Can Doctors Get Rich?


When we think of doctors, we typically think of the “rich doctor”. And most doctors do make enough money to become rich. But many doctors never get there. 

Doctors can become rich. Doctors are among the highest earners in the country which allows them to become “rich” with proper saving and investing habits. However, the majority of doctors have less than $1 million net worth before age 50. 

Can doctors get rich? If so, why do so many have lower than expected net worths? And what does it even mean to be rich? 

Are Doctors Rich?

One of the best sources for physician income is medscape, who publishes annual physician salary reports. Every year they publish the Physician Wealth and Debt Report, which, according to the most recent data in 2019, says:

  • 49% of physicians have a net worth less than $1 million.
  • 44% have a net worth between $1 million to $5 million
  • only 7% have a net worth over $5 million. 

I’m not sure about you, but I grew up being told that doctors were all rich. I had this idea in my head of the rich doctor as someone with multiple vacation homes, plenty of fancy cars, and every other luxury you can imagine. 

What I realized after becoming a doctor myself is that plenty of doctors do embody that idea of the “rich doctor”. But if that’s the case, then why do only 7% of physicians have a net worth over $5 million? I’ll tell you why. 

Because being the “rich doctor” doesn’t mean you’re actually rich. 

That stereotypical rich doctor is less likely to be someone who feels wealthy and more likely to be someone stuck with student loans, expensive car payments, and pricey mortgages. Meanwhile, the wealthy doctor typically leads a more comfortable, less flashy lifestyle. One without the expensive cars, gadgets, and things.

They realize that being wealthy is the result of a higher net worth. And net worth grows by having more assets and fewer debts. So instead of wearing their wealth and driving it around to appear rich, they invest it and use it to pay off their debts.

Net Worth = Assets – Debts

In other words, they know that being a millionaire means saving a million dollars, not spending a million dollars. 

If you want to know more about what makes a millionaire, I encourage you to read the book “The Millionaire Next Door”.  In it, you’ll learn a few things about the “rich”:

– 80% of millionaires are first-time millionaires

– Millionaires live well below their means. They drive regular cars and wear cheap watches. 

– They prioritize financial independence over displays of social status

What I find especially interesting about the book is that most of the millionaires he writes about aren’t doctors. They’re not necessarily even high earners. Instead, they’re hard workers who simply saved and invested enough money over time to build their wealth and become millionaires. 

Doctors, on the other hand, have a huge advantage. Not only are most doctors hard workers, but they’re also among the highest earners. They’re in the perfect position to not only become wealthy, but to not sacrifice much along the way. All they have to do is learn how. Learn to save enough money to become wealthy, but to also feel rich while doing it. 

Can Doctors Get Rich?

I see three main possible financial paths for doctors to take.

  1. The Rich Doctor who spends lavishly and displays their wealth externally
  2. Frugal savers who quickly become financially independent
  3. Doctors who live comfortable, well above average lives and still save enough to become “rich”

If you were making $200,000 to $300,000 per year, which type of doctor would you be? 

Personally, and for reasons I’ll discuss later in the post, I’m the second type. I genuinely enjoy saving and believe in the ideal of being financially independent. But the difference between the comfortable doctor and the financially independent one is really a minor difference in how much they save, their savings rate. The difference between the “rich doctor” and the wealthy doctor, by contrast, is a complete difference in mindset. 

Why do 50% of doctors below age 50 have a net worth less than $1 million dollars?

It’s because they don’t want it. They’d rather have a Rolls-Royce and Gucci clothes. Or maybe that’s just what they’ve been told, that being rich is about having lots of stuff. And they don’t know another way.

But there is another way, and for doctors, it’s easy to get there. It’s only two steps:

  1. To get rich as a doctor, save more money than you spend.
  2. Then, invest it and let it grow.

Why is this easy for doctors? Because after residency and even with student loans, doctors make more than enough money to not only live happy lives, but also afford a few luxuries and still save enough to invest and build wealth.

How Can A Doctor Become A Millionaire?

The first step to become a millionaire physician is to realize that becoming a millionaire is about saving money, not spending it. Then you’ll start looking for ways to build wealth rather than flaunting it. At first you might think you need some other way of generating more money, but being a doctor is all you need to become a millionaire.

To build wealth as a doctor, you don’t need any sort of side gig. You don’t need to learn any new skills or buy a bunch of real estate and become a landlord. All you need to do is focus on being a great doctor, learn a little bit about saving and investing, and avoid major mistakes/make the right big life choices.

The average salaries for a primary care physician and a specialist, respectively, are $243,000 and $346,000. After tax, depending on your state, that comes out to about $160,000 and $216,000. That’s more than 98% of other Americans and leaves plenty to save and invest after covering comfortable living expenses.

Even after taxes, that’s more than enough to build wealth and become a millionaire. You just need to learn the simple way to save and invest.

Saving Money As A Doctor

The first step to saving is figuring out how much you can save. To do that, you’ll need to figure out how much you need to spend to be happy then subtract that from your paycheck to find your savings.

But how much do you need to spend to be happy?

Not long ago, a study came out of Princeton that claimed $75,000 was the exact amount where any extra dollar spent provided less happiness. Of course, in reality there is no number that works for everyone. That study has been thoroughly debunked, but it does bring up a good point. While $75,000 per year might not max out everyone’s happiness, everyone does have a max happiness per dollars number. Only it’s a number that’s specific to you.

I first tried to find my number in my first few years out of residency. After seeing other financial bloggers online, I landed on ~$100,000 per year for Mrs. Average Doctor and I combined. Now, however, after trying to spend that much each year, it turns out we’re happy spending a lot less. This new, lower number allows us to save a whole lot more.

It’s ok to spitball it and adjust it over time. Once you’re aware of your spending, you’ll start to get a better sense of your own number. You might actually be surprised by how little you actually need to spend each year.

Once you know your number and can cover your monthly living expenses, including student loan payments, every other dollar left over is available for saving and investing. Whatever percentage of your income that saving makes up is what’s known as your savings rate. To become wealthy, a doctor really only needs a savings rate of 10-20%.

To become wealthy, a doctor only needs a savings rate of 10-20%.

Easy Investing For Doctors

Once you’ve decided your savings rate, the next step is to put that money to work. To start acquiring assets.

If you leave your savings in a bank account, you’ll end up losing money, a victim of inflation. Instead, you’ll want to invest it.

There are a million different ways for a doctor to invest their money, and it can be very overwhelming. You’re free to choose among any number of asset classes, from real estate to stocks to commodities to cryptocurrencies.

Personally, I like to keep it simple.

My investing strategy operates under a few basic assumptions. First, I am a doctor by training, not an investor. My goal is to obtain the average annual returns of the market as a whole, which comes to around 8% per year. Second, I can only control what I can control. Instead of paying high fees for a stock picker who, as it turns out, doesn’t do a whole lot better than the market anyway, I lower my fees by investing in passive, low cost index funds. Lastly, I plan to maintain my investments over a long period of time, allowing me to take advantage of compound interest.

It’s a simple plan, but it’s been proven time and again to be one that works and that doesn’t require a lot of effort. I’ll show you how it works by comparing the investments of our three different types of doctors over the course of their careers. For simplicity, we’ll assume they all become attendings at 30 years old and make $200,000 per year.

“Rich” DoctorWealthy DoctorFI Doctor
Savings Rate (Dollar Amount)5% ($10,000/yr)25% ($50,000/yr)60% ($120,000/yr)
Age 35$63,000$317,000$760,000
Age 40$156,000$782,000$1,877,000
Age 50$494,000$2,471,000$5,931,000
Age 60$1,223,000$6,117,000$14,682,000

As you can see, you can easily become a millionaire as a doctor without making any crazy investments or building any sort of side business. Simply keeping costs low and investing in the market as a whole.

Now that you know how it works, let me show you where to put your savings to get those results.

You can start investing money in the stock market with any one of the stock investing apps out there. WeBull, Robinhood, Schwab, etc.. But the best way to do it is to simply start with your employer.

As a doctor, chances are your employer offers you access to a retirement account. It might be called a 401k, 457, 401a, or HSA. Take advantage of these accounts. They’ll lower your tax bill and potentially also give you free money. To set up your retirement account, you’ll need to speak with your HR department, create a log in with the brokerage firm, set your contributions, and pick your investments.

For contributions, you’ll want to max the account. In 2020 that max is $19,500 per year (or $1,625 per month).

For investments, remember you’re looking for low cost index funds. These are funds that represent the entire stock market as a whole and have very low expense ratios. For example, VTSAX.

There is some nuance to creating your stock portfolio, and as someone who enjoys these types of things, I encourage you learn it. But if you have no interest in investing and just want to get it right with as little work as possible, you could also invest in a target date retirement fund.

That’s it. Once you set up your account, picks your investments, and set your contributions you’ll automatically be investing and growing your money as long as you’re with that employer.

But wait…$19,500 isn’t all you’re saving. You still have money left!

The next best place to invest your money after maxing out your retirement accounts is a taxable brokerage account. Setting this up is very similar. Contact the company, create an account, choose your investments, and automate your contributions.

Did you catch that? By automating your contributions every month, you’ll never be tempted to spend your extra money. That’s because you’ll never see it sitting in your bank account.

And that’s it. That’s all doctors need to do to become millionaires and get rich. All without needing to struggle or having to create any extra side money.

But what if you want more? What if I told you you could…retire early?

Why Doctors Should Pursue Financial Independence/Early Retirement

Becoming a doctor is hard. It’s a long process with years of studying and training before you finally get to become an attending. And if I told you that I was willing to walk away from medicine after all of that, you’d probably think I’m crazy, right?

Doctors aren’t supposed to retire early.

Why not? Don’t get me wrong, I enjoy my job as a physician and plan to continue doing it as long as I enjoy it. But I decided to be a doctor over 12 years ago. Think back to the decisions you made over a decade ago. Do you think you’d make different choices now?

Besides, medicine has also changed a lot over that time, too. It’s not the same profession it was when I picked it. More and more doctors have become employees rather than owners. Metrics like time to doc and press ganey scores have become increasingly important. And there’s even a move toward midlevels taking over jobs traditionally worked by docs. Who’s to say it won’t change for the worse after another 10 years?

It’s ok for doctors to quit their jobs. It’s ok for them to quit medicine entirely. Whether that’s because the environment of medicine changed or if they decide they just didn’t like it, or for some other reason, it’s ok. The problem is that for one reason or another, money prevents them from doing so.

That’s why I would argue that while every doctor should responsibly save and invest, any of them who aren’t 100% fully committed to medicine (and even some who are) should work towards financial independence.

With financial independence, you’ll gain freedom. Freedom to make decisions without worrying about money. To make decisions with integrity. Freedom that I believe is absolutely worth pursuing.

And it’s not that difficult to get there. All it takes is increasing your savings rate to a point where your investments are eventually able to cover your living expenses. For most people that works out to investments equal to 25x their annual spending number.

Final Thoughts

In the traditional way of thinking, where rich means having a lot of money, yes, doctors absolutely can get rich. All it takes is a little understanding of saving money and investing it, then putting it on auto pilot. If you can avoid the massive lifestyle inflation that many doctors feel entitled to after training, you’ll have no trouble becoming a wealthy, millionaire, rich doctor. Or if you really want, a financially independent one.

6 thoughts on “Can Doctors Get Rich?

  1. Pingback: The Sunday Best (6/20/2021) - Physician on FIRE
  2. Thanks for this nice summary post!

    Based on my conversations with various colleagues over the years, I would propose adding another category to your list: the “ignorant/lazy” doctor who does not have the interest or motivation to learn basic finance and either loses a lot of the their money paying exorbitant fees for financial “advice” or just puts their extra money beyond the basic 401k (a physician who really wants to build wealth will need a taxable investment account) into a savings account and then loses most it to inflation. This is more tragic than the “rich doctor” IMO as they were close to doing the right things but a lack of crucial knowledge and/or motivation was very costly.

    Thanks for what you do!

  3. Pretty good stuff. hi Dad $6000 back door Roth contributions as second in the order of operations after maximizing your $19.5K employee 401k contributions for you (and spouse). Also, if you have a side gig and are paid on a 1099, maximizing your employer contributions next. If you have kids, the marginal amount to 529‘s, which is similar to a Roth for education expenses (don’t overfund it). Then after that, I do a taxable investment account. Asset location – your bond allocation should go in your tax deferred retirement vehicle (401k), and low-cost index funds in your taxable account (VTSAX pays under 2% as qualified dividend , taxed as capital gains).

    1. you cannot contribute to IRA if you are in very high income bracket, which most doctors are. If you did, it is taxable along with some penalty.

      Too much emphasis on low cost funds actually hurts you if the fund is a super performer.

      And, one size fits all advice is not going to help you in any special way.

  4. It is amazing how few doctors build wealth. Many of them should be shooting for $5M.
    That produces $150k at 3% & $200k at 4%.
    Many doctors spend more than that.

  5. you cannot contribute to IRA if you are in very high income bracket, which most doctors are. If you did, it is taxable along with some penalty.

    Too much emphasis on low cost funds actually hurts you if the fund is a super performer.

    And, one size fits all advice is not going to help you in any special way.

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