Marshall Weintraub, a financial planner with Finity Group, spoke with Medscape in an article published Feb. 18 to discuss key financial planning moves for young physicians.
Here are three takeaways from the discussion:
1. Get disability and specialty insurance. Mr. Weintraub recommended that young physicians obtain disability and specialty insurance in the event that illness or injury impedes their ability to continue their practice. This is important for physicians given the amount of time and money they invest into their skillset and careers.
"From my professional view, obtaining an individual policy, not tied to your employer, that goes with you if you change jobs, and that has what we call 'own-occupation language' — that just means it protects you as a physician in your specialty — that's very important," he said. "You can save and invest all you want, but if a disability takes your career away from you, you're going to be tapping into your investments very quickly."
2. Form a well-researched plan for student loans. Mr. Weintraub said that public student loan forgiveness can be one option for physicians coming out of medical school with a loan balance. Another option is looking into state-based loan repayment programs.
"Typically, if you work with an underserved population, they may take $20,000 or $30,000 or more per year to help pay off your student loans as part of your employment," he said. "It's good to be aware of those options if you need to be working in a qualified nonprofit for PSLF or some other employer where there's a loan repayment program attached to your employment."
For those entering private practice, he added, refinancing student loans at a lower interest rate through private lenders may be another option.
"You just want to be very careful with that because it's a one-way street. Once you refinance your federal direct loans, which are eligible for PSLF, with a private lender, then you can't go back and try to qualify for PSLF if your career takes you in that direction," he added. "You want to be very careful before you refinance to a private lender, but if you will be paying off your student loans yourself and there's no other form of loan forgiveness repayment coming elsewhere, then refinancing can save a large amount of interest."
3. Homebuying. Mr. Weintraub said that he encounters many young physicians who have been in the rental market throughout their numerous years of school and are ready to begin the process of buying a home.
"What is very important during the homebuying process is that you come up with a very honest assessment of your cash flow or your budget to see what you can afford for your monthly payment, while not sacrificing your other goals. That would be things like traveling, saving for retirement, or college tuition for children," he said. Based on how much young physicians honestly foresee themselves spending on these other savings goals, they can "reverse-solve" and determine what they can realistically afford with a monthly mortgage payment.