Michael TorneyCFP, J.D., LL.M. 

Medical doctors, especially those starting out, can face unique financial challenges. They’ve often spent years studying for exams and working long hours in residency while watching their former college classmates and friends take jobs and climb the career ladder. On top of that, the average medical school debt for 2021 graduates was $203,062, according to the Association of American Medical Colleges. And, nearly one in five graduates has debt exceeding $300,000.

The good news is that this situation can change in a hurry. Once a doctor’s residency is completed, their annual salary can move quickly from $50,000-$70,000 to five or ten times that amount in a very short amount of time. After years of sacrifice, many physicians want to begin spending and make up for lost time. But this is also an opportunity to set up a long-term wealth building plan.

Our team works with many physicians to develop a comprehensive financial plan that allows them to develop a comprehensive financial plan designed to allow them to begin enjoying their new pay while saving for the future. For medical doctors in this situation, here are four recommendations to help get you started on the right financial path.

Catch-Up Savings

A new doctor’s wealth can be relatively low compared to others entering finance, technology and other high-income positions right out of college. While they are accumulating debt, often, residents may not be able to afford to save a considerable amount of money. They can possibly miss out on years of returns generated from compound interest and may now need to save more in an effort to build the same amount of wealth as those in other fields.

Establish a Long-Term Saving Plan

Your new income provides an opportunity to set up an automated wealth building plan while still living well.

We recently helped a cardiothoracic surgeon who had just started in private practice. The first step was to build an emergency fund and home down payment fund.  Then he redirected the excess cash flow from emergency fund/down payment to retirement savings.  In two years, he was able to accumulate over $400,000 of savings in a combination of tax-deferred, after-tax, and tax-free investment accounts.  He is well on his way to catching up to his peers who have been saving for over a decade.

An automated savings plan provides the benefits of compounding returns, requiring fewer savings to accomplish the same net worth toward the end of your career.  

Taxes and Other Expenses

While your income may increase five-fold, it doesn’t mean your take home pay does. Every doctor should consider planning for the following expenses:

  • Make sure to check out your state’s income tax rates – some are a flat rate and other states are a progressive rate system.  Federal taxes are also different for new attending physicians – a single tax filer may have paid a marginal rate of 22% on an $80,000 income, but the same attending physician would jump into the 35% bracket on $300,000 of income
  • Disability and Life Insurance
  • Tuition and other expenses for a child’s future college education.

Determine Your Goals and Save

Many people want a special place to live, whether it’s a large home or a second vacation home. If this is one of your goals, figure out the math on how to purchase the home and hit your savings goals.

For example, it may mean aggressively paying down debt for three years, building a down payment fund for the next three years and purchasing the home the year after. Along the way, you continue to make your retirement and education savings goals.

If you have questions or need to discuss a strategy for retirement, contact our team at We offer a free consultation to discuss how a comprehensive financial plan could help serve you well now and during retirement.

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