How Much Should a Physician Save for Retirement?
The generic advice says 15%. The generic advice assumes you started at 25. A physician starting serious saving at 33 has a compressed career, and compression changes the arithmetic: the honest range is 25% to 30% of gross. This guide derives that number instead of asserting it, shows the full table by starting age and retirement target, and explains why a percentage of gross beats every dollar-figure goal you have seen.
- The short answer
- Why a late start compresses the required rate
- From savings rate to years of work: the actual math
- The full table: starting age versus retirement target
- Why percent of gross beats dollar targets
- What counts toward the rate
- Hitting 25% to 30% in practice
- Honest objections and adjustments
The short answer
A physician who starts saving seriously at 33 and wants work to be optional around 60 should save 25% to 30% of gross income for retirement. Save 20% and independence arrives closer to the mid 60s; save 35% to 40% and it arrives in the early-to-mid 50s. The generic 15% rule fails physicians because it quietly assumes 40 years of compounding, and a residency-delayed career gets closer to 27. The rate, not the investment selection and not the income, is the variable that decides the outcome. Everything below is the supporting math.
Why a late start compresses the required rate
Retirement saving is a race between contributions and time, and time is the stronger runner. A 25-year-old saving 15% has 40 years of compounding, and in a typical 5% real return world, the early dollars multiply roughly sevenfold by 65. A 33-year-old's first dollar gets about 27 years and multiplies less than fourfold. Same dollar, half the finish value. The Physician Finance Playbook works the headline example: at equal contributions, the ten-year-later starter ends with roughly half the money.
There is a second compression that physician income hides: lifestyle. The percentage you save sets the lifestyle the portfolio must eventually replace. A physician spending 85% of a large income needs a very large portfolio; one spending 70% needs a smaller portfolio and is building it faster. This is why the savings rate does double duty and why raising it is twice as powerful as it first appears: every point moved from spending to saving simultaneously grows the numerator (the portfolio) and shrinks the denominator (the spending it must support).
The encouraging flip side: because both effects work at once, the relationship between savings rate and working years is strongly nonlinear in your favor. Going from 20% to 30% does not shave a fifth off the timeline; it shaves closer to a third. Physicians cannot buy back the lost decade, but a high income makes high rates achievable without hardship, and high rates are exactly what a compressed career needs.
From savings rate to years of work: the actual math
The machinery is one formula, and it is worth seeing once so the table below is not magic.
Show the math
Assumptions. Savings rate s is a fraction of gross income; taxes take a fixed share t = 30% of gross, so spending is (1 minus t minus s) of gross. The portfolio earns a 5% real (after-inflation) return, a middle-of-the-road assumption for a diversified portfolio; independence means holding 25 times annual spending, the standard 4% rule multiple. Income and spending are flat in real terms, and the physician starts from zero at the starting age (loans handled separately).
Formula. Each year the portfolio receives s x G and grows at r. Independence arrives when portfolio = 25 x (1 minus t minus s) x G. Setting the future value of the contribution stream equal to the target and solving for n: n = ln(1 + 25 x (1 minus t minus s) x r / s) / ln(1 + r). Notice G cancels: the answer depends only on the rate, not the income.
Result. At r = 5%: s = 20% gives n = ln(1 + 25 x 0.50 x 0.05 / 0.20) / ln(1.05) = ln(4.125) / 0.04879 = about 29 years. s = 25% gives about 26 years. s = 30% gives about 23 years. s = 35% gives about 20.5 years. s = 40% gives about 18 years. So the 33-year-old saving 25% to 30% reaches independence between roughly 56 and 59, which is the derivation behind the headline answer.
Limitations. Real returns are lumpy, not 5% forever; sequence risk means two physicians with identical averages can finish years apart. The 25x multiple is a planning convention, not a guarantee, and conservative planners use 28x to 30x. Taxes are not a flat 30% and fall in retirement. Social Security, inheritances, a working spouse, and part-time glide paths all shorten the real answer. Treat n as a planning estimate with a two-to-three year error bar, not a promise.
The single most useful property of that formula: income cancels out. A $250,000 psychiatrist and a $600,000 surgeon saving the same percentage reach independence in the same number of years, because the surgeon's bigger portfolio has to support a bigger lifestyle. This is also the mathematical reason percent-of-gross is the right target language, which the section after the table makes concrete.
The full table: starting age versus retirement target
The table applies the formula above (5% real return, 25x spending target, 30% average tax share) and reads out the savings rate required from each starting age to make work optional at each target age. "Starting age" means the age serious saving actually begins, which for most physicians is the first attending year or shortly after, once the first paycheck checklist and the loan plan are running.
| Serious saving starts at | Optional work at 55 | Optional work at 60 | Optional work at 65 |
|---|---|---|---|
| 30 (short residency, no fellowship) | about 30% | about 22% | about 16% |
| 33 (typical attending start) | about 38% | about 27% | about 20% |
| 36 (long fellowship or late start) | about 48% | about 34% | about 25% |
| 40 (second career or restart after a setback) | not realistic on saving alone | about 45% | about 32% |
Read the middle row, because it is most physicians: starting at 33, retiring at 60 takes about 27%, which rounds to the 25% to 30% headline once you add back the real-world helpers the model excludes (Social Security, an employer match, a spouse's savings). Read the diagonal too: every three years of delayed start costs roughly five to eight points of required rate, which is the compression made visible. And read the top right as consolation: even a late start with a normal retirement age needs only modestly more than the generic advice. The crisis cases are only in the bottom left, where a late start meets an early target; those combinations require either heroic rates, a working spouse, or a later target, and pretending otherwise is how bad products get sold to doctors.
Run your own row with your own numbers in the financial independence calculator, which lets you vary the return, the multiple, and current savings rather than trusting this table's fixed assumptions. The FIRE guide covers the aggressive end of the spectrum in depth.
Why percent of gross beats dollar targets
Dollar targets ("save $2 million," "max your 401(k)") fail physicians in three specific ways.
Dollar targets do not scale with lifestyle. $2 million is a comfortable retirement for a household spending $70,000 and a crisis for one spending $200,000. The right target is a multiple of your spending, and a savings rate encodes your spending automatically: whatever lifestyle you actually live, saving 27% of gross builds the portfolio that supports the other 73%-ish in the right proportion. The dollar figure is an output of the plan, not an input.
"Maxing the accounts" is a ceiling dressed up as a goal. A physician earning $400,000 who maxes a 401(k) at roughly $24,000 (approximate; check current IRS limits) is saving 6% of gross and is on the 40-year plan without 40 years. Tax-advantaged limits are set for the whole workforce, not for late-starting high earners; for most attendings the accounts are step one, and a taxable brokerage account carries the rest of the rate. The retirement accounts guide and the 457(b) guide cover squeezing the sheltered space first; the high earner tax guide covers running the taxable remainder efficiently.
Percentages survive raises; dollar habits do not. A fixed $4,000 monthly transfer set in year one silently shrinks as income grows from $300,000 to $450,000, and the raise flows to lifestyle by default. A payroll percentage rides every raise automatically. The cleanest physician rule: set the percentage once, automate it, and give lifestyle only what is left, in that order.
What counts toward the rate
Count, as a percentage of gross income: 401(k)/403(b)/457(b) deferrals, employer match and profit sharing, HSA contributions you invest rather than spend, backdoor Roth IRAs, solo 401(k) and cash balance contributions for 1099 income (the W-2 versus 1099 guide shows how much more space contractors get), and taxable brokerage deposits earmarked for retirement. Do not count: mortgage principal on your own home, the emergency fund, 529 contributions (a different goal), student loan payments (necessary, but they build zero retirement income), or speculative side bets you would not retire on. Loan payoff years deserve one honest note: a physician throwing $100,000 a year at loans while saving 15% is doing fine, provided the full rate snaps into place the month the loans die rather than leaking into lifestyle.
Hitting 25% to 30% in practice
On $350,000 of gross, 27% is $94,500 a year. A representative stack: 403(b) deferral about $24,000, match $10,000, HSA about $8,500 family, two backdoor Roths $14,000, governmental 457(b) about $23,000 if available, taxable brokerage for the remaining $15,000. Every line automated, per the first paycheck checklist. Without a 457(b), the taxable line simply grows; the rate does not care which wrapper the dollars wear, it only cares that they leave the spending stream. Figures are approximate recent limits; check current IRS limits each January and re-set the payroll percentages.
The behavioral trick that makes 27% painless is sequencing, not sacrifice: capture the rate during the live-like-a-resident window, before lifestyle expands to claim it. Ratcheting spending down later is genuinely hard; never granting the raise in the first place is nearly free. Physicians who set the rate in year one report it as background noise; physicians who try to impose it at 45 describe it as austerity.
Honest objections and adjustments
- "I have $300,000 of loans; I cannot save 27% yet." Correct, and the checklist orders it: insurance, match, loan plan, then the rate climbs as the loans fall. What matters is that total wealth-building (loan principal plus savings) sits near 30%-plus of gross from day one.
- "My spouse earns too." Then compute the rate on household gross and let the table apply to the household; two incomes usually mean an earlier row.
- "I plan to work to 70; is 20% enough?" Probably, per the table's right column, if health and burnout cooperate. Medicine is a career where the option to stop at 58 is worth paying for, because surveys of physicians consistently show plans to work longer than bodies and call schedules permit. Buy the option.
- "Returns might beat 5% real." They might, and then you finish early. Planning on it is how people arrive at 60 with half a portfolio. Set the rate on sober assumptions and let good markets be upside.
- "This feels like a lot compared to what colleagues save." It is, and the net worth outcomes physicians report by their 50s reflect exactly that gap. The rate is the whole game; the who we help page links the rest of the physician library.
Bottom line: derive your row from the table, automate the percentage before lifestyle sees it, put the sheltered accounts first and taxable behind them, and revisit once a year. This is educational material, not individualized advice; your loans, spouse, state, and target age all move the numbers, and they deserve a run through the calculators with your own facts.