Becoming a physician is a worthwhile and meaningful career path. Although doctors may be healthcare experts, organizing finances can be another story.
Many young physicians transition from the classroom to the real world with mountains of student loan debt. Although becoming a doctor leads to higher earning potential, there are also various expenses to prepare for, such as insurance, payment for student loans, and various other costs.
Financial planning for doctors can seem like a complicated task. Not only do physicians need to have finances in order for the next few years, but they should also start planning for retirement as soon as possible.
It can be easy to put off a retirement plan, especially as a new doctor earning a higher salary. However, it’s never too early to plan for the future. Taking the time to organize finances now means less financial stress further down the road.
At ARQ Wealth, we specialize in helping high-income earning young professionals such as doctors set up a game plan for managing their finances and setting themselves up to set and meet their retirement goals.
Retirement Planning for Doctors: How to Start
Financial planning doesn’t have to be complicated. Doctors should follow these steps to start planning for retirement and establish healthy financial habits as early as possible in their careers.
Set Financial Goals and Write Them Out
The first and most critical step in financial planning for doctors is setting goals and writing them down. Doctors should think about where they want to be in the next five years, ten years, and beyond.
Writing down goals is the first step toward achieving them. Physicians should think about the various milestones they want to achieve, such as buying a new home or boosting their retirement savings. When setting a financial goal, make sure it’s realistic and measurable.
Track Your Spending
Controlling spending is a fundamental part of financial and retirement planning for doctors. According to a recent study, around 73% of graduating physicians have student loan debt when they first enter their practice. Limiting spending during the first few years of their practice can help doctors pay off debt quicker and get them a step closer to financial freedom.
Just like individuals should write down their long-term financial goals, they should also write down their spending habits. Doctors should pay attention to non-discretionary expenses and see what they can cut out or reduce to save money and get out of debt faster.
Prepare for Unexpected Expenses
As medical professionals, doctors know how unexpected life can be. Having an emergency fund is crucial to protect individuals and their families in case of unforeseen events or expenses.
Having a decent emergency fund can cover unexpected costs like car repairs, medical expenses, income loss, etc. Not only does an emergency fund help protect and organize finances, but it also provides peace of mind.
Pay Close Attention to the Employment Contract
It can be easy to accept and sign an employment contract after seeing a fantastic salary offer, especially for those just graduating from med school. However, it is crucial for a doctor’s career and future finances to read through the contract and negotiate the details.
Financial planning for doctors requires more than earning a high salary. Pay close attention to the various benefits in an employment contract, such as disability insurance, life insurance, office costs, and if the employer matches your retirement contributions.
Leverage Tax-Efficient Strategies
Any financial planning that does not include leveraging tax-efficient strategies is not sufficient these days. Reducing taxes as much as possible can help young and experienced doctors achieve their savings, investment, retirement, and other financial goals quicker.
Planning taxes isn’t just a chore. Doctors should be thinking about potential tax deductions and credits all year long. In addition, doctors should pay close attention to their income and investment contributions to see how much they can reduce the amount of taxes owed each year.
Talk With a Financial Advisor
Retirement planning for doctors is easier with financial advice from an experienced professional. Financial advisors can help doctors make wiser investments and keep them financially motivated.
Doctors should take their time finding the right financial advisor for themselves and their families. Having the right financial guidance can help simplify doctors’ finances and help them achieve their goals, such as paying off their student debt or buying a new home.
Our specialists at ARQ Wealth Advisors know how complicated financial planning for doctors can be. Our professionals can help new and veteran doctors outline their long-term goals and help them achieve them on schedule.
We know that finances are more than an annual income. That’s why we take the time to get to know each client and learn more about their financial goals. Feel free to schedule a free, no-obligation review by calling ARQ Wealth at (480) 214-9572 or visiting the following link to learn more here.