Financial Preparedness: Are You Flunking?

Would you score well on a Financial Preparedness test?  I would give most physicians a C+.  Quite a few deserve an F.  Does that bother you?  It should.

Physicians are used to getting A’s on their report cards.  Schoolwork came easily to most.  Others had to really go all out to achieve the top grade levels.  They mastered that and hundreds of other complex topics.  Despite this many are failing at a subject much more important than the Krebs cycle: Financial Preparedness.

Financial preparedness includes a high savings rate, an emergency cash cushion, minimal or no debt, substantial retirement funds, and an adequate knowledge of the basic concepts of personal finance and investing.  So how many of us “rich doctors” make the cut?  Not many.

It amazes me how many physicians do not prepare well for their financial future.  The AMA and Medscape survey results are worthy of our attention.   Some of the stats that shocked me:


  • 40% have car loans.  17% pay car lease payments.
  • 25% (1 in 4) have credit card debt.


  • 63% still have debt in their 60’s.
  • 48% still paying med school debt in their 40’s.  10% in their 50s.


  • If you save you live below your means.
  • With our high incomes, we should ALL live below our means.  Less than half do (25% to 40%)
  • 1/3 of doctors in their 40s and 50s don’t max out their 401k/403b.


  • 30% of doctors have no emergency fund.
  • Only ½ have an updated will! (47% in 40s and 56% in 50s)


  • 25% of residents are “very concerned” about saving for retirement. 
  • Only 11% of all doctors think they are “ahead.”
  • 40% of physicians consider themselves “behind” in saving for retirement.
  • A minority in their 50’s and 60’s have several million in retirement savings.
  • Only 37% of U.S. physicians have >1M saved for retirement.  Keep in mind that it would only generate 40K / year.


  • Majority of physicians have <1M
  • About half of practicing U.S. physicians average less than $500k in retirement savings.
  • Of those in their forties 15% have 1-3M, 4% have >3M. 
  • In their fifties, those numbers increase but not by as much as they should: 38% and 10% respectively.


  • Part of the issue is a lack of financial knowledge.
  • 18% are “very knowledgeable” about personal finance.
  • 58% have invested in “bad” investments and 20% haven’t invested at all.  

I would like to think that the explosion of physician blogs and books have helped increase financial knowledge.  So far there is some evidence that it actually isn’t getting better.


We all have anecdotal evidence that physicians have very little training or understanding of personal financial management. Now there is published literature supporting this.  The International Journal of Medical Education (IJME) reported results of a study involving medical residents and fellows.  They were given 20 questions on personal finance and 28 questions about their own financial planning, attitudes, and debt.  Here are some of the results:


  • 79% reported high debt levels with a combination of mortgage, credit card, and student loan debt.
  • 20% of respondents had credit card debt that would not be paid off at the end of the month. 32% of whom expected to carry more than $10,000 to the next month.


  • More than two-thirds had student loan debt and nearly half owed over $200,000.


  • Despite having in income like the national median income, nearly 1/3 reported difficulty meeting their monthly expenses.
  • The trainees also reported low levels of satisfaction with their financial status.
  • The study participants were less satisfied with their personal financial condition than the average US citizen. 


  • 38% reported no retirement savings. 56% of those who had retirement savings had under $25,000 worth.
  • Fewer than half of the respondents had projected their necessary retirement savings.


  • The mean quiz score was 52%.
  • Only 13% correctly answered a question regarding no-load mutual funds.
  • Only 20% understood the relationship between interest rates and bond prices.
  • 60% of childless trainees didn’t know what a 529 plan was.
  • Trainees showed low levels of knowledge about health insurance.
  • Few knew that a high deductible health plan is needed for a HSA.  

Does 52% sound like a passing grade to you?  The authors concluded there were serious deficits in financial knowledge.  Those deficits covered a broad range of financial topics.  

This study confirms that personal finance has been largely neglected by the medical education system. This vacuum of education and knowledge makes physicians and trainees susceptible to advisors who charge excessive fees or who recommend inappropriate products. Physicians in training are at high risk for being a target for unscrupulous advisors.

The authors recommend coursework about the basics of personal financial planning, important financial considerations, and health insurance understanding. They recommend specific instruction in several aspects of financial education including:

1. How to make a monthly budget
2. Debt/loan management and credit scores/reports
3. Savings and retirement planning options
4. Life, health, and disability insurance
5. Estate planning strategies

What do you think? How is your current knowledge in these five areas? If you have a knowledge gap is it because you didn’t receive any education in personal finance during medical school, residency, or fellowship?  Should such training become mandatory?

There is a lot of work for us all to do!  Keep reading those physician finance blogs and other resources!  What about you?  Is your Financial Preparedness at A+ levels?  How about the younger doctors you know?  Are they in great financial shape?


  1. Xryavsn said:

    Wait, there is something more important than the Kreb’s cycle??!?!? You know how many times a day that something to do with the Kreb’s cycle comes into my radiology practice?

    I don’t think I have used the Kreb’s cycle once in my entire professional career after med school. Yet the stuff I need like financial education is still sorely lacking.

    Those stats are very sobering. It is easy to get fooled into thinking physicians are improving their finances because as physician financial bloggers we are getting a very skewed audience. For every 1 doc that visits my site, there are 1000 that don’t and carry on their aimless financial path.

    Best way to have a captive audience is to make it mandatory training in either medical school or residency

    August 13, 2018
    • Xrayvsn,
      Yes, we have a skewed view of the world as physician finance bloggers. If you talk to random doctors at work you will find a much lower level of knowledge out there. I hope to help at least a few of those folks get a simple plan to a successful future. I don’t expect to have a huge impact like Dave Ramsey has done for debt or Rob Kiyosaki has done for real estate investing, but we can all do our small part to help share what we know.

      August 14, 2018
  2. I wonder how we compare to the rest of the population on these issues? The numbers are bad, but I suspect they reflect the average American or may be a little better than average. There is a lot of work to do. I better get back to writing.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

    August 14, 2018
    • Yes, Cory please write!
      We need all the help we can get. Doctors are better at some things (like saving for college and participating in 401K at work) but still pretty bad compared to what they could be doing. Especially when you consider their high incomes. I know so many doctors your age that feel that can’t afford a day off let along a vacation or early retirement. They are on a treadmill and feel stuck and lost. It is sad and 100% avoidable.

      August 14, 2018
  3. Dr. MB said:

    I suspect that I will have minimal impact on other physicians. But I really hope that I will have a good impact on my children and their way of thinking about finances.

    Whenever I used to talk about it, my girlfriends’ eyes would all start to glaze! And I wasn’t even talking about anything challenging financially. The recurrent comment of “my husband takes care of it” makes me want to hurl. If I left it for my husband to do it, I’d be afraid right now. Sorry hubs.

    August 14, 2018
    • Dr. MB,
      I agree. I wish more women had an interest in personal finance and investing. I think I married one of your girlfriends because she does the stare-glazed eye look when I speak. That is part of my motivation to blog. I can “talk” about it here and not bore her to death every day. I don’t think Suzi Orman was the best source but at least she got some women excited about this stuff. Women will end up managing this at some point in their life so I think it is a responsibility to at least learn the basics.

      August 14, 2018
  4. Hatton1 said:

    I only know a handful of docs in my real life that are interested in personal finance. The explosion of physician written PF blogs has at least made me feel that I am not alone in the weeds.

    August 28, 2018
    • I agree with you, Hatton1.
      I don’t quite understand how people cannot be interested in this stuff. To me, it is so important and so interesting. But I realize I’m in a tiny minority. At least we know we are not completely alone.

      August 28, 2018

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