Physicians are known to start their careers and begin earning much later as compared to the average people pursuing other careers or professions. After completing an undergraduate degree, an individual may join the medical school at once without losing time provided he is accepted by the medical school. He would be graduating from medical school in his mid-twenties.
After completing medical school clinicians need to carry on with clinical training specializing in their chosen field. The residency would be lasting for 3 to 7 as per the specialty. Around this period fresh new doctors earn a modest salary, attending overnight in exchange for some practical work experience and they would put in long hours at work.
Once they begin their career, usually, physicians receive above average reimbursement and they have practically no risk of unemployment.
Initiate Retirement Savings Early
Doctors are supposed to have a relatively shorter professional life as compared to the average person. They initiate their careers almost ten years later as compared to others. During the initial 10 years, they are not able to earn significantly and they are burdened with huge education-associated debt. So, it is crucial for young physicians to start accumulating retirement savings right from their frugal residency days. Several employers offer both After-Tax Roth and 401K accounts. Depending on their precise financial status doctors must think of maximizing both of these plans but with priority to After-Tax Roth first and then add some money to 401k account. Get in touch with experts specializing in retirement planning for physicians for best solutions.
Aim at Maximizing Retirement Savings
Physicians must maximize their retirement savings in order to compensate for the lost time. They need to necessarily catch up for additional ten years of education and residency. Doctors attached to large healthcare organizations and hospitals should opt for the tax-deferred 401k plan. Several employers consider offering contributions that match your contributions for a specific amount. Various hospitals offer pension plans that would be guaranteeing pension after a specified number of years of service. These plans seem to be working out great provided you plan to stay committed to your current employer for another 10 to 20 years.
Self-employed doctors who run their own private practice or who own a corporation must think about investing certainly in some solo 401k plans. Besides, contributing religiously to the employer-sponsored retirement plans, physicians must set aside a definite portion of their income to taxable accounts. The greatest advantage of these funds would be their flexibility and liquidity that too, with no income limitations.
Manage Your Taxes Efficiently
Physicians who have high income must manage their tax bill efficiently and with top priority. Tax implications may keep varying as per family size, income level, and property ownership. You may hire the services of a financial planner or a tax attorney as that could be helping you in reducing or optimizing your tax dues.
Do Not Go Overboard & Better Stick to Your Budget
Even if you have managed to get a wonderful job with an amazing salary and excellent benefits, there is no reason to go overboard and splurge. You should stay disciplined, as far as your spending habits are concerned. You need to concentrate on all your long-term financial objectives. There should be sufficient money kept aside for mortgage or rent, retirement savings, loan payments, college savings for kids, living expenses, and also an emergency fund.
Apart from the above-discussed financial planning tips for doctors, there are some more tricks that must be kept in mind. A physician must always try staying on top of his student debt. You simply cannot afford to lose track of all the due dates and also the interest rates. Moreover, doctors need to take out some time from their busy schedule in monitoring and understanding their credit score. Last but not the least, physicians must stay insured and be prepared for unforeseen circumstances.
Author Bio: Margaret Jennings is a qualified financial planner who devotes a lot of time to both her career and her blog. She offers expert advice, tips, and tricks relating to your future financial security. She recommends Beamalife.com for best solutions.