Doctors’ career paths and financial situations are unique. Years of school and residencies put savings on hold, and later windfalls take careful planning to use effectively.
Financial planning for physicians has to consider the unique demands of the profession and the educational and occupational complexities that influence the future of your bank account.
The good news is that general wealth principles still apply to doctors—just with a bit more nuance. And the more you use those conventions to plan ahead, the more intentionally you can use your money and design the life you want.
Here’s a guide to the core principles of financial management for doctors, with physician-specific caveats along the way.
Why physicians need financial advice
With an average salary of $350,000, doctors generally fall within the top 10% of earners in the United States. But large paychecks don’t negate the importance of wealth management—especially because doctors encounter unique career-specific situations. Here are some factors to note:
Time constraints
Workloads only increase as medical careers progress, leaving little room for active, ongoing financial management. Research shows that the average doctor works 50 hours a week, and specialists in cardiology, critical care, and general surgery work 55. These long hours and lifestyle adjustments, in part, are why over half of physicians (53%) outsource their planning to investment professionals.
While there’s real utility in trusting a financial planner, it’s never been easier to access tried-and-true investment vehicles and information, even with a busy schedule. Tools like budgeting apps and financial blogs teach baseline financial literacy, so even if you’re outsourcing, you know what’s going on in your bank account—and hold advisors accountable.
Unorthodox risks
Doctors face potential issues that many other professionals don’t. These atypical risks include:
- Malpractice litigation: While some employers may take responsibility for malpractice, depending on the situation, physicians must prepare for potentially costly legal actions that can erode both current and future assets.
- Regulatory and reimbursement changes: Evolving healthcare policies and payment models can disrupt income stability and long-term financial planning.
- Burnout and career longevity: High stress and demanding workloads sometimes prompt doctors into early retirement, reduced hours or career shifts, necessitating flexible financial positioning.
Debt accumulation
The average medical school graduate owes approximately $250,000 in student loan debt. And when the average resident’s salary is $64,000, there’s less disposable income to save and invest during these formative years. Physicians usually earn more later, but failing to adopt a sound financial plan early exacerbates this problem. Let’s consider two hypothetical examples to explain why.
Physician A diligently paid off their student loans over the course of their training and achieved debt freedom by age 35. Once they reached full earning potential of roughly $350,000, they then invested 10% of their income—about $35,000 annually—in an S&P 500 index fund. Assuming 8% annual returns from age 35 to 70, those contributions would grow to about $6 million by retirement.
Physician B became debt-free at 45, then invested 10% of their income—also $35,000 annually—in an S&P 500 index fund. With an 8% average annual return from age 45 to 65, these contributions would grow to roughly $1.6 million by retirement.
Why does a difference of only 10 years result in a separation of $4.4 million dollars? Because of the nature of compounding interest. The earlier you invest, the more you earn over time. While not everyone has the privilege of saving money and paying off debts that quickly, it’s important to note the impact of taking early action.
Asset protection
Protecting their investment portfolios, retirement accounts, and other valuable personal holdings is in anyone’s best interest. Anything could happen, and spending the extra time and money on protections is almost always worth it.
Depending on your circumstances, your protection needs may extend to include advanced estate plan strategies and protective entity structures, such as trusts or LLCs. You may also require insurance policies that shield personal wealth from malpractice claims, creditors and other unforeseen financial threats. If you’re ever unsure about what you need, talk to a finance professional.
2 key benefits of financial planning for medical professionals
While there may be a hundred sub-benefits of financial planning, there are two umbrella advantages: peace and security. Financial planning for doctors both mitigates risk and opens the door to a more solid future. Here’s how:
1. Develop a vision for your life
Financial decisions directly reflect your values. When you make a plan, you say, “I’m going to intentionally manage my money to ensure a prosperous, peaceful and secure future.”
Remember: A high income doesn’t guarantee financial freedom. Lifestyle creep or mismanagement can lead to money troubles. A financial plan lets you intentionally direct wealth to create the life you want.
2. Mitigate risk
The average physician—regardless of their competence—spends an average of 11% of a 40-year career with an open malpractice claim. And this isn’t even the only risk you could face.
Don’t leave your financial future to chance. The more you save and plan, the more financial protection you have in place for when things go wrong. This includes regular tasks like daily budgeting, tax plan optimization and retirement planning, but also insurance to protect your life, property and practice.
5 ways to manage your wealth as a doctor
A Sermo poll found that over half of respondents (57%) have a financial plan in place, with 19% saying they’ve started thinking about it. If you’re like the 24% who said no or the segment ready to build out a plan, we have got tips for you.
All sound financial plans rest on the same foundational principles and structures., so here are the reliable tips you need to know to manage your wealth and achieve long-lasting financial freedom:
1. Create a budget
You need to know exactly how much you’re making and where every dollar is going. And that often happens on paper (or a screen) in the form of a monthly budget.
A budget should account for current and future personal priorities. Plan for basic living expenses, like rent and groceries, and the extras that matter to you. You could also aim to dedicate a certain amount to robust insurance or methodically paying down high-interest debt—whatever’s relevant to your goals.
2. Build an emergency fund
Aim to create an emergency fund of 4–6 months of your necessary expenses based on your budget. These funds cover any unforeseen costs or periods of unemployment. That means if you have $3,500 of monthly expenses, from bills to debt payments, you should have $14,000–21,400 designated for emergencies.
An emergency fund should be fully liquid in a low-risk, easily accessible account, such as a high-yield savings or money market account. It can earn modest interest while remaining readily available for unforeseen expenses.
3. Pay down debt
The sooner you actively begin to pay down debt, the better. This applies to student loans and any other high-interest obligations, such as credit card balances. Lower-interest debt like mortgages is next on the priority list, though mortgages still represent a long-term financial obligation that warrants careful attention and, where possible, strategic management to minimize interest and shorten the repayment timeline.
Explore whether you qualify for the Public Service Loan Forgiveness (PSLF) program, which can forgive the remaining balance of qualifying federal student loans. You have to make 120 on-time payments while working full-time for a nonprofit or government employer before being eligible.
4. Maximize employer benefits
Many hospitals and healthcare organizations offer comprehensive benefits packages. The standard 401k or 403b retirement plans often come with employer matching—typically around 5% of your salary. For a physician earning $350,000 every year, a 5% match could mean $17,500 of extra money annually.
Beyond retirement accounts, consider taking advantage of Health Savings Accounts (HSAs), which offer triple tax advantages: tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. You might also want to investigate disability insurance offerings, as physician-specific policies through employers can be significantly more cost-effective than individual plans.
5. Diversify your investments
Wealth management for doctors should include an investment portfolio. It might seem intimidating, but you can automate the process (after speaking with an advisor) and let your wealth grow independently. Only 18% of physicians who participated in Sermo’s poll said they work with a private wealth manager or advisor to manage their finances, but anyone could benefit.
First, you should know the basic investment risk pyramid. This visualizes levels of investment risk, making it easier to plan and allocate according to your comfort level. At the base—representing the lowest level of risk—you’ll find government bonds, certificates of deposit (CDs) and cash. Moving up to the middle layer, investments like real estate, mutual funds and higher-yield bonds occupy the moderate-risk category. At the top, where the risk is greatest, you’ll encounter futures, cryptocurrencies and collectibles.
As you think about where to invest your cash, consider the individual investment vehicle’s historical trends to assess risk—per the risk pyramid. As a general rule, the further from retirement you are, the more aggressive (higher) risk you can potentially take, gradually shifting toward more conservative diversification investments as you approach retirement age. A 2024 Sermo poll about mandatory retirement found that 26% of respondents felt they would continue working as they approach retirement age for financial reasons.
With a sound financial plan, you can be part of the portion that plan to keep working because they enjoy it (51%).
Automatically investing 10% of your monthly income in a diversified portfolio is a great benchmark. That way, you can create a financial future characterized by peace and security.
Discover a community of financially savvy physicians at Sermo
For medical professionals, financial advice doesn’t stop here. Talking to other doctors can give you the knowledge and confidence to move forward because they’ve been in your shoes.
Sermo is the medical social network with over 1.5 million fully verified healthcare professionals across 150 countries. Every day, thousands of Sermo members log on to exchange knowledge and problem-solve together—whether about patient cases or budgeting advice.
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