Top personal finance tips from experienced physicians
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.
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.