Resident to Attending Salary: Understanding Take Home Pay
After years of hard work to become an attending, you’ve achieved the salary to match. However, it’s important to remember that the work doesn’t end here – you must stay on top of your finances to avoid a cycle of debt and poor financial decisions.
According to the 2022 Medscape Physician Compensation Report, the average Attending salary is approximately 5 times that of the average Resident salary. The average Primary Care Physician salary is $260,000 while the average Specialist salary is $368,000. Obviously, your specialty and location will be a determining factor. The good news is that the salary data will continue to increase, the bad news is there are wealth eroding factors to be aware of that will have a negative impact on your new salary.
An increased salary puts you into a higher income tax bracket. Although you now have the increased income, the impact that taxes have on your take-home pay should not be overlooked. The average Resident is in the 22% Federal income tax bracket while the average Attending is in the 32% or 35% tax brackets. On top of this, 41 of the 50 states in the US have state income taxes. All together, these rates take away a significant amount from your salary.
Beyond this, the average Student Loan debt for Physicians is approximately $203,062.
The standard repayment term for Federal Student Loans is 10 years while alternative repayment plans can be significantly longer. This means that most Physicians will be paying off these loans with the new Attending salary which will impact your take-home pay as well. Another thing to consider is how much money you are contributing to your qualified retirement plans. (401k/403b)
After subtracting these deductions and others you may have, you are left with your take-home pay. From here, the key strategy is budgeting. It is typical to see that when your salary increases from a Resident to an Attending, your living expenses will increase by the same amount. This is often called the “Lifestyle creep.” It’s crucial not to let yourself fall into this behavior, or you will begin to feel like you are living paycheck to paycheck – and maybe you will be!
There are many routes to explore for managing your take-home pay. The most obvious advice is to stay on top of your finances and keep a clear budget. Understand how much you are paying in taxes and other fixed expenses. One suggestion is to save a minimum 20% of your income. This will allow you to not feel the squeeze of taxes and increase in lifestyle.
Furthermore, you should understand your Student Loan repayment schedule and retirement plan contributions, making sure that you are allocating the appropriate amounts. It is also important to see if certain tax deductions or loan forgiveness programs are applicable to your situation. If you would like further guidance, make sure to speak with a Financial Advisor.