Unmasking the Medical Millionaire Myth

Physicians tend to reach their income peak when they have been in practice between 5 and 10 years, and then decrease in subsequent years as the willingness and ability to work the long hours required begins to wane, according to the article "Medical Dispatch, Piecework, Medicine's Money Problem" (The New Yorker; 2005). Although tempting, newly-minted doctors should heed the warnings of their financial advisors not to overspend early in their careers, and create a lifestyle that may be unaffordable 10 years down the road.

An Uphill Battle

William Weeks, a Dartmouth professor, has done a number of studies on the work life of physicians. He found that, if you view the expense of going to college and professional school as an investment, the payoff is somewhat poorer in medicine than in other professions. Tracking the fortunes of graduates of medical schools, law schools, and business schools with comparable entering grade-point averages, Weeks found that the annual rate of return by the time they reach middle age is 16% per year in primary care medicine and 18% in surgery. That compares with 23% for law and 26% for business.

The Steps to Take

The following are measures a young physician can take early in their career to ensure financial stability for the long term:

• Avoid overspending early in your career at the expense of your retirement. Buy a house and car within your budget and finance with low-cost, lowpayment loans. It's important to hedge against the likelihood that health care costs will continue to rise.
• Use bridge loans only when necessary to cover your operating expenses and pay them off as soon as your cash flow increases.
• Embrace and use electronic medical record keeping to its fullest capacity, which will help you to reduce cost, increase efficiency, and, ultimately, reduce overhead.
• Set up a career timetable that allows for winding down gradually in your later years and create a financial plan to match.
• Prepare for your exit or "buyback" strategy now to be assured that the money will be available when you are ready to retire, and your partners won’t feel the pinch.

There is no question today's physicians are facing unprecedented financial constraints and struggle daily to maintain excellent patient care. However, astute financial planning and the guidance of a wellinformed wealth management professional can help physicians better manage both their practice and their personal finances, and help to shore up a comfortable retirement. Sara Wallace Rudder is senior vice president in the Medical Specialty Group of SunTrust Private Wealth Management and SunTrust Investment Services, Inc. This specialty team was created to help physicians meet their unique financial challenges. She welcomes questions or comments at sara.rudder@suntrust.com.