MDs are lifesavers for thousands of people but often put their own needs on the back burner, especially their finances. From excessive student loans to higher than average salaries and varying budgeting needs, MDs need to have a wealth management plan in place even before starting their practice.
Here’s what MDs need to consider.
How to Handle Student Loan Debt
The average college grad leaves college with $37,172 in student loans. Now think about student loans five times that amount and that’s what most MDs carry. The average medical student graduates with $192,000 in student debt.
MDs start their career and adult life off in over their heads in debt. If you didn’t know how to handle it or just didn’t do much about it, you could feel like you’re drowning in student loan debt. Even if you hit it hard for 5 – 10 years, it takes a long time to pay off $192,000 especially when interest keeps accruing.
Getting help from a professional financial advisor in Ann Arbor can put a plan in place and help you learn how to follow it. If you don’t, you may struggle to save for retirement, or even get future loans all because you have student loans looming over your head.
How to Plan for the Future
No matter how much money you make, if you don’t have a plan for the future, such as saving for retirement or planning your estate, it won’t work out like you’d hoped. You have many important decisions to make including:
- What age do you plan on retiring?
- Where do you plan on retiring? Will you downsize, travel, or work part-time?
- Do you own a private practice? If so, what will you do with it when you pass away?
- How will you protect your loved ones (spouse, kids) if/when you are gone?
- Should you set up a trust to limit the taxation your beneficiaries will face when they inherit your estate?
Do you have Enough Malpractice Insurance?
We live in a time when anyone and everyone sues for even the smallest issues. According to the American Medical Association, 8 percent of doctors age 40 and younger have been sued, and as much as 50% of doctors over age 55 have been sued.
No matter where you fall in the age bracket and risks, there’s always the chance of someone suing you. While almost ¾ of cases are dropped, the financial cost (around $30,000) and the emotional/physical drain can take their toll on you. Ensuring you have adequate malpractice insurance should be an important part of your wealth management plan.
Do you Need Disability Insurance?
As a financial advisor in Ann Arbor, I see many medical professionals who forget about disability insurance. It’s most important when you’re a young practitioner and still establishing yourself. With little time or money to save, and your high-earning years well ahead of you, what would happen if you had a sudden accident or illness and couldn’t work?
Disability insurance may help offset a terrible scenario, and at the very least, keep your finances intact while you get better.
Work with a Reputable Financial Advisor in Ann Arbor
Medical professionals have unique financial situations. Whether you’re in your high-earning years or just getting started, there are many factors you must consider. Working with a reputable financial advisor in Ann Arbor who understands the intricacies of excessive student loans, planning for the future, saving for retirement, and establishing a practice you can transfer upon retiring or passing away is important.
If you’re ready to explore your financial needs and to create the wealth management plan that sets you up for success, consider Boardwalk Wealth Management, a fee-only financial planning firm focused on working with medical professionals.