Navigating 5 Financial Stages of Life for a Physician

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As you navigate through the financial stages of your life as a physician, careful planning not only prepares you for each stage, but also helps you maximize your time in each and fulfill goals along the way. The work-life balance for a busy physician can become lopsided when your priorities are not defined. We often hear physician clients who enter retirement say, “I wish I would have spent more time focusing on the things I love along the way.” Consider these goals and action items that are important during the 5 typical financial stages of life:

Setting the Foundation – After graduating from medical school, you may be focused on starting your career and family while getting out of debt. This is a good time to establish financial practices such as sticking to a budget and creating a disciplined savings strategy before you enter into your higher earning years. This is also a good time to set boundaries for your work-life balance and prioritize the important things in life so you don’t lose sight of them.

Financial Actions: Establish a Budget to Live “Below” Your Means and an Emergency Fund, Begin Paying Off Debt, Protect Yourself with Insurance, Maximize Employer-Sponsored Retirement Plan Match, Automate Savings

Building and Safeguarding – As your life and family grows and becomes more complex, making smart financial decisions and working with professionals to build a strategy for meeting your objectives can be key. It is also smart to work as a team with your spouse so you each understand the family goals and game plan for managing your finances. During this stage, ask yourself: am I spending my income on things that enhance and highlight what’s important in my life?

Financial Actions: Consider Hiring a Non-Conflicted, “Fee-Only” Financial Advisor and a Tax Professional, Save for Education Expenses, Focus on Estate Planning, Save for Major Purchases “In Advance” (So You Can Pay in Cash), Continue Paying Down Debt

Looking Toward Retirement – As you look ahead to retirement, you’ll want to know your savings can sustain you in your retirement years. Make the most of your retirement plan by contributing as much as possible each tax year. This is also a good time to prepare an employment exit strategy. Will you retire completely, or transition to part time work while building in more time for travel, hobbies and family?

Financial Actions: Maximize Retirement Catch-Up Contributions, Update Retirement Goals, Research Social Security Strategies, Wipe Out Outstanding Debt

Transitioning to Retirement – This stage is where you want to prepare for health and housing needs you may have in retirement and making sure your family members are aware of your plans. This stage is also the time you get to dictate how you hope to live out the rest of your life.

Financial Actions: Create a Retirement Budget, Utilize Retirement Income Strategies in a “Tax Managed” Fashion, Plan Health-Care Related Needs, Update Beneficiaries

Late Retirement – In the final stage, consider taking actions to solidify your legacy. Whether you want to leave something to your loved ones or support causes you care about, make sure you have a plan to carry out your wishes.

Financial Actions: Reduce Expenses, Consider Alternative Housing Options, Update Estate Plans, Solidify Burial Plans, Engage in End-of-Life Discussions with Your Children

If you’re so focused on your career that you don’t take time to enjoy life along the way, you may reach retirement full of regret. The things you enjoy doing and people you want to spend time with aren’t going to wait around until you have time to focus on them. It’s never too early to start planning so you can make the most of your life.

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