What Your Kids Can Learn About Financial Health from You

Ask any 4-year-old what they want to be when they grow up, and you’ll get a hodgepodge of answers ranging from the adorable to the extreme.

“A firefighter!” “A rock star!”  “A squirrel!”

One timeless profession that has proven to be a top choice for kids decade after decade, however, is that of the doctor. Especially if they have a parent or family member they look up to who is a doctor.

What are we supposed to say to our children, who are looking up at us with twinkly eyes full of hope and excitement, when they tell us they want to be just like us? We tell them that we think it’s great that they want to help people, and they can be whatever they want to be if they work hard and study in school. We certainly don’t whisper about the pitfalls: the long hours, the rough cases, and the…dun dun dun…student loans.

Becoming a doctor is a huge commitment, and that commitment is probably at the back of your mind when your child tells you they want to follow in your footsteps. The amount of extra schooling that it takes and the subsequent debt is nothing to scoff at. Of course, you got through it, and if you got through it, your child can get through it. But after spending 10 years in medical school and residency and racking up sizable debt with student loans, it’s easy to empathize with doctors who may not wish the long journey on their own children.

One of the best things we can do for our kids is teach them about debt and credit and investments to help their future shine as brightly as it can.

The upside is that your child  – like you – will make a great living if he or she follows through with medical school. One thing that isn’t taught in schools as thoroughly as it should be is financial health. Many kids are leaving high school not knowing how to balance a checkbook let alone understanding the ins and outs of IRAs or disability insurance. One of the best things we can do for our kids is teach them about debt and credit and investments to help their future shine as brightly as it can. That is invaluable knowledge passed down.

Only 21% of physicians are “very confident” in their personal financial decisions. We’re here to help you make all the right investments so that you can reduce debt and plan for a lucrative retirement. We hope that by helping you thrive, you can pass down that wealth (both literally and figuratively) for generations to come, and set a great example for your kids on how to invest in their future.

Retire Early…for Your Family

If you make the right choices along the way, there’s a good chance you will be able to retire early, which would bring a wealth of benefits to you and your family. Those right choices include saving in multiple “buckets,” investing in smart funds, avoiding unnecessary debt, and making other sound financial choices.

It should be no secret to learn that retiring early can increase your quality of life. The reduced stress is good for your physical and mental health, not to mention all the newfound time you would have to exercise, pursue your favorite hobbies, and spend quality time with the people you love. Retiring early means getting to hang up the ol’ stethoscope at age 45 or 50 instead of 65 or even older; and that’s an age you can actually enjoy!

Perhaps most importantly, retiring early will give you more time with your kids and family while you (and they) are still young and you can enjoy activities together. No more coordinating nightmarish schedules to try to be present at important family events. No more working late nights or early mornings and missing out on holidays and invaluable memories. No more worrying about what’s happening at the clinic or with a patient. All those years of working long hours and crazy schedules will finally pay off as your family gets you – all of you – all of the time.

“The good news is that as a physician, you can absolutely retire early.”

The good news is that as a physician, you can absolutely retire early. This is a job perk available to you if you plan ahead. You have worked hard to get to where you are, and knowing how to save and invest your salary will determine when you can retire and live a lifestyle you’re comfortable with for the rest of your years. Unfortunately, most physicians have neither the time nor the interest in investing and financial planning. That’s where we step in.

We work solely with physicians, and all of our financial planning services are centered around your success. Our goal is for your investments to thrive. When you do well, we do well, and we are committed to helping you achieve your full potential.

We plan for the long-term and intend to be your advising partner through your career and lifetime. Just as you vow to look out for your patients’ best interest, we are here to look after yours. If you’re ready to start planning for your early retirement, call us for a complimentary consultation.

Pros & Cons of Investing in an IRA

Is an IRA good for your situation?

For those who don’t know what an IRA is, it stands for an individual retirement account. They are a popular place to save for retirement because they are flexible from the standpoint of what you can invest in. For example you can choose mutual funds, ETFs, index funds, bonds, stocks, and even things like limited partnerships and collectibles. Another major reason for their popularity is that they provide a tax deduction so that you can reduce your income taxes.

What about the bad news? Here are some of the reasons why they are not popular…

  • iraYou cannot borrow from the account. It is stuck in there until age 59.5
  • No selling property to it
  • Not able to use it as security for a loan
  • Cannot buy property for personal use

The big issue with IRAs are the penalties. If you go outside of the investment restrictions it can cost you big time.

Anything from the amount of money taken from the IRA to the entire balance being treated as taxable income if you violate the restrictions.

The penalty is for pulling the money out before the eligible retirement window is 10%

  • The most common limitation to traditional IRAs and Roth IRAs are the income limits. Once you make over a certain amount, you cannot contribute to them any longer in the normal prescribed manner. You have to use additional methods in order to participate in them to get around the income restrictions.
  • The biggest drawback of all in my opinion to IRAs is that you can’t invest very much. They limit your contribution to $5500 in 2016.

What about IRAs in the employer sponsored world? Is that possible?

Yes, IRAs can be used for SEPs and Simples. They are employer sponsored retirement plans. Both of them are set up for each participant. Simples are similar but are subject to additional special rules which we won’t get into today.

For self-employed doctors with no employees, SEPs are a great place to save for retirement. Usually, any of that income you earn on your own as a contractor qualifies. Instead of being limited to $5500 you can do up to the greater of 25% or $53k in 2016. For example if you are making less than $200k you would fall under the 25% rule but once you make over $212k you can do the full $53k.

Retirement plans offered through the workplace usually limit participants to an 18k contribution per year if they have a 401k, 403 or 457b. With a SEP you can do much more than this which provides a much needed boost toward retirement savings.

What should you do in your situation? Which type of IRA program is best and how should you go about getting the most out of them? Talk with you advisor or feel free to contact us. We are a fee only financial planner and investment advisor and would be happy to take any of your questions.

doctors life podcast

The Doctor’s Life Podcast 046- Financial Planning Technology Has Changed Everything

The Game Has Changed With New Financial Planning Technology

When you think of financial planning, you may think of endless paperwork and hand cramps just to get started. That has all changed. You could say that it’s not your dad’s financial plan any longer.

Nick Schneider is back on The Doctor’s Life Podcast to talk about technology in the financial planning world, and how it has made it easier for all involved. All episodes of The Doctor’s Life Podcast are available here, iTunes, and Android. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…

What’s The Deal With Taxes?

Feel like you’re paying too much for taxes? You are not alone.

“No new taxes!”. Those were the words of George Bush Sr. when he was running for president in 1988. Similar messages are communicated and thought of not only during election years, but this sentiment resonates in the minds of most who are trying to find ways to lower the amount of taxes they pay regardless if it’s an election year.

3D Reduce Taxes Crossword on white backgroundIf I were to ask you if you think taxes are higher than they were 30 years ago, most of you would say yes. While this is true, it’s not quite that simple, let me explain. Approximately 30 years ago, there were only 2 income tax brackets, 15% and 28%. If you filed your taxes as married filing jointly, any income you earned under $29,750 was taxed at 15% and any income you earned over that amount was taxed at 28%. For single tax payers, it was 15% for any income earned under $17,850 and 28% for any income over $17,850. Today, things look a little different. If you file your taxes as married filing jointly, you can make up to $231,450 before you go above the 28% tax bracket. If you file as single, you can make up to $190,150 and still be in the 28% tax bracket. For higher income earners, the highest tax bracket for 2016 is 39.6% and this percentage is used to calculate the amount of taxes you pay for any income over $415,050 for single filers and $466,950 for married joint filers. One common misconception is that if you make $500,000, the entire $500,000 will be taxed at the higher tax bracket. While this might be how it feels, this isn’t the case. You see, your income is taxed at graded increasing levels the higher your total income is. There are currently 7 income tax brackets ranging from 10% – 39.6%. To understand how you’re taxed we need to be familiar with a few terms. You may have heard of the terms marginal tax rate and effective tax rate. The marginal tax rate is the highest tax bracket someone is in based on their total amount of annual income. The effective tax rate is actual tax rate you pay when you figure all of your income because your income is taxed at the different tax rates so some of your income would be taxed at 10%, some at 15%, some at 25%, some at 28% and so on, depending on how much you earn. Continue reading…

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The Doctor’s Life Podcast 045- Pros & Cons of IRAs

The Good and Bad of IRAs

When it comes to financial planning, there are several routes to go. Each typically has some factors that may make you pause. IRAs are one of the most common financial planning vehicles, and they are no different.

Justin Nabity is back in The Doctor’s Life Podcast studio with a list of pros and cons to IRAs that you may not have thought of before. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on Android. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…

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The Doctor’s Life Podcast Episode 041- “The Splurgers”

There comes a time in your career where you believe you have enough income to purchase anything and everything you’ve waited on. It might be that car you’ve dreamed about or that vacation home on the lake. And then the bills start coming in. Oops!

Nick Schneider is back on The Doctor’s Life Podcast with a couple of stories of clients that believed they could afford a few immediate purchases that ended up (almost) throwing them off-track of their financial goals. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast.


How Much Money Do You Need to Retire?

“So, how much money do I need to actually retire?”

This question came up when we were at the American Academy of Ophthalmology conference in Chicago speaking with a group of eye surgeons. The moment it was asked, I was thinking to myself how am I going to give him a simple answer for this because are so many variables that come into play. He was looking for an exact number. For any fee only financial planner out there, we all can share the same sentiment…it’s like where do we begin, which layer do we start with.

Is there a specific dollar amount that has to be achieved in order to be able to make it? You may have heard $3M or $5M or some other number. Well there are two different numbers to consider. There’s the amount you must have saved by retirement and there is the total amount of spending over the course of retirement with the latter being much more significant. Continue reading…

Why Do You Need a Financial Planner?

So, do you actually need a financial planner?

We all have things we want to accomplish in life. If you’re like most, you’ve spent some time thinking about these things. Initially, it’s as simple as deciding on what area of medicine you want to practice. Beyond that, it usually consists of putting together a more detailed list of the things you want to accomplish, a list of the goals you have.

As a physician, you’ve spent countless hours preparing and training for your profession. A lot of times, the idea of taking care of the financial essentials can seem a bit overwhelming. Whether it’s making sure the contract you’re offered is fair and equitable or getting the adequate amount of disability insurance, each one of these things, along with funding any other goal for that matter, can feel like just another item to take care of and one more thing you can check off your list.

I would suggest however, there’s a better way to approach these things and all your goals for that matter, so you don’t sell yourself short. Continue reading…

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The Doctor’s Life Podcast Episode 035- Why Do Financial Planning?

If you are currently with a financial planner or not, you’ve still wondered “Why do financial planning?”. You wonder if you are maximizing your investments or even your own paycheck.

Dave Swan makes his debut on The Doctor’s Life Podcast to tell you what you should expect with financial planning and what work you need to put in to make sure your financial planning is reaching its potential. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…