Income Identity

Income Identity

Income Identity

I have been thinking a lot about career and life transitions lately. Transitioning to part time work or half retirement has been relatively seamless. But, I have to admit that there was quite of bit of emotional work that took place before the fact. I had to wrap my head around not being the almighty doctor anymore. My authority would no longer be a given. My importance in the world would become less obvious. I could no longer fall back on a title. Innately tied to this concept was my income identity. I identify as a huge wage earner.

This identity, however, is no longer accurate. My current wages, a fraction of prior, no longer elevate me to such vaunted heights. Which is fine because I no longer need as much to sustain my trajectory. I front loaded the sacrifice so that I could slow down.

But did it feel fine?

The W2 Asset Class

I definitely consider W2 income to be it’s own asset class. Unlike most investments, it is one of the few that consumes time instead of money. Otherwise, it is no better or worse than any of the other asset classes. Does it matter whether the majority of money is made through stocks, real estate, side hustles, or a main gig?

Not really. Or at least it shouldn’t.

Yet our basic wage seems to become part of who we are. It is our income identity. The amount of money someone is willing to pay us to do whatever we are expert in.

And this feels good. Sure we like to collect passive income from multiple sources. Yet, there is something special about what someone is willing to pay you to do your job.

It becomes a question of self worth.

Career Transitions

Income Identity

Leaving a high paying job for a lower due to burnout, fatigue, or just plain loss of interest is probably a good thing. Who wants to spend their lives toiling away at a job they despise?

There is, however, a loss of identity that takes place with such moves. Income identity becomes a huge part of our work persona. Giving up status is not easy. It’s not just the dollars and sense. It becomes a deeper issue about personal worth.

We define ourselves by what we are able to make. How well we provide for ourselves and those we love. Intentionally giving up income almost feels like self deprecation.

We are undervaluing ourselves.

Retirement, Early or Otherwise

The natural progression of these thoughts brings us to retirement. If transitioning careers is hard, leaving the work force completely can be particularly devastating. Especially to high wage earners.

So when you drop your income identity, like any part of your identity, there is a struggle to fill the gap. Who am I if I don’t make a lot of money anymore? What is my importance if no one is willing to pay me to achieve something.

While these feelings are natural, they are not often discussed in the FIRE community. We spend so much of our time building a nest egg we get caught in the accumulation phase.

Final Thoughts

Career transitions and retirement can be a gift. They are a reward at the end of a tunnel which is often difficult and anxiety ridden. If you are unhappy at work and have the economic wherewithal to make less or leave altogether, it is a boon.

Yet, we don’t emotionally prepare ourselves for this change. We don’t recognize that income identity is a huge part of how we define ourselves.

This is not something that can’t be overcome.

We just need to be thoughtful about it.

Doc G

A doctor who discovered the FI community but still struggling with RE.

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10 Responses

  1. Wealthy Doc says:

    Thoughtful post as always, DocG.

    I estimate that 70-75% of my identity is made up of being a physician.

    Compared to others that may be high or low.

    Some are higher I’m sure. Others see medicine as just a job and likely feel pity for people like me whose identity is wrapped up in making a living.

    People know I’m a doctor. At work, with friends, at church. It is part of who I am and how people perceive me.
    There is a lot more to me than that but I am also proud to be a physician.

    I see it as a calling. I was never good in school I had some hardships and financial struggles as a youth. It was a heroic achievement for me to get to this place.

    I may give it up at some point, but I wouldn’t do it lightly. I have seen doctors “fail” retirement because they underestimated this identity aspect.

  2. An extension of the above sentiment is the current practice of linking “productivity” to “value,” with the implication that if you are not “productive” (see a lot of patients), then you are not “valuable (little self-worth).”

    If we continue to insist that there is something to the concept of “the art of medicine,” then we should not be resistant to the parallels. The value of a great piece of art has little to do with how much time it took to make or how many were made. In fact, mass-produced art (like mass-produced healthcare) has LESS value that one of a kind, thoughtful and creative pieces.

    I am lucky that I am not paid on a “productivity” formula. Nonetheless, I have to hustle during the day to get the work done that my patients need. I like to think that my professional “self-worth” depends on the value I offer my patients, not what arrives in my W-2. Financial independence will make that assumption even easier if ever I achieve it.

  3. Gasem says:

    It’s time for me to renew my medical license. My state has CME requirements and they use a brokerage service to document CME so the light at the brokerage has to turn green in order to proceed. I’m retired and at some point in the next year will become unemployable as a physician from a medico-legal perspective. If you don’t practice insurance companies won’t insure you after a while usually about 2 years. I like being licensed but it has a non trivial cost, CME and the time involved keeping up, the fees of licensing plus DEA plus ACLS/BCLS/PALS etc. So what’s a mother to do? Pay the cost and keep the license active or let it lapse. Pretty much once it lapses I’m 100% done, yet medico-legally I’m already essentially done. I decided on re-upping one more cycle since being a licensed physician has occupied the majority of my life, but as time goes on the idea of taking someone’s life in my hands as I did for 35 years becomes less and less appealing. I don’t need the worry and I’m nothing if not anal about my business. I turned the light green and renewed. The point of course is, it’s not about money it’s about understanding who you are and what you want and where you want to go. If you’re still worrying about money you are not financially independent by definition. I like being licensed, I’m not interested any more in assuming the risk associated with actual day to day practice. Accumulating money is not part of that equation. At the actual point of retirement it becomes virtually 100% about mitigating risk. The problem with accumulating money over decades is that becomes all you know how to do.

    Udemy had a course sale on black Friday, so I bought about 20 courses on stuff I’m interested in, the topics vary but one thing is programming micro-controllers over WiFi to run machines. So I bought some wireless micro controllers for a couple bucks from Ali-Express, built a lab and HAD AT IT. Now I’m discovering there are a bunch of little software protocols that have different efficiencies at topological aspects to network design, whole ‘nother rabbit hole. I thought I might add a book regarding personal finance which is a Bogglehead alternative, since I think the Bogglehead approach is somewhat misguided in terms of life long risk management and risk mitigation, not accumulation, is the actual key to success, so I’m working on that outline. It’s winter in FL a perfect time to build radio antennas. I used to be an antenna/communications engineer so I’m spending some time out in the yard building antennas. I bought a cute little network analyzer built in a garage by some joker in Germany for $200 which is the equivalent of what you could by from Hewitt Packard for $30K just ten years ago. Great way to get a little sunshine and engage my squash. There are a million things to do that are amazingly interesting that don’t involve nose to the grindstone. If any of it pisses me off I just go do something else for a while.

  4. RE: Gasem
    You are correct that if you are out of practice for 2 years or more it is almost impossible to get back in, regardless of up-to-date CME and a medical license. I encountered this situation personally about 10 years ago. It was only through persistence and a minor miracle that I was able to return to practice. One strategy for those on the fence regarding retirement is to consider occasional locum tenens work. Every clinical assignment resets the clock. I researched this quite thoroughly during the 3 years it took to write my latest book, “The Locum Life: A Physician’s Guide to Locum Tenens.” Of course, if you no longer want to take the responsibility inherent in the practice of medicine, there’s really no need to keep your license.

  5. I struggled with this before pulling the trigger and leaving medicine. After a while, it wore off. I guess it was seeing my bank account growing despite being retired that finally made me feel like I still earned an income, it was just passive now, instead of on a W-2 or 1099.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

  1. January 27, 2019

    […] G from DiverseFI was speaking my language when he wrote Income Identity. Although many doctors self identify with their profession, we equally self identify as being high […]

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