You put in years of education, countless hours of residency work and many long hours to build your health care practice. It’s easy to get lost in the day-to-day operations of a practice, and the needs of your patients and staff. Even if you are part of a large medical group, you know you need to focus on your own financial goals, but it can be difficult to find the time.
The health care industry is undergoing rapid transformation stemming from technological advancements and as a result of health care and tax reform. These changes, which are dramatically changing the medical profession, present physicians with daunting challenges when it comes to attaining long-term financial goals.
- The average physician’s salary amounts to roughly $299,000, and specialty physicians make $30,000 more per year, on average
- Half of physicians surveyed said they live “at their means” and typically use up most of their income with little left over
- Almost half (47%) of physicians did not have a goal for how much they want to save by a certain age. Most school loans are not paid off until age 50.
Attaining financial goals is certainly a challenge for physicians given that most student loans aren’t even paid off until the age of 50. In addition to running your practice, you also need to think about your other priorities, including your family, your home(s) and education funding.
Under new tax reform, you may want to consolidate your charitable contributions. Given that the standard deduction for married physicians has increased to $24,000, smaller deductions will not offer an advantage. However, consider making one large donation every other year. Take advantage of 529 savings plans to pay for private school. You can now use these assets to cover the cost of K-12 education up to $10,000 per year per child. If you are considering refinancing your home, keep in mind that only interest after the first $750,000 is deductible. You may want to reconsider a home equity line of credit because under tax reform the interest is no longer deductible. These are just a few of the factors you will want to consider as you review your personal finances in light of tax reform.
Once you have paid off your loans, you’ll want to work with a professional to examine cash flows, minimize tax obligations and protect against any risks and liabilities that can get in the way. Most important, as you focus on the needs of your practice, remember to also prioritize your personal financial goals.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.