Being a doctor is super rewarding. (We’ll admit, it’s pretty hard to beat saving lives every day.)
But there can be some downsides to the career path, especially when it comes to saving. Because physicians are known to have higher incomes, they are often ineligible for a number of tax breaks and retirement programs. And while recent studies show that 60% of doctors are retired just shy of turning 70¹, current doctors have the opportunity to pursue life outside the hospital long before that.
With a few smart moves, early retirement is possible. Here are three ways doctors can save more now and end their careers at an early retirement age:
Refinance Your Student Loans
Paying back med school loans could keep you working for a while. One way to pay them off more quickly? Refinancing to a lower interest rate or choosing better terms.
As a bonus, this move can save you thousands of dollars that can help you head to earlier retirement. (However, if you are pursuing Public Service Loan Forgiveness Program, don’t do this with your federal student loans—it will make them ineligible.)
Save, Save, Save—Up to 30%
The average worker should aim to save 15% of their income for retirement4. However, it’s different for doctors—due to all the extra schooling and high burnout rates in the field, their earnings window is much smaller. That means physicians have less time to take advantage of the compounding interest that comes with investing, or even a regular savings account.
To make up for this, doctors should consider saving at least 30% of their income if they want to retire early. (One helpful tip: Live like you’re still making what you made as a resident!)
Considering Taking Advantage of any and All Pre-Tax Programs at Work
Got an employer match on a 401(k) and 403(b)? HSA or FSA accounts? Commuter benefits? Consider taking advantage of them as a way to put away more money, pre-tax.
Any opportunities you have to save money on taxes can help out a lot when it comes to your goals toward early retirement. In fact, saving money on taxes is one of the best options for doctors with early retirement goals.
These strategies are just a few of the ways you can start working toward financial independence.
Sources:
1. http://www.annfammed.org/content/14/4/344.full
2. https://members.aamc.org/iweb/upload/2017%20Debt%20Fact%20Card.pdf
3. https://www.medscape.com/slideshow/2018-compensation-overview-6009667#2
4. http://time.com/money/4807504/are-you-saving-as-much-of-your-pay-as-the-average-401k-investor/
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