Financial Planning for Physicians – Delayed Gratification and the Time Value of Money

As a physician, you have committed a significant amount of your life to your work.  You spent years educating yourself, tens of thousands of dollars in tuition and related expenses, and have extended the beginning of your adult life often well into your 30s.  This sacrifice has also likely impacted your spouse, children and even parents.  The commitment you made to the practice of medicine is a tremendous benefit to society and should not be underestimated.

I have a friend who is a physician, and when we were young and in college together, I asked him why he wanted to be a doctor.  I assumed he would say something about wanting to make a lot of money.  He did admit that he was hoping he would make a very good income, but he said, and we were 18 years old at the time, that you do not go into medicine to make money.  You go into medicine to make an impact, a difference in the lives of people.  If you want to make a lot money there are many other ways to do this.  This conversation continues to stick with me today.

I know many physicians, and they are some of the hardest working people I know.  Yes, most make a very good living, But they did not necessarily start making a Net Positive Income (NPI) until many years after their educational cohort.  NPI is the sum of one’s net income minus expenses, debt payments, student loans, etc.  For a doctor who had to take out student loans to pay for their undergraduate education, and then possibly a master’s degree, and medical school, they face a debt burden of several hundred thousand dollars the day they start practicing medicine.  Their NPI will be negative to flat for several years, potentially.  This does not even begin to address saving for retirement, college expenses for children, etc.

When one considers the income and circumstances of a physician and compares this to other high-income professions such as finance, technology, or engineering, the sacrifice is substantial.  Many physicians by the time they begin their practice have also married and are buying a home and taking on even more debt.  Yes, income is rising, but NPI is still likely negative for several years, and now they are in their mid-30’s, raising children and contemplating college costs for their children while still paying off their own student loans.

Many physicians, especially specialists, and sub-specialty physicians, will make substantial income, but more often than not they did not start earning significant income until many years later, whereas other high-earning professions began earning high incomes and did not have the same level of debt to service, beginning wealth accumulation much earlier.

These circumstances also delay the planning cycle.  Because a physician’s income cycle is delayed, they begin their planning later.  For other professions the planning cycle begins much earlier, allowing for changes in life circumstances to play out and to also adjust to situations that arise.  Physicians have a shorter planning cycle due to the delay in beginning.

As planners we are well aware of the challenges faced by physicians.  We assist a wide range of physicians, from dentists to surgeons, and orthopedics to veterinarians.  We have a perspective and expertise in the core financial planning pillars; tax, retirement, risk, estate and investing to assist this client segment.

We are also well aware of the risks that delaying planning present and have the knowledge, expertise and perspective to help.  Contact our team today to discuss financial planning strategies.


Diversification and asset allocation do not ensure a profit or guarantee against loss.

The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.

CATEGORIES: Wealth Management
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