By Laura Freeman
Choosing a career in healthcare often means starting your professional life with a load of student debt. Getting from there to a retirement takes strategy and planning, starting as early as possible.
The magnifying effects of time on money can be surprising, either negatively as debt or positively as investment. That’s why it’s important to get good advice from someone who understands money so you can build a financial plan as soon as possible.
“The conversation begins by listening to our client’s concerns, goals and needs,” Andrew H. Mears, Senior Vice President and Financial Consultant for SouthState Investment Services, said. “We ask questions about their family, their current financial situation and priorities and look for opportunities to help them develop a strategy that meets their goals. Some of the things we think about are age, savings, cash flow, liquidity needs, insurance and what type of legacy they would like to leave.
“We approach each of our client’s goals differently depending on the time horizon, financial situation and specific needs. All of these goals can be incorporated into a comprehensive financial plan that addresses their risk tolerance and takes into account market fluctuations and income needs.
“After we prioritize your goals, we can analyze your current holdings and talk about whether your current plan is on track to meet those goals. We can also look at things like savings, debt, insurance coverage, retirement, income and long-term care plan. Do you have children or grandchildren you want to pass money to? Are you recently divorced or concerned about selling a practice?
“There are many things that may have kept a person from starting to invest, like educational debt, but getting started as soon as possible to take advantage of compound interest over time helps clients in the long run.”
How much money will you need to save and invest to achieve your goals and live the life you want to live thirty years from now? That can be a difficult question to answer, given the many factors involved and the possibilities for changes over time. However, a financial planner can give you a sense of how different scenarios could work.
“Your Financial Consultant can run a full financial plan that can give different projections based on how much you make, spend and what goals you have. Do you want to travel frequently, buy a second home or just cover your basic expenses? All of these things impact your overall savings goals,” Mears said.
The core principle is balance. You’ll typically want to work your way out of debt as soon as possible and move into asset building. However, that doesn’t mean sacrificing interim goals and quality of life to shift everything toward a nest egg at the end of life. One of your interim goals may be buying a comfortable home. You may want to travel along the way. Good financial stewardship is what gives you the means to live your best life over time and still build the resources to live comfortably in retirement and leave a legacy.
A key element in protecting that legacy is estate planning. Ideally, you’ll set up a will as early as possible, check it regularly for needed updates and make changes as your life changes.
“It’s important to update documents as events such as the birth of children, divorce, death of a spouse, second marriages, liquidity events and other changes occur,” Mears said.
For some healthcare professionals, one of the changes to manage at retirement may be the sale of a practice.
“It’s important to have a timeline in which you intend to sell your practice and consider who your potential buyers are” Mears said. “In a practice with multiple owners you could put a buy-sell agreement in place. Money will be needed to complete the transaction, which may come from cash, a loan, savings, an installment sale or insurance.”
There are other aspects of financial management that are more likely to be associated with a career in healthcare. That is why some firms offering financial advice have counselors who specialize in the field.
“My father was an anesthesiologist and my grandfather was a surgeon, so building on that perspective and years of experience in the field have helped me understand how building a healthy financial future may differ for clients working in different areas of health care. For example, in addition to malpractice insurance, a surgeon may need disability insurance written to cover anything that could affect the strength and steadiness of their hands or acuity of their vision,” Mears said.
On the plus side, working in health care may make client eligible for programs that could be financially beneficial.
“There are programs available to help medical professionals repay educational debt, such as the National Health Services Corp Loan Repayment Program, Nurse Corp Loan Repayment Program and the Indian Health Service Loan Repayment Program. There are great resources online regarding each program, eligibility and potential benefits,” Mears said.
A financial counselor is part of your overall team and will likely be working with you along with specialists in insurance, taxes, legal issues and your CPA. The specific combination of investment tools your counselor recommends will vary depending on your season of life, changes in the marketplace and your specific circumstances.
“In general, investments in early years may tend to be more aggressive as there is potential for more growth and losses are able to be absorbed along the way,” Mears said. “Gradually, risk is dialed down to a more conservative investment allocation nearing retirement. However every investor’s risk tolerance differs.”
