Average doctor net worth, how to calculate your net worth, and what it actually means for a pre-retiree physician

Stanley and Danko’s The Millionaire Next Door introduced a simple rule of thumb to measure how well you’re building wealth compared to others your age and income level. Their Expected Net Worth formula—Expected Net Worth = Age × 0.1 × Gross Income—helped millions benchmark their financial progress. But as many physicians have discovered, the traditional formula doesn’t quite fit a medical career.

After all, how can a rule designed for people who began saving in their 20s apply to someone who spent their 20s and early 30s in medical school and residency? For young doctors, the formula is meaningless. But what about physicians nearing the end of their careers—those in their 50s, 60s, and early 70s? That’s where a retirement-focused physician wealth formula comes in.

Calculating Your Liquid Net Worth

Before evaluating retirement readiness, it’s important to know your liquid net worth. This is simple to calculate:

Liquid Net Worth = Investments + Cash in Bank Accounts + Income-Generating Real Estate − Debt

Exclude illiquid assets like your primary home unless you plan to sell them. This number reflects what is immediately available to generate income in retirement and is the most practical benchmark for physicians nearing retirement.

Why Net Worth, Investment and Tax Planning is a little different for Late-Career Physicians compared to early or mid career physicians

By the time most physicians approach retirement, they’ve spent decades earning well, paying off debt, and investing. A doctor's net worth does play into the equation, but we recommend looking at physician net worth a very specific way.

During those years of steady income, the financial margin for error was generous—you could afford to be a little inefficient with taxes, investments, or spending, and it rarely changed your day-to-day life.

The truth is most physicians that come to us in their 50s have left tons of money on the table for decades in their investment and tax planning approaches but it didn't affect their day to day lives because they were living off their income not off their investments so they didn't really need to be efficient.

Retirement, however, changes these facts. The transition from earning to spending what you’ve built brings a new kind of uncertainty. Feeling anxious in the five to ten years before or after retirement is normal and smart because it reflects a time of life when you want to step up your game and get efficient because your income is going to go down so your efficiency ideally should go up to help maintain your lifestyle somewhat.

In our view, the time period where you should really be looking at this is in the 5-10 years before you want to retire.

Retirement is its own kind of challenge, one that requires a different skill set than clinical medicine. Having an experienced guide—who understands the unique complexities of physician retirement, income and tax planning can be very helpful.

In some ways retirement planning for physicians is like that for any other field, but the main way in which it is different is that physicians have unusually high and stable income and it takes a decent amount of skill and investment knowledge to attempt to recretate the stability in income that they are used to. Also due to higher lifestyle costs that have accompanied decades or making $300k to $900k in income, the investments have to generate more lift to keep the lifestyle plane in the air during retirement.

A helpful guide helps you avoid hidden pitfalls and uncover opportunities that might be invisible

if you’ve spent your career mastering patient care instead of studying the intricacies of investment and tax strategies.

Spending-Based Net Worth Rule for Near-Retirement Doctors

By the time you’re within 5–10 years of retirement, the key variable isn’t how much you earn—it’s how much you spend. Income may fluctuate, but lifestyle costs tend to stabilize. That’s why a spending-based approach provides a far more accurate gauge of retirement readiness than an income-based one.

Instead of looking at years of income, try this simplified rule of thumb:

Expected Net Worth of a Near-Retirement Physician (ENWR) = Annual After-Tax Spending × 25.

This formula assumes your investments can sustainably generate about 4% of your portfolio each year to support your lifestyle without depleting principal too quickly.

This is a rough rule of thumb to get a general idea of where you stand. Actual results depend on how you are invested, when and how you make withdrawals, and how your state taxes your income.

Here’s how that looks in practice: if your household spends $100,000 per year after taxes, you should target around $2.5 million in investable assets. If your spending is $150,000 per year, you’d aim for roughly $3.75 million. For a lifestyle costing $200,000 per year, your goal would be about $5 million.

These may seem like massive numbers and you may wonder who achieves them - but they are not as massive as you think because our tax system is highly progressive so as your income goes up your tax rate goes up a lot. As your income falls, it takes less and less pre-tax income to generate a certain amount of after tax income. Essentially your ratio of after tax income / pretax income is higher. In your peak earning years when you account for all taxes you after tax income might be 60% of your pretax income. In your retirement years you after tax income might be 80% of your pretax income. Also the Federal tax code and many state tax codes may highly favor people over 65 or those collecting social security compared to earning wages.

If you’ve already surpassed your “spending × 25” target, congratulations—you’re likely a prodigious accumulator of wealth and can consider full or partial retirement with confidence. If you’re under half that threshold, you may be an under-accumulator of wealth and could benefit from reducing expenses, extending your working years, or optimizing your investment and tax strategies.

If you are right around this threshold - give or take $500k - you will benefit tremendously, in our view, from either working with advisors or doing a lot of self education and becoming an expert in these matters.

A lot of people don't love self eductation on finance stuff because they find it be boring or stressful and those people tend to benefit from working with advisors. For those who don't have those feelings, self education can be a viable strategy.

Average Physician Net Worth Before Retirement

According to recent Medscape surveys:

• 40% of physicians have less than $1 million

• 21% have between $1 and $2 million

• 39% have more than $2 million

This aligns closely with real-world experience: physicians approaching retirement often have between $1 and $3 million in liquid assets—more than enough to retire comfortably if managed well. Only the 11% of physicians with more than $5 million going into retirement could be truly frivolous with their money and still be fine.

Everyone else benefits from being strategic, efficient, and tax-aware in how they deploy their wealth.

Key Traits of Successful Retirees Among Physicians

After years of studying financially independent physicians and retirees, one pattern stands out: those who transition comfortably into retirement don’t just accumulate wealth—they learn how to use it efficiently. Here are the four main traits of successful physician retirees:

1. Efficiently turning assets into income

Once paychecks stop, your focus shifts from accumulating wealth to generating reliable, sustainable income. Many physicians think in terms of portfolio returns, but the true challenge is converting assets into predictable cash flow. This can include dividend-paying stocks, bonds, annuities, and income-generating real estate. Timing withdrawals across accounts is critical. Skilled advisors specializing in retirement income planning can prevent mistakes like withdrawing too heavily from taxable accounts early or keeping too much idle cash.

2. Being Mindful of taxes

Taxes continue after retirement, and ignoring them can erode your portfolio over decades. Smart retirees structure withdrawals from taxable, tax-deferred, and Roth accounts to minimize lifetime tax liability. For example, municipal bonds may generate higher after-tax income than Treasury bills or bank savings. Coordinating Social Security benefits, required minimum distributions, and capital gains timing also helps optimize net income. Even small adjustments, like converting portions of a traditional IRA to a Roth during lower-income years, can significantly improve financial security.

3. Balancing risk and reward for current market conditions

Risk tolerance isn’t fixed—it evolves with market conditions and life circumstances. Successful retirees actively manage portfolios to balance preservation and growth. In volatile markets, they may adopt conservative allocations to protect income. In low-inflation, strong growth periods, staying invested in equities helps maintain purchasing power. Personal factors like healthcare costs, dependents, and investment horizons influence risk management. Regularly reviewing and adjusting portfolios ensures investments align with both markets and evolving goals.

4. Paying off most or all debt before retirement

Debt adds financial and psychological pressure, reducing flexibility and increasing risk. Thriving retirees minimize or eliminate high-interest and variable-rate debt. Mortgages, business loans, or lines of credit can create unnecessary stress if rates change. Paying off debt early frees cash flow for investing or lifestyle flexibility. Some retirees may keep a small, low-interest mortgage strategically, but eliminating high-risk debt generally provides peace of mind, which is as valuable as the financial benefits.

Disclaimer: This article is written for educational purposes only. D.R. Harris & Co. is not your financial advisor unless you have a written contract with us. You should do your own research and talk to your own advisors. If you are within 5-10 years of retirement and are in the $1-$3 million in liquid assets range and you'd like to work with a fiduciary financial advisor, D.R. Harris & Co. virtually serves physician clients throughout the United States. Our process is to schedule a 15 minute introductory call to get to know each other and see if we might be a good fit. Our first year advisory fees are competitive by industry standards but prospective clients should be comfortable paying standard industry advisory fees before scheduling a call.

If you'd like to learn more about Daniel Harris or D.R. Harris & Co. you can do so here.