Many Physicians Live Within Their Means and Save, Survey Shows

Marcia Frellick

June 24, 2020

Although about 2 of 5 physicians report a net worth of between $1 million and $5 million, half are under the million dollar mark ― and about half believe in living at or below their means, according to the latest Medscape Physician Debt and Net Worth Report 2020.

Along with that somewhat prudent lifestyle comes savings, with physicians reporting substantial monthly contributions to taxable and tax-deferred savings.

Those habits may help some navigate the financial upheaval in medicine brought about by COVID-19.

The survey responses on salary, debt, and net worth from more than 17,000 physicians spanning 30 specialties were collected prior to February 11, before COVID-19 was declared a pandemic.

The authors of the report note that by some estimates, primary care offices have seen a 55% drop in revenue because of the pandemic, and specialists have been hard hit with the suspension of most elective procedures.

Primary care offices are seeing fewer patients and are limiting hours, and some offices have been forced to close. Others have stemmed the losses by introducing telemedicine options.

Before COVID-19, average incomes had continued to rise ― this year to $243,000 (a 2.5% boost from last year's $237,000) for primary care physicians and $346,000 for specialists (a 1.5% rise from last year's $341,000).

About half of physicians (42%) reported a net worth of $1 million to $5 million, and 8% reported a net worth of more than $5 million. Fifty percent of physicians had a net worth of less than $1 million.

Those figures varied greatly by specialty.

Among specialists, orthopedists were most likely (at 19%) to top the $5 million level, followed by plastic surgeons and gastroenterologists (both at 16%).

Conversely, 46% of family physicians and 44% of pediatricians reported that their net worth was under $500,000.

Gender gaps were also apparent in the data, especially at the highest levels. Twice as many male physicians (10%) as their female counterparts (5%) had a net worth of more than $5 million.

43% Live Below Their Means

Asked about habits regarding saving, 43% of physicians reported they live below their means. Half said they live at their means, and 7% said they live above their means.

Joel Greenwald, MD, CEO of Greenwald Wealth Management in St. Louis Park, Minnesota, recommends in the report to try to save 20% of annual gross salary.

More than a third of physicians who responded (39%) said they put more than $2000 a month into tax-deferred retirement or college savings, but Greenwald acknowledged that that may become more challenging.

"Many have seen the employer match in their retirement plans reduced or eliminated through the end of 2020, with what comes in 2021 as yet undefined," he said.

A smaller percentage (26%) answered that they put more than $2000 a month into a taxable retirement or college savings account each month.

Home Size by Specialty

Mortgages on a primary residence were the top reasons for debt (63%), followed by car loans (37%), personal education loans (26%), and credit card balances (25%).

Half of specialists and 61% of primary care physicians live in homes with up to 3000 square feet. Only 7% of PCPs and 12% of specialists live in homes with 5000 square feet or more.

At 22%, plastic surgeons and orthopedists were the most likely groups to have houses with the largest square footage, according to the survey.

About 1 in 4 physicians in five specialties (urology, cardiology, plastic surgery, otolaryngology, and critical care) reported that they had mortgages of more than $500,000.

Standard financial advice, the report authors note, is that a mortgage should take up no more than 28% of monthly gross income.

Another large source of debt came from student loans. Close to 80% of graduating medical students have educational debt. The average balance for graduating students in 2018 was $196,520, the report authors state.

Those in physical medicine/rehabilitation and family medicine were most likely to still be paying off student debt (34% said they were). Conversely, half as many nephrologists and rheumatologists (15%) and gastroenterologists (14%) reported that they were paying off educational debt.

Only 11% of physicians said they were currently free of any debt.

Most physicians in the survey (72%) reported that they had not experienced a significant financial loss in the past year.

For those who did experience such a loss, the top reason given was related to a bad investment or the stock market (9%).

Cost-Cutting Strategies

Revenue reduction will likely lead to spending less this year as the pandemic challenges continue.

Survey respondents offered their most effective cost-cutting strategies.

A hospitalist said, "Half of every bonus goes into the investment account, no matter how much."

"We add an extra amount to the principal of our monthly mortgage payment," an internist said.

A pediatrician offered, "I bring my lunch to work every day and don't eat in restaurants often."

Marcia Frellick is a freelance journalist based in Chicago. She has previously written for the Chicago Tribune and and was an editor at the Chicago Sun-Times, the Cincinnati Enquirer, and the St. Cloud (Minnesota) Times. Follow her on Twitter at @mfrellick


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