Going Part Time

[PhysicianOnFIRE]

I will officially be working 40% less starting October 1st. I did the math for today's post (So Long, Full Time Employment) which gave me some interesting info worth sharing on Tax Day.

• Working 0.6 FTE, earning $240,000 gives me an effective tax rate of 23%. After paying taxes (on the $ that's not invested tax deferred), I'm compensated ~$1,700 per shift


• Working the additional shifts to complete 1.0 FTE -- those shifts are taxed at 43%. After taxes, I'm only putting $1,200 in my pocket.

Knowing how taxes work, I'm not at all surprised, but it's remarkable to know I'm essentially getting $500 less per surgery center shift or $1000 less per 24-hr hospital shift for the last 40% of the work I currently do.

Is anyone else working part time, or contemplating it? I know @vagabondmd starts a part time schedule in October also, @thehappyphilosopher works half time, and @thewhitecoatinvestor is down to 3/4 time with his clinical job.

 

[Zaphod]

Ive worked part time as far as doctors go since I left fellowship.

How are you going to be 23% effective tax rate on only 240k? Do you mean that would be your average/blended rate before deductions, etc...?

[TheHappyPhilosopher]

Knowing the tax code is powerful. I know many docs who still don't understand the difference between marginal and effective tax rates. Knowing the marginal dollar leads one to make better decisions, like not trying to kill yourself working 10% harder for 5% more money. Congrats!

[Dreamgiver]

Haha good for you! Depending on the month I work the equivalent of 1.5-2 FTEs. But I am young and hungry! I will slow down to 1.0 FTE in 5 years.

[RadDoc6876]

Really good (and important) analysis which all high-earners need to understand.  However please offer an anti-emetic prescription to accompany such posts. Just unbelievable how our current tax system penalizes hard work and results in physicians being incentivized to provide *less* medical care to the public.  My wife and I are a dual-physician couple and have declined offers to relocate that included a promotion and ostensible pay raise for one of us, since our after-tax income would actually decrease when all factors are considered, similar to your analysis.

[PhysicianOnFIRE]

Zaphod wrote:

How are you going to be 23% effective tax rate on only 240k?

Click to expand...

I took a salary of $240,000, subtracted $43,000 for deferrals to 401(k), 457(b), and HSA, and ran $197,000 for a family of four with 2 kids, married filed jointly, through Taxcaster and a MN state tax estimator (a high tax state, unfortunately).

I came up with $54,000 in taxes from federal, FICA, and state, or 23% of the $240,000 salary.

[Zaphod]

PhysicianOnFIRE wrote:

Zaphod wrote:

How are you going to be 23% effective tax rate on only 240k? 

Click to expand…

I took a salary of $240,000, subtracted $43,000 for deferrals to 401(k), 457(b), and HSA, and ran $197,000 for a family of four with 2 kids, married filed jointly, through Taxcaster and a MN state tax estimator (a high tax state, unfortunately).

I came up with $54,000 in taxes from federal, FICA, and state, or 23% of the $240,000 salary.

Click to expand...

I guess its close to what my AGI is after all deductions and such and its similar to my Cali rates, did not know that MN was so tax heavy, surprised when I looked it up.

 

[CM]

FT until at least 2020 for me (unless I just can't take it anymore :-)).

[Complete_newbie]

True, but in absolute terms you are still making less. I mean that extra ~ 100K...imagine putting that to work every year for 5 more years.

[Miss Bonnie MD]

Full time for a dermatologist is 4 days a week, which to some might be part time anyway. I'll go "part time" meaning 3 days a week in 10-15 years likely.

[Complete_newbie]

I also find your disclosure of earning from blogging refreshing! Its not like "hey I do this because I want to earn money and I work hard; don't like it? beat it", but more like "look this makes money, I donate half and be mindful that most of these bloggers don't disclose that in retirement they make a good chunk from sizable audience. You can too!"

Your writing style is pretty awesome and easy going (less didactic more like a walk in the park throwing stones in the lake). Keep it up!

 

[Craigy]

Really great article.  This is absolutely a thing.  Especially if you're spending just $80k a year... who are you working and saving extra for?

I have dozens of clients, friends, family friends etc who now work less or have chosen to hang it up.  Not just taking fewer shifts, but clients selling their entire businesses to a conglomerate, slowing or stopping expansion and hiring, or in one recent case, just winding down the business completely.

The liberals like to say "oh people won't stop working because of taxes if they still make money" and that line of reasoning, and this is true while people are young and poor and stretched to the max, but for the wealthy who have already made their money and are happy with their lifestyles, it's just not worth the headache and risk to keep pushing, and when uncle sam comes and takes more than half in all its various forms and fashions it makes the decision much easier.  And again, these aren't people just quitting their jobs, but people slowing or stopping their own hiring or even letting go of employees themselves.

Glad you get to keep your full-size locker  :lol:

[VagabondMD]

^^ Agree with the above from CompleteNewbie.

PoF has a terrific, engaging writing style. He is the bomb. I am happy for him that he is starting the glide.

Yes, I am indeed (finally) going part time in the fall. It looks like I will work roughly every other week, 26 weeks per year, which in our group is 59.1% full time, not quite the 60% ball-busting pace of the OP  :P . I thought I was leaving behind the IR piece of my practice, but it looks like I will continue with it for 12 weeks per year (of the 26).

My marginal tax rate will not drop much as my wife's full time job is similar in compensation. Last year, for the first time ever (in 21 years), she edged me out in W-2. This year, I am hopeful that she will do it again, but it will be close. (I wish she were crushing me.   )

My part-time schedule will allow me to explore what to do with the free time and work further on a consulting side hustle that is already in place and running. By most FI/RE standards, I could/should retire, but I also seem to worry more about the ability of one to sustain one's lifestyle from one's wealth and am not as frugal as many of the early retiree types.

My wife will work through her 55th birthday in to qualify for her company's retiree medical plan (which is awesome and unusual in 2017) and then her next bonus round six months later. She will then retire from her job, about three years from now, and I will also retire from mine (if I have not already), all of which coincides with my daughter graduating high school and (hopefully) going away to college.

[janettebournes]

I am only a few years into being an attending and am already down to 0.8 FTE. I've taken down the approach that slow and steady wins the race rather than risk burnout.

I'm torn from time to time. There are some weeks where the workload really isn't that bad and I wonder if I'm leaving money on the table (money that may no longer be available if the doom and gloom about medicine's future rings true)

On the other hand, there are other weeks where I'm really really glad I'm only working 4 days/week!

[jfoxcpacfp]

PhysicianOnFIRE wrote:

I will officially be working 40% less starting October 1st. I did the math for today’s post (So Long, Full Time Employment) which gave me some interesting info worth sharing on Tax Day.

Click to expand...

Huge congratulations. I agree with others that your writing style is captivating and really sets the blog apart. Very happy for you.