How To Build A Strong Retirement Plan As A High-Earning Physician

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Physicians are some of the most disciplined and driven people in the world. You spent more years in school than most other professionals, followed by a grueling and intensive residency. Whether you’re just at the beginning of your career or looking to hang your white coat up for good, there’s never a bad time to think about your retirement plan.

Just as you focus on the health of your patients, the financial health of your upcoming retirement should be a priority as well. A solid plan brings doctors like you a well-deserved retirement full of confidence, joy, and promise.

No matter where you are in your career, there are some things we encourage you to think about right now. From focusing on your health to protecting your income, here’s how to start building a retirement plan as a high-earning physician.

#1: Prioritize Your Investments and Savings

High earners face an interesting challenge when it comes to preparing for retirement. The more you earn now, the more you’ll want to save to maintain your standards of living in retirement. 

And while many think the more money you earn, the more financially literate you become, that’s not typically the case. The reality is the more money someone earns, the more severe the mismanagement of that money can be.

With the power to easily earn six figures year after year, you are responsible for managing your money wisely now to protect your future retirement. 

Saving for Retirement

We recommend saving about 20 to 30 percent of your income toward retirement as a general rule of thumb, though everyone’s plan could be different. Not only does this help build a sizable nest egg over time, but it can potentially lower your taxable income as well.

As part of your benefits package, your hospital has likely offered you some sort of retirement savings plan, typically a defined contribution plan, like a 401(k), 403(b), or 457.

Outside of your employer, you may be able to open an individual retirement account (IRA) or a brokerage account to help establish additional savings patterns and habits.

But before you open and fund accounts outside of your job, check to see what additional benefits your hospital system offers. Many employers provide some sort of incentive for utilizing their retirement plan offerings, such as matching contributions.

A match is when your employer “matches” your contributions up to a certain percentage. A good idea is to contribute at least enough to be eligible for the entire company match. 

Not taking advantage of this offering to its fullest is leaving money on the table—money that could compound into a significant amount by the time you retire.

Other Savings Goals

The point of saving for retirement is to keep that money locked away and earning returns until you’re ready to retire. But if you aren’t keeping other savings goals in mind, the temptation to touch your retirement savings early may pop up from time to time.

As you focus on saving for retirement, don’t forget to save for other important goals. Keep an emergency fund stocked with three to six months’ salary in case of an unexpected layoff or family emergency. 

Once your emergency fund is in good shape, focus on other goals like building a college fund, buying a house or vacation home, traveling, etc. 

Compounding Returns

The earlier you start saving for retirement, the more time you’re giving your money to grow. Compounding returns gives the money in your IRA, 401(k), or other retirement accounts the ability to grow exponentially between now and retirement. 

You may need to start small, and that’s okay! We can help you build an investment plan that puts you on the path to reaching your goals.

#2: Consider an HSA

You emphasize the importance of maintaining a solid health plan for your patients. Now it’s time to practice what you preach.

One way you can protect yourself is to select the right health care coverage for you and your family. If you have the option, consider a high-deductible health plan (HDHP) for the fantastic savings and tax benefits of an HSA.

HSAs are a little-known tool to help individuals prepare for retirement. Why? Because of their triple tax benefits. 

  • Money put into your HSA is pre-tax, meaning it lowers your taxable income for the year you make the contributions. 
  • As an investment vehicle, any gains that grow in your HSA account over time aren’t taxed. 
  • And when you spend the money on eligible medical expenses, your withdrawals are tax-free.

Money in an HSA account can roll over year after year, meaning you can continue adding to it throughout your career and create a hefty savings for retirement. 

You also have the option to invest your HSA balance, letting it grow long-term. A great strategy to consider is paying out-of-pocket for medical expenses now to let your HSA grow. You can still save your medical receipts and draw from your HSA tax-free in the future, but you can’t beat the potential for compound returns long-term. 

If you have an unusually large medical bill, you can draw from your HSA tax and penalty-free for those expenses at any time, though it’s often beneficial to keep it growing and invested as long as possible, because you’ll almost certainly need it in retirement.  

In fact, a healthy 65-year-old is expected to spend around $12,286 a year on medical expenses.1 As a person ages, that number continues to grow.

Saving for these medical expenses throughout your career can significantly reduce the burden of healthcare costs in retirement.

#3: Preserve Your Wealth

Insurance should be an essential part of your greater financial plan throughout your career and into retirement. However, the type and amount of insurance will vary as your circumstances change.

Insurance coverage protects you, your family, and your work. Aside from common insurances like health, auto, and home, physicians need to take extra precautions to protect their income.

Typical insurance offerings for physicians include:

  • Malpractice
  • Disability
  • Life
  • Personal liability/Umbrella

Having the right coverage at the right time in your career can protect you from financial ruin. A sudden loss of income without insurance not only impacts your current standings but your preparedness for retirement as well.

#4: Plan for Your Life

Retirement isn’t the finish line; it’s the beginning of a whole new adventure. While financial preparedness plays an integral role in your retirement readiness, you should also consider a lifestyle plan.

What do you plan on doing with your days once you’re no longer on call? You’ll go from working 40, 50, 60+ hour workweeks to zero. How will you cope with that transition?

Loneliness is a serious issue amongst retirees, and it’s been proven to even cause health issues in seniors. The isolation felt by no longer going to work every day can take physicians by surprise, but knowing this issue ahead of time can help you combat it.

Start preparing now by finding fulfilling and meaningful ways to spend your time when you decide to retire. Set clear goals that motivate you, such as traveling, visiting family, volunteering, or getting active in the community.

As a physician, there are plenty of opportunities for you to get involved. Teach a class at the local community center, volunteer with shelters, serve as a caretaker, etc. 

#5: Pass the Baton to the Pros

One of the most effective decisions you can make regarding your future retirement is to work with a trusted financial professional. As a high-earning physician, you have too much on your plate already. Leave the planning and considerations to a team that’s well-equipped to work with medical professionals like you.

While these tips are great for getting started, it’s important to receive individualized retirement help that puts your unique goals at the forefront of planning. At Partners in Financial Planning, we specialize in helping physicians and doctors navigate the hospital system, protect their earnings and prepare for a fulfilling retirement.

If you’re ready to get started, don’t hesitate to contact us today.



About Us

Partners in Financial Planning provides tax-focused, comprehensive, fee-only financial planning and investment management services. With locations in Salem, Virginia and Charleston, South Carolina, our team is well-equipped to serve clients both locally and nationally with over 100 years of combined experience and knowledge in financial services.

To learn more, visit

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