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Leslie Kane, MA | June 24, 2020
| Contributor Information
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
COVID-19 has changed our world in many ways, including how healthcare is being practiced—or not being practiced. The financial impact is far-reaching and certainly has been felt by physicians in most specialties.
Many doctors who were in fairly solid financial shape as they targeted a retirement age have had to dip deep into their savings to keep themselves and their practices afloat. The pandemic has affected physicians' ability to pay down debt, save for their children's college education, and keep up with mortgage payments.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
This year's report is based on data collected for our Physician Compensation Report 2020 and represents responses from more than 17,000 physicians in over 30 specialties. Medscape gathered the salary, debt, and net worth information prior to February 11, 2020. The financial picture has changed for many physicians since then because of COVID-19's impact on medical practices.
While it will be some time before medical practices return to a new version of normal, our data provide a picture of the debt load and net worth of many physicians.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Prior to the COVID-19 outbreak, physician income continued to rise over the years. In last year's report, primary care physicians (PCPs) earned an average of $237,000, compared with $243,000 this year (a 2.5% increase). Specialists earned an average of $341,000, compared with $346,000 this year (a 1.5% increase).
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Half of physicians have a net worth under $1 million and only a small percentage are at over $5 million. That proportion may change due to the COVID-19 outbreak.
"Many of our clients have reduced incomes, some by over 50%," says Greenwald, a wealth management advisor for doctors. "They have stopped any ongoing retirement savings outside of their employer retirement plans and are trying to have their new, lower income cover basic living expenses. For some that isn't possible, and they are spending from their emergency fund for basic living expenses and/or larger, one-time expenses."
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Many of the specialties with the highest average income are taking the largest hits because so much of their income comes from elective procedures. For example, one small orthopedics group projects that income will be down 90% for the year if current conditions continue. "They have enough cash to survive for the short term, but that money would largely come from their personal bank accounts," says Alex Kilian, CFP, a wealth manager at Aldrich Wealth in San Diego.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Among those with lower net worth are PCPs, many of whom are now seeing fewer patients, limiting their practice hours, or even shutting down their practices. On the other hand, many PCPs are starting to make use of telemedicine, particularly because video and telephone visits generally (although not everywhere) will be reimbursed at a rate equal to that of an in-person visit.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
"Under the CARES (Coronavirus Aid, Relief, and Economic Security) Act is temporary suspension of federal student loans until September 30, 2020," says Greenwald. "Some private lenders have student loan forbearance programs for those financially impacted by COVID-19, and payments can be delayed 60-90 days; however, interest will typically continue to accrue. For mortgage and auto loans, it's best to work directly with the lender to lower or delay payments, although we haven't been recommending this, as none of our clients have gotten to this desperate a situation."
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Age and specialty are major factors in ability to pay off school loans. Close to 80% of graduating medical school students have educational debt, and the average balance for graduating students in 2018 was $196,520. A handful of medical schools in the United States are currently offering some degree of free tuition.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
What size home you can get for your money varies by location. The average new build in the United States grew from 1660 sq ft in 1973 to 2368 sq ft in 2018, according to the US Census Bureau.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Plastic surgeons, orthopedists, and cardiologists are among the specialists with the biggest homes. The US Census Bureau notes that in 2018, only 2.88% of new homes had at least 5000 sq ft of living space.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Many physicians have a mortgage over $500,000. Standard financial advice is that a mortgage should comprise no more than 28% of one's annual gross income. For physicians who are struggling with a downturn in salary or revenue this year, a greater percentage of their income will go to mortgage payments.
"It is an excellent time to refinance and lower the interest rates on the mortgages," says Ram Kolluri, CFP, who is based in Austin, Texas, and chairs Global Wealth Management, a firm in New Jersey. "Younger physicians should consider 30-year mortgages and lock in the low interest rates for years to come. If they can save on the interest on their college loans, they should try to borrow up to the limit the mortgage lender would permit and use the proceeds to pay down (or even pay off) the college or credit card loans."
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
If you're considering refinancing, it pays to shop around, says Kolluri. "Lenders have been stringent upon their underwriting standards with mortgages, but practicing physicians with steady incomes should be able to find a lender that is willing to cooperate and underwrite the loan. Check with the practice's managing partner to explore any existing banking relationships for refinancing the home. Sometimes they might be willing to play ball."
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
The average American has 3.1 credit cards, according to a 2017 survey by the credit reporting agency Experian. In an analysis, FICO noted that cardholders with scores above 800 have an average of three credit cards. Some have more because they use each card for a different benefit, such as cash back or airline miles.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
A small percentage of physicians say they live above their means, although the annual amount that physicians target to save can vary. Greenwald says that aiming to save 20% of one's annual gross salary should put one in a good financial position. Sometimes the goal is challenging when one spouse/partner is a saver and the other is a spender.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Physicians' net worth situation has changed somewhat since our 2016 Debt and Net Worth report, when 51% of male physicians had a net worth of under $1 million, while 6% were at over $5 million.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Many physicians had experienced an investment-related loss, but the bigger losses came this year, after the stock market dropped. The Dow Jones declined from 28,868.00 on January 2 and now stands at 25,73.16 as of June 15. The S&P 500 went from 3257.85 on January 2 to its current 3,066.59 as of June 15. Some financial experts say that the market may be headed up later this year, a hopeful sentiment.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Nine percent of physicians said they made bad investments last year (see previous slide).
"Invested in a natural gas extraction company and then the natural gas market." –Anesthesiologist
"I invested in cryptocurrency; that turned out to be a loser." –Critical care physician
"I sold a rental property far below value because of the market at the time, when I should have held on to it a bit longer." –Family physician
"I invested in office space that was supposed to be flipped. Yet the cost of remodeling was far more than anticipated and the office sold at a loss." –Ob/Gyn
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
About two thirds of physicians have, at the very least, a general idea of how much they should be spending and saving. Still, as some physicians say, when you actually track and monitor your expenses, either with software or an app, it gives you a better idea of where you can cut back and where you might be spending too much.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Overall, physicians are vigilant about putting money into savings, although that's becoming more challenging. "Many have seen the employer match in their retirement plans reduced or eliminated through the end of 2020, with what comes in 2021 as yet undefined," says Greenwald. "All of this will slow down their wealth accumulation and likely lead to them having to work longer.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
More physicians put money into tax-deferred savings plans than taxable plans, which makes financial sense. Putting money into taxable accounts is helpful when you've maxed out your tax-deferred contributions.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
"Typically, one of the spouses in a couple is more adept and interested in managing the family finances than the other," says Ram Kolluri. "This talent is often gender neutral and age agnostic. Thus, he or she is better suited to take up this responsibility.
"However, the 'managing partner' of the family finances assumes a 'fiduciary role' to the other spouse and is required to safeguard the family nest egg against large losses. Frequent financial reviews of the family budgets, savings, and investments are essential to prevent any surprises," says Kolluri.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
"I plan intermittent or large expenses in advance and don't buy unless we have the cash." –Gastroenterologist
"We do aggressive comparison shopping before every major purchase." –Nephrologist
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
Some physicians meet initially with a planner to develop a budget and investment plan, and then decide to work the savings/budget portion on their own. Others turn over the investment portion of their funds to advisers for professional management. About a third have neither met with nor worked with a planner.
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
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Medscape Physician Debt and Net Worth Report 2020
Leslie Kane, MA | June 24, 2020 | Contributor Information
More than 17,000 physicians told us about their salary, incentive bonus, and denied claims, and how they feel about their career in medicine.Medscape Features Slideshow, May 2020
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Leslie Kane, MA
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