Everywhere I go I see unhappy doctors. All everyone does is complain about rising malpractice premiums, more paperwork, declining pay, and 60 hour workweeks. This includes physicians just graduating from residency and physicians who’ve been practicing medicine for several decades.
All of those complaints are legitimate, but one question I always have in my mind about the physicians who are in their 50s is “Why are you still practicing medicine full time?”
I keep hearing about the “golden age” in medicine. I don’t know what that means, but I assume it has something to do with making more money than we do now.
Suppose you’re a 55 year old physician and you’ve been practicing medicine for 25 years full time. If you absolutely love it, that’s great. It’s your passion so go for it. But for the rest of you (which is the majority I think) who are in your 50s, who experienced the “golden age” in medicine and are still practicing full time and complaining, I've got to be blunt: you have failed miserably in your investment career.
What do I mean by this? Let’s say you graduated from residency in June 1985 and started making some money. Suppose you socked away on average $25,000 per year in the US stock market each year for the past 25 years starting in January 1986. The US stock market as represented by the S&P 500 index had an average annual return of 9.9% in that period. So over 25 years your investment portfolio should be at least $2.5 million.
And that’s with putting away only $25,000 a year on average. Bump that up to $50,000 every year—which is an entirely reasonable and attainable amount for a physician to invest every year---and you should have at least $5 million in the bank.
Even if you invested only in bonds you’d have about $1.7 million saving $25,000 a year and nearly $3.5 million saving $50,000 a year. This is based upon the US aggregate bond market index.
How many of you actually have that? Sure a few you might, but I’d bet that the vast majority of you don’t. And I also bet that the reason you’re working full time right now is because you realize you didn’t save enough and invest well. Common reasons why you have a meager portfolio value are:
1. You spent every penny you made
2. You didn’t save enough because you overspent
3. You took way too much risk and got burned
4. You hired a commission based financial advisor who put you in inappropriate investments
5. You invested in speculative investments like restaurants, limited partnerships, or hedge funds, and they tanked
Now you feel trapped in your current situation.
So if you are a physician in your 50s or older and are complaining about your situation, you completely blew a phenomenal time to invest and really don’t have anything to complain about except your missed opportunity. You should have enough to walk away if you want. If you don’t and unless you jump up and down in joy every time you go to the hospital or when you’re on call, it’s time to crack the whip and get moving because the next 25 years are going to be a challenging environment to practice medicine to say the least. And if the chatter I’m hearing is accurate, I don’t think you want to practice medicine full time until you’re 80.