Four ways physicians can have good financial health

The average physician will need $3 million to $5 million in savings for retirement, according to a speaker at the Women in Medicine Summit. When planning for retirement, physicians need to think about how he or she will want to live.

“Imagine your ideal life,” Disha Spath, MD, an internist with Dartmouth-Hitchcock Putnam Physicians in upstate New York, told attendees. “What would your ideal day look like? How about your ideal month? Your ideal year?”

She discussed how physicians may be able to bring those ideas of a healthy financial retirement to fruition.

Protect loved ones

Purchasing disability insurance “is the most important thing we can do right now to make our families safe, and also get that peace of mind that comes with financial security,” Spath said.

Disability insurance can be obtained through an employer or a private plan. Employer-sponsored plans, Spath said, are often significantly cheaper, easier to qualify for and taxable, while private plans are often more expensive, harder to obtain and may not always be taxable. According to Spath, women often have a harder time finding affordable disability insurance; she provided ways to help keep women’s premium costs as low as possible.

“No. 1: Look for a unit unisex policy that doesn't discriminate,” she said. “No. 2: Buy policies before becoming pregnant so that [can’t be counted] as past medical history; and No. 3: Buy your policy at a young age since presumably you are at your healthiest when you are younger.”

Spath said other ways to protect loved ones include estate planning and setting up emergency assets that contain about 3 to 6 months’ worth of funds to cover student debt, essential food items and utilities.

Make investments and make them grow

There are multiple options for making investments, Spath said, including 401(k) and 457(b) plans, stocks, bonds, mutual funds and asset allocation.

“The rule of thumb is generally have as much in bonds as your age. So, if you are 20 years old, have 20% in bonds and 80% in stock,” she said, pointing out that based on a person’s employer (e.g., nonprofit, government-run) not all investment options are available.

These investments can grow by making additional stock market investments, rerouting the funds to other accounts or purchasing real estate. Spath also said regardless of the financial route a person takes, that route must be adhered to — no matter what.

“Write down your investment plan, especially if you are early on in your career, and stick to it,” she said. “Keep doing it no matter what the market does. And most of the time you’ll come out ahead.”

Slash debt

Women hold two-thirds of the debt burden in the United States, according to Spath. Loan forgiveness plans, private refinancing or simply making a spreadsheet that tracks expenses are all ways to slash debt, she said.

“Once you start paying attention, your costs start to go down just because you are paying more attention and making better decisions,” Spath said.

She also said a complete grasp of past, present and future finances is key to getting out of debt.

“Whatever the reason is [for the debt], we need to get wise and learn about this debt, so we can get out from under it and start building our wealth,” Spath said.