PracticeLink Magazine

WINTER 2015

The career development quarterly for physicians of all specialties, PracticeLink Magazine provides readers with feature articles, compensation stats, helpful job search tips—as well as recruitment ads from organizations across the U.S.

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32 PracticeLink.com WINTER 2015 2 0 1 5 AN N UAL Quality of Life issue inf uence on my happiness. It's a matter of contentment." Seven reasons why frugality is key for physicians 1 You have expensive loans. The f rst and most urgent reason to embrace frugality is something you've already encountered: the ever- expanding cost of a medical education. The cost of acquiring an M.D. or D.O. degree has ballooned over the last 20 years, with tuition alone increasing from as little as $6,000 to as much as $82,000 per year. It is no longer unusual for physi- cians to f nish residency owing more than $450,000 in student loan debt at interest rates of 6 to 8 percent. Even those who obtain signif cant forgive- ness will still end up paying hundreds of thousands of dollars. Rakesh Chaudhari, M.D., a neuro- radiologist in Woodridge, Illinois, advises: "It should be a priority to pay those off rapidly. That loan needs to go away in f ve years if possible, 10 at the most." 2 An uncertain future for income. The second reason physician frugality is important is that physician incomes in many specialties are trending down- ward due to the ever-increasing costs of compliance, the move to an employee model, and the downward pressure on reimbursements from public payers and private insurance companies. The trend toward using high- deductible health plans has made the consumer more cost conscious, and also placed much of the burden of payment on the patient, who some- times cannot or will not pay. In short, many mid- and late-career physicians have found that they are making less money now, on an inf a- tion-adjusted basis, than they did earlier in their career. Most physicians expect this trend to continue. 3 You need to start saving for retirement. Physicians are 30 years old—and sometimes 35 or even 40—before f nishing their training. The portion of their career where they are actually earning a full salary is much shorter than it is for many other professionals. This late start requires that physi- cians actually save a higher percentage of their income than others. If non- physicians need to save 10 to 15 percent of their income, physicians may need to save 20 percent or even more to get to the same place. 4 You have to consider insurance costs. Disability and life insurance can be very expensive. The less money you and your family need to live on, the less disability and life insurance you need to carry. The sooner you reach f nancial independence, the sooner you can drop expensive policies. 5 You've got taxes to consider. A physician may assume that an income of $200,000 per year—four times the median household income in the United States—would entitle him to a lifestyle that is four times as decadent as the average family. However, once you incorporate the need for the additional tax due (along Related How much are you really worth? PracticeLink. com/magazine/ featured/ how-much-are- you-really-worth Related How physicians are handling their fi nancial futures in light of their student loan debt · page 52 Forget the Joneses Continued Continued on page 34

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