Working with healthcare professionals can pose some unique challenges that require careful planning. Many are facing student loan debts, cash flow planning needs, and are in need of a professional who can help them tax plan effectively. These are the topics I covered in the first part of my blog series on key financial planning considerations for healthcare professionals.
Once those items have been addressed, oftentimes I find myself having conversations with clients who work in healthcare around how to balance the issues above (student loans and cash flow in particular), with saving and investing for the future- both their own and their families.
Risk management also becomes a key component of a comprehensive financial plan, as often their income is a significant portion of their families, and it is important to mitigate risk if something were to happen to them.
In the second part of this blog series, I will focus on key planning issues to consider that address retirement planning, saving and investing, and proper insurance planning to help mitigate risk.
- Retirement Planning
Many healthcare professionals often get a late start on retirement savings because of extended education and training. To catch up and ensure a comfortable retirement, it's essential to start saving early, even in small amounts.
- Maximizing Tax-Deferred Accounts: Take full advantage of tax-deferred retirement accounts such as 401(k)s, 403(b)s, or a traditional or Roth IRA. These allow your savings to grow tax-deferred. I generally recommend contributing at least enough to get the full employer match, however, building a specific financial plan tailored for my clients goals, including how much to save for retirement, is preferred.
- Catch-Up Contributions: Once reaching 50 or older, take advantage of catch-up contributions in retirement accounts to save additional funds, if needed.
- Insurance Planning
As with any profession, insurance planning is a crucial component of financial stability.
- Disability Insurance: Healthcare professionals should ensure adequate disability insurance coverage. The ability to work and earn income is a significant financial asset, and a long-term disability could severely affect earning potential.
- Malpractice Insurance: Protecting a medical practice from liability with comprehensive malpractice insurance, which can help shield assets in case of legal action.
- Life Insurance: Especially for clients with dependents, life insurance can provide a safety net, helping to ease a potential significant financial burden on a family, in the event of an unexpected passing.
- Investment Strategy
At Impel Wealth Management, one of the services we provide is developing and managing a disciplined investment strategy to help our clients grow their wealth over time.
- Diversification: Build a well-diversified portfolio of stocks, bonds, and alternative investments to help manage risk.
- Risk Management: Balancing the overall investment strategy with an eye towards risk management can help determine an asset allocation in a portfolio to help clients towards their overall financial goals.
In working with a diverse group of healthcare professionals, from doctors, physicians’ assistants, nurse practitioners and anesthetists, registered nurses, and more, it has been my experience that there is no “one size fits all” plan that helps address the unique needs of their profession. This is why it is my belief that it important to start with a Discovery meeting, and spend time getting to know where someone is in their current financial situation. We can then help create a custom plan to help them towards their financial goals and dreams. It is a passion of mine serving healthcare professionals who work so hard to care for others and would welcome the opportunity to serve your family and friends who work in healthcare as we keep Moving Life Forward Together.
© 2024 Nathan Ollish
Senior Financial Advisor
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot directly invest in indices. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. The information on Health Savings Accounts (HSAs) provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at IRS.gov. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at (800) 829-3676.
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