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Am I Prescient, Lucky or Just an Observant Trend Reporter?
By Dr. David Edward Marcinko MBA CMP™
[Publisher-in-Chief]
A few years ago I was involved in a Physician’s Money Digest report that showed the average physician reader (ie, 47 years old and $184,000 in annual income) would need about $5.5 million to retire. This was in 2007-08, right before the infamous financial “meltdown”.
Lifestyle Preservation
Now, that’s if they planned to have the same lifestyle after retirement as in the years just prior to retirement. In other words, to live on 80% of pre-retirement income, my doctor colleagues would need about $4.4 million. Although that isn’t exactly loose change, the average PMD reader at the time, had a head start, with a net worth of $1.1 million. By maxing out on retirement plans, we reckoned the average reader could be in shouting distance of the goal by age 65.
Although the figures were daunting, they were a wakeup call to the fact these doctors, now age 52-53, still needed to save more aggressively to be able to finance the retirement they were working toward. But since then, their home worth and practice value, savings, investment and retirement accounts are probably down in 2012; as is their net worth. Down – and I mean way down!
Link: http://www.physiciansmoneydigest.com/issues/2005/92/3951
Fast Forward to 2012
Today, some pundits posit that doctors in America are harboring an embarrassing secret: Many of them are going broke. This quiet trend and seeming reality, which is spreading nationwide, is claiming a wide range of casualties including family physicians, cardiologists and oncologists. Sadly, it is a trend that I have professionally observed and personally seen.
Link: http://money.cnn.com/2012/01/05/smallbusiness/doctors_broke/
Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. And, no doubt, these are all true reasons – in part. But, some experts counter that doctors’ lack of business acumen is also to blame.
So, that’s why we started our physician focused financial planning firm www.MedicalBusinessAdvisors.com – and – our online educational program for their managerial consultants and financial advisors www.CertifiedMedicalPlanner.com These firms were conceived and launched more than a decade ago; to much derision and haughtiness at the time. Not some much today, however! Why?
Assessment
A decade ago, Forbes magazine ran an article about doctors making six figure salaries and still wanting a medical union to bargain collectively. This was a bit difficult for the average man or woman in the street to imagine about such learned professionals, formerly considered affluent and a cut above the rest. So, where is medical union clout today? Where is MD salary clout? And, where is physician net worth now – and in the future? Doctor – what’s in your wallet?
Conclusion
And so, your thoughts and comments on this ME-P are appreciated. Are doctors really going broke? Are they OWS…ers? Was I prescient, lucky or just an observant reporter of this trend, early on? Please review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
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Filed under: Career Development, Financial Planning, Investing, Retirement and Benefits | Tagged: Are Doctors Really Going Broke?, doctor salary, Dr. David Edward Marcinko, physician income, physician net worth, physician's money digest |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Michael’s Doctor,
Conrad Murray MD, cardiologist for Michael Jackson, filed paperwork last month indicating he is indigent.
Abe
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Financial Planner Bankruptcies Rising
[CFP Board Tackles Issue]
Even certified financial planners [CFPs] are falling prey to bankruptcy, and the CFP Board is looking at changing its rules so a bankruptcy filing doesn’t have such punitive consequences for licensees.
http://www.fa-mag.com/fa-news/9703-certified-financial-planner-board-tackles-bankruptcy-in-its-ranks-.html
Maybe these guy were advising the broke doctors?
Xavier
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Small Steps to Physician Financial Independence
Doctor – What would it take for you to become financially independent? It’s a common goal, and it means different things to medical professionals and all people. I define financial independence as maintaining a lifestyle that supports wellness without having to earn an income.
Happiness and wellness are not necessarily the same, but recent studies suggest an income of around $60,000 is optimum for producing happiness. This is an average, so the equivalent amount might be around $50,000 in areas like the Black Hills and $100,000 in places like New York City.
How much of a nest egg do you need to save to produce an annual income of $60,000? To maintain the purchasing power of your portfolio throughout your lifetime, you will want to limit your annual withdrawals to 3% of the principal. This assumes you’ve invested for the long term in a diversified portfolio with the majority in stocks and alternative investments. To throw off the needed income, you will need $2,000,000.
While two million bucks sounds like a lot of money, accumulating that amount can be done if you start saving early by living on less than you make. A couple who start contributing $10,000 a year to their ROTHs at age 22 and who stop making those contributions at age 29, assuming they invest in equities with an average annual return of 8.5%, will have a reasonable chance of having $2,000,000 by age 65. Similarly, a couple who start saving $10,000 a year in their ROTHs at age 29 and continue to save until they are age 66 will also have $2,000,000.
So, how do you save money? The most common denominator among my clients who have accumulated wealth isn’t the career they chose or the investments they made. It’s their ability to understand, apply, and enjoy frugality.
I asked a friend of mine, a self-made multi-millionaire, how he would explain frugality. He responded, “How would you feel if someone paid you $180 an hour to walk?”
Then he told me this story:
“When I travel on short business trips I often leave my car parked at the airport. It’s more convenient and cheaper than the airport shuttle. I got used to parking in the short-term lot because it’s closer to the terminal than the long-term parking. The short-term parking costs $9 a day, while the long-term parking is $8. Many people might figure on short trips they could easily afford the extra $2 or $3 and reap the benefit of reducing their walk to the car.”
However, a frugal person might wonder just how much that benefit would be. So, I figured out how long it took me to walk the extra steps from the long-term lot to the short-term lot—30 seconds. Walking the same distance on my return makes my extra round-trip walking time 60 seconds. On a three-day trip, my total savings for this one-minute walk is $3, which adds up to $180 an hour.
To my brain, saving $3 seems trivial and meaningless, but being paid $180 an hour is significant enough to interest me. I’ll sign up for that in a heartbeat. Now, I park in the long-term lot.”
For a successful businessman to care about saving a couple of bucks on parking might seem silly or even miserly. But my friend’s story is an example of a frugal mindset. Frugality is choosing not to spend more than necessary on things that don’t matter, so you can spend on things that do matter … lLike saving for your future.
Then someday, when you’re financially independent, people can wonder why you think frugality matters.
Rick Kahler CFP® MS ChFC CCIM
http://www.KahlerFinancial.com
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MGMA-ACMPE Reports Academic Doc Pay for 2011
The median compensation for a primary-care faculty member in the U.S. was $167,943 in 2011, while median compensation for a specialty-care faculty member was $253,917, according to a report from the MGMA-ACMPE, formerly the Medical Group Management Association. The MGMA-ACMPE’s report also notes that specialists in academic settings are paid less than those in private practice.
The report, The Academic Practice Compensation and Production Survey for Faculty and Management: 2012 Report Based on 2011 Data, found that among selected academic clinical specialists, orthopedic surgery faculty members had the highest median compensation, at $432,260. Faculty members specializing in endocrinology/metabolism were at the low end of the compensation scale, at $161,337, according to the report.
Source: Paul Barr, Modern Physician [3/28/12]
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Prices for Doctor Services Lag Behind Inflation
Physicians have long felt that the cost of running a practice is growing more quickly than payment received per service. New government data indicate that this is more than a feeling.
The Consumer Price Index for all items went up 0.3% in March and 2.7% in the previous 12 months, according to Bureau of Labor Statistics data released April 13th. Prices paid for physician care, which includes the amount from an insurer as well as the patient portion for a single service, went up 0.2% for the month and 1.3% during the past year.
The Medical Group Management Association said practice revenues increased 45% between 2001 and 2010, but costs went up 53% even though practices cut costs by 2.2% in 2010, mostly through less spending on drugs and furniture. In the 1980s and 1990s, the physician services rate was well above inflation, but that gap began narrowing significantly in 2001.
Source: Victoria Stagg Elliott, AMNews [4/30/12]
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In Oregon, It Pays to be a Podiatrist
Podiatrists in Oregon can expect to earn more than actuaries, judges, physicists and most all other workers in the state. The doctors who specialize in caring for feet bring home the highest average annual salary in the state, according to the Oregon Employment Department’s new 2012 wage survey.
Top 10 average annual wages in Oregon, by occupation:
Podiatrists: $134,297
Engineering managers: $131,321
Audiologists: $128,583
Physicists: $114,894
Pharmacists: $114,235
Judges and magistrates: $113,241
Computer and information systems managers: $110,867
Actuaries: $110,143
Medical scientists, except epidemiologists: $107,852
Financial managers: $105,235
Source: Molly Young, The Oregonian [6/19/12]
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Supreme Court Ruling: Family Docs See Benefits
[Specialists See “Redistribution of Reimbursements”]
When the Supreme Court upheld President Obama’s health-care law yesterday, many interested parties had cause to celebrate.
http://www.businessweek.com/news/2012-06-29/family-doctors-seen-as-winners-as-high-court-upholds-law#p1
Among them were family doctors like me who stand to gain both influence and money from the decision.
Dr. Murray
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The State of Primary Care Medicine
Dr. Murray – Here is an interesting essay on primary care by Brian Klepper:
http://thehealthcareblog.com/blog/2012/06/29/galvanizing-primary-care%e2%80%99s-pow/
Hope R. Hetico RN MHA
[Managing Editor]
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