I came across an article a couple of weeks ago that asked whether becoming a doctor was a million dollar mistake. This got me thinking.
Most of us would say that the work we get to do each day is amazing. We get to help children and families at some of their most vulnerable moments. From a purely altruistic viewpoint, there aren’t many jobs that are more rewarding and really allow you to make good on your interview statement that you “really want to help people.”
Despite the incredible nature of our jobs, I want to discuss this article and some of the points the authors make.
The first point is that in the Nerd Wallet study referenced, less than 50% of doctors would enter medicine as a career if they had it to do over again. For the reasons I already mentioned, I don’t think this statistic applies to PEM physicians, and a recent survey of specialities backs this up. (Hint: PEM is the happiest speciality!)
The author added up the various costs of becoming a physician and the total come out to nearly one million dollars in opportunity cost. What is opportunity cost? It is the loss in gain from alternative choices when one choice is made. In our case, the lost income/increased debt from choosing medicine.
How did the author get to $1,000,000?
|Educational debt (repay)||~$500,000|
|Lost Income due to school||(10yrs)||~$500,000|
What were the assumptions the author made? She assumes that the average doctor will start working approximately 10 years after their fellow college graduation classmates. She also estimated a $50,000 per year salary (low for residencies now, and likely would be higher if go getter types that go into medicine where applying themselves in another field).
Shes also assume that you repay an average loan balance of approximately $200,000 over 30 years at 7.5% interest. If you need help on NOT having to pay education debt in this manner, see my last post here.
The author also states the figure of $1,000,000 is low due to falling reimbursement and compounded by increasing demands on physician time by paperwork and other administrative tasks.
I do not share the view that medicine is a $1,000,000 mistake but agree that we start our financial lives at a disadvantage compared to our peers that have 10 years head start on saving for retirement. All the more reason to become financially literate early in our careers and make up for lost time by saving a large portion of our income, paying down debt and making smart choices when it comes to investments. Our earning power is high and this is the Ace in our hand. If we apply ourselves we can reap both the emotional/altruistic and financial benefits of being a physician. We needn’t allow the “million dollar” hole we start in to be our final financial destination.
See article online: http://www.cbsnews.com/news/1-million-mistake-becoming-a-doctor/
None of the above should be construed as offering tax, legal, investment or other advice. It is offered for informational purposes only. Please consult professional tax, legal, or investment advice.
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