Psychiatrists' Income, Wealth Gain Ground Despite COVID-19 Challenges

Megan Brooks

August 16, 2021

Although many physicians endured pandemic-related income struggles in 2020, psychiatrists are doing fairly well with building their nest egg and paying down debt, according to the Medscape Psychiatrist Wealth and Debt Report 2021.

Surprisingly, despite COVID-19, psychiatrists' income improved somewhat this year ― from $268,000 in 2020 to $275,000 in 2021.

However, that still puts psychiatrists among the lower-paid specialists.

The highest-paying speciality is plastic surgery ($526,000), followed by orthopedics and orthopedic surgery ($511,000) and cardiology ($459,000), according to the overall Medscape Physician Wealth and Debt Report 2021. The report is based on responses from nearly 18,000 physicians in 29 specialties. All were surveyed between October 6, 2020, and February 11, 2021.

Psychiatrists' overall wealth gained some ground over the past year, with 40% reporting a net worth of $1 million to $5 million this year ― up from 38% last year. Just 6% of psychiatrists have a net worth north of $5 million, up slightly from 5% last year.

Keeping Up With Bills

"The rise in home prices is certainly a factor," said Joel Greenwald, MD, CFP, a wealth management advisor for physicians based in St. Louis Park, Minnesota. He noted that the rise in the stock market also played a role, with the S&P 500 finishing the year up over 18%.

"I've seen clients accumulate cash, which has added to their net worth. They cut back on spending because they were worried about big declines in income and also because there was simply less to spend money on," Greenwald said.

The percentage of psychiatrists with a net worth under $500,000 decreased from 37% last year to 32% this year. Psychiatry is still among the specialties reporting a high percentage of members with net worth below $500,000.

But gender matters. Earnings overall are higher for male than female psychiatrists, and that is reflected in net worth. Fewer female than male psychiatrists are worth more than $5 million (4% vs 7%), and more female psychiatrists are worth less than $500,000 (41% vs 26%).

As in prior years, most psychiatrists are paying down a home mortgage on their primary residence (66%). Psychiatrists' mortgage payments span a wide range, from less than $100,000 (23%) to more than $500,000 (15%). However, 27% report having no mortgage.

Mortgage aside, other top expenses or debts for psychiatrists are car loan payments (36%), paying off college and medical school debit (26%), credit card debt (25%), and medical expenses for self or loved ones (19%).

Other expenses include college tuition for children (16%), car lease payments (14%), mortgage on a second home (13%), private-school tuition for a child (12%), and child care (12%).

Despite some financially challenging months, the vast majority of psychiatrists (94%) kept up with paying their bills.

That's better than what much of America experienced. According to a US Census Bureau survey conducted last July, roughly 25% of adults missed a mortgage or rent payment because of COVID-related difficulties.

About half of psychiatrists pool their income to pay for bills. One quarter do not have joint accounts with a spouse or partner.

Spender or Saver?

About three quarters of psychiatrists continued to spend as usual in 2020. About one quarter took significant steps to lower their expenses, such as refinancing their home or moving to a less costly home.

In line with prior Medscape surveys, about half of psychiatrists have a general idea of how much they spend and on what, but they do not track or formalize it.

According to a recent survey by Intuit, only 35% of Americans say they know how much they spent last month. Viewed by age, 27% of millennials, 34% of Gen Xers, and 46% of baby boomers knew how much they spent.

Many psychiatrists have a higher-than-average number of credit cards; 42% have at least five. By comparison, the average American has four.

Savings was mixed for psychiatrists this past year; 61% put in the same amount or more each month into their 401(k) plans, but 33% put in less money compared with last year.

For taxable savings accounts, half of psychiatrists put the same amount or more into after-tax accounts ― but 22% put in less money compared with last year. Another one quarter did not use these savings accounts at all.

The percentage of psychiatrists who experienced losses because of practice problems rose from 6% to 9% in the past year. Much of that was likely due to COVID. However, about the same percentage reported no financial losses this year (76%) compared with last year (75%).

The vast majority of psychiatrists report living within or below their means; only 5% live above their means.

"There are certainly folks who believe that as long as they pay off their credit card each month and contribute to their 401(k) enough to get their employer match, they're doing okay," Greenwald said.

However, "living within one's means is having a 3 to 6 months' emergency fund; saving at least 20% of gross income toward retirement; adequately funding 529 college accounts; and, for younger docs, paying down high-interest-rate debt at a good clip," he added.

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