The New Doctors’ Financial Planning Checklist
Congratulations on becoming a physician! You’re going to help a lot of people, potentially save a lot of lives, and in the process, make a good deal of money. The total lifetime earnings of a physician easily amounts to upwards of $7 to $10 million and sometimes more, over the course of a successful career in medicine. Your mileage may vary depending on your specialty, work ethic, clientele, and a bit of luck, but one thing is certain: Your single greatest asset early in your career, by far, is your future income as a working physician.
So it pays to protect it, nurture it, and make the most of it. As Certified Financial Planner (CFP®) practitioner and insurance professional, we are here to help you and your family ensure the best possible financial outcome for you and your loved ones whether you live a long and healthy life and have a full, successful career, or whether you are not as lucky and become disabled throughout your career or pass away prematurely.
Exceptional financial planning secures your future and that of your family in all three circumstances.
But you need to take some actions – and take them now, while coverage is affordable and while you are still relatively young and healthy. This stuff doesn’t get cheaper or easier as you get older!
1. Life insurance. This is basic. At a minimum, you want to have enough coverage in place immediately to provide your family members and loved ones with enough income to meet their needs for food, shelter, clothing and education. There are many different kinds of life insurance – term insurance is temporary, permanent ‘cash value’ life insurance is designed to be permanent, but has a higher premium. Both are good, but when in doubt get term insurance in place immediately – guaranteed convertible, so you can convert some of it to permanent insurance as your income grows, if you so desire.
The most important thing to remember starting out: Do it now. Especially if you have family to protect. Tomorrow is not promised.
2. Disability insurance. This is insurance that protects your most valuable asset: Your income as a doctor. If you become disabled and unable to work as a physician, or in general, disability insurance pays a monthly income – typically up to 65 percent of your pre-disability income, up to the limits of coverage. This is enough to keep paying your mortgage and meet your basic expenses for yourself and your family members if you lost your job as a doctor.
3. An emergency fund. Doctors have emergencies, too. They get injured, laid off, have car wrecks, kids and spouses who suddenly have a medical issue or other emergency requiring thousands of dollars right away. That’s when you need your emergency fund – somewhere between 3 months and 6 months’ expenses sitting in a bank, money market or checking account. Once you have protected your family against the worst (your death or disability), this is next.
4. A Will. Your last will and testament makes your wishes concerning your assets known to those charged with executing your estate. Absent a will, you don’t get to make decisions about how your assets will be distributed after your death. Instead, your estate gets chewed up by a bunch of lawyers who must apply intestate laws, which is a set of defaults set up by your state legislature. This is normally not what people want. Set up an appointment with an attorney and create a will. Update it as your financial situation evolves. Otherwise, you risk accidentally disinheriting a beloved stepchild, stepsister, or other loved one who is not technically or legally related to you.
5. A living will. While you’re at it with the attorney, take the opportunity to draw up a living will. These are your instructions to medical professionals about your wishes in the event you are medically incapacitated. You can also appoint a health care power of attorney to make medical decisions on your behalf if you are incapacitated. Both are important documents to have in place.
These are the foundational documents and insurance policies that form the basis of any sound financial plan. After these are in place, it will be time to talk retirement planning, long-term care costs, education planning and other aspects of your financial life. However, without the foundations in place, any other goals you set for yourself are at risk.
Ready to get started? Call DoctorDisability.com today at 866-899-7318 for a no-obligation consultation and review. We can get the basic building blocks for a financial plan taken care of and set you up in good stead for the future, able to deal with a wide variety of financial and medical setbacks that may come your way.