Scraping by on 400k per year...

[Habeed]

http://articles.moneycentral.msn.co...ngTrading/getting-by-on-400,000-MSNMoney.aspx

Wow. The bottom line appears to be that, depending on spending habits and location, even an income of $400,000 per year can be insufficient. Obviously, even a two physician household is unlikely to reach that level of income.

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[southerndoc]

http://articles.moneycentral.msn.co...ngTrading/getting-by-on-400,000-MSNMoney.aspx

Wow. The bottom line appears to be that, depending on spending habits and location, even an income of $400,000 per year can be insufficient. Obviously, even a two physician household is unlikely to reach that level of income.

Ha, that's funny. There are plenty of single physicians who reach that income in certain specialties.

 

[Habeed]

Ha, that's funny. There are plenty of single physicians who reach that income in certain specialties.

As a percentage of the whole? Don't think so. 400k is out of reach for most physicians most of the time.

 

[medicinesux]

It's not how much you make, It's how much you keep

 

[mgdsh]

$400k a year after taxes isn't much at all, especially with a family and especially living in one of the most expensive areas in the world (NY, NY).

Now if you are like a good portion of physicians that don't mind living in some remote rural area, then that can go a long ways.

But if you want to live in a highly desireable area of the country, forget about it

BTW... $400k a year isn't 'rich'. 'Rich' is having so much money that you or your kids never have to work again

 

[MOHS_01]

$400k a year after taxes isn't much at all, especially with a family and especially living in one of the most expensive areas in the world (NY, NY).

Now if you are like a good portion of physicians that don't mind living in some remote rural area, then that can go a long ways.

But if you want to live in a highly desireable area of the country, forget about it

BTW... $400k a year isn't 'rich'. 'Rich' is having so much money that you or your kids never have to work again

400k after taxes? 800k pre tax? Most docs will never come close... in fact, most two physician households will not either...

 

[mgdsh]

400k after taxes? 800k pre tax? Most docs will never come close... in fact, most two physician households will not either...

That was meant to say... "After paying taxes on an income of $400k, you're not left with a whole lot."

 

[dragonfly99]

That was meant to say... "After paying taxes on an income of $400k, you're not left with a whole lot."

This shows how out of touch with the average person some physicians and premeds really are. I can't believe anyone would say that. Either pretax or posttax, 400k/year is a LOT of money to the vast majority of people in this country, whether living in NY or LA vs. not. It definitely won't go nearly as far in Manhattan as in the middle of Kansas, but even in NYC you'd be doing way better than the average person on 400k/year.

 

[southerndoc]

Ha, that's funny. There are plenty of single physicians who reach that income in certain specialties.

I'm not going to say any further on this. Trust me, there are single physicians who make more than 400k/yr.

 

[The White Coat Investor]

There are lots of physicians out there making $400K per year who are just scraping by. I know several. The problem, however, has nothing to do with their income but rather their spending habits. Just like it is possible for someone who makes $60K to buy too much home and too much car and too much vacation, it is possible for someone who makes $400K.

Even docs benefit from being frugal. Also, keep in mind that as your income climbs, a much larger percentage goes to stuff that the less fortunate don't pay. I make less than $150K, but after retirement plan funding, charitable contributions, and taxes (especially self-employment tax) I only take home $56 of my $150/hour moonlighting gig salary.

It's a nice problem to have, but don't get into the mindset that someone who makes $400K can live 8 times as well as someone who makes $50K. They can live 3 times as well, sure, but not 8 times.

The wise physician never lets his spending level get anywhere near his income. You've got too much to make up for (remember how you didn't put anything into your 401K during your 20s and buy a house when you were 25 like all your friends did? Now's the time to make up for that with a higher savings rate.)

Plan on paying 1/3 in taxes, saving 1/3, and living off 1/3 and that'll be about right.

 

[dragonfly99]

There are lots of physicians out there making $400K per year who are just scraping by. I know several. The problem, however, has nothing to do with their income but rather their spending habits. Just like it is possible for someone who makes $60K to buy too much home and too much car and too much vacation, it is possible for someone who makes $400K.

Even docs benefit from being frugal. Also, keep in mind that as your income climbs, a much larger percentage goes to stuff that the less fortunate don't pay. I make less than $150K, but after retirement plan funding, charitable contributions, and taxes (especially self-employment tax) I only take home $56 of my $150/hour moonlighting gig salary.

It's a nice problem to have, but don't get into the mindset that someone who makes $400K can live 8 times as well as someone who makes $50K. They can live 3 times as well, sure, but not 8 times.

The wise physician never lets his spending level get anywhere near his income. You've got too much to make up for (remember how you didn't put anything into your 401K during your 20s and buy a house when you were 25 like all your friends did? Now's the time to make up for that with a higher savings rate.)

Plan on paying 1/3 in taxes, saving 1/3, and living off 1/3 and that'll be about right.

this is very wise.
southerndoc is right, though...there are quite a few docs out there making 400k, but you have to be in certain specialties, and probably have some pretty good business sense to do that, and usually be willing to work more hours than the average doc.

 

[mgdsh]

This shows how out of touch with the average person some physicians and premeds really are. I can't believe anyone would say that. Either pretax or posttax, 400k/year is a LOT of money to the vast majority of people in this country, whether living in NY or LA vs. not. It definitely won't go nearly as far in Manhattan as in the middle of Kansas, but even in NYC you'd be doing way better than the average person on 400k/year.

Or conversely it shows how naive physicians are.

You shouldn't be comparing yourself to the 'average' person, for a myriad of reasons. I shouldn't have to list those for you.

Again, $400k a year pretax isn't ****.

 

[southerndoc]

Again, $400k a year pretax isn't ****.

Depends where you live. If you're in NYC, then no, it's not much. If you're in a rural area where housing and living is affordable, then yes, it's quite a bit.

 

[The White Coat Investor]

Or conversely it shows how naive physicians are.

You shouldn't be comparing yourself to the 'average' person, for a myriad of reasons. I shouldn't have to list those for you.

Again, $400k a year pretax isn't ****.

I'll trade you some **** for $400K. At the going rate for manure ($50/truckload) I could probably bury your hospital for $400K.

If you can't live on $400K you've got problems. I feel like I'm drowning in cash at 1/3 that.

 

[dragonfly99]

If you can't live on $400K you've got problems.

That was what I meant...

 

[MOHS_01]

I'll trade you some **** for $400K. At the going rate for manure ($50/truckload) I could probably bury your hospital for $400K.

If you can't live on $400K you've got problems. I feel like I'm drowning in cash at 1/3 that.

Huh... well, just to help a good ol' boy out, I'll tell you what... you send me the excess that you're "drowning" in... just so that I can keep you safe from that horrible, drowning death... and I'll use it to pay down some of that monstrous debt that I am drowning in.

 

[bkpa2med]

I don't know why everyone always references these extremes to NYC. Most people in NYC live with $50k/year. Someone who makes $400k should be shot if they feel that it's not enough. I'm from NYC and when I make $200k in the future I know I will live reaaaaally well. Some just need to come down to reality -- and btw the American dream is over. Welcome to Great Depression Part II.

 

[The White Coat Investor]

Huh... well, just to help a good ol' boy out, I'll tell you what... you send me the excess that you're "drowning" in... just so that I can keep you safe from that horrible, drowning death... and I'll use it to pay down some of that monstrous debt that I am drowning in.

What are you driving? How big is your house? There you go, I just saved you $30K a year.

 

[mgdsh]

I'll trade you some **** for $400K. At the going rate for manure ($50/truckload) I could probably bury your hospital for $400K.

If you can't live on $400K you've got problems. I feel like I'm drowning in cash at 1/3 that.

I could definitely survive on $400k a year. Hell I could survive on <$30k a year, but would I truly be 'living' in the way I want to live? No I wouldn't.

I personally don't want to sit around working my whole life. I'm retiring at or before 50.

I also have a tendency to enjoy the finer things in life. Everyone has their own expectations, but for me to do what I want in this lifetime, $400k isn't going to cut it... esp since I'm only going to be working about 1/2 to 2/3s as long as most people do.

 

[MOHS_01]

What are you driving? How big is your house? There you go, I just saved you $30K a year.

Ford pickup... bought and paid for... house is $150k, 2000sq ft.... living below my means has never been a problem (although, to be fair, I intend to buy and build a little nicer place soon).

 

[The White Coat Investor]

Ford pickup... bought and paid for... house is $150k, 2000sq ft.... living below my means has never been a problem (although, to be fair, I intend to buy and build a little nicer place soon).

Guess that won't work. I've got one more idea how to get rid of your loans (although I can't say I recommend it):

http://www.goarmy.com/amedd/

 

[The White Coat Investor]

I could definitely survive on $400k a year. Hell I could survive on <$30k a year, but would I truly be 'living' in the way I want to live? No I wouldn't.

I personally don't want to sit around working my whole life. I'm retiring at or before 50.

I also have a tendency to enjoy the finer things in life. Everyone has their own expectations, but for me to do what I want in this lifetime, $400k isn't going to cut it... esp since I'm only going to be working about 1/2 to 2/3s as long as most people do.

That's exactly my point. By the way, no matter how much you make, retiring by 50 is tough as a doc. Run the numbers and you'll realize you need either a really high savings percentage or a really high return. Making reasonable assumptions I can't see how I can do it before age 52-55.

I'm not saying I couldn't spend $400K/year. I'm sure I could. But I can live very comfortably on much less.

 

[MOHS_01]

Guess that won't work. I've got one more idea how to get rid of your loans (although I can't say I recommend it):

http://www.goarmy.com/amedd/

I think that I'll take my chances... with every new (non-communist) system there is the creation of a new set of winners and losers... those with the foresight and drive to remain ahead of the curve should continue to do well... and I'm afraid that providers will be shifted from the former class to the latter.

As a side note, it would appear that a strong America needs a strong Russia/U.S.S.R./China in order to maintain its appropriate directional bearing. Without the presence of a viable threat we lose sight of why our system is better, was better, and forever will be better. Without the competetive threat we become complacent, focusing on "social justice" and other internal parasitic issues............ I just hope that we can redirect our focus prior to the point of no return, a point where we are saddled with so much domestic and foreign social obligations that we have no reserves for external threats... and we come to our senses and realize that our current leaders are attempting to rewrite the >236 year old social contract that is (was) the American dream...


"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free."

Ronald Reagan
40th president of US (1911 - 2004)

 

[Poitiers2]

As a side note, it would appear that a strong America needs a strong Russia/U.S.S.R./China in order to maintain its appropriate directional bearing. Without the presence of a viable threat we lose sight of why our system is better, was better, and forever will be better. Without the competetive threat we become complacent, focusing on "social justice" and other internal parasitic issues............ I just hope that we can redirect our focus prior to the point of no return, a point where we are saddled with so much domestic and foreign social obligations that we have no reserves for external threats... and we come to our senses and realize that our current leaders are attempting to rewrite the >236 year old social contract that is (was) the American dream...

There is a heck of a lot of insight in this post. Well said.

 

[UserNameNeeded]

Ironic quoting Reaganisms at a time like this-- "trickle down" is exactly why we're all under water now.

--

With student loan debt as high as they've become for medical graduates, I can see how getting by on something seemingly large as $400,000 with a new/expanding family can be difficult in this age. I can buy a nice, upper middle class home in Texas as I spent on getting my medical degree. Heck, I could buy 2 houses! Tack on the interest costs compouning over 10 years, I could buy 4.

The average home price in Detroit has crashed to $7,000. When will our graduate school costs come down to earth?

 

[dodobird13]

With student loan debt as high as they've become for medical graduates, I can see how getting by on something seemingly large as $400,000 with a new/expanding family can be difficult in this age. I can buy a nice, upper middle class home in Texas as I spent on getting my medical degree. Heck, I could buy 2 houses! Tack on the interest costs compouning over 10 years, I could buy 4.

The average home price in Detroit has crashed to $7,000. When will our graduate school costs come down to earth?

not sure how far 400k goes when you're already 200+ in the hole. i'm tired of people acting like doctors who have invested AT LEAST 7 yrs of their youth into post grad education at the cost of hundreds of thou should be happy to get a 125k salary. something is screwed up about this situation.

 

[deleted116380]

Too funny. $400k and problems getting by is a complete joke. Btw, I know quite a few doctors that make over $400k not including their spouses (rads, derm, heart surgeon, etc). Definitely not the "most common" physicians, but it's not that hard to find a doc making that much (in FL as least where we get a lot of medicare-covered patients ).

 

[Actuary]

[QUOTE="in FL as least where we get a lot of medicare-covered patients .[/QUOTE]

Maybe I'll fix that.

400k a year after taxes is relative garbage

 

[Actuary]

The Asian kids who's parents think medicine is the only way to go are the ones going to get screwed when ACA starts trending reimbursements down, down, down. TVM on 100s of thousands of school debt, puts anything but specialist, in the a ****ty ROI. CRNA's are pulling nearly as much as hospitalists without the debt. That's a killer ROI.

Physician pay is going to go down, not in dollars, but adjusted for inflation and shifts in utilization and frankly i feel a little bad for you

 

[PsychPod]

400k post taxes, if spent correct (i.e not a 1.2MM home and lexus and bmw and three vacations a year out of country) will go A LONG ways. I just hope to make 212k at age 40.

Then again I never plan to retire completely.
I'd like to become adjunct faculty teaching biology at an university.
Or maybe even a pre-health advisor when I get to like 65+

 

[Actuary]

· Average School Debt is based on number of prerequisite years of school and varies wildly by individual.

· Estimated Average Career Salary, is based on a number of sources, mostly Forbes/BLS and for Actuary DW Simpson with 20,000 subtracted for good measureJ

· Average Years to Practice is age 65 minus age 18 minus any years spent in school.

· Estimated Career Income is expressed in nominal dollars. The assumption being that estimated career income moves uniformly with inflation. This is not a measurably good assumption but there aren’t predictable alternatives.

· Estimated total debt liability is the average school debt expressed as uniform payments over 30 years with the average time value of money of 6%. This is fairly accurate.

· Effective Tax rate is based on the estimated average career salary. This also would be very accurate—even for careers with a wide range of salaries. There is no measurably good assumption that will indicate future tax rates.

· Estimated career return on investment is the ratio of estimated career income to school debt liability net of taxes. This is an imperfect measurement but fair.

 

[PsychPod]

@Actuary

The only thing that sucks about those top three careers which are non-medical and have the best return.
They are all location dependent. Good luck wanting to be a petroleum engineer and working in Oregon (of course some there but you get the point).
Even actuaries are location dependent in huge metro areas, where insurance companies/consulting firms are located.
As well as they are more conceptual based learning methods involved with mastering those fields whereas medical is "more-so" memorization based. Which require more intelligence than hard work IMHO.

Although I agree that Oil&Gas, Insurance and Medicine are the three industries which are never going away and give the best reward.

 

[Actuary]

@PsychPod

You've made several excellent points.

I cannot speak to Oil--and have had no general desire to work in that field. I hear it is boom and bust industry.

Actuarial work becomes very specialized very quickly. Across specialties there are about 30,000 credentialed actuaries (roughly as many anesthesiologists). The mobility issue that you raise is a good one, although I've never had any personal difficulty with it. The Actuarial exams are a significant hurdle that favor the analytically inclined. Frankly, I have great distaste for memorization, and a creeping laziness, so I think I would be out of my element in medical school.

All that said, I considered medical school and I essentially chose freedom from debt/risk (my undergraduate degree was full-scholarship) over the mobility and lower pay concerns.

In general, I enjoy the cerebral nature of the work I do, the very laid back work hours and a reasonable salary at 28 (156,000) and great benefits.

 

[PsychPod]

@Actuary

I actually considered being an actuary. I love probability, statistics, mathematics in general and for some reason LOVE insurance haha. I have an interdisciplinary degree in business and economics and adding pre-med prereqs (were going to be upper level math if Actuary path).

The only problem was the mobility issue in the fact that I wanted to live in rural/northern Texas and in Dallas actuaries don't really account for many jobs.

As well as actuarial science majors have near 0 unemployment and have many other opps (finance, statistical analysis, data analytics).
IMHO Actuary is the best job in the US.

 

[Actuary]

@Actuary
I wanted to live in rural/northern Texas and in Dallas actuaries don't really account for many jobs.

I could see that being an issue. In Dallas area the big ones are HCSC, Deloitte, Humana, and AON consulting. There are several others but nothing too notable. Of course, Houston will have the most.

 

[Mapplicant]

I could definitely survive on $400k a year. Hell I could survive on <$30k a year, but would I truly be 'living' in the way I want to live? No I wouldn't.

I personally don't want to sit around working my whole life. I'm retiring at or before 50.

I also have a tendency to enjoy the finer things in life. Everyone has their own expectations, but for me to do what I want in this lifetime, $400k isn't going to cut it... esp since I'm only going to be working about 1/2 to 2/3s as long as most people do.

And now we find out why this poster thinks 400k/year is nothing. I was beginning to become more disturbed by how anyone can think 400k is nothing.....unless that person wants to live in a very large home with multiple Italian exotic sports cars and frolic in the tropics/europe as they please while they taste the finest cuisines all over the world and traveling in luxury.

Billionaire trustafaraians are the very luckiest lottery winners in that regard.

I know people who also said that 6 figure incomes are not "rich" in the sense that you are still a wage earner...not much different than a burger flipper...except the burger is patients are the wages are much higher.

If one wants to re-define rich they can...rich means you do not have to work for money...with so much assets already under control that there is no need to earn wages.

I think it can actually be very useful to think of incomes like 400k as nothing much. This keeps people humble. And this keeps people in a prodigious savings and investing rate. Otherwise if they think 400k is so much money....then they get into trouble and you get OP's problem where even 400K is not enough to sustain a lifestyle.

 

[Silent Cool]

The Asian kids who's parents think medicine is the only way to go are the ones going to get screwed when ACA starts trending reimbursements down, down, down. TVM on 100s of thousands of school debt, puts anything but specialist, in the a ****ty ROI. CRNA's are pulling nearly as much as hospitalists without the debt. That's a killer ROI.

Physician pay is going to go down, not in dollars, but adjusted for inflation and shifts in utilization and frankly i feel a little bad for you

This. And that's without the killer work hours of hospitalists, too. From most job advertisements I have seen, the CRNAs make about 10-20% more per hour than hospitalists. Much less training, and MUCH less debt holy crap. Also considering the expanding scope of practice in many states and the potential to charge cash for outpatient work (like dental offices), or the chance to own billing contracts. Way better ROI than most people in medicine. I wish I had thought about it sooner. Educational costs have become ridiculous.

 

[Silent Cool]

Ironic quoting Reaganisms at a time like this-- "trickle down" is exactly why we're all under water now.

--

With student loan debt as high as they've become for medical graduates, I can see how getting by on something seemingly large as $400,000 with a new/expanding family can be difficult in this age. I can buy a nice, upper middle class home in Texas as I spent on getting my medical degree. Heck, I could buy 2 houses! Tack on the interest costs compouning over 10 years, I could buy 4.

The average home price in Detroit has crashed to $7,000. When will our graduate school costs come down to earth?

That's because the market sets the housing costs. In higher education the government now sets the costs.

 

[mgdsh]

And now we find out why this poster thinks 400k/year is nothing. I was beginning to become more disturbed by how anyone can think 400k is nothing.....unless that person wants to live in a very large home with multiple Italian exotic sports cars and frolic in the tropics/europe as they please while they taste the finest cuisines all over the world and traveling in luxury.

Billionaire trustafaraians are the very luckiest lottery winners in that regard.

I know people who also said that 6 figure incomes are not "rich" in the sense that you are still a wage earner...not much different than a burger flipper...except the burger is patients are the wages are much higher.

If one wants to re-define rich they can...rich means you do not have to work for money...with so much assets already under control that there is no need to earn wages.

I think it can actually be very useful to think of incomes like 400k as nothing much. This keeps people humble. And this keeps people in a prodigious savings and investing rate. Otherwise if they think 400k is so much money....then they get into trouble and you get OP's problem where even 400K is not enough to sustain a lifestyle.

In all fairness, that post was from years ago as I was a 1st or second year resident. I'm now 2+ years out of residency

I've now far eclipsed that mark and yes I do think I should be rewarded for my hard work. I have an estate, have had several high end Italian cars, including one on order. Thankfully I'm not much of a traveller and you don't necessarily need to leave the CA to taste some of the best foods around.

Most importantly, it depends on where you live. In the Bay Area, $400k a year is not a ton. In the midwest (location listed under your avatar), you may possibly live like a king.

 

[Mapplicant]

In all fairness, that post was from years ago as I was a 1st or second year resident. I'm now 2+ years out of residency

I've now far eclipsed that mark and yes I do think I should be rewarded for my hard work. I have an estate, have had several high end Italian cars, including one on order. Thankfully I'm not much of a traveller and you don't necessarily need to leave the CA to taste some of the best foods around.

Most importantly, it depends on where you live. In the Bay Area, $400k a year is not a ton. In the midwest (location listed under your avatar), you may possibly live like a king.

Oh wow didn't even realize that post was in 2009! Well good to see you've been having a satisfying life so far and 400k is not the end of the world

I'm going to defer some of the joys of life until I am near retirement. I'm gonna opt for a more aggressive savings rate and put more into proper investing. I too hope to one day own an Italian exotic but it may be at age 65 rather than 45.

 

[mgdsh]

Oh wow didn't even realize that post was in 2009! Well good to see you've been having a satisfying life so far and 400k is not the end of the world

I'm going to defer some of the joys of life until I am near retirement. I'm gonna opt for a more aggressive savings rate and put more into proper investing. I too hope to one day own an Italian exotic but it may be at age 65 rather than 45.

If it matters and if it helps, I'm 33 I've loved cars ever since I was 3? 4? years old.

Income is just one part of the picture. Making smart decisions is probably as important in that picture.

We're incredibly happy and saving a very healthy amount every month and year with the goal to retire in our early 50s.