Strategies for Physicians in Uncertain Times
This article was originally published in Keystone Physician Magazine, Summer 2020
Thank you for the work you’re doing. We’ve heard stories from primary care physicians about how much harder it’s become to deliver care, with patients afraid to come into the office, proper examinations difficult, telehealth compensated but phone calls often unpaid, and all of this compounded by doctors’ worries about their own health and that of their loved ones.
Today, physicians are at ground zero of the most volatile intersection of medicine and finances ever seen in human history. You may well be facing the worst combination of job stress, personal health concerns, and financial uncertainty of your life. As someone who’s been providing financial advice since 1978, let me offer what perspective I can on this unprecedented crisis.
First and always, recognize your most valuable asset, and protect it. That is the lifetime value of your medical education, training, and licensure. For a young doctor couple, that value can easily be in excess of $10 million. Even if your practice or hospital fails, our nation faces a growing shortage of doctors, and compensation must follow that reality. You are necessary, and you will be able to earn a good living in the future.
For all physicians: Interest rates are near all-time lows. Consider refinancing mortgages or other loans. (Student loans are a special, more complex case.) Your health may be at risk. Don’t miss life or disability insurance payments. This might be a good time to review your beneficiary designations. Make sure you have a will, advance directive, and health-care power-of-attorney.
Early-career physicians: Rare good news on student loans: your public sector loan payments will be paused, but will still count toward Public Service Loan Forgiveness (PSLF) and other programs. Take maximum advantage of pretax savings plans through your employer or your practice. As a saver, you are a buyer of financial assets, and buyers always benefit from lower prices. A bear market advantages you, the more severe the better. Invest at least 60% of your retirement savings in diversified stock funds. Mortgage rates are historically low, but real estate markets are unsettled. A buying opportunity for residential real estate may emerge, but it's not here yet. As always, don’t buy too much house.
Mid-career physicians: You’ll still be a net buyer of financial assets between now and retirement. Be sure to maximize your pretax savings. Most of your holdings should be in diversified stock vehicles. We’re all experiencing involuntary spending restraint on travel, meals and entertainment. This may free up new savings or debt paydown opportunities. Once past the crisis, you’ll have an opportunity to assess which experiences you most missed, and which you can easily do without. You may find you like cooking at home (fewer costly dinners out), but desperately miss walking on the beach (vacations at the Jersey Shore instead of in a big city). Or vice versa.
Physicians near retirement: Experiencing a bear market in stocks near your retirement date can be an economic challenge. Be open to revising your financial plan. Avoid panic. Remember your economic time horizon. It’s not between now and your retirement date, it’s between now and your actuarial mortality date. Don’t sell out of equities. You’ll probably get the timing wrong, and returns on bonds and cash will likely be low. If you can put your retirement decision on hold until after the combined health and financial crises, and keep working and earning a paycheck, that may be wise. A best-practice retirement cash flow plan should be robust and resilient enough to withstand unanticipated financial events. This is an area where working with a qualified financial advisor may help you move forward with greater clarity and confidence.
We work with doctors at all stages of their medical careers. We recognize that these are times of unique stress and great financial uncertainty. If you have questions about finances, we’re happy to try to answer them as a special courtesy during this uncertain time. Simply direct your question(s) to and we’ll answer them in the order we receive them.