Interesting Financial Questions New Physicians Ask Their Financial Advisor

By John Fales

The financial demands on your life as a doctor will be unique in every stage of your career. From your education to residency, first years to a seasoned career, and career closure to retirement, a financial plan can guide you through a fulfilling career in medicine and help build your legacy.

Here are some questions we often hear from residents and new physicians:

Will I be financially behind by entering the workforce later in life?

While medical school can delay your entry into the workforce, you’re not doomed financially. One of the more important steps early in your career will be having and sticking to a financial plan. You want to understand your debt and plan to tackle it systematically, understand your current salary vs. earning potential, develop a budget, not let lifestyle creep take over, and plan for any financial goals.

How do I manage such high student loan debt?

An Association of American Medical Colleges study shows that 76% to 89% of medical students graduate with an average of $203,062 in total education debt. Considering this amount looks like a mortgage which people normally pay off over 30 years, it’s easy to start feeling overwhelmed by the number. We like to understand how aggressive you want to be in paying down debt before developing a plan. We also consider any relief available, refinancing opportunities, tax deductions while your salary may be lower, eligibility for loan forgiveness, and other repayment considerations.

Do I need long-term disability insurance as a doctor or specialty doctor?

In most cases, the answer would be yes and potentially more.

As a physician, you are probably your most valuable resource, particularly as your skills generate earning potential for the lifetime of your career. If you were unable to turn those skills into results, the financial repercussions could be substantial. Long-term disability could help replace those lost funds, and there are many additional riders that you might consider, such as an own occupation rider. Many employers offer group coverage, but consider supplementing it with an individual policy to maximize your coverage needs.

Should I consider a physician loan for a home purchase?

New doctors in the market for a new home may find themselves with a high amount of student debt and not enough savings for a down payment. Fortunately, physician loans can be more accommodative for doctors than conventional loans, such as waiving mortgage insurance (PMI) and a down payment. This may allow doctors (or certain other high-earning professionals) to purchase a home for which they might not otherwise qualify. While this may be an attractive option, there are risks to consider, such as over-leveraging yourself. It’s imperative to have a handle on your personal finances before purchasing a large asset, like a house.

Ask these questions early and get a plan in place. We would be happy to discuss your personal situation and needs any time.

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The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on May 25, 2023 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.