By Dr. James M. Dahle, WCI Founder
There are lots of differences that a dual high-earner couple faces in comparison to a single doc, a single earner couple, and a couple with one high earner and one low earner. Some are advantageous and some are disadvantageous. Let's go through a few of them and I'm sure readers will add in a few I forgot in the comments section.
Double Medical School Loans Means a Bigger Hole
One of the worst parts about being a dual high-earner couple is that you start out with a much more negative net worth. If the average med student graduates with $200K, the average couple may have $400K. That might be $600,000 by residency graduation, and that's average. If you're above average (which you are likely to be since you had no working spouse to help support you in school) that could be $800K or even $1 Million! That debt burden alone prevents many couples, who would prefer to have one of them stay home with the kids, from doing so. They simply both have to work in order to make the loan payments.
Dual Income Means a Bigger Shovel
Luckily, that bigger hole is typically matched by having a bigger shovel. Sure, you might owe $600K, but you also may earn $600K. Dual income couples can throw gobs of money at student loans every month. Imagine living on only one physician income and throwing the rest at the loans. Or living like residents. Or even like A SINGLE resident. A $600K loan goes away very quickly when you're throwing $30K at it every month. But here's what's cool. Even after the student loans are gone, that $30K can go toward paying off a house or reaching financial independence just as easily. That big shovel doesn't go away when the student loans are gone.
You Don't Need Two Doctor Houses
Doctors like to live in doctor houses and doctors and their spouses like to drive doctor cars and they like going on doctor vacations. But a two doctor couple doesn't need two doctor houses nor four doctor cars nor double doctor vacations. Like any other couple living together, you might get to save almost half of the living expenses!
Higher Childcare and Household Costs
Of course, that all goes away when you have kids. A one-earner couple saves all kinds of money on childcare costs. The stay-at-home parent also likely has more time to shop wisely, prepare food, care for the house and yard, plan vacations, and otherwise maximize the household economy. Two docs working 60+ hours a week will either not do those things well or have to hire them out. Child care is particularly expensive, and high earners lose out on the tax benefits of paying for it.
Higher Taxes for Dual Income Couples
This one is particularly painful. While for many people there is a marriage tax bonus when you get married, most dual-high income couples that get married face a marriage tax penalty. Not only does our progressive income tax system penalize higher-earning couples by making the entire income of the second earner taxable at the marginal income tax rate (or higher) of the first earner, but they also have to pay two sets of payroll taxes, for much less than twice the benefits. Upon realizing just how high this penalty is, many dual-income couples decide to have one of them stay home with the kids either full or part-time!
More Retirement Accounts
Another great aspect of having a second earner is the availability of additional tax-protected (and usually asset-protected) retirement accounts. While you only need a spouse, not a working spouse, to do a spousal Roth IRA and a family contribution to an HSA, other retirement accounts, such as a 401(k), require an actual second earner. This is especially useful if the retirement accounts offered by your employer stink. You can preferentially max out your partner's options and live off your earnings.
Complicated Residency Student Loan Management
Student loan management as an attending is pretty straightforward. If you're working for a 501(c)(3), go for PSLF. If not, refinance your student loans and pay them off over 2-5 years by living like a resident. It is also pretty straightforward for most single residents and residents with a non-working spouse—enroll in REPAYE.
Trick question — How many people in this picture earn income?
But when you're married to another resident or a high earner, things can get really complicated, really quickly. REPAYE might be right. Refinancing might be right. In fact, even IBR or PAYE might be right, particularly if you elect to file Married Filing Separately. While filing MFS often increases your tax bill, it might also decrease your required IBR/PAYE payments, increasing the amount available for PSLF. If you are in this situation, this is a good time to get some professional student loan management advice.
Working the Benefits
Just like you can take your pick of retirement accounts, you can also take your pick of benefits. For instance, if you are self-employed and your spouse is a university employee, use the university health insurance.
Saving on Insurance
A lot of dual-income couples have asked me about their need for term life or disability insurance. While this depends on your individual situation and desires, one possibility is for each of you to serve as the other's life insurance and disability policy. Obviously, that won't help your kids much if you are both killed or disabled in the same accident, but you clearly have less risk than a single-earner couple. At any rate, you should be able to get away with less insurance than a single-earner couple.
As you can see, a dual-income couple has both financial advantages and disadvantages. Try to minimize the impact of the downsides and take advantage of the upsides to improve your financial situation.
What do you think? What did I miss? What advantages and disadvantages do you see for a dual-income couple? Comment below!
Though I may ruffle some feathers of those who are more traditional, I have decided to skirt the issue of the marriage tax penalties (which in my case would result in ~40K more in annual taxes) by choosing to wed without signing a legal document. Both my soon-to-be spouse and I earn 6 figures but there is quite a large discrepancy in our incomes. After crunching the numbers with our CPA we decided that the tax penalty was a huge deterrent to legally marrying. A piece of paper will not make us feel any more married or committed than we already are.
Agreed. To us, it mattered far more that we were married in the eyes of God, ourselves and our family than it mattered that the government thought so. A few legal documents later pretty much created the marriage minus the taxes and government recognition.
Note to WCI:
I am logged in as “CM” and have posted often as “CM,” but I did not write the post above.
Apparently, two of us have an account as “CM.”
Can you fix this?
Thank you,
Another CM
There is no “account” associated with blog comments. It’s whatever you put in the box. For instance, you could start putting “The Original CM” in the box if you like. This is part of the issue with using initials.
He is not even the Original CM. I am. 🙂 The OG CM. Straight outta not Compton.
this had me laughing.
This seems rational to avoid the marriage penalty for high earners.
My question is how would this affect estate planning since you can’t form a marital trust and several states have low estate tax thresholds.
I suspect a lot of what you save in income taxes would then be paid in estate taxes.
Good point. I have an estate and trust and my significant other is one of the beneficiaries. He is also my DPOA. Am I wrong to assume that because I have an estate and trust he won’t have any major estate taxes even though we aren’t legally married?
You probably won’t have any estate taxes whether you’re single or married. Most people, even high earners, simply won’t have large enough estates. But I can’t answer your question without more information. Since you have a trust, I suspect you have an estate attorney, so I’d ask him/her that question.
The official answer from the estate attorney:
paying taxes on inherited property where there is no spouse is solely a function of the size of the net taxable estate. If under $5.49million, no tax. A spouse, however, can inherit an unlimited amount from his or her spouse with -0- tax. So, where a couples’ combined wealth exceeds $5.49 million, it might make sense to be legally married to increase the exemption to $10.9million combined.
I fully agree. Be married in your hearts and in your minds but not legally. It is worth a fortune in tax savings. $15k/yr in tax savings invested is worth $1 million after 30 years at 5% real growth. That is well worth it in my eyes.
And the just legally marry after peak earning years or when one goes part-time. That way you benefit both ways.
For those willing to do it, you could make this determination every year after estimating your taxes both ways! It makes me sad to think that someone might actually have to make a law to prevent abuses like that.
Would you be able to clarify this further in terms of your general respective incomes? I’ve in a similar situation but even with 2 high earners have calculated a difference of 5-7k per year. Painful, but not as bad as 40k.
The New York Times has an interesting interactive graph that you can use to evaluate a federal tax penalty based on respective earners. Even for 2x MD couples in the 200-400k range each it looks like a penalty of 10-20k total on the federal tax side, with the max penalty of 35k for two very high earners.
https://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html?mcubz=0&_r=0
Another good calculator for business vs W2 income allows single vs married filing jointly and separately including state taxes is http://www.tax-rates.org/income-tax-calculator/ . This was the website I used for my calculations. However I didn’t go to a professional accountant and now I’m wondering if I should before taking the plunge. 40k per year extra savings would be well worth skipping a legal certificate!
Thanks for sharing the links.
I wonder if we’ve named this “penalty” entirely wrong. It’s not really a “marriage” penalty. It’s a “dual-earner” penalty. You’re being punished for both working, not for being married. Just getting married, where only one is working, is a huge benefit tax-wise. Just a thought.
Semantics.
If you are a high earner and then get married it is a marriage penalty. You are being penalized for getting married. The Obamacare surtax of 0.9 % for example hits at $200k each when single or $400k but $250k when married. That is a tax of $1350 just for being married and making a good income.
Okay, that one’s a marriage penalty. But the cap on SS taxes is a penalty on dual earners.
The “dual earner” penalty might not sound as bad as a marriage penalty, but it highlights the sexist nature of the tax code which assumes the wife does not work and encourages one spouse not to work.
Not necessarily. There is no penalty for sending a woman to work and having the man stay at home. Nothing sexist about it. Although we all know that 90% of the time it’s the guy going to work. And I’m not entirely convinced that encouraging that with the tax code is bad. At least 100% bad. There are great benefits to stay at home parents, both for the family and society.
For me personally my soon to be spouse is a firefighter, not in medicine and earns ~120K annually. I make ~400K.
For simplicity sake, here’s how the #s shake down for federal taxes:
Single: I pay 132K, he pays 33K = 165K
Married Filing Jointly: We pay 205K
Married Filing Separately: I pay 158K, he pays 30K = 188K
Obviously it’s much more complicated than that w/ deductions, etc… Our individual situation is also tricky (we have separate homes, he splits custody of a 5 year old…). But the CPA who I trust was adamant that overall we’d see a pretty substantial tax increase.
And I hear what WCI is saying about his marriage being way more important than money and representing more than a legal contract. And yes, it is SO much more than a piece of paper…and that’s exactly why I don’t see the added benefit of signing a piece of paper to make my marriage any more valid. We are committed to each other and have a very nontraditional union. The piece of paper wouldn’t add any value to us personally. But of course, it is a personal decision and I fully understand the flip side. For others that piece of paper and some extra money in taxes makes sense and perhaps strengthens their commitment to each other.
You can call your union anything you like, but I’m not sure it’s accurate to call it “marriage” without the piece of paper, is it?
Webster:
At any rate, marriage brought on A LOT of expenses for us, the taxes make up only a small part.
I love that interactive graph. I’ve posted it a few times on Bogleheads comments.
What I thought was interesting is, although you hear so much about dual high income couples getting hit, it also really hits dual very low income couples who definitely can’t afford paying extra taxes.
Depending on the state you’re in, you may be considered married for tax purposes, even if you never obtained a marriage license. This is a pretty variable topic, state to state.
Not that many states have common law : http://www.unmarried.org/common-law-marriage-fact-sheet/
We are not married either, not just for tax purposes tho. Ex wife and son/child support stuff I don’t want to ever deal with (so waiting until son is done w college). But yeah I’d bump up my fiance at least 1-2 tax brackets if we were married.
Savvy to consult CPA prior to getting hitched. I don’t think we even gave the tax implications a second thought.
Answer: all 6 earn an income.
That’s right. Of course, 100% of 4 of them goes straight to retirement!
Awesome. Both my preteen and teen do the same. It’ll add up by retirement age!
Do these couples keep separate investment accounts. Is this normal or practical
I ask because my daughter is in a bad marriage
Both mds
I recommend a postnup. And for the rest of us a prenup for our unmarried kids or us if single. AMongst our separate retirement accounts and the house and joint accounts, in a decent happy 27 year marriage, I keep a separate mutual fund. Partly it would supply the weird charitable and family gifts my will specifies (my husband’s will lists none), partly it’s a bug out of the marriage fail safe. Not that it could be ignored in a divorce, but at least he can’t empty it if he tries a hide all the money pre divorce ploy (though he’s the one who needs to worry about that since I manage all the accounts). I like to think I’m trying to put in it about as much as we’re spending on his more expensive hobby, sailing. I also have my name on that sailboat worth more than many houses so he can’t sell it without me knowing. (And vice versa!)
Depending on the state though separate accounts means little at a divorce, unless it is accounts they held before marriage. In some states (and would change depending on where they lived at time of divorce) not mingling assets would let one claim the other spouse had no claim to it. Residents of Texas earlier, my husband signed a disclaimer to some family property I inherited/bought so he has given up a claim to it in divorce or the right to fight over who I leave it to at my death (my kids, but if I had none, back to my siblings, not to spouse). Had he not he’d be entitled to half of it at divorce.
Similarly we’re worried about dying young enough to leave our kids a lot, and then a SIL/DIL divorcing our kid and getting 1/4 our fortune. Might form a trust with the first marriage to block this possibility. Have a friend who treats her SIL/DIL same as her kids in her will; I’ll need to know mine a lot better before I’d feel that way or even agree they’ve ‘earned’ half of any amount we leave each kid. I’d like my kids to have a prenup disclaiming a share of inheritances left to the specific person not both in a couple. Might cost my kid if her spouse has rich relatives but it’s fair either way. If they stay together they’ll still get to benefit from the inheritance.
Another selfish strategy (if the daughter agrees the marriage is bad) is NOT saving much until out of the marriage or at least not sacrificing just to increase the divorce settlements. IE now might be a better time for her to cut back on hours than after a divorce (and might even improve the marriage), or as my dad says when he flies to see me and his grandkids “Your step-mom hasn’t curtailed her spending to fix our budget problems so why should I feel I can’t afford to come see you?”
Anyway my mom worked legal cases in big big money hiding assets from the opposition divorce cases- I recommend your daughter familiarize herself with family and his (and her) finances and make sure if possible he can’t empty accounts easily without her knowing or agreeing.
I’m a little late to your comment here, but you should consider engaging your estate attorney again to think through how to handle accounts that you intend to pass to your kids. You are correct that each state will have different laws that govern, but inherited assets are generally separate property that belongs to individual who inherits, and not “community” property. This is true even in community property states like Texas.
BUT! in many cases you can pass your assets into trusts that are designated for each of the kids, and the trustee has to follow your instructions on how the assets are distributed. For example, you can instruct the trustee to not distribute the funds until the children are 30/40/50 years old, and/or to distribute the funds based on items you believe to be valid (i.e., paying for children or grandchildren’s education; purchase of a primary home; distribution of small nest egg upon birth of grandchild, etc.). You may find some peace of mind if you know that your assets will be distributed as you so choose. It also avoids a sticking point of you insisting on a pre-nup for your kids.
You shouldn’t think you are being “selfish” by passing your assets to your children and not jointly to your children and their spouses. Seems to me to be very rare to pass an inheritance to a child and his/her spouse.
Great post. Some points add: there is minimal “unspoken for” time. Everyone with kids can sympathize with this, but for a dual income (especially dual physician) couple, it’s even worse. The only unassigned time (when not on call) is 9:30 or 10-11 pm (usually spent catching up on the backlog of the daily emails or reading WCI/PoF posts) and 5-6 am (usually spent working out for us). Even weekends (when not already on call/rounding/traveling to a course or meeting) are spent running errands/getting groceries/cleaning up house/yard from the week/going to church. No time for golf with the guys or nails with the gals.
In our experience in order to make it work you have to have three things:
1. Trust- undying belief/trust that your partner is doing everything they can to better your family (just like you are).
2. Communication- CONSTANT. We have outlook/email calendars, physical calendars in the kitchen and on the way out the door, and we text/email/call each other multiple times per day with schedule changes/updates etc.
3. Sacrifice- You are both going to have to sacrifice family time or career advancement or both. The amount/percentages of each is different for everyone, but it’s going to happen and it’s going to happen a lot. It may mean you don’t get to do a lot of things you want (like go to a really cool CME conference in Park City), but that’s the way it is. This one is the hardest one, especially for people who have worked their whole lives to have a successful career. To be able make this one work without a lot of arguments, see numbers 1 and 2.
Life isn’t easy as a dual physician couple, but there a lot of positives as well. One of which being that it makes seeing patients and being a physician one of the easiest parts of your day. Learn to enjoy it.
That was a really nice comment- thanks for sharing. So true.
Enjoy this comment as well.
One great advantage is having way more money than you need. Your shovel is excessively large. With such a big shovel, you can easily back off on work hours to have more family time. A two physician family is very taxed in the family time area. Why not take more time off or each work ¾ time or some other arrangement. Enjoy the fact you have such a high income and back off a bit to enjoy your life more. You have more options than single earner families.
That’s probably good advice once you’re both established but that’s not as easy when you’re first starting out in practice, as the original poster/tweet questioned.
Not too many practices/hospitals are keen on a brand new partner starting out at 3/4 time or taking less call, etc. Plus there are loans to pay off, new mortgage, new/young kids, etc. Takes a little while before you feel like you have “way more money then you need,” even in a dual income household. Maybe you get to the position you describe faster though.
Not too many employers or partners are keen on long-established physicians cutting hours or decreasing call.
This is not an option for everyone.
Another CM
That option, however, often miraculously appears when the alternative is to quit completely.
A *third* CM agrees completely. 🙂
As a 2 MD couple this has been our experience. Admittedly just starting family but at some point the shovel is so big that problems go away.
We had 2 years where we were both full time (EM+Anesth) and I had 3 years of attending before that. Able to get way out ahead of the curve in terms of retirement, house, no student loans etc.
Wife will cut back a bit now that kids are coming and full time nanny will end up being <1 month gross pay.
We are lucky, very lucky.
My advice to 2 MD families is to work like dogs for a few years after residency. So much more exciting to be welcoming kids into a house with basically only a mortgage.
That’s wonderful when it works out, but fertility treatments are also expensive if you wait too long…I mean, if you’re 35 when you finish a pulm fellowship and wait 3 more years to start and want 3 or 4 kids…it’s going to be problematic.
good point, that said i’m guessing the # of docs who pursue subspecialty training and also want 4 kids is a small intersection on the Venn diagram.
my wife is 4 years younger than me, so we had the leverage of my 3 years as an attending before she started practice.
we’ve also managed to keep our lifestyle such that we could do it not on 1 salary but we could make it work pretty easily on like 1.2.
Ahh…the younger wife. An excellent strategy, at least for the financial aspect. But there is still the issue of making sure you’re working full-time for a few years after training in order to solidify skills. I suppose with the older guy who has already been through those few years after training HE could be the stay at home parent for a while allowing her to get those critical years in while still starting the family relatively early.
And you’re probably right about the Venn Diagram. It’s a lot easier to get 1-2 kids starting at 38 than 3-4.
What state are you that a nanny is <1mo salary?!
Nannys in westcoast cities are minimally 2 mo pre-tax salary.
IL.
her gross vs our gross right?
nanny pay here is $40-50k for full time.
2 MD we will be a bit over $500k after she cuts back.
so closer to 1 i guess
Thanks for posting this. My colleagues and I always mention how your posts (and physician on FIRE) assume there is a woman watching the kids and childcare costs don’t enter the picture much. More than 50 percent of students in med schools are female these days, and while we don’t make 50 peecent of the full time physician work force, the amount of work we have to do to care for kids, home ‘economics’, and work outside is undisputed. I could have paid off my student debts so much quicker if we didn’t have one kid at home with a nanny and another at preschool for 4 years. Also thank you for the discussion on disability insurance. Now that my husband is the higher income earner and I have the pleasure of working 50 percent, I no longer carry disability insurance above what’s offered to me at work, whereas he has the higher life and disability insurance.
One difference for dual physician couples is that you have to deal with not one demanding medical career but two demanding medical careers and the associated marital stresses that come with it. I think the data shows that dual physician couples divorce less than other couples, but two physicians working hard, especially early in their careers/training, can pose marital risks that need to be managed. For us, having one of us work part-time was the best solution.
The brutal marriage income tax penalty can’t be denied. For my husband and I it is $20k- $30k annually. Also true that during some of those years the paper was the only thing holding us together. It’s worth something. The empty nester years are timely for exploiting the big shovels. Until then, I highly recommend one or both spouses working part time.
BTW, a combined income of $17k is jointly taxed worse than at the high end.
May I ask a bit of a personal question?
If you know that the tax penalty is worth $20k-$30k why not get a paper divorce and use the extra money to make your life easier? Such as a nanny or part time chef/maid?
I’m not jz, but I can answer for myself and my wife. Our marriage is far more important than any amount of money and represents far more to us than a legal contract with the state. In fact, it is so important to us it makes us sad to see others look at it as merely a piece of paper. In our philosophy/religious views it is quite literally the purpose of our lives.
Plus, for most of our marriage we have enjoyed a marriage tax benefit. Our marriage/dual earner penalty is relatively new since she began working for WCI.
WCI,
I completely understand your sentiment and fully respect it. For us, the government definition of marriage is meaningless. It is what is in our hearts which is so much more important which is why we can forgo any legal documentation of marriage. If we wanted to look on the religious side as well, we would consider us married under the eyes of God. After all, we had a ceremony in front of witnesses. I’m sure you would agree that a US legal document has nothing over the religion. Also, by having more money you can always tithe some of it to the church which I am sure would be a far better use of it in your eyes.
The reality is the US government wanted to incentivize marriage and therefor created financial incentives to be married. Back in the day women did not work or worked part time and it made marriage a tax benefit for high income men and their families. Today it is not the case and our tax code has not changed with the times. Odds are it will never change considering it will be viewed as a tax break for the rich. Therefor we opt to be married in our hearts, our minds, and in the eyes of God while at the same time saving tens of thousands of dollars in taxes.
Your partner chose a lower level of commitment to you. Report back in 2-3 decades and tell how that worked out.
That was kinda rude. Almost like you wish for us to separate.
We just don’t see how a paper document says anything about commitment. Lots of people have paper documents expressing commitment and get divorced. Maybe actually loving someone and expressing commitment through actions means a lot more but I guess I’m just a fool with more money.
That was a pretty brutal and unnecessary comment. The piece of paper I had on my first go round didn’t matter at all in the end and it shouldn’t be the glue that holds a couple together. But that’s outside the scope and purpose of this blog.
EnjoyIt, I’ll be the fool with you. In 2-3 decades we can buy a really nice bottle of wine and toast with our spouses over the amount of money we’ve saved in taxes while remaining happy and committed.
🙂 cheers 🙂
An excellent point for defenders of marriage as a societal institution. Legal marriages falling apart is a much larger problem than committed unions not doing the paperwork.
Totally agree with those who are not getting married legally. My personal libertarian position is that government should not even be involved in marriage.
As for religion – many state sanctioned marriages are not even considered valid in some religions, for example, in mine if a special document called a Ketubah was not done. All that is required for my religion for a marriage to be official with respect to my religion are two witnesses, the ketubah and a ring or some valuable object given to the bride. No government intervention necessary. And divorce is actually separate from secular divorce. Those who are divorced in the secular court might not be divorced in the eyes of the religion if certain procedure is not followed.
Amy, you and your “spouse” are entering into an arrangement, but it is not marriage. Enjoy your arrangement, but do not insult our intelligence.
my daughter knows nothing about his finances and if he is supporting his parents or putting money in another hidden account
YES create trusts so your sil or dil cannot touch your assets ITS CRITICAL!
Not sure how paying less tax would lead to paying more tithing. I’d be able to save more though.
While I agree that far more women work outside the home now than decades ago, it’s a highly politically charged discussion about what behavior should be incentivized.
One thing you mentioned made me curious, are there organized religions out there that will do a marriage ceremony without a marriage certificate from the state? I mean, obviously anyone can have a ceremony at any time but I’m just curious which religions might do it routinely.
WCI,
You can have a religious ceremony outside of the United States where the paperwork does not transfer to the US government.
Aside from religious/moral implications:
#1 – It’s a very unsexy proposition, not going to be a fun series of conversations to have with your spouse. Many spouses don’t even want to think of a divorce, paper or not.
#2 – Getting a divorce is very expensive, long, arduous process, even with willing participants
#3 – You give up many legal advantages that marriage provides. Doing the estate planning necessary to replicate the benefits of marriage without a marriage will be expensive and may not be completely possible.
#4 – Family and friends won’t understand, will make many assumptions, think something is wrong with your family, etc.
#5 – Things like the marriage penalty come and go every decade or so as the tax code changes. You’re going through tremendous hassle and you may end up worse off with a future change in the law.
Craigy – Estate planning for unmarried couples isn’t onerous at all – not like being married means ONE will, etc. You still need your own will, POA etc. We did it and was easy. Not unsexy at all, fiance has no issue with us not being married. Legal advantages – unlimited gifts, inheriting certain retirement accounts, social security are the big ones for sure. I’m more in the delaying legal marriage camp then never getting married. Save the date – 2027 😉
I’d be interested in hearing your explanation of the $17K figure. You mean the marginal rate on the next dollar? Or the effective tax rate (which is obviously wrong)? Or the overall total tax paid (which is obviously wrong)? And are you talking about a total income of $17K (obviously wrong), an AGI of $17K (obviously wrong), or a taxable income of $17K?
Look at the NYT table cited above. A couple, each earning 8K annually = 16K total , will pay a 4.3% penalty for the marriage. A couple each earning 415k annually = 830k total, will pay a 4.1% penalty for the marriage.
In ref to the marital tax: Here’s an illustrative scenario my in-laws live out. He worked, she worked. They both paid SS taxes on all their income. They opt now for 150% of his higher SS payout and also get his Army retirement pay. Their neighbor rose to a much higher rank, perhaps due to his always at home wife supporting him en route to his stars (General). They (He) paid SS taxes probably on all his salary, but only since his pay would be well under that of the average doctor of his time. This couple now gets 150% of his much higher (than my FIL’s) SS payout, even if they earned only as much as my in-laws together for SS purposes.
I told my MIL when she explained this unfairness to me that: they should divorce, and they should marry foreigners, to get them green cards but no share of the increased SS payments.
It is kind of ridiculous that when you file separately $250k is the 39.7% threshold for both. Payroll taxes are not very much though.
Also, do many doctors work part time in their thirties? (From someone potentially interested in marrying another physician.)
I do know a few who have gone part-time right out of residency, but I think it’s a good idea to be full-time for at least a few years to solidify skills and reputation.
I went part time straight out of residency. I think outpatient psychiatry is especially suited for part time work. It made a huge difference in our family’s quality of life. I’m 11 months in to waking up 2-5 times a night with a baby and believe me, I would not be doing any patients a favor working full time right now. The only reason my life is manageable is because I have the flexibility to schedule my patients as I please. I think it’s important to look at your individual situation and figure out what works best.
I’ve known a few who went part time. Some to have babies (men and women), some to have side hustles, some because they wanted to travel.
Re: the marriage tax, my fiance and I have been together for 13 years without marriage partly because I too felt it’s just a paper, meaningless, why bother just to pay extra taxes, etc. However, there are also non religious benefits to marriage, especially in certain states where domestic parters, common law, etc are not recognized. For instance if one of you get sick, a spouse can take FMLA; a partner, common law, POA etc may not be able to in certain states. So while I may be getting taxed extra this year, there are some other benefits too.
Good point.
“Re: the marriage tax, my fiance and I have been together for 13 years without marriage partly because I too felt it’s just a paper, meaningless, why bother just to pay extra taxes, etc.”
My wife and I were together 10 years before we married. I felt the same way (as above), and we married primarily so she could have my employer-sponsored health insurance and my (larger) Social Security benefit (after my death), as well as other state-sponsored and social benefits of marriage.
However, being married feels different. It’s better. That’s a surprise to me.
Another CM (accept no alternative)
I think all the CMs should PM each other and decide who is CM1, CM2, and CM3.
That’s a good point about employer-sponsored health insurance. My employer got rid of domestic partner coverage when everyone was able to “make it legal”
Like most policy changes, helps one group and hurts another (the opposite gender domestic partners not interested in marriage.)
Several recent articles in newspapers have been discussing how marriage is becoming more the domain of the wealthy and upper middle class, and less the domain of the lower middle class and poor.
Yes, I’ve seen some pretty strong data suggesting the decline in marriage is responsible for a significant chunk of the growing gap between the wealthy and poor. Rich people still get married about as much as they used to. Later in life, but they still do it. Among the poorest, it isn’t even the norm to get married at all. Here’s a good example: https://www.usnews.com/news/blogs/data-mine/2015/10/26/marriage-and-the-growing-class-divide
Coming Apart by Charles Murray is a fascinating read on this topic.
+1. I read that book when it was first published, but have thought about it frequently since the election with all of the post-mortems from the Belmont-types trying to understand the Fishtown-types.
I actually read the book last month. A little heavy on the endless statistics, but interesting nonetheless. I had a bunch of my family members take the quiz that’s supposed to tell you that you’re an out of touch upper class person, and one very middle class couple scored about what the rest of us did, so not sure it’s really a validated quiz.
I am in a dual physician marriage with kids. It is definitely a challenge and has taken a few years of practice to keep our goals in line. I agree with some comments in that communication is one of the most important aspects of the marriage. We continuously re-assess our situation, goals and how previous decisions area affecting our current situation.
Some of the challenges as described above are the mountain of debt we accrued from med school(>500k), lack of time to spend with family and each other, aligning career and family goals, then being as flexible as possible while some goals and/or situations may change.
We kind of floundered financially initially until I found WCI, at which point we designed a 5 year plan. We are almost done with that initial plan and a negative net worth has become a respectable positive net worth and we can finally see the light at the end of the tunnel- thanks Jim!
Concerning work hours and balancing family time, we both work minimum hours but my wife is 75%. She has remained at that level to keep benefits- both for retirement and healthcare. In the future she will probably work less as our debt goes completely away. I work full time but I never pick up extra shifts unless it is absolutely required by my group. We have a babysitter that at times is probably more like a nanny and also family helps out with childcare. We both get the daily opportunity to send the kids off to school and/or stay at home with the youngest. We were able to avoid daycare for all our kids and raise them ourselves with the help of others. We definitely spend a lot of cash on the babysitter but in the end it is worth it. The first few years with infants/toddlers were tough as we worked opposite most days of the month. We weren’t able to spend a lot of relaxing time together but as a trade off we were able to spend any time we weren’t at work raising our children.
I think one of the main things that has helped our situation is that we approach everything as a 50/50 share. We have a few jobs that each of us almost always do but overall we share the workload evenly. We both cook and clean, we both do the laundry, we both are involved with the kids’ school, we both suffer through the nightly task of putting the kids to bed, etc. By being involved in all the aspects of our family we respect each other’s time and effort.
Concerning the main financial issues in a dual income marriage, we never really looked at the taxes as an option. We of course have no intention of paying extra but at the same time we never considered putting energy into avoiding a marriage certificate to reduce our tax burden. I think we do enjoy the benefits of a reduced need for life and disability insurance and ‘larger shovel’ when it comes to debt. We however were initially annoyed with the amount of debt we had when we started our careers with below average salaries for our specialties. Over time we have stuck to our guns concerning family time as our main focus. The salaries have improved for multiple reasons and we now are average or above for our specialties and location. We constantly have to avoid ‘keeping up with the Joneses’ as we know several other physicians and their families.
Overall, we have been really lucky as we have an excellent marriage and both enjoy our careers. We both work so that we can enjoy our family. We plan to retire or go part-time early in life so that we can spend more time with family and volunteer more in the future.
We are also dual income and both full-time with call so having a well-organized schedule is the key to survival. We staggered our training though (not on purpose), which helped. I was an attending when my partner was a resident which kept the total loan burden from becoming the huge pits that some dual income MDs have. I would reiterate the difficulties of dual income including:
1) Precious few hours to do normal things like being with the kids (you can only out source so much)
2) Very expensive childcare. We are in HCOL area and even with one (of 3) in public school our child care costs for 2016 was 68k — that’s not a typo. No one plays piano/speaks 3 languages/does sports/wears J&J. We have two in part-time pre-school (glorified daycare) but that cost will still be replaced by before and after school care once they are in public school. We have an au pair now (until Trump says otherwise) so 68K is an improvement compared to when we had nanny.
3) Demands of physician career, it’s a tough work-life balance. This has caused some resentment as someone has to be the one to cancel clinic, say no to activities/responsibilities that might boost your career, etc. But compromises in some areas are necessary to make it work because neither of us is ready to give up our respective careers.
If you don’t have kids, you’re golden!!!! Nah, we love them, but man……
As the wife in a dual physician couple, married 25 years, three kids through college here’s what worked for us:
-One income automatically is invested (we were lucky to have minimal student loans)
-After nine years in academics moved to private practice in a LCOL area
-One of us( me) was ok with working a bit less (Wednesday’s off, little call) at a major paycut , but really important to have time for kids. They require your time, taking shortcuts here will have a negative impact in so many ways. What’s the point if you don’t see them? Now that they are out of the house I am back to full steam and adding new skills in my field. Because I want to, I don’t have to -we are FI.
-Spend money where it matters-a good sitter and her benefits, cleaners, lawn help.
-Live close to grandparents
-Pay off the mortgage as soon as feasible-10 years for us-LCOL helps greatly!
-Make memories :We took vacations that were so ambitious I look back can’t even believe what we did. Best of all the kids remember them!
I really appreciate MEA & christymmd comments. It’s practical and family oriented, which is exactly what we are looking to implement in our family.
I am a hosptalist and my wife is pediatric cardiologist in early career, and FI is important; however, I am taking a pay cut to be able to spend more time at home with my family. Marriage, job, and life isn’t simple calculations of financial model and ROI based on time, salary/compensation, prestige, and future income.
My wife and I both have been making choices in specialty, career, and job so far based upon how we like it rather than maximizing ROI. We always thought medicine would give us a “safe” income and hopefully we can be more “entrepreneurial. ”
appreciate the advice!
To WCI,
That photo looks like Svinafellsjokull Glacier. If so, how did you tolerate an Icelandic $30 hamburger and fries? I found it very uncomfortable.
Sounds like an exotic trip. That particular glacier, however, is in Juneau, AK. I’ve never been to Iceland. PoF has though! But $30 hamburgers are $30 hamburgers, no matter where you buy them.
It would be nice to read Dr Mom’s and PhysicanDad’s perspective on this. Whatever happened to Dr Mom anyway? I haven’t read comments from her in a long time.
I’m a 3/4 time pediatrician and my husband is 3/4 time ER. While I really considered stopping work while the kids were young, I’m so glad I didn’t.
Reasons why:
– I love the feeling that the hardest part of my life career wise is behind me. This is in contrast to my stay at home mom friends who are now struggling to restart their careers and find their identities after 15-20 years away.
– I think that my children respect us more because they’ve seen how hard we worked to make things happen. And maybe they find us more interesting because we have lives away from the home?
– I echo the post above about saving one partner’s income, and about vacationing with kids and exposing them to the world. So, so important.
– Love that we will be FI the same year our youngest goes to college in 3 years.
– Am so happy that we are able to give our children the gift of paying for college and grad school. I acknowledge that our life was sometimes hectic when they were young. But it was because we both continued to work that we are in the position to fully fund school for them. (while my philosophy is that making good grades and being contenders for scholarships are my kids’ main “job” in high school, yes my kids hold jobs in the summers and on school breaks).
Would I do some things differently? For sure!
– I would ask for and accept more help. I would be better about asking for what I need.
– I would let go of the Supermom ideal and pay better attention to my own needs for exercise, healthy eating, time with friends. Kids just seem to suck all this out of you.
– I would recognize that after a hard weekend of call, I needed some time to myself and would find a way to make that happen.
A book that echoes this- one line summary ‘kids are young a short time, it’s a long time afterward with an empty nest- don’t give up your career’- is Getting to 50/50. I give it and The Price of Motherhood to graduating college kids (generally female; I have daughters; but men could read it to be better husbands/ fathers in future). PoM summary: ‘marriage is no certain contract- if you give up your career (or 3-30 years salary) for children and your spouse sacrifices nothing, no judge will make that up to you in divorce court’.
Or, I might add, if you’re widowed or your spouse loses/ can no longer work their high salary job. It’s not antimarriage for Mom (Dad) to keep their career options open, it’s profamily. And don’t even get me started on ‘traditional’ families where dad works 3 jobs and never sees or raises his kids while mom homeschools and can’t consider working even parttime to let dad be home some. (Though certainly a parent home fulltime can save a lot of money for a family, and the economy makes it tough for some to raise a family on only 2 jobs.)
At least in doctor- nondoctor families, the doctor working 80-90 hours a week and other partner none does more for the bottom line than doctor 40 hours, other partner any amount of minimum wage work.
Mendenhall?
Yup.
Curious, what do you consider dual high income – what’s the cut off for “high income”? 100K+, 150K+, etc?
I generally leave that number intentionally vague, but sure, $100K is twice the American average household income.
Wow,
The responses in this post were really helpful and I can definitely relate. Marriage is about a partnership and communication. Both of which we can always improve on. Having our third child last year (8,4,1) really increased the stress level way more than 33%. But the joy I get from our third is priceless, the other two are pretty great also but the little one just smiles, laughs and always says “Hi da” when she see’s me. She’s the only one who ever reaches for daddy when mom is holding her. Once she learns the word “no” she will most likely just be great like the other two, no favorites here.
My wife turns 42 this year and I will be 45. We both have made sacrifices in our careers for our family’s. We were both academic physicians when we started out. My wife is ER with fellowship training and was full time with career path that would have lead to national recognition. She chose to drop her academic position and transition to a pure 70% clinical position but at the same academic center. The commute from the suburbs to the city can add 8hrs/week to her hours not to mention post shift charting. So even though she is 22 clincal hrs she puts in closer to 36hrs. She could make more and work less moving out of the city but she would have to do more nights/weekends, so it is a balance.
I was on track to have a successful academic research track, but realized that once I obtained my K23 I would have to change institutions to advance. This would have required a cross country move away from family and the highly leucrative “northeast” not!!! This was out of the question secondary to family. So I made the move to a community academic hospital and took a full time intensivist position. We made the move to the burbs for the schools and the commute really helped me pull the trigger, my commute is now 10 minutes was >1hr. When we lived and worked in the city the academic life really works well with child care. Hard to leave ICU for a daycare fever but easy to leave the lab. I now work 13 twelve HR shifts per month, I am still able to perform research but my salary no longer depends on its success. These sacrifices allow us to spend a lot of time with our kids and we will most likely reach FI by our early 50’s. Our biggest expense beyond our mortgage is daycare 4/5 days per week for our two youngest (46k) and an occasional babysitter for pickup a couple times per month. In laws are close which also really helps out. We chose daycare for the socialization benefits and the heard immunity is a plus. Our oldest rarely ever gets sick. Once all our kids are in public schools I may drop down to 10 shifts per month. Great to have options, FI is all about options.
We also share the cooking, cleaning, laundry and bedtime but have some areas of specialization. I do more laundry she does more baths. Wife organizes the b-day parties and summer camps. I do all the home repairs, yard work, management of our rental property (we were able to keep our condo in the city when we moved to the burbs, already provides 14k positive cash flow per year.) and coach my son’s sport teams. I am also in charge of all our finances my wife has no interest in the subject. She likes to call it “Majic Math” and says she would just hire someone, which drives me nuts. But she also said to her family recently that she plans to retire at 65 just like every one does? Every time I talk about FI she just roles her eyes at me. We are lucky our three kids 529 plans are fully funded “assuming” 7% return but also assuming private 4 year college for all three. We max out 403b x2, 457×2 and back door Roth x 2 and are now working to build a larger taxable account. My wife was right about the majic math and we will be paying off her remaining student loan at 3% who would have thought interest rates would have stayed this low for this long. Mortgages are next but since their effective rates are less than historic inflation I am hopeful the “majic math” will pay off in the long run. I don’t plan on paying them off until we decide to significantly reduce our work/income/tax brackets.
Maybe when the kids are out of daycare I will drop down to 50% or even maybe 0% since wife is already planning to work until 65????
Dual physicians life has lots of benefits and stresses. Weekends and holidays as a single parent are no fun but who else would really be able to relate to our crazy cases or when we complain that we can’t leave the intern alone or the might kill someone.
The tax penalty is no longer true due to the Tax Cuts and Job Act for most high income households. For instance, my wife makes $250,000 and I make $600,000. We suffer no additional taxes than if we were single.