Kaiser SCPMG total compensation

[brabbit2222]

I'm having trouble comparing apples to apples total compensation value of a Kaiser Southern California full-time partnership track to a 1099 no-benefits job. In other words, has anyone done basic math of how much the benefits that Kaiser offers are actually worth? I'd have to take a $100k pay cut, but my gut instinct tells me the pension, job security and insurance are worth it long term. But I would like to see if they math supports it.

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[Brigade4Radiant]

We can help list the benefits also for health insurance you need to go on the healthcare.gov website and see how much a plan similar to Kaiser would give you

 

[HemorrhagicShock]

While I have no official sources or references to send to you, I've just heard through the grapevine of people talking about cost-benefit analyses of Kiaser Southern California positions and the number I see thrown around is the value of the benefits over the long term is equivalent to almost $500k/year. I've heard this from different Kaiser and non-Kaiser people, and independently too.

If you can deal with working 40 hours per week for 15 years+, Kaiser seems like a great gig. I don't know of a single unhappy Kaiser doc, but at the same time don't know how much of that is Stockholm Syndrome from the golden handcuffs. Granted we're all handcuffed somehow, to something, and somewhere. So who cares?

 

[gutonc]

NB: I'm not in EM, nor am I a Kaiser employee. But I have plenty of friends who are (both) and have some family insight to the Kaiser system (sister works in non-clinical, but high up admin for them).

Kaiser is a pretty great place to work a non-procedural medicine career. Much like the VA, if you're willing/able to stay long enough to fully vest your retirement, you'll more than make up on the back end what you forego on the front end. If you're ortho/neuro/CT/plastic surg/derm OTOH, much less so, unless you can somehow structure your position to make it worth it for you.

TL;DR since this is the EM forum: if this is your "forever" job, it's probably a pretty good choice. If you're looking at your first gig out of residency, and will likely change/move 2-5 more times in the next 10-30 years, look elsewhere.

 

[cyanide12345678]

Which job is better? Less patients per hour and a better more sustainable gig. Pick that one.

 

[namethatsmell]

As others have said, Kaiser is best for the long play. Pros/cons to the golden handcuffs of Kaiser and similar systems. The job stability+good staffing+medmal protection does provide immediate value. And the retirement payoff if you stay awhile is...huge.

 

[emergentmd]

equivalent to almost $500k/year.

So is this equivalent to 500k/yr total package or on top of your yearly salary? If similar to a 500k/yr job, how would you even start to calculate this?

100k/yr is about 70k/yr after taxes. If you are disciplined (big if), you are always better off just investing the extra $$$.

If you are 30, put 70k/yr into the S&P500 getting 9% yearly return, at 50 (20 yrs at Kaiser), you will have 3.3M. Don't put another penny and just leave it, in 15 yrs when you are retired at 65, you will have about 13M which equates to 500k/yr at a 4% withdrawal.

Plus you will never feel the big golden handcuffs. Life is full of surprises, no guarantees you will stay in Cali. You have no idea what will happen to medicine in 5 yrs, lest 20 yrs. You could get sick and not do EM.

I personally would not do it if jobs are similar, take the money now.

 

[thegenius]

If you can deal with working 40 hours per week for 15 years+, Kaiser seems like a great gig. I don't know of a single unhappy Kaiser doc, but at the same time don't know how much of that is Stockholm Syndrome from the golden handcuffs. Granted we're all handcuffed somehow, to something, and somewhere. So who cares?

Oh boy I know dozens and dozens. They don't make that much money. The best way to take a Kaiser job is to get in while you are young (like 30-32), work for 20 years and then retire and get a pension the rest of your life.

 

[brabbit2222]

Thanks for your help, everyone. I used to think I could do better investing my extra income in the market, but I'm feeling more and more pessimistic about long term market returns, and would rather have the guaranteed Kaiser pension.

I ended up doing the math myself, and yes, the total compensation value for me is probably low 500k. But definitely way less and probably not worth it if I leave before getting pension.

 

[cyanide12345678]

Thanks for your help, everyone. I used to think I could do better investing my extra income in the market, but I'm feeling more and more pessimistic about long term market returns, and would rather have the guaranteed Kaiser pension.

I ended up doing the math myself, and yes, the total compensation value for me is probably low 500k. But definitely way less and probably not worth it if I leave before getting pension.

You are getting one of the best buying opportunities right now for the long term and now you’re becoming pessimistic?

This is the time to double down on investing in the market. The lower the market goes, the more money you need to throw in it

 

[brabbit2222]

You are getting one of the best buying opportunities right now for the long term and now you’re becoming pessimistic?

This is the time to double down on investing in the market. The lower the market goes, the more money you need to throw in it

I think this was true for a while, but the country has been undergoing major negative changes, which I think will only get worse. I will still continue to invest in my 401k, but I don't expect my long term returns to be anything close to what they were historically. I hope I'm wrong.

 

[cyanide12345678]

I think this was true for a while, but the country has been undergoing major negative changes, which I think will only get worse. I will still continue to invest in my 401k, but I don't expect my long term returns to be anything close to what they were historically. I hope I'm wrong.

I agree that you’re unlikely to see high returns in the near future. Who knows what the long term future holds. But that’s why you diversify, if you hold market weight international stocks then you would be 45 percent international today.

You could always take your finances to the next level and educate yourself on alternate investment as well. Real estate syndications for example on average yield 15-20 percent IRR and come with tremendous tax benefits.

And then there’s the world of premium harvesting through selling options - wonderful strategy if the stock market remains stagnant for decades. I believe I’m up YTD 17-18 percent on my taxable account where i only sell puts for premium (70k profit ytd) rather than a 15 percent or whatever market drop.

The point is, educate yourself, investing in vti/voo/vtsax is not your only option.

 

[emergentmd]

Thanks for your help, everyone. I used to think I could do better investing my extra income in the market, but I'm feeling more and more pessimistic about long term market returns, and would rather have the guaranteed Kaiser pension.

I ended up doing the math myself, and yes, the total compensation value for me is probably low 500k. But definitely way less and probably not worth it if I leave before getting pension.

I don't want to be harsh, but for a group of people who are highly educated/intelligent, doctors make some of the worse financial decisions. Give a CPA or anyone with average financial sense making 3-400K/yr, at 30 and you will almost always end up at 65 with 5-10M in the bank unless something happens that has not happened in the whole stock market history over a 30-40 yr period.

The chance of you going to Kaiser, not getting the full pension is many magnitudes higher than having the stock market crash with less than 6% return over that 30 yrs.

I am never one to Monday morning QB and I have no idea what the future holds. But to pick a pension for safety vs investing in the S&P is almost always the poorer choice. People setting up pensions is smart and it is like insurance. They have calculated the risk and realize that having a pension is less costly than paying market salaries b/c they know they will perform better in the market.

Also, we are going down the path of Universal healthcare in some shape or form. If this happens, how do you know if Kaiser will still be viable? What if they go bankrupt?

How do you think those government employees are doing who had their pensions stripped. Medicare is essentially a ponzi pension and the gov will soon have to bail them out. How are the automakers pensions doing?

Its a risk I would never take. Take the extra $$$ and bet on yourself.

 

[emergentmd]

l. Real estate syndications for example on average yield 15-20 percent IRR and come with tremendous tax benefits.

I wish someone told me about this when I was 30. Finally had a friend introduce me to this, and over the past 3 yrs have 2.5x my money and went from 8% annual distribution to 20% on my original investment. If this happens again in 3 yrs, I will be looking at 40% annual distribution on my original investment.

Looking back at its history, If I put in 300K (my original investment) 20 yrs ago, I would have about 10M portfolio producing $+800K a yr in distribution.

 

[cyanide12345678]

Take the extra $$$ and bet on yourself.

That’s what i would always pick myself. A dollar today is worth so much more than a dollar in the future.

And 20 years before a meaningful pension happens - ouch. I don’t know if I’m working another 3-5 years honestly let alone 20 years 😅

 

[Mbekweni]

I wish someone told me about this when I was 30. Finally had a friend introduce me to this, and over the past 3 yrs have 2.5x my money and went from 8% annual distribution to 20% on my original investment. If this happens again in 3 yrs, I will be looking at 40% annual distribution on my original investment.

Looking back at its history, If I put in 300K (my original investment) 20 yrs ago, I would have about 10M portfolio producing $+800K a yr in distribution.

This has absolutely been the case for those investing in the post 2008 era picking up distressed assets and now with a major run up in value 2020-2021. This is currently a tough market to make money in real estate so not all rainbows. Most good real estate options (few and far between) seem to be on the debt side, and some areas like Houston offering to waive property tax if you convert an asset to 50% low income housing which can juice yields. I would be cautious now for sure, though fully agree that real estate syndications have a lot of promise as an add on to portfolio.

 

[xaelia]

If it's all about the money, then all the above comments regarding the ability to control your own investment fate are true.

Working within the Kaiser system is quite different than the Real World, in ways that work for some, and don't work for others. Nothing is perfect. There is heterogeneity within sites at Kaiser. Clinical directors change. The pension could change – many investments that are "too good to be true" end up exploding. A unicorn pension may be unsustainable if the market can no longer keep up.

The other nice thing about Kaiser is there is substantial opportunity to trade your clinical responsibilities for administrative ones, particularly as you get older. Of course, if you've done your own investing, you might be retired by that point ....

 

[emergentmd]

This has absolutely been the case for those investing in the post 2008 era picking up distressed assets and now with a major run up in value 2020-2021. This is currently a tough market to make money in real estate so not all rainbows. Most good real estate options (few and far between) seem to be on the debt side, and some areas like Huston offering to waive property tax if you convert an asset to 50% low income housing which can juice yields. I would be cautious now for sure, though fully agree that real estate syndications have a lot of promise as an add on to portfolio.

You are right that everything has risk and most people could do not wrong investing post 2008. I remember when I first started doing syndications, even during the 2008 downturn when home values and SP500 when down significantly, Apartment investments were one of the few to stay flat. This makes sense that when the economy does well, people have more money to pay for rent. When the economy goes into a recession, people leave their homes as in 2008 and need a place to live which ends up being an appt.

Apt syndications are essentially a CAP play which is directly related to rent. Its value goes up with rent and I just don't see rent going down unless you pick a wrong City. I pick my syndications essentially where most people are moving to and have a diversified economy not linked to one industry such as Detroit in the 80s

 

[EctopicFetus]

I like to control my own money. I think earn aggressively, save aggressively, invest broadly.

Docs and EM docs are often conned to do stuff for free. I do little for free for my hospital system. I do a lot for my group as I view that as my job as a partner.

but when the hospital does charity stuff I dont participate. I get no credit for it and they do and frankly all they care about is $$. I volunteer a fair bit outside of that i just wont do it for them.

If they wont give us staff to care for ED patients and that directly impacts my income and job satisfaction why would i donate my free time to them.

 

[namethatsmell]

All this talk about Kaiser pension vs investing for yourself, why the implication that this a binary decision? Nobody should consider a pension to be their main retirement vehicle, that's way too risky. If you're looking at a job with a pension but otherwise doesn't pay enough to make decent investments beyond your retirement accounts I'd probably keep looking. It's probably better to view pensions as sweat equity in exchange for a small long-term hold of a huge institution.

As people read all the hate for pensions on here, ask yourself this: if pensions were so terrible (for employees)...why have most employers done almost everything they can to eliminate them for new hires over the years? Hint: it's not altruism.

Primary value of a pension can be boiled down to 2 factors: potential future cash value (including options for early distributions), and stability of the employer. Bigger governmental entity is safer than smaller governmental. If you're considering a private gig with a pension, you need to consider the company's bond rating as well as consider how likely it is for the company to remain solvent for the foreseeable future based on your view of them in the HC landscape.

In addition to adding diversification to your portfolio and serving as a shield against volatility, pensions provide several other benefits: asset protection, opportunities to change jobs within the entity while still earning a physician level pension. Anybody hear of Financial Samurai? Former Goldman Sachs finance bro who has a pretty decent personal finance blog / podcast that adds some nice contrast with WCI. Anyway, about every time this guy mentions pensions he blabs about how awesome (and rare) it is to have such a solid income stream.

I'd never recommend anybody take a job just because of a pension. But if there's a job you otherwise like and you think comp package represents a fair trade wrt work load:compensation...and that job happens to have a pension, don't hesitate to jump at it.

Before I sound too much like an institution fanboy, I'm definitely not. One thing that rubbed me the wrong way with a Kaiser offer many years ago was some language in the contract that basically said I couldn't have any side-gigs that touched on medicine -- totally verboten. Another contract from a fancy academic center described their "share" I'd have to pay them for any consulting work I did that in any way touched on medicine (even if this was done on my own person non-work time)....HAH!

 

[emergentmd]

The question was if taking a 100K pay cut working for Kaiser monetarily worth it. With all things being equal, no question I would take the 100K.

if pensions were so terrible (for employees)...why have most employers done almost everything they can to eliminate them

Because Companies were not fiscally restrained enough and used the $$$ instead of putting it towards their Pension.

If someone is willing to give me 100K/yr x 20 yrs at 30 yrs old and guarantee them 500K at 65 til they die, I would take it in a heart beat. Hell, I would just fire them after 15 yrs and keep their money which is another risk.

 

[namethatsmell]

The question was if taking a 100K pay cut working for Kaiser monetarily worth it. With all things being equal, no question I would take the 100K.

Because Companies were not fiscally restrained enough and used the $$$ instead of putting it towards their Pension.

If someone is willing to give me 100K/yr x 20 yrs at 30 yrs old and guarantee them 500K at 65 til they die, I would take it in a heart beat. Hell, I would just fire them after 15 yrs and keep their money which is another risk.

If total compensation (including all benefits and pension value) between two jobs is truly 100 K, then yeah the pension is probably not worth it… but the value of the pension needs to be defined.

100k extra from a job works out too 66K post tax. Invested over 20yrs earning 8% would yield ~3.6mil. At a 4% draw that’ll gross 144k/yr in retirement. IIRC when I interviewed at Kaiser the back of the napkin math showed their pension would have paid ~215k/yr.

 

[emergentmd]

If total compensation (including all benefits and pension value) between two jobs is truly 100 K, then yeah the pension is probably not worth it… but the value of the pension needs to be defined.

100k extra from a job works out too 66K post tax. Invested over 20yrs earning 8% would yield ~3.6mil. At a 4% draw that’ll gross 144k/yr in retirement. IIRC when I interviewed at Kaiser the back of the napkin math showed their pension would have paid ~215k/yr.

I used a doc starting EM at 30. Pick an equal job paying 100K more. Work 20 yrs (I assume this is what gets you full pension). I have no idea when Kaiser gives the pension after 20 yrs or when they hit 65 but I just assumed they start taking full pension at 65.

So you are right, in 20 yrs put them at 55 around 3.5M. At 65, that equates to about 10M. 4% w/draw is 400K

 

[cyanide12345678]

I used a doc starting EM at 30. Pick an equal job paying 100K more. Work 20 yrs (I assume this is what gets you full pension). I have no idea when Kaiser gives the pension after 20 yrs or when they hit 65 but I just assumed they start taking full pension at 65.

So you are right, in 20 yrs put them at 55 around 3.5M. At 65, that equates to about 10M. 4% w/draw is 400K

The idea of using a 4 percent withdrawal rate for comparison is flawed.

The 4 percent withdrawal rate is a safe withdrawal rate for the worst case scenarios in the last 100 years. There are 2-3 years in the last 100 years where you would run out of money in 30 years based on the 4 percent rule. In fact, in all other scenarios, which are much more likely to happen, the person continues to have a significant chunk of their portfolio. Also there’s a very large probability that the portfolio is significantly larger despite a 4 percent withdrawal.

So if you owned your 3.5 million dollar portfolio and withdraw at 4 percent. Not only does it give comparable cash flow, but with a high probability you are likely to have a larger portfolio than you originally had. And most importantly, at death, while your pension goes away, your portfolio can then be inherited by your heirs with a step up in basis.

Then obvious answer is picking the extra 100k from a pure mathematical perspective. It eliminates single company risk, 20 year service risk, and gives you control over your own money while having a significant probability of creating wealth that will out live you, generational wealth, which is the case in most cases in the 4 percent rule.

 

[Brigade4Radiant]

Also you don’t need your money to last forever since it is highly likely you’ll die on 30 years after retirement

 

[coachB]

Thanks for your help, everyone. I used to think I could do better investing my extra income in the market, but I'm feeling more and more pessimistic about long term market returns, and would rather have the guaranteed Kaiser pension.

I ended up doing the math myself, and yes, the total compensation value for me is probably low 500k. But definitely way less and probably not worth it if I leave before getting pension.

Yes, it can be challenging to accurately value the benefits. What most people here don't seem to recognize is that there is a lot of value aside from the pension (which is the most questionable component and probably the toughest to accurately value). But comparing to a 1099 job with zero benefits, you are also getting:

• health insurance for you and your family
• life insurance
• disability insurance
• ability to take advantage of California AB150 deduction
• unheard of job security

Not to mention multiple vehicles to optimize retirement saving in addition to the pension. No doubt the job has its own set of drawbacks and the calculation changes somewhat depending on how old you are, but I'm not sure a lot of people here really understand the whole picture.

 

[emergentmd]

The idea of using a 4 percent withdrawal rate for comparison is flawed.

The 4 percent withdrawal rate is a safe withdrawal rate for the worst case scenarios in the last 100 years. There are 2-3 years in the last 100 years where you would run out of money in 30 years based on the 4 percent rule. In fact, in all other scenarios, which are much more likely to happen, the person continues to have a significant chunk of their portfolio. Also there’s a very large probability that the portfolio is significantly larger despite a 4 percent withdrawal.

So if you owned your 3.5 million dollar portfolio and withdraw at 4 percent. Not only does it give comparable cash flow, but with a high probability you are likely to have a larger portfolio than you originally had. And most importantly, at death, while your pension goes away, your portfolio can then be inherited by your heirs with a step up in basis.

Then obvious answer is picking the extra 100k from a pure mathematical perspective. It eliminates single company risk, 20 year service risk, and gives you control over your own money while having a significant probability of creating wealth that will out live you, generational wealth, which is the case in most cases in the 4 percent rule.

You are correct the 4% is antiquated and any reasonable stock market period would have your portfolio grow to a much larger amount. Pensions from a purely economic standpoint is a poor decision. I can't imagine working in a job for essentially my whole career. Even unicorn jobs don't last 20 yrs. This almost reminds me of USACS lite

 

[HoosierdaddyO]

Ok so now let’s switch it up and take a look at these VA mDoD jobs starting out around 290/300k as a GS. The pension which only costs ya 13k a year seems like such a swat gig. Plus other bennys and job security. The day the fed govt defaults is the day none of us want to be around lol.

 

[RustedFox]

Ok so now let’s switch it up and take a look at these VA mDoD jobs starting out around 290/300k as a GS. The pension which only costs ya 13k a year seems like such a swat gig. Plus other bennys and job security. The day the fed govt defaults is the day none of us want to be around lol.

What do these abbreviations mean?

 

[HoosierdaddyO]

Haha sorry the VA being the veterans affairs. And the DoD was a typo (dept of defense). And GS is the general schedule which is a term used to describe federal employees. There’s grades and steps in the federal system etc. sorry for the typos and confusion.

 

[namethatsmell]

Ok so now let’s switch it up and take a look at these VA mDoD jobs starting out around 290/300k as a GS. The pension which only costs ya 13k a year seems like such a swat gig. Plus other bennys and job security. The day the fed govt defaults is the day none of us want to be around lol.

Haha sorry the VA being the veterans affairs. And the DoD was a typo (dept of defense). And GS is the general schedule which is a term used to describe federal employees. There’s grades and steps in the federal system etc. sorry for the typos and confusion.

I'll bite. I interviewed for a VA EM job around 6 years ago so maybe things have changed a little, but overall the VA's job security is as rock-solid as you can get. Have also talked numbers with a director about a civilian job at an army hosptial in the lower 48-- for simplicity, will bundle them together as "VA" since compensation+benes and pros/cons were overall similar.

The pension itself doesn't pay out as well as Kaiser's, but is far more secure. The impression I got was that docs there essentially treated their pension as the fixed-income portions of their portfolio so didn't need to invest in bonds and put their $ into higher risk:reward things like the stocks and RE.

The VA math worked out so that if your salary was 300k and you then added in the yearly bonus+401k+pension contributions and value of the many benes than the total comp was around 400k or perhaps a touch above. So overall it was on par with academic and CMG shops and didn't come close to legit SDGs and good hospital-employed jobs. But unless you've already been given site-specific info, you can't assume what a given VA will pay. I've heard of docs starting in the range of 230k (HA!) to 330k.

However, the biggest con to the VA was that FT meant 40 hours/wk (like Kaiser, but VA paid less). Apparently there was a rule that all FT federal docs had to work 40hrs/wk and there was no exception for EM docs. I've heard there was a push to change this rule and if that's been done than that's a huge win. Anyway, to try to compensate for this, the place I interviewed at gave each doc 4 hours of "admin time" per week so each doc worked 3 12s/wk which, when you factored in the yearly PTO (equated to 2-3 less shifts per month), seemed like a reasonable ratio of workload:compensation. But if the VA you're looking at expects you do to 40hrs/wk clinical time I'd ask for more $$$ or admin time or walk away.

The VA has some big problems and some big pluses. I don't know a single doc who picked the VA for the compensation. They pick it for the patient population >>>> work-life balance, low stress environment, opportunities for career transitions over time, and chance to be a doc without dealing with some of the bull**t that the majority of us stuck in a highly pro-profit driven system have to endure.