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AbstraktMarketing2023-03-15 09:00:002023-03-08 16:38:36How Inflation Impacts TaxesWhy Should You Build a Small Business Retirement Plan?
Exiting your healthcare role may be more complicated than anticipated without careful financial planning leading to your retirement date. You may not have enough money saved and find yourself working when you should be enjoying well-earned time with your family and friends.
Medical professionals spend a lot of time training and often accrue substantial student loan debt. These financial obligations duel for your attention, and it feels impossible to find the time, means, and motivation to plan for retirement. Regardless, it’s essential to do what you can to prepare for your future. A physician who doesn’t enter practice until their 30s has missed out on ten years they could have contributed to their 401(k) plan or Traditional Individual Retirement Account (IRA).
Creating a simple retirement checklist can help you organize your efforts and gain perspective on your short- and long-term goals. If you aren’t sure where to begin with a retirement planning checklist, use our retirement checklist to start in the right direction:
Our Retirement Checklist
Successful retirement plans save money, maximize employer contributions, and endure tax season. Here are a few things to consider when building your retirement account:
Address Outstanding Debt
Medical school is expensive, so it’s common for healthcare professionals to transition from education to practice with a large amount of student loan debt. Establishing a well-structured debt management strategy early in your career can make it easier to make room for proactive retirement planning. Outstanding debt can restrict your cash flow and negatively impact the amount you can contribute to your retirement account.
Any surviving fixed payments will command a larger share of your expenses as soon as you retire. To combat debt, you should push as much money toward paying off high-interest debt as possible without harming your ability to make minimum payments on other accounts. Tackle all credit card debt and personal loans first, and save low-interest obligations like mortgages for last.
The key to paying off debt is dedication. Track your progress and hold yourself accountable. Stick to your strategy and modify what isn’t working. With debt squared away, you’ll have more flexibility to contribute to your retirement account and use the funds how you want.
Account for Your Assets
Evaluate your financial situation. Understanding current financial well-being makes navigating the landscape and building a retirement plan with your long-term success in mind easier. Write down your liabilities, savings balance, and income. Track your cash flow and record your contributions to disability insurance, life insurance, or long-term care insurance policies.
Consider writing everything on a worksheet or document you can adjust as needed. Maintaining oversight of your financial situation empowers you to stay flexible and proactive in your retirement planning approach.
Define Your Retirement Needs
How do you want to retire? Think about where you want to be during retirement and how you plan to spend it. If you wish to master a new craft or discipline, move to a new place, or even take up a new job, you need to plan accordingly. Determine your expenses and evaluate your cash flow. Consider your revenue streams and how income taxes may impact your wealth. Create a retirement budget and measure it against your current spending.
Retirement planning doesn’t have to be a massive project. Physician’s Resource Services is ready to step in and support your money-saving efforts with industry-leading tools and deep financial knowledge.
Research Your Retirement Account Options
No matter where you are in your career, there are always ways to save money as a healthcare professional. Whether you open a Simple IRA or focus on a 401(k) plan, as an employed individual, you have the freedom to save however suits you best. Here are a few key options:
401(k) Plans
Physicians who receive a W-2 listing wages or salary may have a workplace retirement plan to defer income and contribute to a retirement account. 401(k) programs allow medical practitioners to defer up to $18,500 ($24,500 if age 50 and older) a year. If you withdraw before age 59 and a half, your retirement savings are subject to income taxes and a 10% penalty.
Simplified Employee Pension (SEP) IRA
SEP IRA is a Traditional IRA for self-employed physicians. The retirement plan has a contribution limit of up to 25% of your profit. You can keep a Traditional IRA or Roth IRA in addition to a SEP IRA and roll funds over to other tax-qualified plans.
Traditional IRA
Physicians can defer up to $5,500 per year ($6,500 per year if age 50 or older) to their retirement savings under a Traditional IRA. If a workplace retirement plan doesn’t cover you, you can make non-deductible contributions depending on your income and filing status. Early withdrawals incur a penalty.
Solidify Your Pre-Retirement Checklist With Physician’s Resource Services
Medical practitioners have a lot to deal with on a day-to-day basis. Finding the motivation for retirement planning and other financial matters is a challenge between daily expenses, debt repayment, and other obligations. Physician’s Resource Services relieves the stress of saving money for retirement. As financial advisors, we guide your efforts and highlight resources to reinforce your retirement strategy.
We’re here for you with high-quality financial solutions, whether you want to get an early start on retirement savings or make up for any lost time. Ready to get to work? Reach out today.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
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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