Most people think the medical profession is highly lucrative, and doctors don’t have to worry about things that drive other people crazy, like budgeting, loan repayments, and planning for retirement. However, despite earning very well, many doctors find themselves financially stressed and unable to save adequately for a carefree future.
Common Issues Faced by Doctors Regarding Saving For Retirement
Medical education can be expensive, and it usually takes a long time to get qualifications that permit decent earnings. Doctors, typically, carry some of the heaviest student loan burdens that can easily take many years to be paid off even when they are earning well.
The high cost of establishing a practice
Doctors with their practice tend to earn far better than those who are employed. However, setting up the practice and making it successful can be expensive.
Doctors need money to pay the rent, afford staff salaries, advertisement expenses, membership to professional bodies, subscription to publications, attend seminars, etc. In this scenario, retirement planning for physicians can take a back seat.
After spending many years in relative hardship, when doctors start earning handsomely in employment or practice, they tend to go overboard and start living beyond their means with fancy homes, luxury cars, modern gadgets, exotic holidays, etc., leaving little, if anything, for retirement savings.
Inadequate financial planning
Like most individuals, most doctors also lack sufficient financial and retirement planning knowledge.
Consequently, they tend to save less than required or make unsuitable investments based on inexpert advice from various sources.
How Can Doctors Boost Their Savings for Retirement?
Review the expenses of your practice
If you have been too engrossed in attending to patients, it is time to take a hard look at the finances and see whether you are actually making the sort of money commensurate with the effort.
Find out where you are leaking cash, plug them, and see how you can economize.
Investigate opportunities for partnership
If you find that your practice is sub-optimal and you could benefit by associating with other doctors, then try to strike up partnerships that could see a merger of two or more practices, allowing all partners to benefit by sharing costs.
Plan your finances
As a busy doctor, you are unlikely to have enough time to do investment planning personally.
It is better to engage a professional advisor who will examine your finances, suggest cutting costs, and advise you on the best avenues of investment and the optimum ways of saving tax.
Eliminate high-risk investments from your portfolio and focus on retirement accounts with an eye on the long term.
It would be best if you appreciated that without proper money management, you would be unable to save enough money for a secure retirement.
If saving does not come easy, instruct your bank to sweep aside a certain amount of money every month into special savings account that you can use to fund your retirement accounts.
Elena Mitchell is an investment advisor and private equity manager for high-net-worth individuals.
A famous personal finance and wealth management blogger, she interacts with users via a Q&A column.
Follow Us on Twitter for more updates.