This reports surveyed nearly 20,000 doctors across 26 specialties with margin of error <1%.*
Two slides I found particularly informative are:
Physicians’ Net Worth by Age
“Over 90% of physicians younger than 28 years of age were worth less than $500,000. Net worth increased with age; by age 50, less than a quarter (23%) had a net worth under $500,000. By then, over half (55%) were worth $1 million or more. By age 65, nearly half (49%) had accumulated over $2 million.”
In my age group 28-34, 85% of the young docs have <500k net worth; 9% have 500k-1 mil net worth; 1% have 1-2 mil. In fact, I won’t be surprised that majority of the 85% with <500k net worth have NEGATIVE net worth in age 28-34.
By age 34, I will have conservatively speaking 85k (without accounting for the potential 8-10% growth of my ROTH accounts and the potential annual gain of 2-3% in my home value). My net worth will be behind the top 10 percentile of my age group of physicians’, but I’ll be doing fine.
When many young docs are making big attending paychecks at age 30, I’ll still be in training, making pgy5 income. If I can max out ROTH retirement accounts available to me, build home equity, and be student loan free, many people my age should be able to do better.
My goal is to help the 85% who has <500k build as much positive net worth as possible. If we even use just 3% of the brain power that’s required to get into and survive medical school to our personal finances, we can all easily build positive net worth much sooner instead of the being part of the prevalent trend of massive negative net worth in our later 20’s and mid-late 30’s.
Paying off Student Loans by Age Group
“It is not surprising that the percentage of school debt falls steadily with age. According to the AAMC, medical school debt has increased by 6.3% since 1992 compared with a 2.5% increase in the Consumer Price Index. The AAMC also has reported that the median 4-year cost to attend medical school for the class of 2013 was $278,455 at private schools and $207,868 at public ones. Given these high tuitions, resident debt has risen much more rapidly than inflation or resident compensation. According to the Medscape survey, 20% of physicians 50 and older are still carrying this liability. Even more physicians may owe money on college in mid-life as the current younger group of physicians age, and their higher debt continues into later life.”
In my age group 28-34, 67% of us young docs are still carrying/paying off student loans.
My goal is to help the 67% of us who are still carrying (likely massive 200k-500k) student loans to get rid of this noose around the neck ASAP. Paying interest at 6.8% is a pretty bad guaranteed loss… why not find ways to lower such as high interest rate?
While refinancing was not available to those without attending income just a few months ago, residents and fellows can actually refinance now (DRB and Earnest have rolled out programs allowing pgy’s/yet-to-be-attending to refinance their student loans to a lower rate.)
If you do the math, you’d recognize that the student loan burdens are massive because of the HIGH Interest combined with LONG TIME the principle is compounding. Many students who graduate with 400k student debt, only borrowed 330k in the first place. 50-75k of the total debt at graduation ares simply Interests+ origination fee accrued during medical school alone, not to mention the interest that will accrue during pgy training as it’s compounded on ever growing principle debt balance.
So the best 2 things one can do is: 1) minimize taking out student loan/high interest loan (be frugal, creative, and live within your means). 2) DELAY and AVOID debts with high interest rates (take on a debt with lower interest rate such as credit card balance transfers w annual interest rate 2-3%, utilize home equity loans, or better still use 0% APR promotional rate for 18 months on your living expenses/tuition. Then either pay it off when the 0% APR is up with readily available student loan or simply balance transfer to 2-3% interest rate deal.)
If the damage is already done, ie, you already have quite some high interest debt. Then, convert your debt to a lower interest by refinancing, or taking advantage of low interest credit card deals, home equity loans, or personal loans @ a lower interest rate to pay off your high interest rate student loan ASAP.
*You can see the full Medscape report here.
- What financial moves have helped you tackle your student loans?
- Did you look into student loan refinancing? Were you happy with the rates/terms that were offered to you? What was your experience with the refi companies such as DRB or Earnest?
- Any other student loan refi companies you recommend?