data that shows that 16% of docs have a net worth of at least $500K.
Age 35-39
Here is a category that is near and dear to my heart, since I was 38 and Katie was 35 when we became millionaires 7 years out of residency. We're still pretty unusual in that respect, but at least we have company, about 16-17% of you. By this time 39% of doctors are worth at least $500K.
Age 40-44
Here is the category we are in now. Let's be honest. It would be VERY hard for a physician to be worth $5M at this age based solely on their physician earnings. Even a doctor who came out of residency at 30, made $500K/year, saved 40% of it every year, and earned 8%/year on it would only have a nest egg of $4.8M at age 44. Not very many docs doing that, so even with home equity and “stuff”, there just aren't very many worth $5M+. Most of those in this category are probably successful entrepreneurs of some sort. However, lots of doctors are becoming millionaires by this age, 30-36%. A majority (57%) now have a net worth of $500K.
Age 45-49
Still only 2% in the $5M+ category here, but lots and lots of millionaires, 44-50%. 70% are worth at least $500K and 17% are now multimillionaires.
Age 50-54
Overlooking Maybird Gulch from the Pfeifferhorn. Physician millionaires can go hiking on weekdays.
This is the first age at which you start seeing significant numbers of early retirees. I mean, there might be a few in their 40s like The Physician on FIRE, but most docs who stop working before 50 are becoming stay at home parents or changing careers, not really stopping work altogether. You can see why 50+ is such a significant age. Now the majority of doctors, 55-61% are millionaires. I love the fact that the more recent data looks so much better. That's a 6% increase in just 3 years. How much of that is due to inflation versus nice market returns versus higher salaries versus increased financial literacy? I don't know, but I'm personally taking credit for 1% of it! If you're not already worth $500K by the time you're 54, you are behind your colleagues. Over 3/4 of your peers are wealthier than you are.
Age 55-59
Lots of doctors retiring at this age. It's still an early retirement technically, but not unusually early. 84% are worth > $500K, 65-71% are millionaires, 36% are multimillionaires, and 8-11% are worth $5M+.
Age 60-64
Now we're getting into the traditional retirement years. I think it's safe to assume that many doctors are retiring with the net worths displayed in this age group. 88% have $500K+, 72-75% are millionaires, 43% are multimillionaires, and 11% have $5M+. That last number hasn't budged in the last 3 years, which is kind of a bummer.
Age 65-69
Here is the last half of the 60s and this period includes the current average physician retirement age of 65 (it's 63 for Americans in general). Presumably, some of the people in this category have already been retired for 1-15 years at this point, so maybe it isn't a huge surprise that the numbers aren't really different from those in their early 60s. 89% with $500K, 74-75% (actually dropping from 2016 to 2019) millionaires, 48% multimillionaires, and 14-15% with $5M+.
I find this data depressing. I mean, this number is not just their nest egg, it includes EVERYTHING, especially their house. The average doctor these days is making $275K and the vast majority are making at least $150K. But if you assume these doctors have $500K-$1M tied up in their house and stuff, 1/4 of doctors are basically retiring on just Social Security and (using the 4% rule) a majority are likely retiring on less than $80K in income in addition to Social Security.
Now I'm not saying you can't have a comfortable retirement on $100K or so a year, but it seems a shame to me given what most docs should have. I mean, if you assume a doc comes out of training and starts saving at 35 and works to age 65 and saves $50K/year at 8%, they should have $5.7M by retirement in addition to their house and stuff. Multiply by 4% and add in $40K in Social Security and that's $268K gross. Even if you make a few bad decisions along the way and only end up with half that nest egg, you should still have a retirement income of $154K. Lots of work still to do here. I guess I can't quit blogging yet.
Age 70+
The rich get richer and the poor get poorer. If you had lots of assets in your 60s, you likely have more now. If you had fewer assets in your 60s, you likely have less now because you're spending them faster than they're growing. That's not necessarily bad (none of us live forever) but it is an interesting bit of data. The greater than $5M crew goes up from 17-22%, but the less than $1 Million crew also goes up slightly.
I think the biggest lesson to learn from all this is that the process of becoming wealthy is not automatic, even for high earners. While very few of us went to medical school to try to get rich, it would be dishonest if we didn't say that most of us still expected it to happen thanks to our high income. But some of us never build significant wealth. Sometimes this is due to tragedy, but certainly not the 25+ percent of time that it happens.
Lots of that tragedy, at least the financial tragedy, can be prevented, anyway, with things like disability and life insurance. More likely the story behind all these non-millionaire physician retirees involves spending too much, lack of investment discipline, lack of any sort of coherent financial plan, and maybe a divorce or two. Make plans now to ensure you're not in that category when you retire.
What do you think? Why do you think 11-12% of doctors in their 60s are not worth $500K and 1/4 of them aren't millionaires? What can be done to help our peers build a secure retirement? Comment below!
Choose your spouse carefully – it is THE most important financial decision of life. I see way too many docs on their 3rd marriage, expecting the newest one not to have exactly the same issues as the prior ones.
Divorce leads to an immediate loss of approximately 60% of one’s net worth (varies depending on the situation). Add to that the emotional turmoil, distraction from work, inability to work as much if children are involved, and it’s a total financial mess.
Add a 2nd divorce, and it’s almost impossible to build a solid NW.
Otherwise:
Save 20% of income from day one
Invest in SP500 or Nasdaq or whole world funds
Make at least 200 hours to read investing books and recognize if you have the Right personality,; then take 10% of retirement funds and find 3 solid companies that you can keep up-to-date on with excellent management, a path to increasing sales, and good margin.
Keep overhead low – no expensive cars, houses, hobbies. It costs nothing to run in the park, hike, and stay in shape.
If you have not read at least 200 hours of investing books 3 years out of residency, you have to ask yourself why it is not worth $1mm-10mm of your money to put in this time. Because by the time you have retired, if you have not done things correctly, it is going to cost you somewhere in this range to lack financial literacy. Most do not understand how costly it is over a 20-30-year career to not understand investing.
Just following this advice will guarantee most physicians become multimillionaires.
We need you lecturing all the residents on financial literacy.
Why include individual stocks in your list when the data suggests trying to pick stocks well enough to beat the markets these days is a fool’s errand?
The data lump everyone together. Yes, absolutely safer and better to go with low management cost index funds. Personally, I have found a few companies that – after extensive research – I could not *not* invest in for the long term. My ten-year annual returns in my two IRA’s are 26 and 31% . Certainly not typical. Talk to me in ten more years to see if I regressed to the mean.
Also, human nature. Despite the index fund trend toward superiority over time, some people like to choose stocks and get more involved. By setting that individual trading limit at 10% of retirement account assets, it acknowledges that desire to try to beat the market without excessive risk.
But not at all important. 20%+ saving rate and consistent investing in one of the indexes is most important.
If you’re going to pour a bunch of time and effort into your investments, I can think of several asset classes that are more likely to be more worthwhile than publicly traded stocks.
Instead of feeding the desire to beat the market, why not just get rid of it and spend your time and effort where it is more likely to pay dividends?
The marital decision definitely impact finances a great deal, but may I suggest that if you are on your 3rd spouse, that it is not the choosing of the spouse that’s the problem. It’s you. You want a great marriage? Put forth the effort to be a great partner.
I have seen a lot of second marriages by male physicians to much younger women, and it’s great at first: he is a 45 year old doctor, still looks fit for his age, and she is stunning and 28. You get lots of pix from Cabo, she in a barely there string bikini sitting on his lap, a great big grin on his face.
The problems start about 7 years later, when she can leave with half the money and marry someone closer to her age.
This kind of second marriage is really a very expensive hobby. There is a better solution. As someone has quipped, you can’t buy happiness, but you can rent it.
That’s a very cynical view on life. Not saying it isn’t true sometimes, but it sure is depressing if it is.
This just highlights the importance of what you are doing. I agree with the advice above as well. It’s not hard to do but it takes an introduction to the concept which many doctors never get or seek out.
The biggest misunderstanding for doctors is that they think making a million dollars in salary makes you a millionaire. This mindset leads you to spend a million dollars. No net worth calculator cares about how much you make. Simply learning the difference between an asset and a liability is the first step (I know because not too long ago I was in the clueless cohort). Calculating and tracking net worth is so helpful to see what decisions increase versus decrease your net worth. Once you realize these relationships it becomes a lot more motivating to make the right decisions.
Yes, most people think they want to be millionaires, but what they really want is to spend a million dollars. Unfortunately, these things are polar opposites. You become a millionaire precisely by not spending a million dollars you could have spent.
I am going to use this quote (credited to you of course) in my resident finance lectures. It all boils down to this.
I first heard it from Morgan Housel in a 2018 blog post on the psychology of money.
“When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people.”
https://www.collaborativefund.com/blog/the-psychology-of-money/
Yup, not my quote. Give Morgan the credit.
And Morgan is absolutely right, especially in my wife’s case. As my wife constantly reminds me, money is meant to be spent to make you happy. Unfortunately Jonathan Clements is very right as well, that we don’t know what makes us happy and I suspect many docs who are in that older non-millionaire category were trying to fight a career of burnout by trying to buy happiness instead of saving for retirement. Morgan could have completed the thought that most people mean “I want to spend a million dollars because it will make me a million times happier!” I try to mention this to my wife that this is false but she is still convinced that spending a million dollars will make her a million times happier. If only this were true!
A balance is definitely the best as we have found out. Luckily me and the wife have a good balance . I focus on the saving for retirement and limit on purchasing things that maximizes happiness, and my wife makes sure I am not a scrooge tightwad miser that will be the richest doc in the grave.
You’re right, you can’t quit blogging just yet :)… The data is not surprising but hey, it’s going in the right direction. Change takes time. We’ll get there.
Thanks for all you do,
PFB
It’s unusual, but it didn’t feel hard to be in that 40-44 category and reach >$5M point… Probably the same age as you, WCI. Graduated EM residency at 28 with essentially zero student loan debt. I grew up in a saver house where it was expected to invest your high school summer earnings in the stock market (got a parental match for spending money, that of course I never went hog wild on). Had a roommate in residency and always maxed my institutions 403B plan (approx $13-16K per year) and Roth IRA. After residency, I stayed in my low cost major southern city and made $400-500K annually and truthfully probably saved 60% of that. I waited til I was deep in my 30s to get married, and thankfully saving comes naturally to her too.
So even after all the market turmoil this year, I’m close to $3M in taxable, $2M in retirement accounts and a paid-off home. My dad is proud bc all those high school summer jobs now pay me annual dividends of about $8K (of course, I curse the fact that he had me invest in individual stocks but you can’t do everything perfectly).
Like I said, it has never felt hard and I’ve never felt like I was sacrificing. I used to wonder if there was some spending category that I was forgetting about that others had. Before Covid-19, we traveled overseas 6-7 times a year and ate out all the time. In this new era, with young children at home, no travel and no dining out, we just don’t have that much to spend money on. We’ve actually laughed bc we are back to “Living like a resident” at our current spend rate…
It’s unusual in many ways, not the least of which is graduating residency at 28. That’s about as early anyone possibly can graduate, Doogie Howser types excepted. If your parents were in a position to match investing dollars, you were also starting from a place most of us did not. It’s still impressive of course.
The formula is simple–make a lot of people, don’t spend a lot of money, make your money work as hard as you do.
Makes me think about SORR from the opposite end of the career angle. 2008 +/- a couple years was a decent time to finish training to build wealth, for most specialties. Stock markets were down, home prices coming down, tuition wasn’t quite as inflated, and physician wages were taking off. Maybe clinical practice wasn’t quite as onerous, either?
Contrast with 10 years earlier: a lost decade for stocks, wages were much less ($100k was good starting wage for primary care), housing bubble was coming, bond yields going down, lower 401k limits. That was my era, when mentors wistfully recalled the “good old days” in the 70’s and 80’s. We’ll just have to wait and see how it goes for today’s newly minted docs.
That said, the concepts espoused in this blog and these comments are timeless.
POF notes he started his career at a pretty good time. But I think it matters more on the back end honestly, it just so happens that POF’s back end and front end were the same years.
Fancy doctor house notwithstanding, POF has a good ROI for his human capital. I imagine that applies to most anyone who can accumulate >$3M non inherited?
Why aren’t there more physician millionaires?
You said it. Divorces. Excess spending. Lack of investing knowledge or discipline. There is also a specialty effect from say pediatrics versus orthopedics in wages ($200,000 vs $500,000 for example’s sake) but this can be defeated by planning and living within your means.
I’m 56. While I’m in the top few percent in wages in the US in general, I’m only in the top third of physicians as to “millionaire” status.
Mistakes:
-Saving nothing before age 30
-Only saving 401K limits from age 30 to age 45
-Spending too much on housing (2003 McMansion cost $500,000) and building it in a poor market (it’s still worth the same money) and spending too much in general
Other factors that slowed things down
-choosing Psychiatry over the OCRD group (ortho, ortho, otolaryngology, radiological, cardiology, derm, etc.)
-having a low wage earning spouse with no 401 plan
-choosing to have 4 children and putting them in private schooling and paying for their colleges
– taking 3-4 nice vacations a year
– financial illiteracy from age 30-45
– Some of my friends also got a boost from inheritance. In fact, many of them received hundreds of thousands. I’ll be getting zero. No luck there, but I always knew this.
Things that helped:
– earning a pension at one job in 11 years that is worth $30,000 a year after age 60 (but I have to live a long life to capitalize on this)
– WCI from age 50 to now
– a second job (Side gig on weekends) from age 44 onward that has pumped my wages into the ORCD group since age 50.
– maxing out a 401A (with a 5% match), a 457, a SEP-IRA, an HSA, these last 6 years
Good luck to all of you. Marry well. Don’t divorce. It definitely helps if your spouse is a wage earner. Spend little, save big, drive reasonable cars, don’t build a big house in a non growth area.
The quip about inheritance is crude, but I’m not kidding when I say that many of my friends net worth doubled via this bit of sad luck. Not the best strategy as someone has to die for these windfalls, but a lucky break if your parents leave more than debts.
Never heard OCRD before. It seems like it was the ROAD specialties back when I was in school.
Most millionaires did not receive any significant inheritance.
Those retired docs are not necessarily living only on Social Security. Depending on their jobs while working they may have pensions. Even without pensions, they may have annuitized a large share of their retirement money. They could be drawing a hefty income without it showing up in networth.
But it does surprise me to see how much many docs spend on stuff I do not want, let alone would never consider buying. I hope for their sake that they are well up in the >$5M club.
I was so pleasantly surprised to see that my husband and I are in the multimillionaire category. What’s even more surprising is that we’re both social workers (and the joke is that you never go into social work for the money)! Our success comes from marrying someone with similar money values; signing up for retirement plan at work as soon as I knew there was one; contributing the maximum I could; Paying more on our mortgage so we could pay the house off early; owning a house (coastal Southern California) that would appreciate more than we ever could have imagined; Paying credit cards in full every month; investing wisely (mostly index funds); not paying for a financial advisor; living comfortably, but not extravagantly. Our only debt is a car payment. I enjoyed your article and you made my day!!!
Good stuff here, but agree that numbers should be better. One comment about divorce, yes it has a major impact on finances, but no amount of money makes up for an unhappy home and married life. You can also choose wisely, but life happens and people change, often not for the good. Someone once told me you can always make more money and he was right if you’re willing to put in the effort.
I’m sure it helped that I finished medical school fifty years ago without debt (thanks, Dad!) I had a moderately busy surgical practice for about thirty years. We lived a modest life style, but did own a couple of Mercedes and Porsches before we gained our sanity and drove two Lexus‘s, each for eighteen years. We had a nice home and did have a sailboat and a lake condo. Vacations were modest, We paid for the education of two children, recently financing an MBA for one of them. We maximized our contributions to our profit sharing plan, and invested any spare cash in an after tax account. We invested in low expense mutual funds and ETF’s as well as zero coupon treasuries. I retired in my early sixties, moved, and bought our retirement dream home for cash. We are now debt free, with a net worth in eight digits. We plan to leave much of our estate to various charities. My point is that you do not have to live like a pauper in order to accumulate significant wealth. It feels good to be financially independent.
Hello All,
Thank you for sharing your wisdom and life experiences on this page. I am a rising 4th year student who will be applying for Internal Medicine residency. I will most likely be working as a hospitalist/internist in the future. I will be in around $320K debt when I graduate. This number really freaks me out but I plan on paying it off in huge chunks as soon as I graduate residency at the age of 29. A bit of background about myself: I am a first generation college student. I grew up underprivileged and under-resourced, on and off welfare for as long as I can remember. College and med school was completely out of the question, but I was determined to change my destiny from a young age. My background made the journey to medicine a difficult one. I have worked hard my entire life, working odd jobs in college to support my family, while at the same time trying to gain entry into med school. I plan on (happily and with great joy) taking care of my parents in the future. They have sacrificed so much for me to pursue an education. I want to know what my financial plan should be in y’alls opinion? I want to maximize my earnings without doing a fellowship. I am driven to work as much as I can when I become a physician. I am also dating a girl in the class behind me. She is nice but something inside me says that she’s not the one. Divorce scares me, and I don’t ever want to go through that in my life. She has a “strong” personality and is huge on social justice issues. I am not like that at all. I care about human rights of course, but she’s on a different level of aggressivenes about it. Do doctors who marry other doctors do well in the long run? I feel like the dual doctor income is meaningless if you are unhappy/unfulfilled. Sorry for the long post. I hope some of you medicine veterans can help me. I tip my hat to you all. Thank you for your service to the field of medicine.
You have a bit of a steep battle ahead of you with that kind of debt. The $320k figure will be significantly more assuming you do IBR. If you’re really interested in financial stability you do have other things going for you. Namely your early realization of the importance of personal finance and your single marital status. I recommend that you find moonlighting opportunities in residency to help decrease your debt burden and also contribute to retirement accounts. Live frugally. Additionally be selective about your job after residency. If earnings are your focus you may need to work, at least for some time, in a smaller, less desirable locale. That will maximize your salary. Continue to moonlight as a hospitalist to juice your earnings further. Continue to live like a resident, pay down your debt aggressively and contribute to all tax-advantaged retirement accounts at least until all your debt is gone. Don’t buy a house during or immediately after residency. Rent while you pay down your debt.
As for the marriage issue be very careful about who you marry. If financial stability is your goal you will need to make sure her financial goals/behavior are solidly aligned with your own. If she’s a profligate spender you’ll be unlikely to achieve your goals. Divorce will also destroy your financial progress so avoid it if at all possible.
Hope that helps.
If you live like a resident until your loans are gone you’ll do fine. When you’re ready to get a financial plan in place, why not start with the WCI Online Course (currently called Fire Your Financial Advisor) or hire a WCI recommended financial planner? For now, just borrow as little as you can, do the right thing for your student loans in residency, get some disability insurance, and start saving when you start earning.
Dual doctor couples actually have lower divorce rates than one doctor couples, so don’t let that stop you. But if she’s not the one, she’s not the one.
Really enjoyed the article. Keep up the valuable work that you do.
I am grateful to say that I became a millionaire at 34 years old (April 3, 2016 to be exact). Fortunately, I was able to become a multi-millionaire by age 37 (turned 38 in February). No inheritance, no family gifts, just good ‘ol hard work and saving the majority of my income.
I am a pediatric dentist who is fortunate to earn a very comfortable income. I have a wonderful wife and two beautiful daughters. We live comfortably and have more than our basic needs met, but live well below our means. My annual plan has been saving $250,000 per year in our after tax Vanguard mutual fund accounts AFTER fully funding my 401K, HSA, 529s, and (backdoor) Roth IRAs. We also own two investment properties (one paid for in cash).
Saving money has always come easy to me as far back as I can remember. When I was in 4th grade, my elementary school gave laminated paper award slips called “Bee Specials.” They came in 1pt and 5pt values. You could earn these “Bee Specials” by doing a kind gesture, following a rule, getting a good test grade, etc. Every quarter we would go to the school store where we could spend our points. Some items for purchase were stickers, candy, and other toys and gizmos. My classmates and teachers thought it was strange that I would not purchase anything during the first 3 quarters, but rather browse and save all of my “Bee Specials” to spend at our final 4th quarter shopping visit. By that time I had accumulated a small fortune of points. And what did I finally purchase? Baseball cards that they had for sale because I knew these would appreciate in value (unfortunately the value of baseball cards has dropped to worthless lol). Quite the different reasoning and behavior of your typical 4th grader, wouldn’t you agree?
Anyway, I have plenty of other unique stories to share in regards to my innate desire to save money (ie getting our electric bill down to $17 one month while I was in dental school).
Love Life!
That second million sure comes faster doesn’t it?
I’m impressed with your income if you’re saving $250-350K/year. That’s likely significantly higher than the average pediatric dentist. Nice work. Much easier to save a ton on a higher income.
The second million definitely came faster. Something others may find amusing is that I recently had to sell my car that I have been driving since…wait for it… my senior year in high school. It was a 2000 Toyota Celica, manual transmission. I sure do miss that thing, but it was time to let it go as age was catching up with it. I remember the first time parking it in the physicians’ parking lot at a surgery center where I do cases. One of the staff members thought someone had mistakenly parked in the lot. Classic.
Love Life!
I hear those stories all the time but it seems so bizarre to me as there are no flashy cars in my hospital parking lot. The nicest ones are usually driven by heavily indebted nurses! I just park my dented 2005 Sequoia next to them.
I think anyone who works with (or knows they work with) WCI would be too embarrassed to park a flashy car in the parking lot!
Thanks for everything – you make financial wellness enjoyable to read and digestible. I’m so grateful I discovered your book/site. I’m by no means in shape now but I was an idiot before. Good writing reflects good thinking and you have amazing clarity of thought (and a certain fearlessness). I am an attorney but I think talented doctor-writers are so much more free and fun.
Tesla’s are the four safest cars on the road. In full self driving mode, they are ten times less likely to get into an accident based on billions of miles of data.
Fall asleep at the wheel? It’ll signal and pull over to the side of the road. This ever happen to you as a physician after a busy 12-hour overnight? I know at least two who could’ve killed themselves in this situation.
Why would you do anything less for you or your family?
The WSJ published a chart of accident likelihood. The older the car, the more likely to be in an accident and not survive. It was pretty dramatic to see this data escalate each year that elapsed.
36,000 killed on our roads each and every year.
2 million with serious injuries annually.
It’s not about flash.
I’m pretty sure I’m likely in the 1% for physicians. I came of age when getting a financial education meant reading Money magazine and Kiplinger’s and studying how to invest. I started with investing when I was in high school and I decided Vanguard was the way to go back in the 1980s. That was after making the mistake of buying gold bullion when I was 15. I inherited $30,000 from my grandfather when I was in college. This board is anonymous, so I can say here what I cannot say anywhere else in life. My net worth is around 40M. It’s mind boggling to write that number down. It doesn’t feel real. Although my friends, colleagues and extended family know I am successful, we practice stealth wealth to a degree. Those around us likely think we are millionaires, but they simply have no idea!
Good decisions were to live well but to do so carefully. The first million in savings and investment was the hardest. It took many years to get to where the investment growth far exceeded the earned income. We drove nice Honda’s and Toyota’s in the early years, and we kept them up well. I also worked a bit on the side for extra money in the early years. And finally, I also started a business which has become quite successful. The compounding effect accelerates things once the numbers start to get up there. We now live lavishly for us, which means spending perhaps far less than 10% of what we could spend. That means big checks to charity. $35,000 for a nice trip abroad. Multiple Tesla’s in the garage, running on solar power.
We mostly fly business class and first class, and we will be traveling to Asia and Europe this year, perhaps New Zealand as well. I’m still seeing patients part time, on my terms. We are working on giving much more to charitable causes. By the time RMDs start, the tax deferred account, the taxable account, the real estate portfolio, and the value of the business that I started will each individually be well into the 8 figure range.
We got to this crazy level of wealth because each and every one of the multiple pillars of success all did very well, saving, investing, stocks, real estate, and a start up business. I paid attention to taking care of my marriage, my family, my patients, my business, and my finances. I’m incredibly fortunate and my current need is to continue to work harder on giving back to others, to share our good fortune as far and wide as we are able.
Very inspiring, thanks for sharing.
Jim, this is a great website which I just discovered! I wish I had this in my 30s!
You’re welcome! I also could have really used it when I was finishing residency.
Hi Ziggy,
Thank you for sharing your amazing story. It’s indeed inspiration to learn of a life so well-lived.
You did not state your age. Will you please tell us your approximate age and when you cut back to working part-time.
Thank you,
Roger
Mr. Ziggy, your story portrays a man who stewarded his resources well. Who sat down, planned, saved up early, invested, and build his estate and legacy well. Anything you manage well tends to grow well too.
Hi Ziggy,
Thank you for sharing your amazing story. It’s indeed inspiration to learn of a life so well-lived.
You did not state your age. Will you please tell us your approximate age and when you cut back to working part-time.
Thank you,
Roger
Ziggy,
Some consider (non-Roth) IRA’s/401k’s to be a liability rather than an asset as they are ultimately taxed at our effective income tax rate upon withdrawal rather than at the capital gains tax rate. HSA contributions are optimal tax vehicles but are of course limited by small contribution limits. I could still consider Roth conversions, but with a few $M in IRA’s already and being mid-career those probably will have limited effect on future NW.
Fidelity retirement tools estimate that if I work to my full retirement age with continued contributions to retirement accounts and at average market returns, I will be withdrawing roughly $3M-$4M/year at RMD age of 72. I trend better than average given the cushion afforded to higher risk, higher return investments. That’s a hard but inevitable tax bill to swallow.
Since that’s still more than two decades away, I was considering ending IRA contributions at this time and investing instead more in my taxable account, but every year I chicken out of doing that, short-sightedly opting instead for the immediate tax deferral given a 7 figure income. At least the growth is tax deferred as well.
I always wonder what I would have done differently knowing what I know now. What do you think/would have done? I’m looking at how to guide my kids, currently maximizing Roth contributions at their income level.
FYI I also went the business ownership, strategic real estate, maximum savings and generous charity route. Seems to be a good course, along with the spouse for life!
That’s a great combo. Entrepreneur & MD, creative and smart.
THis is great advice. Prenuptial agreements are a must in an age where over 50% of marriages end in divorce. Im sure all those failed marriages started out with great promise. LIfe gets in the way so this is a way to protect yourself if there are disparate incomes.
At 55, divorced, I have a Net worth of over 7 Million. I can attribute this to a few things.
1 . Prenuptial agreement
2. Dumb luck- I started investing in the early 1990s, and if you look at the graph of the S&P 500 it has gone up logarithmically. I have also owned real estate in New England where house values have gone up dramatically, so I have always made money with real estate
3. I invested in Vanguard, and only index funds like Total Stock, S&P , small cap value, REITs
4. I mostly tried to avoid dumb financial moves. I was very close to buying a whole life policy in my early 30s. Thank God i wisened up and said no. I never bought a boat or a plane. I never speculated on stocks (ok, a few times, but thankfully never lost a significant amount of money)
5. Even though I make a mid 6 figure income, I always live frugally. I dont eat out that much, I dont spend exorbitantly.
in fact, I live mostly like I did when I was in school with no money. I just have a really nice house and a really nice car.
6. I NEVER used a financial advisor. There is a weird image in our society of white males in nice suits, that if you somehow wear a nice suit, you are smarter than everyone else. I always knew that was BS. I have amassed enough wealth in Vanguard that they give you free financial advice anytime. I do use that.
7. I am mostly allocated to equities. 40 % large cap, 20 % mid/small cap, 20% international, 10% REIT. I have enough in cash/Bonds to ride out 3 years of living expenses in case of any bear market,
Thats about 5%. And finally I have about 3 to 5% in what I call crazy money. I do own individual stocks, such as Tesla, I buy old vintage watches which I wear and enjoy and also travel money.
The good news is that divorce isn’t 50% among docs. More like 25%. And among 2 doc couples, only about 10%. Still a major financial risk though.
Great post!
I have a question. Is it wise to max UTMA contributions (30k per year) for your children ?
Thanks
Depends on your goals.
Lots of great points in this article. My wife is an OB, she has no time and absolutely no interest in thinking about financial planning. Thankfully, I use my business background to manage her portfolio:) Many of her friends are hesitant to plan & save for retirement. There is plenty of financial education available, just need to get them to pay attention and use it for themselves. Most docs are really smart to make great decisions but lack the financial understanding to take wise actions.
One great tool that I don’t see many high-income earners are using is Premium financing. We used this tool to double our net worth and increase tax-free retirement income and protection. Why use your savings when you can leverage banks’ money as most multi-millionaires do. This is one of the plans we use for ourselves. Hopefully, it can help someone.
https://www.myilia.com/agent-link/3edad95f-31fc-4627-ae79-a390edb5f997
That topic has been addressed on the blog in the past: https://www.whitecoatinvestor.com/financing-whole-life-insurance-premiums/
I have learned over the years that the word ‘data’ is plural – Data are , not data is
And I have a NW of $18 million in my 60s and I’m not a neurosurgeon.
The thing about generating wealth is that it can be as stressful as being broke. The process at least.
How many of you will be satisfied with some arbitrary amount? $1 million? $ 2 million? $10 million? $50 million?
Where does it end?
I expect to have $10 million by retirement but when I see others with much more than that, the $10 million seems like I somehow failed at life.
The bigger issue with financial literacy and generating wealth is to first understand who you are and what you want out of life and to stop paying attention to the next person.
Yes, it’s a good idea to define “enough” a priori or you might not recognize it when you get there.