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4 Physicians Revisited: The Impact of Specialty Choice

In each of our previous looks at the 4 physicians, each doctor had a baseline salary of $300,000. We looked at the impact of making more money with a job change, and making less by working part-time.

We haven’t discussed the impact of a range of salaries on the ability to achieve financial independence, which is what we’re going to do today. For this exercise, we will be dismissing Drs. Anderson, Benson, Carlson, and Dahlgren for a new set of characters, Drs. Altruism, Bettercheck, Cashmoney, and Diamond.


4 Physicians Revisited: The Impact of Specialty Choice


Dr. Altruism makes $200,000 a year. What specialties make about $200,000 a year? According to the 2016 Medscape compensation survey, doctors in the following specialties have average salaries of $204,000 to $241,000

  • Pediatrics
  • Endocrinology
  • Family medicine
  • Infectious disease
  • Allergies
  • Internal medicine
  • Psychiatry
  • Rheumatology
  • Neurology


Dr. Bettercheck earns a better check, equal to $300,000 for our analysis, by working in one of the following specialties, with a range from $266,000 to $329,000.

  • Pathology
  • Nephrology
  • Ob/Gyn
  • Pulmonary
  • Critical Care
  • Ophthalmology
  • Emergency Medicine
  • General Surgery
  • Oncology


Dr. Cashmoney went into a high-paying specialty, earning $400,000 a year. The following physicians are pulling in from $355,000 to $443,000.

  • Anesthesiology
  • Urology
  • Radiology
  • Gastroenterology
  • Dermatology
  • Cardiology
  • Orthopedics


Dr. Diamond Is crushing it in the dollar department, earning $500,000 per year. This physician is most likely in private practice in a high-paying specialty, and may be supplementing income with locum tenens work. He or she may be an entrepreneur, with an ownership stake in a surgery center, imaging center, brewery, or billing company. It is not unheard of for a busy medical professional with a lucrative practice to earn seven figures. For our calculations though, we’ll examine the effect of a half-million dollar salary.


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Time to Financial Independence


Just as we have done in the other 4 Physician posts, we make the following assumptions when crunching numbers: the physician is married, in a one-income household with two children at home. They start this exercise with a net worth of zero, perhaps a few years removed from training.

Each physician will have an annual budget of $100,000. This is enough to live pretty well in most parts of the country. In Manhattan or San Francisco, and some other high-cost-of-living areas, it would be more challenging. In rural areas, these physician families could live like kings and queens.


kew gardens house
not Dr. D’s home


Note that the budget will not rise with rising salaries. Although such a trend is typical in real life, the amount of money required to live a fulfilling and happy life doesn’t increase along with salary. If you can’t possibly be happy with $100,000 after-tax dollars to spend each year, your problem is probably not a lack of money, but something else.


To reiterate, required annual spending is related to annual salary in the following ways:

  • absolutely
  • none


With that out of the way, let’s look at a hypothetical breakdown of our 4 physician’s salaries, including where the money goes, and how long it will take each of them to accumulate 25x annual spending, or $2.5 million, to be considered financially independent.





Each of our physicians would be considered an excellent saver, by virtue of their 31% to 48% net (38% to 68% gross) savings rates. How do they save so much? By spending “only” $100,000 a year. Calculate your own savings rate here.

Comparing Dr. A with Dr. D, you can see that Dr. D pays over four times the taxes, despite making two-and-a-half times the income. But, by keeping spending equal, Dr. D is able to invest nearly four times as much money towards retirement. This results in financial independence in 8 or 9 years, whereas Dr. A will be working for 19 to 28 years, assuming reasonable returns of 2% to 6% real.

Do physicians in higher-paying specialties typically reach FI sooner than their counterparts in primary care? I don’t have any hard data, but anecdotal evidence suggests that the answer is “no.”

In reality, spending can easily rise in step with increased income, sometimes eclipsing it, leading to a scenario in which a doctor can never retire with the usual definition of financial independence. Of course, it doesn’t have to be this way, and many of my readers are mold-breakers. Physician devotees of the Bogleheads, WhiteCoatInvestor, or Mr. Money Mustache may be doing as well or better as our fictional Dr. Diamond.


Money isn’t everything.


While it’s clear that a $200,000 salary will prolong the path to financial independence, the goal is not out of reach, and should be achievable for most physicians in their fifties.

Sliding up the pay scale, Dr. B needs an extra four to six years to achieve financial independence, and Dr. C needs only a couple additional years as compared to Dr. D. It’s better to spend fifteen years working in a job you enjoy compared to eight or nine in a stressful job that might burn you out. Specialty choice, or job choice, should not be made based on salary alone.

How should you choose a specialty?


The answer is beyond the scope of this personal finance blog, but I’ve found a few fun flowcharts that may be useful here, here, and here.

Personally, I’m a Dr. C, having chosen a specialty that pays pretty well, and is compatible with my personality and work ethic. I would never recommend choosing a specialty solely on the income potential, but it is a factor worth considering, particularly if you are on the fence between two specialties you might find equally rewarding in all other aspects.

Physicians, are you happy with the specialty you chose? What specialty or specialties would you recommend to someone starting medical school today?


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22 thoughts on “4 Physicians Revisited: The Impact of Specialty Choice”

  1. As usual these specialty discussions omit Radiation Oncology – which pays generously, with reasonable hours and very low rates of burnout. Very FI friendly specialty!

    • Excellent point. It’s based on the Medscape survey, which for whatever reason, does not include rad onc.

      Thanks for the reminder!

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  4. Hi, I am wondering what all is included in the “all contributions” row. I added the pre-tax and post-tax contribution totals but there seems to be something missing. ex: Dr. C would total 185k, but the all contributions row is 195k.

    • If you download the spreadsheets, you can both see and alter the formulas to best suit your situation.

      The $195,000 includes the $20,000 profit sharing (which will be used in retirement), but not the $10,000 529 Plan contribution, as that money serves a different purpose.


  5. Very interesting post indeed. Based on my specialty, I am Dr. A. I was surprised to see that it would take me >20 years before FI (based on your chart). Gah! Luckily, my salary has been more like Dr. C for the past 3-4 years, so hopefully my 4 year plan will come to fruition. After that, we will live on the income of my CPA husband whose salary is kind of like Dr. A (so yes, accountants can make decent money, too). Hopefully, he will be able to retire 6 years after me. Just like when you are choosing a career, it is definitely important to take into account the salary a specialty will make, but do not let it override your passion. I would never dream that I would be making this much for a primary care physician, but it does happen especially in private practice. The downside is I am pretty burned out from all of the patients I am seeing. It definitely is not by choice, but I guess the upside is I am getting paid for it and can look forward to the end in a few years.

    • If you are earning well above average for your specialty, that’s great! Geographic arbitrage, perhaps? It certainly helps to have a spouse with a physician-like income. Obviously, knowing and controlling your annual spending is going to be The key piece in determining your FIRE plans. Best of luck to you – our timelines are very similar, but we won’t have a second source of income (except the potential from this blog).


  6. Great post as usual PoF! I like all the numbers. I think the key for bright-eyed medical students is to acquire some basic accounting skills. Not to the point where they start up a blog like you and me, but enough so that they aren’t completely overwhelmed when coming out of med school. I agree that income should be a consideration in choosing a specialty but exactly how much is up for debate.

    I’m curious why you set the Nest Egg required for FI at the same level for all 4 docs? I would assume that Dr. D would probably need more than Dr. A for retirement no?

    • Thank you, FPMD.

      To answer your question, I am trying to make the point that annual spending and annual income are two separate numbers, and they don’t need to rise together. That’s a mistake that many with high-incomes make, growing spending right along with income, which not only makes it tougher to save more, but increases your FI target.

      I gave each doc the same annual budget, $100,000. The FI target for each is 25x that, or $2.5 million. Earning more should make it easier to become FI, not tougher.


      • Makes perfect sense. I feel that’s a point that many sorely miss – just because you make money like the Joneses doesn’t mean you’re obligated to keep up with the Joneses. 🙂

  7. Do you think it is largely older physicians who are upset about the increase in paperwork since it adds to their long days? Do newer physicians accept it as part of the gig?

    Fascinating breakdown – thanks for sharing it.

    • I know some physicians (and other healthcare workers) who have decided to retire early rather than deal with the new computerized charting. I think the biggest pushback though, is coming from the younger physicians. They’re the ones who have a whole career ahead of them. If you’re in the last five years of your career (like I probably am), it’s a little easier to just deal with it, knowing that the burden will soon disappear.


  8. A really interesting read from the field of education. It takes years to get to any kind of decent salary unless you move to administration (which I did). That requires more education too. More money and getting burn out drove me to teaching at a college. Loved the job – but not the pay. With many years of experience I was making the same salary as a mid-career teacher – but with a lot more time. I valued time over money.

  9. I’m an accountant so obviously I compare this to my options. I’m interested to learn how the salary progresses through a career. Say an anesthesiologist starts practicing at 30. Do they make $350k out the gate? How much are they making at 45?

    In accounting you may start your career for a public accounting firm at $60k at age 22. By 36 if you stuck with it, you could be making $300k+. And by 45 over $500k (depending on geographic location, size of firm, your specialty, etc.). It’s a lot of compensation on the back-end unfortunately…

    • Starting salary can vary some by specialty and by the particular job, but most physicians will start out earning at least 70% to 80% of the median salary. This is especially true when you don’t rely on referrals to build up a practice (Emergency medicine, anesthesiology, pathology…). Most of us more or less plateau fairly quickly, within a few years. Some who have been around awhile have seen their compensation shrink while the days have gotten longer, and the bureaucratic burdens heavier.

      Back to your situation, Holy Golden Handcuffs, Batman!

      I had no idea that kind of money could be made by a CPA my age. I would guess it’s a small percentage that reach those lofty numbers? If not, I’m in the wrong business. How many of your clients would likely perish if you turned out the office lights and walked away for ten minutes? Or get rolled into your cubicle on a stretcher looking a pale shade of blue with nary a pulse to be palpated?

      I think you should be ecstatic that salaries like that could await you. It certainly raises the opportunity cost of a very early retirement, but you could certainly retire rather early and quite comfortably after multiple years of physician-like income.


      • It’s amazing how many other white-collar jobs can command a quarter million dollar annual salary without the risk and pain of being a Dr. A/B/ or C. I wished that I were a Dr C/D, but hey, money isn’t everything. I just need to be a little more entrepreneur-like or get some shares in passive income… 😉

      • You are correct – only a small percentage reach those numbers. Those amounts are reserved for those who enter the partnership, maintain the client relationships, go get the new work, etc. A lot of people burn out before then or decide the money isn’t worth the stress. But then again I know a lot of people who basically just hung around long enough, and fell into it with a good book of business given to them.

  10. Personally I’m Dr. C and my husband is Dr. A so you are right on spot about 9 years, we are FI. I’m extremely focus on FI and also burnout so it helps to know I have option whenever I can’t stand medicine anymore

    • That’s great! A + C = D?

      It’s great to have options. For some, just knowing that you are FI can change your outlook. The career can become more enjoyable when you know you are working by choice, and not to pay off debts or to set up your future. You also may be able to drop the most demanding parts of your job. An Ob/Gyn can drop the OB portion if the hours are too much, for example.

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  12. As a lawyer, our profession has bimodal salary distributions. Most graduates cluster in either the $60,000 range or the $160,000 range (soon to be $180,000 thanks to recent market movements).

    It’s interesting that physicians have four separate paths to follow. Are the higher-paying jobs more competitive? Using your hypo I’m curious if the top 25% in a graduating class become Dr. Diamond, the next 25% Dr. Cashmoney, etc. If that’s the case, does a young doctor have a lot of control over where they end up or is it pretty much correlated to where they rank in their class?

    • Interesting dichotomy in law. The $60,000 pay scale is surprising. I was listening to NPR yesterday, and automotive technicians were receiving free on-the-job training (5 weeks) then going on to earn an average of $80,000 a year.

      Physicians can choose from among dozens of paths, hundreds, really. I bunched them to demonstrate the difference each additional $100,000 in annual salary will make. I would say there is a low correlation between class rank and ultimate salary. Pre-med can be seriously competetive, but in my experience, medical school was more cooperative. There wasn’t necessarily a class rank, but the top performers could distinguish themselves with excellent ratings on hospital rotations, and high Step 1 and Step 2 board scores.

      There are a handful of specialties that have more applicants than residency spots, and it helps to have better scores and recommendations from faculty to match into a quality program (or at all). Orthopedics, dermatology, urology, plastics, and a few others I’m sure.

      Also, keep in mind, the salaries reported in the Medscape survey are not starting salaries, but average salaries. It often takes at least a couple years to ramp up volumes to receive an “average” salary and of course there is a wide range. Salaries tend to be higher in middle and rural America, and lower on the coasts and some metro areas.


      • More unsettling is how many lawyers are also surprised to only be earning $60,000 after graduation, but that’s a pretty standard starting salary if you’re working for the government. It’s not lost on them that they could have been making just as much in another industry without the accompanying $200K in law school debt.

        Your analysis is interesting because it sounds like it’s up to each medical student to decide what specialty to pick. I’m surprised that everyone doesn’t rush toward the higher paying careers, but maybe doctors are more altruistic than I give them credit for (or perhaps there’s other reasons why those jobs are less attractive).

        Your comment about the salary ranges in middle and rural America is the other complete reverse of the legal profession. The high paying jobs are all concentrated in urban areas, particularly on the coasts, so if you want to earn $180,000 out of law school, you’re also going to have to pay San Francisco or Manhattan living expenses. Starting salaries for lawyers in middle and rural America are strikingly lower, although of course that’s not to say that you can’t grow your income over time.

        Thanks for the follow up.


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