When it comes to financial planning, there are factors that set physicians apart from average Americans trying to plan for their financial security and retirement, according to a certified financial planner.
And these days, faced with increased regulations and decreasing reimbursements, doctors have less time to spend on financial planning, Colin Wiens, the southern U.S. regional director for Larson Financial Group, LLC, and Larson Financial Securities, LLC, said in an interview with Diagnostic Imaging.
A poll last year found that saving enough money to retire tops the list of physicians’ financial concerns but almost 40% consider themselves behind the curve on their savings. What distinguishes physicians from other clients?
Less time to save for retirement. Doctors get a later start and hope for an earlier finish to their careers, Wiens said. With medical school and residency/fellowships, doctors may be in their thirties before they have their career established and begin thinking about retirement plans.
Doctors also must factor in medical student loans, which are very costly and which can take years to pay off, according to a post on ValueWalk from financial consultant Sally Hay. Faced with burnout, some doctors may want to retire early, leaving them with 25 to 35 years to save for retirement, rather than the usual 40 to 45 years, said Wiens. However, it’s not always the case that physicians want to retire early, as a recent survey found many late-career physicians are hesitant to retire and many want to keep working when they do.
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Complex investments. With higher income, physicians often look to more complex investment products, said Wiens. These can include taxable brokerage accounts, backdoor Roth IRAs, cash balance plans, multiple 401(k) accounts and cash value life insurance and annuities. Doctors need to carefully evaluate what best fits their plan.
Asset protection. With the threat of lawsuits, including medical malpractice, physicians need to plan for the possibility of an adverse event or outcome, Wiens said. A basic asset protection plan can help protect retirement savings.
Lifestyle costs. Most doctors overspend when it comes to lifestyle choices, according to Hay. So they and their families need to prioritize their spending and ensure financial habits align with financial goals, said Wiens.