Dr. Mena with his mentor, Stephen A. Morris, OD, who now works around two days a month. Dr. Mena says Dr. Morris, who is 83, just loves optometry and keeps going! Dr. Mena says there are specific financial goals to reach for a secure retirement–whenever that happens to be.
Optometrist salaries and retirement savings: How do we compare to other professions?
By Vittorio Mena, OD, MS
Oct. 23, 2024
How do we optometrists measure up to other professions in our yearly salaries and current retirement savings?
Average Yearly Income of ODs
In my previous articles, I noted that, as of July 2024, the United States Bureau of Labor Statistics showed that the average optometrist nationwide earns around $147,576 annually, which is about $71 an hour.
According to an American Optometric Association survey, optometrists’ average income was $163, 789 in 2022. Adjusted for inflation, that would be $183,789 in 2024.
The Economic Research Institute cites $176,782 as the average income of an OD, and an ODs on Finance survey cited $155,000 per year as ODs’ average annual income.
However, if you average 0-5 years ($155,000) to 21+ years in practice ($257,189), the average for all age groups would equate to $208,895 per year.
If a new optometry graduate at the age of 27 years old were to make $155,000 a year without any raises, they would accrue $6.2 million after 40 years of work (normal age of retirement) before taxes.
Since I “low-balled” the numbers, let’s pretend that they will be taxed at the “highest” tax bracket of 37 percent. That would leave them with $3,906,000 of total money accrued in their lifetime (ideally it would be 24 percent if they were single. Even if they married another optometrist, filing jointly, with the same salary, it would still total $4,712,000 after taxes).
Subtracting Living Expenses
You must now start subtracting home/rent, student loans, license renewals, continuing education credits, cars/gas, vacations, groceries, a wedding, kids/pets, birthday celebrations, private schools/colleges, funerals, insurance, etc., throughout those years.
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How much does that leave you with, factoring in how much you may inherit from your parents? Keep reading to find out.
How Much Should You Have Saved Before Retiring?
Our goal is to have, at bare minimum, $1.5 million when we are ready to retire.
At my current age of 38, my personal financial independence number where I personally do not have to worry of running out of money during retirement is $4 million. I live in the state of New Jersey, where taxes are high and my lifestyle is likely different than yours.
Typically, “poor retirees” are those in the lower 20th percentile with a net worth of about $20,000. These individuals usually rely heavily on social security or minimal pensions.
“Middle class retirees” comprise 50 percent of the population. They have a net worth of $275,000-$300,000. They usually have equity in their home, retirement savings and 401(k) plan through work.
The “upper middle-class retirees” (which is what the majority of optometrists are considered) are part of the upper 20th percentile who have a net worth in the range of $325,000-$650,000. Those savings typically include diversified assets and enough in retirement to live comfortably.
The upper 10 percent are the “rich retirees” who have a net worth of at least $1.9 million or greater. They often have more than one house and can afford luxuries. They also have access to legacy planning, allowing them to leave wealth for their descendants or charities of their choice.
What Should the OD’s Goal Be for Retirement Savings?
We are all on a racetrack to a specific dollar amount, not necessarily a specific age for retirement.
The goal either now, or in the not-so-distant future, is to “save/invest” 15-20 percent of your yearly salary.
Whether you put away 3 percent or 20 percent of your salary, by the time you are 35 years old your retirement portfolio should be worth 1-1.5x your salary. If 3 percent of your salary is not getting you there, it is time to switch lanes.
When you hit age 40, your savings should be worth 1.5-2.5x your salary. A 40-year-old optometrist (10-15 years out of school) should be averaging about $200,000 a year or more for a salary (if you make that already coming out of school, kudos to you!).
At that point, the aim of your portfolio is to have $300,000-$500,000 (1.5-2x).
At 45 years old, it should be around 3x your current income.
At 50 years old, it really gets fun. At this point, your savings should be at 4-6x your salary, and at 55 years old, 4.5-8x your salary.
When you finally reach your sixties, and are about to retire, the true goal is to have between 7-14x your income in savings.
If you are a high earner (which is the 1 percent of the U.S. population that make > $500,000 a year in salary), the aim should be 14x of your income in savings.
You Can Catch Up if You Are Not On Track to Reach Ideal Retirement Goals
Do not feel overwhelmed by this information. Also, don’t forget that when you turn 50 years old you can make catch-up contributions.
If you feel like you are “behind,” the best time to invest is always today and then the next day after that. The beauty of compounding interest is on your side.
If you are well into your sixties, or already in retirement, and feel like “it’s too late for me,” I urge you to share this information with your children or grandchildren. The information will benefit them in their own retirement planning.
Thanks for reading, and I hope you catch my article next month!
*There is always risk with any type of investment. This column is for informational purposes only. Please seek a professional financial advisor when embarking on any type of investment journey.
Vittorio Mena OD, MS, is the sports vision director with Optical Academy. Dr. Mena is also an Optometric Financial Planner, with Series 6 and 63 investment licenses and Series 2-14 life and variable annuity licenses. To contact him: menavitt@gmail.com
