Physicians’ Financial Landscape: A Road Map to Successful Retirement
Doctors don’t have unlimited funds. People often assume anyone who has gone to medical school is well off financially, but that isn’t necessarily the case. Many physicians aren’t good with money, and it costs them. They need to plan for the future just as all individuals do because retirement will be here before they know it. What are some things a doctor can do to prepare for a successful retirement?
Stick to a Budget
After years of schooling, a physician might be tempted to go out and spend money when they get their first job. However, they may get in over their heads and find they are constantly playing catch-up. Stop doing so immediately.
Go back to the days of residency and strict budgeting. Determine where the money is going and eliminate unnecessary expenses. Any money saved by cutting these expenses should go into savings or be invested. This is the first step in retirement planning for physicians because there will be no money to set aside for retirement without a budget.
Save Money
Many physicians don’t save enough money. Plenty is coming in, so why do they need to put some aside? Saving money is essential, and doctors should start when they get their first job. Look for a high-yield or interest account and put aside 10 to 15 percent of the annual income in savings. A retirement account is also an excellent place to put these funds.
Retirement Accounts
Most healthcare systems offer a qualified retirement plan, such as a pension plan or 401k. Physicians should take advantage of these plans to increase their retirement savings. Choose the most generous plan offered to get the best return on investment from this money.
Invest
Physicians can’t go out and get side jobs. They may be called upon to help patients day or night, on holidays, on weekends, and more. Every doctor should find a passive source of income. Investing is an excellent one for doctors. They often have the right personality to withstand fluctuations in the market and can make split-second decisions about buying or selling.
However, some physicians prefer to build a Certificate of Deposit ladder. Doing so allows them to spread their savings across several accounts or CDs that mature in succession rather than all at once. The physician can then access the funds, including the interest earned, and they may choose to reinvest in additional CDs or high-interest accounts. The funds are diversified, increasing the odds of a good return.
Work with a Financial Advisor
Physicians may struggle to maintain their financial health. The global pandemic was challenging for many private practices and healthcare organizations, and the effects of COVID-19 are still being seen in all parts of the economy. Every physician should work with a financial advisor to protect and grow their assets, even when times are tough. These professionals help clients determine how to navigate the economic challenges they are experiencing, so their fee is worth every dime the physician pays.
Physicians have options when it comes to managing their funds. Finding suitable options isn’t always easy. Still, those who plan will discover they can have a successful retirement, one that allows them to relax, enjoy life, and engage in the activities they love without worrying about their finances as they do. Who wouldn’t love that?