The State of Optometry’s Financial Health

Between late 2023 and early 2024, ODs on Finance conducted a large income and net worth survey of optometrists (see Get the Full Picture). A total of 1,912 optometrists responded, and the results were eye opening, to say the least. Some of the results are promising, in terms of the fiscal viability of our profession, while other areas seem to be in definite need of improvement, and all of this is punctuated by what we believe to be a significant gap in financial education.

Here, I detail the top lessons learned from analyzing the results of the survey.

LESSON NO. 1: GROSS ANNUAL PAY HAS INCREASED

Gross annual pay earned by optometrists surveyed averaged out at $155,000, with a median income of $165,000 (Figure 1). These data were a substantial increase from previous publications, which have cited an average gross annual pay of around $135,000 to $140,000.¹ It is also important to note that most of these previous publications used n values of 200 to 400, while our study had an n value of 1,912.

Gross pay versus years in practice showed an almost linear rise, with an increase of $20,000 to $30,000 occurring every 5 years. This can most likely be attributed to larger raises and salary negotiations leveraged based on experience for associates, as well as owners building their practices to maturity.

LESSON NO. 2: THE AVERAGE NET WORTH OF OPTOMETRISTS IS PROMISING

The average net worth of an optometrist was found to be $872,765. Considering that a recent survey of MDs conducted by The White Coat Investor showed an average net worth of $1,100,000 for ODs,² who historically have earned smaller salaries than most MD roles (minus general practitioners and pediatricians), this average shows a general sense of ODs’ financial health.

Net worth also increased with years in practice (Figure 1). Here are two points to better understand this trend:

• A negative average net worth was seen for new grads (0-5 years in practice), which can be attributed to high student loan debt and is especially weighed down by those only out of school for 1 or 2 years.
• A huge shift (nearly doubling the amount) occurred between the 16- to 20-year cohort and the 21+-year cohort. The reason, we suspect, is compound interest on investments.

LESSON NO. 3: OPTOMETRISTS DO NOT SAVE ENOUGH FOR RETIREMENT

Our survey revealed that the average OD has about $300,000 in combined retirement accounts, including 401(k), individual retirement accounts, and other taxable accounts. ODs with more than 21 years of experience average around $1,200,000 in their accounts, and a clear increase can be seen as an OD becomes more advanced in their career (Figure 2).

But here’s the problem: With inflation and rising costs of living, a conservative balance of $2,000,000 should be the standard for an OD as they approach retirement (more is even better). Based on the data, ODs are under-saving for retirement. This more than likely will result in them staying in the profession longer than 65 years of age. This could be influenced by overarching debt, poor saving habits, and a lack of knowledge about how to properly set up and invest in retirement accounts.

LESSON NO. 4: STUDENT LOAN DEBT IS AT An AL ALL-TIME HIGH

Close to 90% of ODs report having student loan debt upon graduation. Unfortunately, the days of having less than $100,000 in debt upon graduation are gone for most ODs. In fact, nearly 50% of ODs reported graduating with debt loads of more than $200,000, with an average of $230,000. A more alarming trend we noticed was that, of the 8% of ODs who marked their debt as “over $300,000,” most were recent graduates (ie, 0-5 years in practice).

This poses a couple problems for our newest generation of ODs. First, debt-to-income ratio (DTI), which can be an important determination factor in student loan refinancing, mortgage, approval, and practice loan qualification, is rather high. Considering most new ODs graduate with more than $200,000 in debt and get jobs that tend to fall under the average salary, they start out with only a 2:1 DTI. Secondly, large debt loads relative to income prevent an OD from investing more and may stifle their willingness to take risks, such as jumping into practice ownership. With such heavy debt, younger ODs may also be prone to taking stable, yet unfulfilling, roles simply to satisfy their debt burden and cover their living expenses.

LESSON NO. 5: PRACTICE OWNERSHIP LEADS TO THE BEST FINANCIAL OUTLOOK

There’s no question about it, practice ownership yields the highest levels of compensation for ODs. The average gross annual pay of a practice owner is $263,995; when we broke down practice owners by the size of their practice measured by the number of associate ODs they employ, we saw an average income of more than $400,000 for those who employ four or more associates and a complimentary net worth of more than $4,000,000.

Independent optometrists are vital to our profession. They keep large conglomerates and vision care plans from taking complete control of the profession. In addition, they provide employment and allow successful ODs to enjoy the fruits of their labor at similar compensation levels to surgeons. This increased compensation helps ODs feel confident in their profession, get the chance to teach others how to build successful businesses, and have the means to donate funds to efforts involving scope expansion.

A lot to be optimistic about

Despite the issues that our industry faces, data show our profession continues to generate wealth. With disciplined financial behavior, optometrists are poised to be able to create an exciting and successful future.