Several months ago I stumbled upon a personal finance blog geared towards physicians and financial independence, two topics that are very relevant to my life. A series of posts there detail the financial lives of four fictional doctors and how their various financial decisions result in radical differences in retirement savings and age at which financial freedom is achieved.

 

More recently a fifth doc was added to the mix, a physician who decided to go half-time relatively early in his career.  This guy sounded a lot like me, although my path was motivated by major burnout and I was not financially independent when I made the decision to cut back on work.

 

After reading the post I felt compelled to share my story and experiences, not to indulge my ego but to help physicians and  others who may be considering part time work. Hopefully I will add value to this discussion and give some insight into the impact of going part-time. I have been doing this for about three years now. Here are my semi-coherent ramblings on the matter.

WARNING: LONG POST AHEAD. NON-PHYSICIANS MAY BECOME DROWSY WHILE READING. PROCEED WITH CAUTION.

 

 

The Myth of the Ideal

There is a narrative written for each of us by society. It is the script we are expected to follow more or less. As a physician we go to college, then medical school and residency, sacrificing the best years* of our lives and going deep into debt to learn to be a healer. When we get out of training around age 30 or so we get ready for a long and fulfilling career as a physician. We dedicate ourselves to saving lives and healing others, and as a side effect make pretty great money in the process. With this money we live comfortably and buy stuff like a big doctor house, European ski vacations and poorly designed financial products in our limited free time. Work-life balance is a myth, but we don’t care because the joy of working is enough for us. Life is beautiful. We ride off into the sunset with the credits playing and the audience in tears. The end.

 

That is unless you are in the greater than 50% of doctors that burn out, spiral into cynicism, or one of the unfortunate ones to die by suicide (at twice the national average). Oops. They don’t tell you that part. Maybe we need informed consent for medical school and residency.

 

I’m not trying to be a major buzzkill here, but we don’t all follow the idealized optimal path. I love the fact that many physicians absolutely love their work and couldn’t imagine not working full time until the day they die. I’ve worked alongside these people as colleagues and have seen them as a patient. Many are my closest friends. I am in awe of them. Our society probably needs people like this to function so efficiently and effectively, but let’s be honest here and acknowledge the people that do not fit this ideal scenario. After all, there is a reason these financial independence and early retirement blogs are so popular.

 

Burnout

Let me briefly tell my story (long boring version here). I went through major burnout about 5 years into my career working in private practice radiology. It was an insidious process, but after a while I noticed I just could not recharge during my days off. I was beginning to resent work. I was becoming less efficient and less engaged. There was a low level anxiety and fatigue that hung like a cloud over me. I knew that if I continued down this path I would become completely disengaged from my job altogether and become a zombie; just a walking dead FTE showing up and doing the work, but not really mentally available for much else.

 

Hating zombies as much as the next guy, I decided this was not going to be my fate…

 

As I sought solutions to my dilemma I learned a lot about the process and emotions of burnout. I thought through  many possible options. At first, my solution was to put my head down and grind through for a few more years. I would quit altogether after I hit financial independence. Most burnt out physicians do this, and, to be honest, when I was in the trenches this seemed like the only option. Nothing else made sense financially or otherwise. Most of us just hope things get better, and often times they do slightly improve.

 

After reflecting on this for a while, I realized there may be a better way than just muddling through and hoping for the best.  In this post I will discuss my path to part-time work and observations.

 

Defining Part-time Work

 

Part-time as a physician can take many forms including, but not limited to:

 

1. Job share: Typically two employees share one FTE (full time equivalent) in the schedule and divide the work between them. This is what I did. It is one of the more flexible options, but it requires cooperation between you and your job share partner. This can fall apart if one party quits. Also, it can result in temporary full-time work if one partner goes on leave for some reason (such as maternity leave). It leads to great flexibility in scheduling, though, as the ways to divide up the work are nearly endless; one week on one week off, splitting weeks, half-days, long sabbaticals, etc.
2. Fractional FTE: Excellent if it can be arranged, but most groups think in terms of full time equivalents and this may be a more difficult sell. In the right situation this can benefit the group tremendously if a round number of FTEs are not optimal with respect to staffing needs. This may work better with shift work specialties.
3. Locums or other contracted work: This is extremely flexible, but also the most volatile, as many of these positions are not permanent. There is likely none of the nonclinical work or politics involved in usual medical practices, which can be a huge plus. Having never done locums I am quite ignorant on the subject.
4. Internal locums: With this I refer to the buying and selling of days/weeks/call responsibilities within your group. This can be a big win-win scenario as there are often people that want more work/call for extra money. This is my favorite solution as it uses free market supply and demand to allocate work, but needs the right kind of people and group to make it work. In an environment where the specialty is short staffed and overworked already it is unlikely there will be many wanting to take on more work.

 

Each of these solutions will have different trade-offs in terms of job stability, financial impact and quality of life issues. There will be vast differences in your ability to implement these in your current job based on your subspecialty, employment model and the demand for your specialty in the geographical location you are working.

 

Everyone’s a Winner

In general, the more flexible you are, the greater number of options will be available. You may need to create the position you are looking for and ‘sell’ it to your employer. It is very important that you look at your job situation in terms of win-win scenarios. If your part-time position does not create a win for both you and your employer it is unlikely it will be a successful endeavor.

 

Some examples of win-win for the group:

• There are more bodies covering the same number of FTEs so in the situation of illness or leave it is easier to cover shifts.
• There is another person in the schedule available for committees, meetings etc.
• Happy physicians are more productive and make fewer mistakes.
• Keeping a half-time physician longer into her career provides more stability and institutional knowledge to the group.
• If the part-time position results in a more optimal staffing level it may be easier to retain/recruit other physicians, especially in high demand specialties.
• There may now be enough work available to hire a physician with specialization the group desires.

 

I’m sure you can think of other win-win situations that would be specific to your group or specialty, and it you are thinking of part-time work this is a necessary exercise.

 

*****

 

Before going down this path, there are financial, psychological and practical implications of this decision to consider. I will cover these topics in no particular order of importance. Everyone will have different opinions of what is most critical in their decision making.

 

Financial Impact of Working Part Time

The financial impact of going half time is huge. As a physician you have great earning power over your lifetime and going half time effectively cuts your income in half or more. It roughly doubles the length of your career, but each scenario will be unique.  There are multiple factors that come into play that will probably make the math not quite 50%.

 

Your effective tax rate will be lower. As you shave off the top half of your income you are eliminating the half which is taxed at a much higher rate. You will likely escape the dreaded AMT (alternative minimum tax) and the ACA (Affordable Care Act) Medicare surcharge on investment income. And, unless you are in a very lucrative specialty, you will probably fall out of the top federal income tax bracket or two.

 

If your state tax is progressive, you will likely find significant savings here as well. To see the impact in your situation you can use a tax estimator like TurboTax TaxCaster to estimate your federal tax burden under different scenarios.

 

Taking a very simplistic scenario of a family of 4 with few deductions I got the following effective federal tax rates:

 

EFFECTIVE TAX RATES AT DIFFERENT INCOMES

Income	Effective Tax Rate
$500,000	28.2%
$375,000	26.2%
$250,000	19.7%
$200,000	17.5%
$165,000	15.6%
$125,000	11.5%

These are estimates and will change depending on multiple variables.

 

This is amazing when you think about it. Simply put, it is incredibly tax inefficient to work at high income levels. Additionally this math becomes even more impressive when you start sheltering money in tax advantaged accounts (401k, cash balance plans, HSA, etc.) because your taxable income will actually be less than 50% of what it was when you were full time.  To maximize the tax advantage of this lower income frugality becomes an important component.

 

Pro tip: If you have a large after tax account when you pull the trigger and go part time, use the dividends generated to live off of and shelter more earned income in tax advantaged accounts.

 

Example: You are now making 125k/yr, living off of 80k/yr and generating 20k/yr dividends and interest. It is now wise to only generate 60k/yr of taxable income from your salary and shelter the other 65k if you can. Your 20k of qualified dividends will not be taxed because you are now in a tax bracket where dividends at this level are not taxed. As a rule, if you can get your income into the 15% marginal tax bracket some pretty magical things start happening.

 

In addition to the tax savings realized you free up time and energy when working part time. You will simply have more available bandwidth to become more efficient with your spending. One reason physicians waste so much money is that they don’t have the time to think through financial decisions. All of our mental energy is focused on the practice of medicine.

 

I spent some of my new time further optimizing my financial life, although I was pretty dialed in before I cut back so the savings were negligible. There is also danger in drifting in the other direction. Now that there are more days off in my schedule I find more ways to spend money. This was not a big change for me as most of my hobbies cost very little, but my travel expenses definitely did go up now that I had more days to do it.

 

There are embedded costs to being a physician that do not go away when you are half time, and these will affect you to varying degrees depending on the type of employment arrangement you have with the hospital/group that you are working for. If you are self-employed these costs will be 100% your responsibility. These include licenses, CME expenses, credentialing, DEA certification, insurance, etc. Medical malpractice should be less, so be sure to check with your medical malpractice provider to get discounted rates.

 

Time to Financial Independence

The amount of time to financial independence is dependent both on initial invested assets AND market returns, assuming your investments are primarily typical paper assets (stocks, bonds, cash). The larger your portfolio the greater impact investment returns will have, as these returns will be a greater percentage of your net worth growth. The smaller your initial portfolio, the greater the impact of the timing of your decision to go part time and the cycle the capital markets are in.

 

Since your income is falling, you will be able to contribute less to savings once you make the transition. Assuming no assets, if you cut back right before a period of lower market returns this makes the math favorable for part time. If you cut back into a period of high market returns this makes full time more favorable.

 

I know this is confusing. I got confused just writing it.

 

Think of it this way: If you can contribute 50k/yr to savings working part time and 100k/yr working full time, you get your money into the market much faster working full time. You are rewarded disproportionately by the higher early returns. If you already have a huge investment portfolio like Dr. Findley in the fancy looking table below, your time to financial independence is much more dependent on market returns (those numbers in the pretty shades of blue).

In other words, if you are going half time without an investment portfolio your career will be more than doubled in length, assuming no change in spending. This is because your savings rate has to go down. It’s just math that cannot be changed.

 

The math will get worse the lower your initial full time salary because fixed costs will become a greater percentage of your income, and the savings rates will start to diverge more. Early retirement math is shockingly simple. In the example of Dr. F, note the 70.6% vs. 45.8% net savings rate even after tax benefits are factored in. Here are some more detailed tables and a link to the article to put them in more context.

TL:DR: Shoveling money into retirement savings early provides the most options barring a zombie apocalypse. Going part time with no savings makes you much more dependent on market returns.**

 

Lifestyle Impact of Working Part Time

Although going half time doubles your effective working career (more or less) it is a massive improvement in lifestyle, especially if you are burned out. As I detailed here your ability to work is your greatest financial asset. Full time is obviously much more lucrative than half time, but for some, part time work will be the only thing that is sustainable in the long run. Had I not gone half time I have no doubt I would have quit medicine by now. Now I feel I could work half time indefinitely. I cannot understate the lifestyle benefits of this decision for me.

 

Going half-time is a compromise. It is like retiring and working at the same time. It is hard to describe the change in lifestyle going from 5 days working 2 days off to 2 days working 5 days off (some weeks). It was profound to say the least. It felt like the first time in decades that I could fully relax and just breathe. I had time to do nearly anything, and not in that rushed-hurry-through-it way I normally did when full time. It took a full six months to adjust to it, and when I did, it was simply amazing.

 

People with furrowed brows and sincere looks of concern and bewilderment ask me what I do with all of this time, which I find quite sad and depressing, actually. I don’t know if they are just trying to make conversation or if they really can’t imagine a life without 50+ hours of stressful work.

 

Here are a few things you will be able to do when you cut back to part time: Go on more walks, read books, go on your kids’ school field trips, start a blog, sleep, ride your bike, go on vacations, attempt to get half as good as your son at first person shooter video games (not going to happen), visit friends and family, go on a retreat, drink a beer on your front porch, play guitar, spend quality time with your spouse, have squirt gun fights with your kids, do yoga, breathe deeply.

 

I pose the following question: Are we designed to work full time or is this just convenient for society? I know we all adapt, but is it really an optimal way to live?

 

Half Time is Not Really Half Time

I should note that half time is not exactly half time. Even if you are only working half the number of clinical and call days, you will probably be expected to contribute just as much to the nonclinical work that comes with a career in medicine. This will include committees, meetings, practice building, continuing medical education, recertification, etc. I have spent many of my ‘days off’ in the hospital at a meeting, giving a conference, etc. This is the cost of working part time and there is little you can do about it without making people around you very angry.

 

Certain specialties lend themselves to part time work better than others. Generally shift work is more amenable to these arrangements such as radiology, emergency medicine, anesthesiology, pathology, and hospitalist. The clinic based and surgical specialties are more challenging, because often patients expect to see only you. There are follow-up responsibilities that become inefficient to pass along to another provider. I know people who make this work, but it is more challenging.  Mrs. Happy Philosopher did this for a while and her 0.5 time was really more like 0.75 time (but for 0.5 pay)!

 

Psychological Impact of Working Part Time

When I was working full time and going through burnout it felt like I could never recharge. It didn’t matter if I had a week off or a long weekend, it just wasn’t enough. This is a horrible feeling, and what made it worse was that I knew it was self-inflicted. Residency is of course much more time consuming and psychologically demanding in many ways, but there is a certain acceptance of it. It feels like you just have to do it. There is no choice so you just move forward, and I think this makes it easier to accept.

 

I knew my career was not sustainable in its current form for the long term, and psychologically this was devastating. I felt like a failure and that I had been lying to myself for all these years. I questioned my decision to go into medicine. Ultimately I decided I was going to work a few more years and quit, maybe doing something different entirely, maybe just living relatively frugally and not trying another career.

 

I was largely at peace with the decision to quit entirely, but deep down there was something a little unsatisfying about doing 10 years of medical school and residency and quitting after only another 10 years. I still felt like I had something to contribute, although I was not willing to sacrifice my happiness to make that contribution.

 

These decisions are deeply personal and although it is useful and helpful to listen to other people’s opinions, they are not you. They do not have to live in your shoes. Their opinions will be colored by their experiences, and their recommendations may not be what are best for you. It is necessary to take full responsibility for this decision because it is your life. This is a scenario where a coach or other consultant may be very helpful to bounce ideas off.

 

How Personality Affects Going Part Time

After spending much of my time on early retirement blogs I’m convinced there are distinct personality types that are not meant to work full time careers to traditional retirement age. I am one of those types. I’m not sure I would be happy working any job full time to full retirement age of 65 or so. Accepting this fact was liberating.

 

If you are someone who does not understand the desire for early retirement it is likely you are heavily influenced by established personality traits (such as a high degree of extroversion). Spend some time understanding your personality and what your inclinations are. It is important not to become trapped by your personality and make excuses, but knowledge is power. Know thyself.

 

Gender and Part Time Work

Another variable I will address here briefly is gender. While it is quite common for a woman physician to go part-time early in her career, this is much less common for a man. You may be judged for this decision, by others but especially by yourself. Our (male) egos are usually tied to our career more strongly than women (not always, but again this is the standard societal narrative and anecdotally I have found it to be true) and thus we have a harder time letting go. For some this will be the most challenging part of cutting back, especially if you are a guy. I would highly recommend one thinks very deeply about this before going part-time as it can be quite disconcerting. More on this topic in a future article as this post is way too long as it is.

 

One More Year Syndrome

It is terrifying to ponder giving up such a huge income stream so early in your life, especially after the massive sunk costs of becoming a physician. For those of you not familiar with one more year syndrome (OMYS), it is the insidious compulsion to work just one more year instead of retiring even though you have enough to comfortably retire on. The psychology is complex, but probably mostly based in fear: fear of change, fear of running out of money due to disaster, fear of having to go back to work at a much lower income level. It usually manifests itself by the following self-dialogue:

 

“If I work just one more year then I can do (…)”

 

And it doesn’t matter because there is always another (…) when the year is up. Our desires and striving can be endless, and it is not always about more money or more stuff. It could be about security, ego, meaning or purpose.

 

“If I  work one more year I can get my SWR (sustainable withdraw rate) down to 3.2% and increase my portfolios chance of survival from 99.7% to 99.75%!!!!”***

 

Going part-time is a hedge and a compromise. It forces you to work more years which psychologically I think can be a good thing for some. It delays the one-more-year-syndrome dialogue which we all have at one point or another if we become financially free.

 

Transition to Part Time

Part-time is a great transition to full ‘retirement’ from medicine. Maybe some people would be bored retiring early.  We have all seen examples of people who retired and were unhappy for one reason or another. Going half-time allows you to test drive this new reality. It is quite common for older physicians to go part-time near the end of their career, and I think this is a great idea rather than just quitting cold turkey.

 

Being a physician requires so much time and energy there will be a void when it goes away. It’s a big change going from 50-60 hours a week plus overnight and weekend call to 100% free time. Regardless, I feel a full 6 month trial is required before any judgement is passed. For some it may be even longer. It simply takes a while to adjust to a new normal and half a year is pretty reasonable.

 

Conclusion

Half-time work early in my career was one of the biggest financial decisions I made in my life. The short term financial consequences were severely negative, but probably saved my career. In the long run it will probably be the best financial decision for me. If you aggressively save, pay down debt and live a life of relative frugality you can be in this position less than 10 years from the start of your career. My advice is to do this so you have options. You can live a ridiculously lavish life on much less than what a typical doctor earns.  If you end up loving your job, open up the purse strings and co crazy if this is what makes you happy. Alternatively, if you are burned out or realizing medicine is not for you then you have options. For the right person, half-time is the best of both worlds. It provides adequate income, an incredible lifestyle and the ability to lessen the chance of burnout. It creates the space you may be craving in your life.

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*Is this really true? I know it is conventional wisdom, but you all probably know by now how I feel about blanket statements that everyone accepts as truth.

**Explaining complicated details of personal finance is not my strength. This is why I blog about philosophy instead.

***I totally made up these numbers.

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