6 Things Every Physician Should Know About Retirement Investing

Doctors face unique challenges when planning for retirement.


Relaxation, recreation, and leisure: After a lifetime of working hard to care for other people, doctors deserve to enjoy their retirement to the fullest. A 2013 survey conducted by AMA Insurance revealed that only 6% of U.S. physicians consider themselves ahead of schedule when it comes to retirement preparedness while about 48% feel that they are behind. The survey also found that the primary difference between the 6% and the 48% was that the more prepared physicians possess a deeper knowledge level of personal finance concepts. Because retirees are living longer and the cost of healthcare and insurance is rising, planning for retirement and understanding the process is more important now than ever before. Physicians face unique concerns in putting back enough to retire comfortably. Here’s what physicians really need to know about investing for retirement.

1. The earlier you start saving the better.

Unfortunately, physicians often get a late start when it comes to retirement contributions because they spend so much time in school and don’t typically begin earning higher income until their 30’s. Therefore, a physician’s retirement goals may require a higher contribution rate, including maximizing profit sharing contributions.

2. Doctors need to put away more to retire.

Physicians are often unaware of the considerations that should be planned for when projecting how much is needed for retirement in order to maintain one’s lifestyle. A competent financial adviser that specializes in physician retirement and who understands the unique challenges that doctors face (like UPAL) can assist you with building your portfolioand calculating different scenarios and outcomes.

3. You and your practice can benefit from tax breaks.

Not only can you contribute money pre-tax, but contributions for the benefit of you and your employees as well as administrative fees can receive favorable tax treatment.

4. Investment fees and administrative fees are a reality.

So be prepared to read the fine print and determine exactly how your plan’s fees are assessed for you and your employees. For example, at UPAL we structure administrative fees to cover a broad range of services at the lowest possible price point without “nickel and diming” physician clients. In addition, we try to lower fees every year. For example, UPAL physician leadership has waived March plan administrative fees each year for the last three years (How many service providers voluntarily do that?) and the physician Board reduced total fees permanently by 10-12% in August of 2012.

5. There are annual contribution limits to be aware of.

Physicians in private practice who offer a retirement plan benefit for their employees should know the annual limits on contributions. For 2014, $17,500 is the 401(k) employee deferral limit for plan participants under age 50; for those 50 and over, the limit is $23,000.

6. Many doctors are employed by a hospital or other healthcare facility with a 401(k) but want to contribute even more.

An IRA is another choice to consider, in which you are allowed to put in money after taxes and have it appreciate tax-free. This allows you to divide your yearly contribution between an IRA and a traditional 401(k) giving you more investment growth over the long-term. For example, UPAL offers employed physicians these options:

  • Traditional and Roth IRAs through its WealthBuilder Program.
  • A unique investment program through Schwab, utilizing the Dimensional Fund Advisor (DFA) family of funds, for personal funds and traditional and Roth IRAs.

Utica Physicians Association, Ltd. specializes in physician retirement investment. Contact UPAL to get started or to receive a complimentary analysis of your current investment portfolio. 918-747-5585 —