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Are you an MD? Then These 5 Things Should Factor Most When Creating Your Financial Plan

By: Chris J. Roe, CPA/PFS

Physicians spend their lives caring for others, but that doesn’t mean their own financial well-being should be left on the back-burner. Physicians should have the same confidence in their finances as they have in practicing medicine. 

From the moment a doctor earns his or her MD to the day they hang up their white coat for good, doctors face unique financial hurdles, dilemmas and questions.  Here are five key components every doctor should consider when putting a financial plan in place.

#1: Student Loan Debt

Medical school students will accumulate an average of $192,000 in student loan debt by the time they graduate.1  In comparison, the average student loan debt per student in America is $37,172.2

Carrying five times the student loan debt as the average college graduate, doctors are starting their careers with a monumental financial burden. That’s why for most doctors, paying down student loan debt is a top priority for the first five, 10, 15+ years of their career.

If you’re still working to pay down debt, this needs to continue to be a priority as you work with your financial advisor. Student loan debt that is not paid down timely and strategically can wreak havoc on your credit score, savings goals, home buying dreams and retirement planning.

#2: Disability & Life Insurance

For many doctors, establishing their own practice is a big goal.  But pouring your resources and time into a private practice can leave you with little left in the way of savings - making disability insurance crucial.

For young doctors, their high-earning years are still ahead of them.  Should they lose the ability to work now, they’re facing an uphill battle with debt to pay down and a loss of income.  Disability insurance can help doctors and surgeons protect themselves financially from this worst-case scenario.

Moreover, doctors with families should make sure adequate life insurance is in place to ensure their family is well taken care of should a disaster arise.  Sometimes, even without a family currently, doctors should consider obtaining term insurance while they are young and healthy to ensure they maintain insurability as they age.

#3: Robust Estate Plan

Your career is demanding, but that doesn’t mean you can neglect preparing a plan to protect your future legacy and family.  From determining what will happen to your private practice after you pass to ensuring your spouse and children are well-taken care of, a robust and well-defined estate plan is critical.  If you are in private practice, an estate plan may also include a buy sell arrangement to ensure your family gets the the value they deserve from you hard work building the practice. 

#4: Malpractice Insurance

According to the American Medical Association, one in three physicians has faced a medical liability lawsuit in their career. That number jumps up to nearly half for physicians aged 55 and older.3

You’re working in a high-stakes field, meaning a less-than-desirable outcome could incite legal action by a disgruntled patient or their family.

The good news is, around 68 percent of claims are dropped, dismissed or withdrawn. However, they still cost doctors around $30,000 in defense costs on average.3 Having malpractice insurance can help reduce or eliminate this financial burden.

#5: A Well-Suited Financial Advisor

You know better than anyone that your financial situation is unique - and your needs differ greatly from those of friends and family who work outside of healthcare.  As a result, your financial plan deserves the dedication of a financial advisor who specifically works with and knows how to help doctors.

An advisor who is able to accommodate your busy (often erratic) schedule, address your debt, assess your risk coverage options and help prepare a legacy for your family.  Additionally, you  may want to work with someone who can help you establish a practice and transfer it to new ownership when you’re ready to retire.  Finding a well-suited financial advisor can be one of the most impactful decisions you make regarding your finances.

As a busy physician, it’s important to know you have a thorough, encompassing financial plan that addresses all of your financial concerns and you have a financial guide to implement the plan for you.  If you desire to chat or have questions about your specific situation, please contact us

  1. https://www.debt.org/students/loan-consolidation/medical-school-loans/pay-off-fast/
  2. https://www.debt.org/students/
  3. https://www.ama-assn.org/practice-management/sustainability/1-3-physicians-has-been-sued-age-55-1-2-hit-suit


2020 All Rights Reserved.  This content is developed from sources believed to be providing accurate information, and provided by Twenty over Ten and  Rx Wealth Advisors, LLC for general informational purposes only.  It may not be used for the purpose of avoiding any federal tax penalties and in no way is meant to provide specific tax, legal or financial advice.  Please consult legal, financial or tax professionals for specific information regarding your individual situation.  The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any financial advice or investment security.