Financial Advice for “Low-Income” Doctors

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In medicine, there can be a pretty significant disparity in earnings when you look at the entire spectrum of doctors. As with any other industry, some pull in a salary below the average or median pay for a group. Do the same financial tenets and nuggets of advice apply to a doctor on the lower end of the range as they would to a doctor on the upper end?

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Many of you have previously seen the series of posts I did for “high-income” doctors aimed primarily at well-paid specialists or dual-income families making $500,000-$1 million or more per year. This post addresses the opposite issue—”low-income” doctors.

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7 Financial Considerations for the “Low-Income” Physician

I don’t feel bad for doctors who have a relatively low income. I know you can have a pretty great life on $150,000 a year because I’ve done it. The ones I feel bad for are those with a high student loan burden.

Pediatricians look at hospitalists enviously, family doctors look at emergency doctors enviously, emergency docs look enviously at ophthalmologist salaries, ophthalmologists covet the boats of back surgeons, and spine surgeons look at the hedge fund manager on their street and wonder why they can’t get their own jet, too.

Doctors making $150,000 don’t need very many retirement accounts, and they may never need a taxable account at all. If they want to save 20% for retirement, they can get that out of a run-of-the-mill employer-provided 401(k) and a Roth IRA or two.

Disability insurance is really easy for a “low-income” physician. You can do it with a single policy. In fact, you may not ever need to do anything but exercise the FPO option on the one you bought in residency.

One downside of being a “low-income” physician is that Social Security tax will be assessed on a much higher percentage of your income—especially if you’re self-employed—than a doctor making $400,000 or more.

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Financial Advice for “Low-Income” Doctors

Many of you have previously seen the series of posts I did for “high-income” doctors aimed primarily at well-paid specialists or dual-income families making $500,000-$1 million or more per year. This post addresses the opposite issue—”low-income” doctors.

7 Financial Considerations for the “Low-Income” Physician

I don’t feel bad for doctors who have a relatively low income. I know you can have a pretty great life on $150,000 a year because I’ve done it. The ones I feel bad for are those with a high student loan burden.

#1 Student Loan Issues

#2 You’re Not a Back Surgeon, and That’s OK

Doctors making $150,000 don’t need very many retirement accounts, and they may never need a taxable account at all. If they want to save 20% for retirement, they can get that out of a run-of-the-mill employer-provided 401(k) and a Roth IRA or two.

#3 Avoiding Portfolio Complexity

Disability insurance is really easy for a “low-income” physician. You can do it with a single policy. In fact, you may not ever need to do anything but exercise the FPO option on the one you bought in residency.

#4 Disability Insurance

One downside of being a “low-income” physician is that Social Security tax will be assessed on a much higher percentage of your income—especially if you’re self-employed—than a doctor making $400,000 or more.

#5 Social Security – Plus/Minus

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