Why Do So Many Doctors Go Broke Despite High Incomes?
by Malik Amine
Key Takeaways
- High income does not equal wealth. Physicians often delay building assets for a decade while peers in other fields compound growth.
- Lifestyle inflation, student debt avoidance, and poor tax planning destroy physician net worth faster than most realize.
- The fix isn't complicated. It's about starting a basic plan and actually implementing it.
Physicians are among the highest earners in the country. An attending in a specialty like orthopedics or cardiology can pull in $400,000, $500,000, even more. And yet, I talk to doctors regularly who feel financially behind. Some are broke by any real definition of the word.
That's not a judgment. It's a pattern I see in physician financial planning, and there are specific reasons it happens.
Why Do Physicians Build Wealth Differently?
The short answer is timing. By the time a physician finishes med school, residency, and maybe a fellowship, they're 32, 33, sometimes 35 years old. Their college roommate who went into finance or tech has been investing since 22. That's a ten-year head start.
Compound growth doesn't care about your income. It cares about time.
A 22-year-old investing $500 a month gets a fundamentally different outcome than a 32-year-old investing $5,000 a month. The math just works differently. That lost decade is one of the biggest silent wealth killers in physician financial planning, and it's not your fault. It's the structure of the career.
The problem is when doctors don't account for it. You can't get the time back, but you can be aggressive once the salary hits. A lot of physicians aren't.
What Taxes Affect Doctors the Most?
This is where a lot of wealth disappears.
Physicians hit the highest federal tax brackets quickly. You're paying 37% on income above roughly $609,000 for married filers in 2026. Most attendings are in the 32-35% range. Add state income tax in places like California or New York, and you're sending 40-45 cents of every dollar to the government.
The tools that reduce this exist: 401(k) and 403(b) contributions, backdoor Roth IRA conversions, health savings accounts, defined benefit plans for private practice physicians. But I've spoken to residents who don't know what a backdoor Roth is. I've met attendings three years into their careers who aren't maxing their employer plans.
It's not laziness. Nobody taught them this. Medical school doesn't cover it. Residency programs don't cover it. And the first year or two of attending life, most physicians are just relieved to finally have a salary. Tax optimization isn't the first thing on their mind.
But every year you delay costs you real money. Physicians lose hundreds of thousands of dollars over a career to poor tax planning. That's not an exaggeration. That's the math.
Why Do Many Doctors Go Broke?
There are a few reasons, and none of them are about intelligence. These are smart, disciplined people.
The debt shock. The average medical school graduate carries over $200,000 in student loan debt. Some carry $300,000 or more. When your attending salary hits, there's a psychological pressure to pay off that debt as fast as possible. I get it. Debt feels bad. But sometimes that instinct leads physicians to throw every extra dollar at loans while missing years of tax-advantaged investment growth. The calculus between payoff and investment is real, and it requires an actual plan.
Lifestyle inflation that hits hard and fast. Realistically, you spent your 20s being told to wait. Wait until you're done with med school. Wait until residency is over. Wait until you're an attending. Then the paycheck comes, and you stop waiting. New house, new car, private school for the kids. Those are all reasonable things. But they compound. And if they happen before you've built any real financial foundation, they lock you into a spending pattern that's hard to reverse.
Nobody told them what to do. This is the one I keep coming back to. I've worked with physicians who are brilliant, meticulous people at work. But personal finance was never part of their training, and when they finally had the income to make real moves, they froze. They didn't know who to trust. They didn't know where to start. Some worked with advisors who only sold them products instead of giving them a real plan. So nothing got done.
Money in your hand with no direction is money that disappears.
When Should Physicians Invest in Real Estate?
Real estate comes up constantly in physician communities. The pitch is compelling: passive income, leverage, appreciation. And it can work.
But the timing and the how matter a lot.
A physician with no emergency fund, no disability insurance, and a half-funded 401(k) probably shouldn't be buying a rental property right now. Not because real estate is bad, but because you should build the foundation before you build the upstairs.
Once the basics are locked in, real estate can be a strong piece of a physician's portfolio. The key is going in with a real plan, not just a hunch that property is a good investment. Know your cash flow numbers. Understand the tax implications. A real estate investment that loses money on paper can be a tax advantage if structured correctly. A lot of physicians don't know that.
For high-income physicians, real estate also pairs well with a cost segregation study on commercial or rental property. That's an advanced strategy, but it's worth knowing it exists.
How Much Should a Resident Doctor Save?
This is one of the most common questions I get, and I always say the same thing: something.
Residents are not making much money. I know that. $60,000 to $80,000 a year sounds okay until you factor in the hours, the loans, and the cost of living in cities where most residency programs are located. Saving feels impossible.
But here's the thing about residency: it's one of the only times in your life when your income is low enough to do a Roth IRA contribution directly. No backdoor. No conversion. You just contribute. That window closes when your attending salary hits and you're above the income limits.
If you can put away $200 to $300 a month into a Roth IRA during residency, do it. That money will compound for 30 years. It's not about the dollar amount. It's about the habit and the head start.
Also, lock in disability insurance during residency. Rates are based on your age and health at the time of application. You're young and healthy right now. The policy you buy at 28 is cheaper than the one you'll buy at 38. Residency stress takes a toll on health. Don't wait.
What's the Best Retirement Plan for Physicians?
It depends on where you work.
If you're employed by a hospital or health system, you probably have access to a 403(b) and maybe a 457(b). Max both if you can. The 457(b) is especially good because there's no 10% early withdrawal penalty if you separate from service, which gives you flexibility later.
If you're in private practice, a solo 401(k) or defined benefit plan opens up much higher contribution limits. In 2026, a defined benefit plan can allow contributions over $200,000 in a single year depending on your age and income. That's not a typo. For a high-earning physician in their 40s or 50s who got a late start on saving, a defined benefit plan can be a game-changer.
The backdoor Roth IRA is something almost every physician should be doing. You contribute to a traditional IRA, then convert it to Roth. The income limits don't apply to the conversion. This gives you a Roth account growing tax-free, which becomes extremely valuable in retirement when your tax rate matters.
For a deeper look at defined benefit plans specifically, the full breakdown is here: Defined Benefit Plans for Physicians.
The Real Problem
I want to be honest about something.
Most physician financial planning failures aren't about knowledge gaps. The information is out there. The real problem is implementation. Having a plan, even a rough one, and actually doing the things in it.
I've talked to physicians who could explain every financial concept perfectly and still hadn't set up a backdoor Roth or increased their 401(k) contribution in three years. Life gets in the way. The job is demanding. Financial planning feels like homework you never get to.
You got to be smart about this, right? Because nobody else is going to do it for you. You can have the best intentions in the world, but if you don't sit down and actually set up the account, pick the contribution amount, buy the insurance policy, nothing happens.
It's actually pretty simple once you start. The hard part is starting.
FAQ: Physician Financial Planning
Q: Is it too late to build wealth if I'm already 40?
No. Physicians who start at 40 with a serious plan can still retire with significant wealth. The timeline is compressed, but the tools are powerful. A defined benefit plan at 40 with high income can catch up a lot of ground. Start now.
Q: Should physicians pay off student loans or invest?
It depends on your interest rate and loan type. Federal loans at 6-7% are borderline. If you qualify for PSLF, do not aggressively pay them off. That's free forgiveness you're throwing away. If you're in private practice with private loans at 4-5%, the math often favors investing. This is one of the most important decisions to get right.
Q: Do I really need a financial advisor as a physician?
Not necessarily. But you need a real plan. If you'll build and execute one yourself, great. If the honest answer is that you won't, a good advisor pays for themselves many times over in tax savings and avoided mistakes.
Q: What's the biggest financial mistake physicians make?
Waiting. Every year you delay building the foundation, it costs you compounding time you can't get back. The mistake isn't making the wrong choice. It's making no choice.
Q: What is physician financial planning?
It's the process of building a financial strategy that accounts for the specific challenges physicians face: delayed wealth accumulation, high taxes, large student debt, high liability, and the need for income protection. It's different from generic financial planning because the numbers and timing are different.
Malik Amine is a financial advisor and the founder of Money Talk with Malik. He works with physicians and high-income professionals on financial planning and wealth building.