Financial Planning for Physicians

Financial planning for physicians presents unique challenges, especially as they transition from residency to a higher-income stage. Key considerations include managing substantial student loans, negotiating favorable employment contracts, balancing housing choices, allocating resources for children’s education, and building financial independence.

Physicians often need to catch up on retirement savings, considering they may start later due to extensive education. Asset protection is crucial given their higher liability risks, making insurance and investment choices vital. Optimizing taxes becomes essential, particularly for those in private practice, as the tax impact can significantly affect financial independence.

Ultimately, the goal for many physicians is not early retirement but achieving the autonomy to work by choice rather than necessity. Balancing various life stages and career longevity requires a specialized financial planning team to help physicians navigate these complexities effectively.

Video Transcript

Financial planning for physicians comes with its own set of unique circumstances. Typically, when a physician is graduating from residency or potentially fellowship, they’re coming out with a large amount of school loans, a much higher income.

And balancing big decisions, we’ve found, can lead physicians either on a great path to financial and dependence or a path that they’re always feeling behind. So balancing school loan payments, making sure that the contract they sign is set up for their favor and not just the hospital’s favor.

And then ensuring decisions such as how big of a house they can purchase, making sure they balance their time and resources for kids, college and also creating financial independence is the art of financial planning that we typically see is overlooked, if not planned for.

Very tactfully. Some of the biggest considerations for physicians are how to balance catching up. A lot of people will start saving for retirement in their 20s, we see. Typically, physicians don’t start really saving for retirement until the late 30s, early 40s.

So although they have a higher income, there also has to be a higher percentage of income that’s saved to catch up goals such as college or retirement. Asset protection is of key importance simply because physicians are at a higher risk for things like lawsuits on the job, off the job.

Making sure you have the right insurances in place and making sure that you save money into the right places is a key to your success to make sure the money stays in your pocket and not someone else’s pocket.

Another consideration for physicians is being as tax efficient as possible. The higher income that you earn, the higher tax rate that you’re in your own practice, you’re setting up your own retirement plans, versus you being a w two employee at a hospital.

Making sure you take advantage of all of the right tax avenues when saving money in the right place can be a huge differential in developing early financial independence. Most importantly with physicians.

We find that. Most physicians are not motivated by retiring early or getting to a certain net worth. They want the autonomy and independence to work because they want to, not because they have to. So often there’s goals competing for time and there’s goals competing for resources that they have.

So having a team that’s able to navigate this with experience of how to maximize the lifestyle, whether kids are young and under the roof and the majority of their time with their kids will be spent during those early years versus also making sure that they’re in the position their fifty s, sixty s and seventy s where work is out of want, not out of need.

So the physician can really focus on the specialty and intellectual capital that will continue to build over their careers.

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