Top personal finance tips from experienced physicians

AMA Wire
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If you could turn back the clock to your residency days, what changes to your personal financial planning would you make? In hindsight, the majority of physicians say they would have made major changes to their approaches to finance. Use these six lessons from physicians over 60 to avoid regret later in life.

Retirement savings is a top concern, according to the 2014 Work/Life Profiles of Today’s Physician  released last year by AMA Insurance. About one-half of physicians think they are behind where they should be in retirement savings. But with smart planning, it is possible to be secure in your personal finances.

“My goal when I finished my residency was to be able to walk away from medicine at age 55—knowing I never would, but having the financial security to do so,” said Louis Weinstein, MD, professor and former chair of obstetrics and gynecology at Thomas Jefferson University Hospital who is 68 years old. Here are some tips from Dr. Weinstein and other physicians who want to share their best advice.

Work with a trusted financial advisor

According to the survey, only 6 percent of physicians consider themselves “ahead of schedule” in planning for retirement  and a majority of physicians would have sought the advice of a financial advisor Get help early in your career to build your knowledge about your personal finances and goals.  

Your advisor is there to make sure you “cross your Ts and dot your Is,” said Angus McBryde, Jr., MD, an orthopaedic surgeon and professor at the University of South Carolina School of Medicine who is nearly 78 years old. “The physicians I know who have gotten into trouble [with money] didn’t get good advice. You’ve got to have a resource.”

Always plan for the worst

“You’ve got to plan for at least one disaster,” Dr. McBryde said. Unexpected illness, bad investments or family troubles can deplete you financially, and young physicians should take this into consideration. “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,” Dr. McBryde said. “You’ve got to shoot for more than you’ll think you’re going to need.”

Don’t skimp on disability insurance

“There’s a higher chance of you becoming disabled than dying,” Dr. McBryde said. “I carried a huge amount of disability insurance. Fortunately I’ve never had to use it, but I have friends who were underinsured.” Think preventatively and learn what you need to know about disability insurance while it is still only a possibility

Review and update your estate plan

More than two-thirds of physicians under age 40 don’t have an estate plan at all. Work with your financial advisor to have the minimum in place—a will, plus end-of-life and medical directives—so that the responsibility to make those decisions is not the only thing inherited by your family members.

Know your investment options

Physicians under age 60 are unsure what investments they should make which often results in no investments at all. Spend time with your advisor learning about your options, and, instead of finding time, make time to work on your personal finances quarterly or monthly.

Educate yourself on your own finances

“I started reading about finances and investing very small amounts of money,” said Dr. Weinstein. “Doctors can be really dumb about finances, but it’s only because they never taught themselves.” Be sure you know how your money is working for you.

Besides these tips, a piece of advice from Barbara Schneidman, MD, clinical professor of psychiatry and behavioral sciences at the University of Washington School of Medicine—who just turned 71—is to manage credit cards wisely.

“Always pay off credit card debt each month,” she said. “If it isn’t possible, stop charging things.” Read tips for students and residents to avoid credit card debt and manage personal finances.

Tell us: What advice would you give to young physicians about planning for the future? Share your top tips in a comment below or on the AMA Facebook page.

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We were taught to serve the best interest of the patients. A lot of money is spent on taking the USMLE and "review courses". Even more is spent on prescribed medications (which are wrong) to improve focus on studying for exams which are poorly written and politically biased. The majority of practicing physicians in this country clearly do not understand " primum non nocre". The good has outweighed the bad from day one and the people doing the harm are never held accountable. In most cases, they worsen the problem instead of improve it.
Great article and in my experience quite true. I know your time me is tight, especially in the early days of your career but take time NOW because you can't get it back later.<br/> <br/> Find a reliable, unbiased Financial Advisor/Coach to help you with today and plan for tomorrow.<br/> <br/> Shamra VanArk
Financial advice for physicians ought to be specialty-specific since some physicians easily make over 3x-5x what other full-time physicians are earning. Hence, some global tips are obvious (live below your means, set goals for savings, etc.), but other tips are relevant for those earning an income of X vs. tips for those who are earning an income of 5X.
SAGE ADVICE IN THIS ARTICLE 3 other suggestions 1. if possible,stay married to the person you married the first time 2. get you kids through college as quick as you can 3. do not build a new house after you are 50
My accountant and her partner specialize in medical practices.<br/> I essentially retired at 58 and have at least 13k to spend monthly. Probably 20K, but I don't use it all. My ex wife is similarly situated. Tips?<br/> 1. Very early on, learn to distinguish needs from wants. You worked hard to get here. But you don't need an expensive car. You don't need the biggest or best house in town. You don't have to go to Europe 2X per year. Get the idea?<br/> 2. You are not that smart. If you don't intimidate your accountant he/she will tell you that. Get a great team and then listen to them.<br/> 3. Invest in Real Estate. Read the book Real Estate Investmnents and How to Make them by Milton Tanzer. You can find it on Amazon for about 5 dollars. Then, allow your broker, lawyer, accountant, and PROPERTY MANAGER to do all f the work. After all, you generate down payments by doing what you do best: practicing medicine.<br/> 4. Get into balanced funds and leave them alone. DO NOT TRY to do better than the market; it won't happen in the long run.<br/> 5. You are a high income earner. YOU CANNOT AFFORD NOT TO TAKE CALCULATED CHANCES. <br/> 6. I worked for UNUM disability for about 5 years. In spite of advice to buy lots of disability insurance, be aware that they will try to screw you at every opportunity. The faster you can accumulate wealth, the faster you can reduce of eliminate these slime buckets from your life. They are NOT interested in helping you. Life insurance and health insurance is a different matter.<br/> OK. That's enough for now. Feel free to ask more; I certainly have my opinions.
All of the advice is good. I would add two things: 1) save money to regular bank accounts that are not tax deferred; 2) save money to tax deferred accounts for the future. The stock market is risky over time. I saved money that is 70% non-tax deferred and 30% that is tax deferred.
Amen to trusted Financial Advisor and Accountant, silly me tried to do it on my own for the first 10 years, lost $ and lost those all important early years for future growth. Ultimately cost 1-2 million out of the retirement nest egg.
Learn the stock market ASAP. Put as much money as you can in sheltered accounts, either IRAs, 401K, kids and spouse accounts, etc. Diversify the portfolios, USA and foreign stocks, no bonds, and look for high interest and dividend reinvestment plans. Subscribe to Investors Business Daily, and they'll head you in the right direction, and tell you the best place to put your money. Read a few books about the market, check out Mad Money on TV with Jim Cramer. Develop your own philosophy and pick investments that you understand. Look at Mutual funds and see their biggest holdings. Even though $$ is tight now, put aside those few bucks for yourself and family now. Pick a broker like Chas. Schwab, low commissions and good research. That's a start, and when you become knowledgeable about the basics, you can start with Options, puts and calls.
Excellent article!! Good a Physician in mid career, planning is key....I use a variety of options Dave Ramsey and Robert Kiosakyi are my favorites. I would say to know your markets and investment vehicles well....I had invested in Real Estate early on but did mot manuver well when the market changed and so I lost income...plan and adjust always
My advice would be to always put the most you possibly can away for retirement even if it means cutting somewhere else. I'm retired now and am very glad I kept to this plan. It wasn't always easy, but we made it happen.


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