How to Achieve Financial Wellness for Doctors
If you’re a physician ready to take control of your financial future, don’t miss out on these practical tips on achieving financial wellness for doctors.
Common Financial Challenges for Physicians
In order to achieve financial wellness for doctors, it’s important to have an understanding of common financial challenges:
High Level of Income/Human Capital
Despite their impressive earning potential, physicians often struggle to effectively manage their finances. This is due to their demanding schedules and limited time for financial planning. Doctors possess a unique asset known as human capital, which includes their knowledge, skills, and experience. However, this high level of human capital can also present financial challenges. For example, doctors often have to deal with the burden of student loan debt, which can take years or even decades to pay off. Additionally, their long and rigorous education can result in a delayed start to saving for retirement.
Delayed Investment Strategies
The high income of physicians can be tempting when it comes to mortgages and student loans, leading them to over-leverage and preventing them from saving in the early years of their career. As a result, doctors often have to invest more capital later on, work more years, and may even take on higher risk investments to catch up.
Common Target for Litigation
Your high-risk profession, high income, and perceived wealth make you a common target for lawsuits. Implementing tools like personal liability “umbrella” insurance policies and malpractice insurance can help cover claims. Safeguard your assets from creditors with retirement accounts, 529s, and UTMAs, special trusts, life insurance, and limited liability companies.
Vulnerability to Financial Solicitation
Another major financial challenge for physicians is vulnerability. Yes, you are highly respected and successful, but that also makes you a target for lawsuits. You’re also a target for friends and family members who want to pitch their investment opportunities to you.
While it’s great to support your loved ones, it’s crucial to ensure that your financial portfolio remains balanced. You don’t want your investments to hinder your ability to contribute to retirement and life insurance accounts. Plus, let’s not forget the short and long-term personal demands on your cash flow. Before diving into any investments, take a step back and assess the potential impact on your financial goals. As physicians, your financial well-being is just as important as your patients’ well-being.
Higher Taxes Compared to Other High-Earning Professionals
Compared to other high-earning professionals, doctors often face a more difficult tax burden. While real estate developers and small business owners can take advantage of various deductions to lower their tax payments, doctors typically only have their earned income taxed without these benefits.
Constant Need to Keep Pace With Evolving Industry Standards
The healthcare field is constantly changing, and in order to provide the best care possible, we need to keep up with the latest advancements. However, this comes at a cost. As we strive for specialization and further education, the burden of student loan debt keeps piling up. The more we invest in ourselves, the more we are weighed down financially.
Understanding retirement accounts is daunting, but with these tips, you can choose the right retirement plan for your needs.
How to Achieve Financial Wellness for Doctors
Financial well-being ensures that doctors can focus on saving lives without any financial stress. It goes beyond just earning a good salary. In fact, it involves smart budgeting, managing debt, and preparing for retirement.
Here are a few ways to achieve financial wellness for doctors:
Save Money Early On
Doctors often have a high earning potential, so it’s important to save money from the beginning of your career. This will help you create an emergency fund, invest for the future, and achieve financial stability. Track your income and expenses to gain a clear understanding of your financial situation. This will help you identify areas where you can cut back and save more.
Maximize a Retirement Plan
By investing in a retirement plan, securing your financial future but also enjoy some amazing tax benefits. Consult with a financial advisor who specializes in working with doctors. They’ll help you navigate the complex world of retirement planning, ensuring you make the most of your investments.
Consider Life Insurance
Life insurance not only provides financial protection for your loved ones in case of the unexpected, but it can also be a valuable asset for your future financial goals. By having life insurance, you can ensure that your family is financially secure, even if you’re no longer there to provide for them. This can alleviate the stress and worry that often comes with being the main breadwinner. Additionally, life insurance can be used as a tool for estate planning. It can help cover estate taxes, pay off debts, or even leave a legacy for future generations.
Consider Disability Insurance
As a doctor, your ability to work and earn an income is crucial. But what happens if you become disabled and are unable to practice medicine? That’s where disability insurance comes in to save the day. With disability insurance, you receive financial protection in case you become disabled and can no longer work. It will provide you with a steady stream of income that can help cover your living expenses and maintain your standard of living.
Are you a practicing physician looking for financial clarity and peace of mind? PRS is here to help. With a team of consultative professionals, PRS provides the tools and guidance you need to improve your financial standing. Whether you’re transitioning from residency to practice or preparing for retirement, we’ve got you covered. Our financial advisors are available year-round to offer support and share their knowledge, helping you strengthen your portfolio and make informed decisions. We help you make sure you have enough saved to enjoy your golden years without worry. We also provide comprehensive insurance solutions, including disability income insurance that protects your income in case of illness or injury. Contact us today to learn more about how to achieve financial wellness for doctors.
Life Insurance: Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
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Advisory services offered through PRS Investment Advisors, a Member of Advisory Services Network, LLC. Tax services and insurance products offered through Physician’s Resource Services. Advisory Services Network, LLC and Physician’s Resource Services are not affiliated.