ODs who own or are partners of a practice have a strong financial advantage over those who are OD-employees, findings from Jobson Optical Research’s 2014 ECP Compensation Study suggest. The average compensation reported for employed ODs was $107,692. The average total compensation of optometrists who are owner/partners for 2013 was reported as $143,146. The compensation for this group would include any salary they may have assigned themselves.
Click HERE to purchase Jobson Optical Research’s 2014 ECP Compensation Study.
Want to make an extra $3,804,384? Let’s ask the question a slightly different way: How much does it cost you to be an employee optometrist over the course of a 40-year career?
The Jobson Optical Research’s 2014 ECP Compensation Survey found the average compensation for an owner optometrist in 2013 was $143,146. The average compensation for an employee optometrist was $107,692. That is a difference of $35,454 for one year. If that difference is maintained over the course of a 40-year career, then $35,454 x 40 years equals $1,418,160.
A better approach than taking the money as income is to invest the money in a tax deferred vehicle that returns at least a modest 7 percent compound interest per year.
Assuming a 50 percent tax rate, the owner/partner would have a minimum of $17,272 to invest each year (i.e.: $35,454 x 50% = $17,272). After 40 years, that comes to $3,804,384 before taxes and inflation.
Employees often cite the following two reasons for not wanting to be an owner/partner: responsibility and the additional work load of being an executive, as well as a doctor. Most employees do not know how much that decision costs over the course of a 40-year career. That difference is worth at least $3.8 million dollars. It’s important to know all the facts when making career decisions.
Today’s action plan for both the owner/partner doctor and the employee doctor is:
1) Review your career plan to make sure you are on the right track for your life goals.
2) Review your investment plan to make sure you are investing wisely.
Want to blow your mind? Go to this investment calculator and simply change the return on investment number from 7-10 percent.