AMA Insurance conducted a survey called the 2015 Report on U.S. Physicians’ Financial Preparedness: Young Physicians Segment.
In February, we reviewed a similar AMA Insurance Report about financial preparedness for a different physician demographic, women. This time we turn our attention to young physicians. The report categorizes “young” as under 40.
DOCTORS ARE DIFFERENT
Claims the report’s opening headline in the introduction. It continues to explain why: “The majority (83 percent) of U.S. physicians under age 40 say “doctors have unique/more complicated personal financial needs” than same-age peers in other professions. A delayed start to their earning years, medical school debt, malpractice and liability concerns, and the lack of time to spend learning about personal finance create a situation unique to today’s physicians.”
Keeping these self-reported concerns in mind, let’s take a look at young doctors’ financial preparedness.
The report is divided into questions based on subject areas. For the scope of this post, responses to the two sections that arguably relate to financial preparedness the most—financial acumen and retirement—are as follows.
FINANCIAL PREPAREDNESS: ACUMEN
- Most (71 percent) feel somewhat or not very knowledgeable in the areas of personal financial planning, retirement planning, and insurance. However, only 5 percent of young physicians consider themselves very knowledgeable about personal financial issues.
- Half of physicians under age 40 use a professional financial planner.
- 84 percent of physicians who use a financial planner are very or somewhat satisfied with their current planner.
- Young physicians say the top two reasons they don’t use a financial advisor is it costs too much and/or they haven’t found someone they trust.
- 7 percent of young physicians feel only somewhat or not very confident that they are making the best personal financial decisions. However, 25 percent are very confident in their personal financial decision-making.
- For young physicians, guidance from a professional advisor and/or advice from another established physician would increase their confidence in personal financial decision-making. 42 percent said advice from another established physician would increase their confidence.
- 53 percent of physicians under age 40 feel that the time they spend on personal financial planning is not adequate.
- Lack of time is the number one reason young physicians say they don’t spend more time on personal finance. 22 percent say it is because it’s not their area of expertise.
FINANCIAL PREPAREDNESS FOR RETIREMENT
- Young physicians’ top personal financial concern is having enough money to retire, followed by their concern about funding their children’s education. 22 percent are very concerned about their medical school debt.
- On average, only 7 percent of physicians under age 40 believe their retirement financial plans are ahead of schedule. 45 percent say they are behind.
- 35 percent of physicians under age 40 plan to retire before they’re 65. About 40 percent plan to retire between 65 and 70. 15 percent are not sure.
- 41 percent of physicians under age 40 have less than $100,000 in retirement savings. Another 41 percent have between $100,000 and $500,000 in savings. 6 percent of young physicians have more than $1,000,000 saved for retirement.
- Most physicians have a 401k or 403b in place. About half have a Roth IRA.
So, what can be gleaned from this report? Instead of generalities concerning the good and the bad of these findings, it might be best to say that today’s young physicians are at a financial crossroad where making the right decisions are critical to securing financial preparedness for a healthy financial future.
If you need more advice about financial preparedness for the future, please contact your financial advisor or tax planner. If you’d like more information on how to reduce your monthly medical student loan payments so you can save more money each month or decrease the length of your loan period, call us today at (844) 226-LINK (5465). We’re here and happy to help.