You got into the medical field because you wanted to spend your life caring for others. Medicine can be a financially lucrative career, especially when establishing a private practice, but it also comes with more risks than the average job.
MDs face unique issues that can cause significant and extended wealth management problems if not addressed proactively. Even if you have an employment contract with a hospital or a medical practice, your exposure to risk with the decisions made with a patient requires attention sooner rather than later.
What Financial Issues Do MDs Face Today?
Young MDs typically earn an above-average income throughout most of their career. Since you’re in school longer than other professions, you’ve got some catching up to do to create a comparable lifestyle when you’re ready to retire.
That’s why the following issues should be a priority when creating a financial plan for the future.
1. Student Loan Debt
The average medical school graduate accumulates over $240,000 in student loan debt1 before working as an MD. That’s more than five times what the typical student earns in other career fields.
This monumental financial burden requires direct attention to avoid excessive interest charges and income interference. Most MDs need between 5 to 15 years to clear this debt, even when paying it immediately.
Failing to pay student loans on time can lead to defaults, credit damage, and even tax refund confiscation.
Before buying a home or an expensive car, consider getting this liability paid off as soon as possible to avoid adverse outcomes.
2. Estate Planning
Although working as an MD can be demanding, it also gives you the chance to establish a long-term legacy for your family. Estate planning ensures that you can take care of your spouse, children, and others if something unexpected happens to you.
Healthcare professionals should always have a well-defined estate plan because of the nature of what they do. Even with adequate personal protective equipment and safety protocols in place, your job puts you around illness and disease daily.
It’s never easy to think about what might happen if you’re not here. This financial management asset ensures that the outcomes you want can still occur.
3. Malpractice Insurance
About 30% of American physicians have faced at least one medical liability lawsuit during their careers. When only MDs above the age of 54 are surveyed, that figure jumps to nearly half of all practicing doctors.2
People come to medical professionals for their healthcare needs, which means you’re working in a high-stakes field. Anyone that doesn’t get the outcome they want could pursue you in court for damages.
Malpractice insurance can also potentially protect you in circumstances where a mistake or misdiagnosis occurred without the proper patient waivers signed.
Most malpractice claims are withdrawn or dismissed. Even in those circumstances, the average cost to defend yourself in these situations is approximately $30,000 per instance. Insuring your financial future against this issue makes it easier to plan for your other needs.
4. Disability Insurance
Many MDs have the goal to start their own medical practice. If you pour your income into a potential business venture, it can reduce how much you have available in savings.
If something were to happen during the establishment of your private practice, it could be nearly impossible to recover financially. That’s why disability insurance is an essential asset for all MDs.
The cost is minimal. In return, you’re protecting yourself against the worst-case financial scenario.
5. Financial Management
With the demanding schedule that MDs manage, there isn’t always enough time to address your financial needs individually. That’s why it helps to have a well-suited advisor taking care of this chore on your behalf.
When you find the right financial advisor, they’ll help address your student loans, assess risk coverage needs, and start the legacy planning process for your family.
Depending on the current status of your career, a financial advisor can help you establish a practice, create an exit plan for your business, and take care of the unexpected circumstances that arise.
How Prepared Are You for Your Financial Future?
All healthcare professionals should have a comprehensive financial plan that addresses their current and future concerns.
As an MD, you have the added pressure of managing potential malpractice claims. If you have a private practice, you’ll need your business to be structured so that your personal assets are not exposed to your professional activities. By paying attention to these five critical areas, you’ll start building the foundation that lets you achieve your financial goals. Boardwalk Wealth Management is here to help if you need it.1. https://educationdata.org/average-medical-school-debt
About Boardwalk Wealth Management: Offer financial planning & wealth management for individuals and businesses in Ann Arbor, Michigan & beyond. The foundation of Boardwalk Wealth Management lies in true dedication to our clients and determining what their wealth means to them. We offer investment management, tax planning, and retirement services. As a fee-only financial advisor, we do not sell financial products or collect commissions. We enjoy working with clients both locally and remotely.