Personal finance advice for doctors is generally welcomed by most physicians as saving for retirement is often a top concern for them.The 2014 Work/Life Profiles of Today’s Physician survey by AMA Insurance showed only six percent of American doctors consider themselves “ahead of schedule” when it comes to saving for retirement. Half the doctors were “behind where they would like to be.”
In hindsight, the majority of physicians:
- Would have sought the advice of a financial advisor.
- Spent more time on financial planning.
- Used different investments early in their career.
Below, seasoned physicians over 60 provide seven personal finance tips for doctors based on their own experiences.
PERSONAL FINANCE ADVICE FOR PHYSICIANS FROM PHYSICIANS
Work With a Trusted Financial Advisor
Find a reputable and knowledgeable financial advisor early in your career. A trusted financial advisor can help you make smart decisions about your money.
Dr. Angus McBryde, Jr., MD, a 78 year old orthopedic surgeon and professor at the University of South Carolina School of Medicine, says “your advisor ensures you cross your Ts and dot your Is. The physicians I know who have gotten into trouble with money didn’t get good advice. You’ve got to have a resource.”
Be Prepared for the Worst
Especially when you are young and healthy you don’t think about things going wrong but it’s always best to be prepared for the worst.
Dr. McBryde advises you to be prepared for at least one disaster. He explains “unexpected illness, bad investments, or family troubles can deplete you financially, and young physicians should take this into consideration.”
He further adds “everybody’s going to have some big bumps in the road, so you can’t just look at the projection of what you’ll have when you’re 60. You’ve got to shoot for more than you’ll think you’re going to need.”
Buy Enough Disability Insurance
Dr. McBryde advises doctors to think ahead and buy disability insurance.
Disability insurance provides income if you become disabled for an extended period of time.
He says, “there’s a higher chance of you becoming disabled than dying. I carried a huge amount of disability insurance. Fortunately I’ve never had to use it, but I have friends who were underinsured.”
You’ve spent so many years training to become a doctor, chances are you’re most likely only going to have a career in medicine.
Therefore, should you ever become injured on the job, you’ll be financially protected if you have enough disability insurance coverage.
Create an Estate Plan
More than two-thirds of physicians under age 40 don’t have an estate plan at all.
If you don’t have one, work with a trusted financial advisor to create one.
Your estate plan, at minimum, should include a will as well your end-of-life and medical wishes. By doing so, you won’t leave the burden of these big decisions on your family members.
Understand Your Investment Options
If you’re unsure of what types of investments are right for your retirement plan, make sure to educate yourself.
Spend time researching options as well as talk with your financial advisor to learn about what investment vehicles exist and would be suitable for you.
Know Your Own Financial Situation
It’s important to understand your personal finances.
Dr. Weinstein advises to start by reading about finances. He says doctors don’t know enough about money but it’s only because they never taught themselves.
You can learn a lot about your own financial situation by creating a personal budget.
Manage Your Debt Wisely
Barbara Schneidman, MD, a clinical professor of psychiatry and behavioral sciences at the University of Washington School of Medicine in her 70’s, advises doctors to pay credit card bills on time as well as manage debt wisely.
It’s important to explore all options on how to best manage your debt like credit card bills and medical student loans.
If you have a high interest student loan you should consider options like refinancing your medical student loans.
Refinancing means you apply and become approved for an entirely new loan with a different interest rate, maturity schedule, and schedule of monthly payments.
Your new lender pays back your existing student loan(s) and issues you a new loan at a potentially lower interest rate which results in a lower required monthly payment.
Following these financial tips from these experienced physicians can help you get ahead of where you’d like to be when it comes to personal financial planning and saving for your retirement.