How to make a million dollars a year as a Doctor...

[Twitch]

Tax brackets (typically) refer to federal brackets. Most sub spec. with taxable income > $349k would be in 35%, which is as high as it (federal bracket) goes.

Let's say you're one of the lucky few raking > $1mill. Guess what bracket you fall in? Still 35%.

This wasn't always this way. There was a time (not too long ago) that we were hovering close to 38%-39%. Interestingly, in UK, the highest is 40%.


Back to OP's main topic - any standalone physicians out there with their own company? I wonder if there are any comparative financial studies across specialties on a $/hr basis. Anyone know?

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[Stroganoff]

Back to OP's main topic - any standalone physicians out there with their own company? I wonder if there are any comparative financial studies across specialties on a $/hr basis. Anyone know?

Own company meaning own private practice or company that is separate from one's practice but somehow related to medicine?

 

[wanabdoc]

Someone making 200k per year

Some tax breaks from kids and some state income tax will approximately keep it about the same so let's just say 50k for argument's sake.

So now we are down to 150k.

The median house price (and most docs will buy over the median, but let's just say they don't) is about 250k and monthly payments including principle, interest and insurance could easily be $2000. 2k x 12 = 24k.

Down to 126k.

A couple of decent cars could easily cost $800 per month for payments and insurance. Food, gas, bills (cell phone, internet, tv, gas, elec, water, sewer, garbage), necessities and other expenses for you, your spouse and a couple kids can easily be $2700 per month. $3500 x 12 = 42k

Down to 84k.

Note that all this would buy only a very average lifestyle.

Experts say you should plan to spend about 10% of your income on unexpected expenses related to accidents, house repairs, medical bills, etc.

Down to 64k.

Average student loan amount is around 120k. Payments after deferring through residency would probably be around $750/mo, although this can vary DRASTICALLY. (My payments will be $650 on 140k, but half of my loans are at <3% interest) Anyways . . . 750 x 12 = 9000

Down to 55k

That's enough to buy a Corvette and a trip to Europe! Retirement is so far off anyways and I am sure I will find money to save later . . .

Investing 55k per year could still get you over 5 million easily in 30 years. Think you want some nicer stuff earlier? Buy a house twice as expensive, a couple more cars and the 15k you have left over per year will only be about 1.5 million after 30 years, but that 500k house you just paid off is probably worth 4 million now. Invest evenly in stocks and real estate. Bonds never hurt either . . . sometimes they break records . . . home run records. All my figures are using 7% rates.

Thanks to this thread, I made my future budget spreadsheet for when I finally become a doctor:

Repaying student loans (10y): 35k/year
350k House Mortgage (10y): 4k/month
1 Porsche and 1 Toyota Minivan (4y) (Don't like porsches, but it sounded nice for arguments sake): 1.2k/month
Roth IRA Max: 5k/year
30 day vacation for 2: 7k/year
Food, Gas, Clothes (I don't eat out every meal and my current food budget is $200, so food wouldn't be a big problem, and I only spend $40/month on gas with a 12y/o car, for me clothes would be the biggest part, but to be outrageous I'll go with 2k/month): 2k/month

After putting this and all the different specialties salaries adjusted for taxes (its a very complicated spreadsheet and uses the brackets, not 33% across the board) I came up with the following summary:

Wouldn't be able to afford this lifestyle, although they were very close:
FM
IM
Peds
Phychiatry

Easily afford this lifestyle:
All other specialties, except a few odd primary care ones (like urgent care)


However, I am paying off student loans and mortgage in 10, not 30 years (so I will still be 41-42y/o young when I finish paying for my education and house, 20 years ahead of most people).

You don't need a porsche, seriously if you want a nice car, go with BMW or Mercedes, a porsche makes it look like you hit your midlife crisis 10 years too early. You can settle for a nice Audi and only pay $600/month

350k is a decent house (in california) and in rural Nebraska and other places it would be one of the biggest in town

If you are the marrying type, factor in a wife, we'll say a relatively dumb looker who only earns 30k/year as a secretary somewhere. Now all specialties can afford my original budget (after taxes.) Of course if two FM's or peds get married, they will also easily afford the above budget.

Thanks to this thread, I have had to face my calculator, and to be honest, even for primary care, the future isn't too bad.

Also, if you figure in a 10% cut in physician salaries, the primary care specialties will have problems with this, but I think Primary care will stay fairly stagnant, and if salaries decrease drastically, they will probably affect specialties, who even with a 20% decrease in salary can afford the budget (except EM)

 

[Tenesma]

a few issues with your numbers

- it will be VERY hard for you to find a home for 350k in most areas of the country unless you are moving to oklahoma or north dakota - you should figure on 450-600k for a home --- and in california 450k will get you a small starter house unless you are willing to commute 2 hours to work every day.

- you don't want to pay off a mortgage in an accelerated fashion unless you KNOW that you will live in that home for the rest of your life - or unless the interest rate is too high

- a porsche (911) if not leased is $2,200/month - a boxter is about $1,200/month - then add minivan $500/month - plus insurance/gas/repairs - total is closer to $3,300/month

- as a physician you don't qualify for a Roth IRA - but that is okay, because if you are self-employed you can do a SEP - or go with your employers 401k
- so yearly contributions on that are 15k to 45k (depending on which way you go)

- 30 day vacation for 7k/year ---- if you are self-employed every day you take off for vacation you lose about $1,000 to $2,000/day in lost revenue - if you aren't self-employed then this isn't an issue... AND a vacation for a family of three (you, spouse and 1 child) to Florida for 5 days - flying coach, and staying in average hotel, plus meals and misc. will run $3-4k... so how do you figure you can do 30 days on 7k/year - unless you stay home for vacations...

- food for a family of three - groceries alone is about 400-600/month - dining out depends on your tastes but can range 200-500/month

- gas - 40/month!!! that would imply that you drive only 250 miles/month with a car that gets 20mpg - i doubt it - you gotta figure at least 100/month per car that you own

- you are also leaving out life insurance, disability insurance, umbrella insurance on personal liability, and potential umbrella insurance on malpractice, home-owners insurance, etc..

and for TRAMD

if you make 200k - after deductions that leaves you with about 130k after taxes... then you have to figure that average home 500k, average cars (2 cars) $1,200/month, insurance, etc will leave you with monthly expenses of about 8k/month which is about 96k - that leaves you with 44k/year ...

now if you want to retire at age 60 and be able to live on 180k/year (inflation adjusted in todays dollars) you need to save about 50k/year starting at age 30.... so you are actually in the hole 6k/year ---- so time to cut your expenses and start saving every penny....

 

[TRAMD]

and for TRAMD

if you make 200k - after deductions that leaves you with about 130k after taxes... then you have to figure that average home 500k, average cars (2 cars) $1,200/month, insurance, etc will leave you with monthly expenses of about 8k/month which is about 96k - that leaves you with 44k/year ...

now if you want to retire at age 60 and be able to live on 180k/year (inflation adjusted in todays dollars) you need to save about 50k/year starting at age 30.... so you are actually in the hole 6k/year ---- so time to cut your expenses and start saving every penny....

AVERAGE HOME $500K? It is too bad that fools in parts of the country are paying so much for housing. $600 per month for a car payment? My 2005 Subaru Legacy GT Turbo Limited that I purchased brand new has payments of $355--72 month. Plus $1100 per year for insurance and about $150-$200 for gas and that $600 is about right. Were you including those?

Not to help make your point but 130k - 96k = 34k

 

[McDizzy]

It is possible to make $1 million/yr or more as a physician. The local hospital publishes the top salaries because it is a non-profit. The top 2 are above $1 million and the top 5 are over $650K. The top 10 are over $500K. How do they do it? Well they are the most productive in the hospital. Their productivity is more twice the MGMA medians for their specialties.

On another note:

If you are thinking about paying off your mortgage quickly, consider this. Alot of you will be subjected to the Alternative minimum tax. It is a nasty little tax which will strip away almost all of your deductions. The biggest deductions it doesn't take away are mortgage interest and property taxes. So, If you are making alot of money, then it is often better to invest the money you would use to pay of your house in order to keep the deduction.

 

[etf]

On another note:

If you are thinking about paying off your mortgage quickly, consider this. Alot of you will be subjected to the Alternative minimum tax. It is a nasty little tax which will strip away almost all of your deductions. The biggest deductions it doesn't take away are mortgage interest and property taxes. So, If you are making alot of money, then it is often better to invest the money you would use to pay of your house in order to keep the deduction.

well it all depends - it's like saying "keep losing money on stocks so you can write off the capital losses." as long as the marginal tax rate is below 100%, you're always better off earning money and paying taxes on it. the money you pay in interest might not be offset by your tax deduction, so be sure to run the numbers first.

 

[michaelrack]

He got robbed.

I agree

 

[Poitiers2]

Does making healthcare across the US a standard provided by the US Government great for the country and not so great for future physicians?

It's not good for the majority of patients, and nor is it going to be good for the majority of doctors. For the majority of the 47-million uninsured (40% of which are illegal aliens), it's a pretty sweet setup. You pay nothing into the system, and some other sucker pays for everything for you.

 

[Poitiers2]

- it will be VERY hard for you to find a home for 350k in most areas of the country unless you are moving to oklahoma or north dakota - you should figure on 450-600k for a home --- and in california 450k will get you a small starter house unless you are willing to commute 2 hours to work every day.

There are plenty of areas in the country where $350k will buy a nice 4-5 bedroom home. There are multiple major metro areas where that applies. If you're willing to locate to a town off 250k or so, even more. California is a rip-off, and their state's punitive tax system is not friendly to physicians.

If you really want to be on the West Coast, live and work in Vancouver, WA, and shop in Portland. Home prices are still rip-offs there, though. (I know, supply-demand... But there are plenty of places where you can live on the lake and by the mountains and not get jacked to pieces for the price of owning a home--and still have good schools, to boot.)

if you make 200k - after deductions that leaves you with about 130k after taxes... then you have to figure that average home 500k, average cars (2 cars) $1,200/month, insurance, etc will leave you with monthly expenses of about 8k/month which is about 96k - that leaves you with 44k/year ...

now if you want to retire at age 60 and be able to live on 180k/year (inflation adjusted in todays dollars) you need to save about 50k/year starting at age 30.... so you are actually in the hole 6k/year ---- so time to cut your expenses and start saving every penny....

The caveat here is that the home may be paid off sooner rather than later. Then you dump the house payments, get rid of interest, and pour the money into retirement investments.

 

[dragonfly99]

If you really want to be on the West Coast, live and work in Vancouver, WA, and shop in Portland. Home prices are still rip-offs there, though. (I know, supply-demand... But there are plenty of places where you can live on the lake and by the mountains and not get jacked to pieces for the price of owning a home--and still have good schools, to boot.)

I know a doc who lives in Vancouver, WA and does that.

 

[MagicDrumSticks]

It is possible to make $1 million/yr or more as a physician. The local hospital publishes the top salaries because it is a non-profit. The top 2 are above $1 million and the top 5 are over $650K. The top 10 are over $500K. How do they do it? Well they are the most productive in the hospital. Their productivity is more twice the MGMA medians for their specialties.

On another note:

If you are thinking about paying off your mortgage quickly, consider this. Alot of you will be subjected to the Alternative minimum tax. It is a nasty little tax which will strip away almost all of your deductions. The biggest deductions it doesn't take away are mortgage interest and property taxes. So, If you are making alot of money, then it is often better to invest the money you would use to pay of your house in order to keep the deduction.

I don't understand what you're saying. Sorry my English isn't that good, can you please break this down for me?

 

[Poitiers2]

Tax brackets (typically) refer to federal brackets. Most sub spec. with taxable income > $349k would be in 35%, which is as high as it (federal bracket) goes.

This wasn't always this way. There was a time (not too long ago) that we were hovering close to 38%-39%. Interestingly, in UK, the highest is 40%.

If you're interested in this, you need to go back a bit further in history. Before Reagan, the top tax bracket was 72%. Yep, downright criminal. Reagan cut it to 28% and kicked off the economic growth of the 1980s and gave rise to the whole yuppy craze in the process.

There are nations in Europe that when you add the VAT tax confiscate over 80% of one's income if you've set yourself up in a position where you earn more than others.

 

[link2swim06]

If you're interested in this, you need to go back a bit further in history. Before Reagan, the top tax bracket was 72%. Yep, downright criminal. Reagan cut it to 28% and kicked off the economic growth of the 1980s and gave rise to the whole yuppy craze in the process.

There are nations in Europe that when you add the VAT tax confiscate over 80% of one's income if you've set yourself up in a position where you earn more than others.

 

[DocFeelGood8976]

..... If the system is socialized, the government will be in control of our wages as a whole. We cannot let that happen. What are some ideas to prevent that from happening as well as maximize our bank rolls?

I know this post was written back in 2007, but it is more pertinent today than the day it was written. We need to start and open discussion on this topic yesterday. So what do we do?

 

[MOHS_01]

How to make a million a year as a doctor...

Write some bathroom novel entitled "hopes of my daughter".... if you're a practicing doctor just starting out, it will be a tragedy from beginning to end... if you've been working for a few years the first few chapters will be rosy, filled with hard work, long hours, and sacrifices... only to be rewarded to some extent for your efforts... until one day some teleprompter reading inexperienced crazy confused socialist/fascist/overall authoritarian loon hijacks your profession and rapes your earning power....

 

[strangeglove]

http://www.newyorker.com/online/blo...cago-medical-school-commencement-address.html