Careers and Net Worth

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Your Career as an Asset Class

By Rick Kahler MS CFP®

Rick Kahler CFPIs your [medical] career part of your net worth? Should you include it as an asset class in a diversified investment portfolio? While we consider careers as essential aspects of financial and professional success, few of us think of or manage them as financial assets.

Emerging New Philosophy

Michael Haubrich, CFP®, of Financial Service Group, Inc., in Racine, Wisconsin, encourages clients to think of careers this way. Some of the following ideas come from his new book, Career Asset Management: Getting Ahead, Staying Ahead and Using Your Head to Maximize Your Career Value.

Career as Assset

If you consider your career an asset, then managing it means paying attention to the return you get from that asset. Here are a few things to consider in order in order to receive the most value from a career.

  1. Keep in mind that the most important return on investment from a career is not necessarily financial

The value of a career is much more than just the money you earn; it includes a host of less tangible but vital rewards like the satisfaction you get from your work and the fulfillment that comes from following your dreams and using the talents that make up your unique genius.

  1. Consciously set out to build a career rather than get a job

As with investing, this provides the most benefit when you start early. Settling long-term for “just a job” usually won’t provide as much value, in terms of both income and job satisfaction, as you will get from a meaningful career.

  1. If your career asset isn’t providing a good return, make changes

Just as you might sell an underperforming mutual fund, consider making changes to your career if you aren’t getting the earnings, fulfillment, or other value you want from it. You might look for a similar job with a different company, add skills and knowledge to help you move up, consider changing careers, or explore starting your own business.

One way to fund such changes is to budget for a reserve over and above the six months of living expenses that many financial advisors recommend. Mike calls this reserve an Asset Working Capital Fund. He suggests the amount to have in this fund depends on the “velocity” and “volatility” of your career asset—including how fast you’re likely to advance, the stability of your job and career field, and life changes like starting a family that will affect your income.

  1. Think of your career as a rental property

Mike recommends viewing your career as an asset that you own and rent to others for given periods of time. To get the highest “rent”—income and satisfaction—you need to keep that asset in top shape by keeping your skills and knowledge up to date, maintaining your passion for your work, and building a strong reputation and network of relationships within your profession.

  1. Make the most of your near-retirement years

Wanting to retire early because you’re dissatisfied with your work can be a sign that your career asset isn’t working for you. Yet staying employed for even a few more years can make a big difference in your retirement income. Mike suggests considering options like part-time or contract work, flexible scheduling, consulting, or freelancing to add value to your late-career years. This can help you move into retirement gradually, as well as provide more financial security.

Bear + A Falling Stock Chart


Chances are you won’t choose to list your career as an asset class in your investment portfolio. To make the most of both your aspirations and your earning power, however, keep in mind that a satisfying career is one of the most important assets you can own.



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Financial Planning MDs 2015BOOK:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

7 Responses

  1. The Nature of Surgeon Human Capital Depreciation

    An Essay by Jason Hockenberry and Lorens Helmchen

    NBER Working Paper No. 20017
    Issued in March 2014
    NBER Program(s): HC HE

    To test how practice interruptions affect worker productivity, the authors estimated how temporal breaks affect surgeons’ performance of coronary artery bypass grafting (CABG).

    Using a sample of 188 surgeons who performed 56,315 CABG procedures in Pennsylvania between 2006 and 2010, the authors found that a surgeon’s additional day away from the operating room raised patients’ inpatient mortality risk by up to 0.067 percentage points (2.4% relative effect) but reduced total hospitalization costs by up to 0.59 percentage points.

    In analyses of 93 high-volume surgeons treating 9,853 patients admitted via an emergency department, where temporal distance effects are most plausibly exogenous, an additional day away raised mortality risk by 0.398 percentage points (11.4% relative effect) but reduced cost by up to 1.396 percentage points.

    These estimates imply a cost per life-year saved ranging from $7,871 to $18,500, rendering additional treatment intensity within surgery cost-effective at conventional cutoffs.

    Their findings are consistent with the hypothesis that after returning from temporal breaks surgeons may be less likely to recognize and address life-threatening complications, in turn reducing resource use.

    This form of human capital loss would explain the decrease in worker productivity and the simultaneous reduction in input use.

    This paper is available as PDF (227 K) or via email.

    Hope R. Hetico RN MHA


  2. Some Physicians Plagued by Student Debt, Bad Investments

    A survey of physician debt and net worth — part of Medscape’s Physician Compensation Report 2015 — shows that rising medical student debt is taking a long time to pay off for many doctors, and bad investments are also taking a toll on some physicians. As part of the debt-to-net worth ratio, patient-care compensation for employed physicians in the survey included salary, bonus, and profit-sharing contributions.

    Net worth tended to increase with the age of respondents. More than 90% of those aged younger than 28 years had a net worth of less than $500,000. By age 50, more than half (55%) had a net worth of at least $1 million; by age 65, 49% of physicians had accumulated more than $2 million.

    Source: Troy Brown, Medscape News [5/19/15]


  3. More on Careers

    The most important financial asset for most working Americans is a career. Our careers represent skills that we, in effect, rent to companies or individuals in exchange for money—which constitutes employment. If no one is exchanging money with you for your skills or services, you are unemployed.

    According to information released by the Bureau of Labor Statistics at the beginning of February 2017, the US unemployment rate is 4.8%. This is only slightly higher than the 4.6% reported at the beginning of December 2016, which was the lowest level since August 2007.

    This is a vast improvement over the 10% unemployment rate of the Great Recession. Seemingly, things appear to be reasonably good, as 19 of 20 people who want a job have one.

    However, unemployment numbers, like other statistics, are more nuanced than they might seem at first glance. For example, the average hourly earnings for American workers in January was $26.00. Over 2016, this average rose by 2.5 percent . However, it is still lower than you might expect in an economy where there appears to be tight competition for workers.

    One explanation for the low wage growth is that part of the drop in unemployment was the result of people getting new jobs, but a larger part was people dropping out of the labor force. The total labor force was 157.03 million in the US in January 2015. By November 2016 it had risen to 159.49 million, a 2.5 million worker increase. However, 4.8 million new worker-age Americans were hired during the same time, so why did the number of people employed only rise 2.5 million?

    The bottom line: people are giving up on finding jobs faster than they’re being hired. The Labor Department identified 532,000 “discouraged workers” in January. These are people who are not currently looking for work because they don’t believe any jobs are available for them.

    The US unemployment rate of 4.8% includes potential workers all across the country. But what if you want to know the figure for adult men and women over age 20? Or for people with a high school diploma vs. those who are college-educated?

    The Labor Department breaks down these figures in some detail. Much of the actual joblessness is found in the teenage population, age 16-19 years, where unemployment runs at 15.0% overall. Americans 25 years and older have an unemployment rate of just 3.9%—a figure you probably won’t see anywhere in the headlines.

    Also note that Asian Americans have a rate well below the national average (3.7%), white Americans have a higher but still below-average rate (4.3%), while unemployment rates are higher for Hispanics (5.9%) and African-Americans (7.7%).

    Or look at the figures by education, and you see the value of a diploma or degree. The rate is three times higher for people who never graduated from high school (7.7%) than for people who graduated from college (2.5%). The unemployment rate for high school graduates is 5.3%, over twice as high as that for college grads.

    Then there are state and regional variations. At the end of 2016, New Hampshire had the lowest unemployment rate in the US at 2.6%, with South Dakota and Massachusetts tied for second at 2.8%. The highest rate, 6.7%, was in Alaska. Knowing there are plenty of jobs in Boston may not mean much to you if you happen to live in Juneau.

    Statistics can’t tell the full story of unemployment, which ultimately comes down to millions of individual experiences. No matter where you live and what demographic categories you fit into, your best protection against unemployment may be to keep investing in your career.

    Rick Kahler MS CFP®


  4. What Should Your Net Worth Be At 40?

    Everyone’s financial situation is unique, and your net worth is going to reflect that. There’s no one “right” net worth to work toward when you’re in your 40s. Your net worth goals should be based on your lifestyle goals – not just an arbitrary number you want to grow your wealth to.

    That being said, there are a few ways to determine whether you’re “on track” with your net worth; according to Forbes.

    Rules of Thumb
    There are a few rules of thumb that people follow when setting a net worth goal. The first is a catch-all equation:

    Ideal Net Worth = [Your Age – 25] x [⅕ x Annual Gross Income]

    Let’s look at an example. Let’s say you’re 43 years old, and you make $100,000 a year. Using the above equation your ideal net worth would be $360,000.

    $360,000 = [43-25] x [⅕ x $100,000]

    Another common rule of thumb when it comes to net worth goals is to have a net worth of 2x your annual salary by the time you’re 40 years old, and 4x your annual salary by the time you turn 50.

    Using our example above, if you’re now 43 and your salary is $100,000, you should have a net worth of almost $300,000

    Dr. David E. Marcinko MBA


  5. Fidelity Investments recommend that you save:

    * At least one times your salary by your 30th birthday
    * Three times your salary by your 40th birthday
    * Six times your salary by your 50th birthday
    * Eight times your salary by your 60th birthday




    The net worth of US households rose to a record $141.7 trillion in the second quarter, up 19.6% from a year ago, the Fed reported yesterday.

    The unprecedented rise in net worth reflects two defining trends of the US economy in 2021: a surging stock market and a white-hot housing market. Of the $5.85 trillion increase in net worth, stocks accounted for $3.5 trillion, and real estate appreciation was responsible for $1.2 trillion.

    Home equity percentage rose to 67.7% in April, the highest level since the 2008 financial crisis.



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