While doctors earn a high income relative to the general population, it also means they pay more in taxes (for some, this can mean as much as 40% of their income). If you find that your money isn’t going as far as you’d like, you might start thinking it’s time for a raise. 

Whether you are in the midst of contract negotiations, gearing up for a performance review, or planning to discuss compensation with your boss, think strategically about your request for a raise. Getting paid more in salary or as a productivity bonus is great, but may also result in a much higher tax bill.

 

Increase your retirement match 

 

A retirement match is when your employer gives you extra “free” money to put in your 401K or 403b (or TSP if you are in the military). As most employees can’t rely on a pension during retirement, they need to invest money into their own retirement fund, and many jobs will try to incentivize employees to make contributions to retirement accounts by offering a match up to a certain percentage of the employee’s salary. 

This match varies by employer, but is around 5% to 10% of your income, and it might be worth asking for a higher match percentage. 

 

Because you will likely have lower taxable income when you retire as you won’t be working, the taxes you will pay on the amount you withdraw may be much less than the taxes you would pay on that money now. My point? Getting more money in the form of a retirement match saves you money in the long run. 

 

 

Ask for more paid time off (PTO)

 

If your job won’t increase your salary, or if budget cuts have prevented your employer from offering you a raise, you can try to negotiate for more PTO. The same salary with more PTO means you are effectively getting paid more to do less work. 

This type of raise doesn’t cost you more in taxes, and instead allows you to buy back your most precious commodity—time.

I’ve seen some physicians start off with 3 or 4 weeks of paid vacation then successfully increase that to 5 weeks a year. Other physicians have been able to get more paid sick time and use it periodically for doctor’s visits for themselves and their kids. Some people have been able to advocate for more paid holidays each year, which allows them to take more time off without using vacation days. 

 

My point? Try to negotiate more paid time off, so you can maintain your income while spending less time working.

 

Restructure your schedule 

 

This is one of the things I did when I started as an attending. I had found a good job in my preferred city with people I knew I’d enjoy working with. There was just one problem: the pay. 

 

The job was in an academic setting, and there was only so much the department chair could offer me in salary starting out. 

 

Getting creative with my schedule not only allowed me to increase my pay per clinic day, it also allowed me to add some flexibility to my schedule regarding research while spending more time at home during my “admin time.” 

Can you try to negotiate something similar? Perhaps your job would be willing to give you an extra half day of admin time each week if they can’t pay you more in salary. You may even be able to “buy back” time by teaching medical students or residents.

 

Increase your CME allowance 

 

Most jobs tend to give physicians some sort of CME allowance each year, ranging from a few hundred dollars to a few thousand, along with some paid time off to accommodate the time to earn CME credits. Increasing this allowance is another creative way to get a tax-efficient raise.

As physicians, we use this money (and the CME days off) to go to medical conferences, pay for relevant subscriptions, maintain memberships in certain organizations, and purchase other products and services that help us stay up-to-date with medical advances. 

 

You could use these extra funds to attend a medical conference in an area you’ve always wanted to visit. Many doctors have chosen to attend conferences in tropical locations, skills-training seminars or annual meetings near ski resorts, or wellness conferences aboard cruises in the Caribbean. 

Because CME money will typically cover hotel costs, many physicians choose to invite their friends or family to come along for the experience. My point? Securing additional funds each year from your employer for CME gives you access to tax-free money that you may be able to use to fund an expensive trip or travel experience.  

 

Utilize pre-tax deductions and investment accounts 

 

Generally speaking, there are two types of FSAs. There is a healthcare FSA, which is open to people with comprehensive health plans and can be used to pay for out-of-pocket healthcare expenses, such as co-pays, prescriptions, and other supplies, tax free. 

The other type of FSA is a dependent care FSA. This type allows you to save money in taxes on things like childcare or daycare expenses, along with any nursing home care you may be paying for aging relatives. 

Another pre-tax account to consider is a health savings account (HSA). This is an investment account that allows people with high-deductible health plans to invest money tax free, grow it over time, and earn a profit, which can then be withdrawn (tax free) to pay for healthcare expenses. 

You can also consider pre-tax work retirement accounts (like a 403b) along with deferred compensation accounts (like a 457b) which allows you to invest pre-tax money to both save you money that year and build wealth more quickly.