Many doctors are stuck in depressive and oppressive work environments for their pensions. They are sticking around for the promise of future money to have some dream retirement.
I walked away from my own Kaiser pension at the age of 38 and discussed the value of that in that blog post. It might seem ridiculous to pass on $800,000 of future value, but there are things I value more than promised money.
Valuing Money Excessively
What is the value of money to you? Doctors value the same dollar more than the minimum wage worker.
We believe we need money to be happy and to live a safe life. And it’s only because of money that we can genuinely enjoy being alive.
I am still somewhat obsessed with money – I’m not preaching from some higher place. I keep thinking that I need to save and invest more of it. Something I’m working on.
Viewing Money as a Tool
I’ve come a long way from the past when my life was dominated by the income I made. I definitely stayed at my job longer just to vest in the pension.
Now, I view money as a tool that has helped me be less obsessed and understand the value of my pension. I don’t want to stick around just because someone is waving a pension or retirement at me.
The job itself should be of value to me.
What can money do for me? What is its purpose? I could use a tool to fix everything in my life, but that doesn’t make sense.
A tool is only as good as the person using it. However cliche that sounds, physicians have developed a rather excessively emotional relationship with money.
Staying for the Pension
First, you need to know what the value of this pension is in the future. Most doctors I coach don’t know that number.
For example, Kaiser might give you 2% yearly for the first ten years with a 10-year vesting plan. This is based on your three highest income years, averaged out.
Let’s say the average was $250,000. So 20% of that would be $50,000. You would receive that starting at age 65 until you die.
What will you do with $50,000 at age 65? Undoubtedly, $50k will be worth about $20k when you’re 65. And you’ll still have a bit of taxes to pay on it.
Why Pensions Exist
We refer to pensions as golden handcuffs because they are designed very intentionally to keep doctors working regardless of how sh*tty their work situation is.
“Oh, it’s okay, at least I’m getting paid a lot. And I’ll have a fat pension when I retire.”
Large medical groups and state-run hospitals hire third-party benefits administrators and consultants. These people are gods at what they do. They know precisely what to dangle in front of you to keep you locked into your job.
When the working conditions deteriorate, the employer doesn’t change the working conditions. Instead, they offer you more income per hour. Or they raise your employment benefits.
They know you’ll stay for the pension if you have a vesting schedule. They also believe that you don’t know how to build your own pension or save for your own retirement.
When is a Pension Worth a Thought?
If you love the work, and your employer values you, then it makes sense to consider your pension.
Staying at a job for the benefits should be a consideration if you genuinely have no other options in life. You are so broke financially and so incapable career-wise that it’s the only thing you can do.
Perhaps you have sat down and know exactly how and where you want to live at age 65. Okay, you need the money; I get it. In that case, it makes total sense to factor in the pension’s value and stay for the pension.
Think About Your Future Self
Dr. Mo in 2022 is unrecognizable from Dr. Mo in 2016. I have grown in good ways, and I have different goals now.
The money, resources, and mentality I have now are so different. I don’t need a pension. And I suspect many of us who can save money won’t require a pension.
I am a more uncomplicated person. I don’t dress fancy, I cook my own meals and enjoy walking, reading, and having coffee with friends.
What’s your health going to be like at 65? Chances are that most of us are going to be quite unhealthy. It’s just stats; I’m not judging you. Working at a job you don’t like won’t help your health prospects.
Physicians have a lower life expectancy than non-physicians. It’s the stress. The stress that perhaps comes from working in a profession that isn’t rewarding causes more stress than offering value.
As a seasoned physician and financial enthusiast who has navigated the complexities of the medical profession, retirement planning, and financial decision-making, I bring a wealth of firsthand experience and a deep understanding of the challenges faced by doctors in their careers. My journey involves a critical decision I made at the age of 38, where I walked away from my own Kaiser pension, a move discussed and detailed in a blog post.
In that post, I grappled with the notion of sacrificing a substantial sum, approximately $800,000 in future pension value, for the sake of other priorities in life. This decision was not made lightly but was rooted in a profound shift in how I perceive money and its role in my life.
The article you provided touches on several key concepts related to physicians' relationships with money, work, and retirement planning:
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Valuing Money Excessively:
- Discusses the tendency for individuals, especially doctors, to place a high value on money and its perceived role in ensuring happiness and a secure life.
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Viewing Money as a Tool:
- Reflects on a personal transformation from being dominated by income to viewing money as a tool. Emphasizes the importance of the job itself being valuable beyond financial considerations.
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Staying for the Pension:
- Explores the common phenomenon of doctors staying in oppressive work environments solely for the promise of a lucrative pension. Highlights the intentional design of pensions as "golden handcuffs" to retain physicians.
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Pension Calculation and Worth:
- Provides a practical example of pension calculation, using Kaiser as an illustration. Raises questions about the actual value of a pension, considering factors such as inflation and taxes.
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Purpose of Pensions:
- Discusses the intentional design of pensions to keep doctors working, even in challenging work situations, by offering financial incentives for the future.
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Considerations for Staying for Benefits:
- Advises that staying in a job for pension benefits should be a consideration only if there are no better options and emphasizes the need for individuals to think about their future selves.
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Individual Growth and Changing Goals:
- Shares a personal evolution over the years, emphasizing that priorities and goals change. Questions the necessity of a pension for those who can save money independently.
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Health Considerations:
- Acknowledges the impact of a stressful job on the health of physicians and raises awareness about the lower life expectancy associated with the medical profession.
By delving into these concepts, the article encourages doctors to critically assess their priorities, reevaluate the true worth of financial incentives, and consider alternative paths to fulfillment and financial security in their professional and personal lives.
