Your practice career is an investment. You should look at the decision to be either an owner or an employee as the core career decision to make. Which choice gives you the greatest return on your investment and enables you to live the life you want?
What is the primary difference between being either an owner or an employee? The primary difference is owners get to make choices, and employees are told what to do.
Some people like to be decision makers, and others simply want to be told what to do and when to do it. Other than deciding where to live, deciding to be either an owner or an employee is the most important career decision an optometrist will make.
It is important to know that owners make significantly more income than an employee over a lifetime of a practice career. Here is data from the 2021 ECP Income Study conducted by Jobson Research for average income for owners versus non-owners.
2021 ECP Income Study
conducted by Jobson Research
That is a difference of $201,098 – $117,875 = $83,223.
Over the lifetime career of an optometrist, the difference in compensation between an employed optometrist and an owner optometrist is: $83,223 X 40 years = $3,328,920.
As an owner, you will have over $3 million to spend that an employed optometrist does not have. As an owner, you will be able to have more choices in life.
Consider the End Game
We also need to think of the end game. If we consider the end game to be retirement, then we need to know what that looks like. An optometrist retiring today needs a fund of between $1-3 million to retire comfortably. On the other hand, an optometrist going into practice today will need a retirement fund of between $3-5 million 40 years from today to retire comfortably.
(NOTE: Different parts of the country have either a higher or lower cost of living than the average, so for those areas the numbers would need to be adjusted.)
With average return on investment, it is not a problem to reach these retirement numbers for an owner optometrist. An employee optometrist will have a harder time getting there.
If an owner optometrist invested the difference between what they make and what the employed optometrist would make over 40 years, a Return on Investment Calculator1 gives these results:
These results are giving a conservative number by not adjusting for inflation and using a modest 7 percent rate of return. The owner optometrist’s potential investment is worth over $13 million after 40 years.
What you do with that money is your choice. You can give it away to the poor, you can fund your favorite charity, you can spend it on your own family, or you can use this as legacy money for your family. The important point is that you have choices. As an owner, you will have choices in life that employed optometrists do not have.