How Retirement Planning for Doctors and Dentists Is Different

As a doctor or dentist, retirement planning can present some unique challenges. Sure, many of the principles are the same. But doctors and dentists often get a late start on retirement savings because of the time it takes to get through school. When you do graduate, doctors and dentists typically have significant student debt.

These and other factors unique to the profession make retirement planning for doctors and dentists different than it is for most other people. Here are four things you can do to make sure you’re enjoying the life you want today while still setting yourself up for retirement.

1. PAY LOANS STRATEGICALLY
   
   
   
   As you start to earn real money, getting out from under the burden of your student loans can be appealing. Certainly, you could dedicate more than the minimum monthly payment to your loans. But there may be ways to reduce what you owe by lowering your interest rates or even getting your loans forgiven — some public service work can qualify you for loan forgiveness.
   
   
   
   Once you’ve reduced what you’re paying monthly, consider using a debt repayment strategy if you’re going to make extra payments on your loans. Two common debt repayment strategies are the snowball and avalanche methods. With snowball, you make the minimum payment on all your debts and then make extra payments on the debt with the smallest balance. Once that debt is paid, then you put all the extra money to the next smallest and so on. Debt avalanche is the same, but instead of paying the lowest balance first, you pay the debt with the highest interest rate first and then work on the next highest rate and so on.
   
   
2. MAXIMIZE YOUR SAVINGS
   
   
   
   While it can be tempting, don’t put all your extra money towards debt. This is especially true if you have debt with low interest rates. That’s because you could make more in interest on your investments than you would save by overpaying a loan with a low rate.
   
   
   
   When you do begin to save, look into tax-advantaged options like an IRA or a 401(k), if one is available to you through work. The tax advantages these accounts offer help you be more efficient with each dollar you save.
   
   
   
   In addition, another way to be efficient with the money you’re setting aside for financial goals is with whole life insurance. A whole life insurance policy can solve a number of needs within a financial plan. In addition to providing a death benefit that will protect your loved ones, whole life insurance accumulates cash value that’s guaranteed to grow and never decline in value¹. In retirement, life insurance cash value can even help your investments weather down markets².
   
   
3. PROTECT YOUR INCOME
   
   
   
   You have made a significant investment in your ability to earn the income that will pay off your loans and help you save for your retirement. Your income earning ability is your greatest asset. It’s important to get the right insurance to help protect that income. Consider a disability income insurance plan that’s designed for doctors and dentists. Ideally, you should look for a policy that will provide benefits in as many situations as possible and offers you the most flexibility should a disability occur.
   
   
4. WORK WITH A PROFESSIONAL
   
   
   
   You have sacrificed a lot to get where you are today. It’s not uncommon to want to spend your money when you start to earn it. And that’s okay. A financial advisor can work with you to figure out what you want today and what you want to do tomorrow. He or she can help you build a plan that balances all your priorities and shows you how all the pieces of your financial life — including your insurance and your investments — fit together.

¹ Unless you cancel your policy or stop paying your premiums.

² The primary purpose of permanent life insurance is to provide a death benefit. Utilizing the cash value through policy loans, surrenders, or cash withdrawals will reduce the death benefit; and may necessitate greater outlay than anticipated and/or result in an unexpected taxable event.