Physicians, like yourself, earn some of the highest wages in the country; you deserve it given your dedication to years of education and hard work. Unfortunately, your well-earned income pushes you into the top tax bracket, so you may end up paying some of the highest taxes in the country as well.
What can you do to ease your tax burden?
A prudent financial advisor may tell you to maximize contributions to qualified retirement plans in order to defer your taxable income. This will not only help to minimize your current tax liability and increase your retirement savings, but can also provide you with asset protection as assets inside qualified retirement plans are fully protected from potential creditors.
It may seem like an easy concept; yet, more often than not, financial planning is pushed to the back burner while attending to the long, intense days of your medical practice and personal life. Do you know what the maximum contributions are for your retirement plans? Did you know those limits can change each year? Letting such details fall by the wayside can result in missing out on opportunities to minimize your current tax liability in years when you are earning significant income.
Put a financial advisor to work
In light of your busy schedule, financial planning probably isn’t at the top of your priority list. But it most certainly will be for a dedicated financial advisor who can help you identify your financial goals and objectives, assess your current plans and explain your options. With a financial advisor at the helm, you may find out about opportunities you might otherwise miss.
One example I discussed in a previous blog post is the possibility of a self-directed brokerage option. A self-directed brokerage account provides the flexibility to access a wider array of investment options inside your 401(k) that may not be available in the plan’s preselected group of funds. This gives you the opportunity to manage your 401(k) assets in a way that truly complements your overall investment strategy.
Working with an experienced financial advisor who understands the issues doctors and their practices face can lead to a more strategic approach around building a successful, long-term financial plan. Your patients seek medical care from you, an experienced and trusted physician. Why should you treat your finances any differently? Take the time to find a knowledgeable financial advisor. Engage them through the full planning process so they are equipped to help you pursue your overall financial wellness.