Like everyone else, doctors are concerned they are not saving enough money to retire on. However, there are many factors that set physicians apart from the average American trying to plan for their retirement. First, due to their grueling schedules doctors have less time than the average individual for financial planning.
Second, the cost of regulation and compliance is growing and that is increasing business expenses and disrupting cash flow. Third, reimbursements are decreasing and that negatively impacts income. What else distinguishes doctors from other folks hoping to safeguard their financial future? Plenty! Here is why healthcare professionals and clinicians need more than the general investment advice found on Google and in newspaper and magazine articles:
It takes more time to establish their healthcare practice. Medical school, residency, and fellowships – a doctor’s career takes longer to get started, and it takes longer for their medical practice to become established. Add to that early retirement due to burnout and the staggering amount of student loan debt, it’s no wonder there is less time to save what’s needed for retirement.
Higher income may require more complex investments. Tax efficient investing is a priority for physicians who traditionally make higher incomes, and often juggle brokerage accounts, Roth IRAs, life insurance and annuities, and outside retirement plans. It is important to consider tax-advantaged and tax-exempt investments and know how to access funds in the most efficient way during retirement.
An asset protection plan is needed. Medical malpractice lawsuits loom large and doctors in every profession need to plan ahead for the possibility of an adverse event as well as for disability. Income and retirement savings need protection, and long term care must be considered. A risk assessment is needed and an insurance audit for yourself and your family as well as for your practice.
A long term exit strategy is essential. Transition models can include selling your practice and all related assets outright or a partial sale of the practice assets only while retaining ownership of hard assets, such as the building and land, which can generate ongoing income.
Job security is a myth. Group contracts are not always renewed by facilities, and some physicians are being replaced by mid-level providers to contain costs. Leverage that physicians once had as a unique and powerful brand is fading. Even a doctor who is the head of a department or a key faculty member is subject to the whims of a large bureaucracy or big corporation just as much as the rest of us these days. And as the economy goes (or the insurance provider) – so goes the elective surgeries. Medicine is not recession proof.
Spending habits are hard to break. Lifestyle choices can be difficult, but budgets work for a reason. Financial goals need to be aligned with spending and financial habits like saving.
Financial planning for physicians is a specialized area of practice that requires an understanding of the unique financial challenges facing doctors today. Healthcare practitioners need to take a wellness approach to their financial health and that includes an annual financial check-up! Do you have access to adequate resources for emergencies or opportunities? A comprehensive financial plan for a physician from residency to retirement would include:
• Financial Statements,
• Income Tax Planning,
• Insurance and Asset Protection,
• Debt Analysis and Management,
• Budget and Cash Flow Management,
• Tax Efficient Investment Planning,
• Business Loan Procurement,
• Employee Benefits Planning,
• Retirement Planning, and
• Estate Planning
Contact the healthcare experts at TFG – we are more than just accountants and tax experts, we are medical practice consultants and business advisors. We understand your struggles with variable income, compliance issues, payors, and the changing landscape of medicine. Take advantage of our 20+ years of experience whether you are a physician, surgeon, chiropractor, dermatologist, dentist, podiatrist, pharmacist or other niche healthcare provider.