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Retirement Planning for Doctors: Why It’s Tough and How to Get It Right

Today’s post is a guest post from Rick Pendykoski, the owner of Self Directed Retirement Plans LLC, a firm that specializes in the type accounts discussed in a recent post on real estate in a self-directed IRA. Mr. Pendykoski and I have no financial relationship.


Viewed from the outside, the medical profession looks highly lucrative, and most people think that doctors don’t have to worry about loan repayment, budgeting and retirement planning. The reality is not quite so rosy, though. Despite earning well, many doctors find themselves unable to max out their retirement plans and save enough for the future.

Let’s look at some common retirement planning issues faced by medical professionals and how you can overcome them.


Why Do Doctors Find It Difficult to Save for Retirement?


These are the five main reasons why medical professionals are unable to save enough money for retirement:


  • Expensive Student Loans— It takes years of education to become a qualified medical professional, and this education doesn’t come cheap. Doctors have some of the heaviest debt load before they even start working, and they can spend a large portion of their life just paying off student loans. Even after they start working, it takes time to reach an income level that can offset this debt.


  • Cost of Setting Up a Practice — Doctors who set up their own practice are likely to earn good money, but that doesn’t happen overnight. The cost of establishing a practice and getting it up and running can be tremendous, adding to the existing debt and making it heavier. While trying to manage these expenses, retirement planning tends to take a backseat for most doctors.


  • Running Expenses for a Clinic —After a practice is set up, there’s a wide range of expenses involved in its day-to-day running. Clinic expenses typically include heavy rent and upkeep, staff compensation, cost of equipment, utilities and supplies, as well as other expenses such as fees for professional association memberships, publication subscriptions and marketing/advertisement.



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  • Overspending on Lifestyles — After so many years spent in internships and residency programs, many doctors feel entitled to big rewards when they start out on their own. Earning well doesn’t always help, though. It’s quite common to see medical professionals spending all their money on fancy cars, large houses and the latest gadgets, with nothing left for retirement savings.


longing for a large house


  • Insufficient/Improper Planning — Most medical professionals lack proper knowledge about retirement planning, even if they have access to financial advice at work. Many are unaware of retirement plans available through their employers, or make bad investments based on advice from friends, coworkers or even patients. As a result, their retirement nest egg suffers.


Essential Financial and Retirement Planning Tips for Doctors


Here are five core ways to boost your retirement savings:


  • Focus on Long-Term Benefits — Forget about individual stock trading and high-risk investments if you don’t have time to keep track of the market. Instead, invest as much money as you can into your available retirement accounts such as a 401(k), HSA, self directed IRA, and others where you can invest in options that offer long-term gains.


  • Review Your Clinic Expenses — If running your clinic is proving a drain on your finances, look over the costs and see where you could cut down. Consider a smaller space or other changes if the practice isn’t earning enough to justify what you spend on it.


  • Explore Partnership Opportunities — Reach out to other medical professionals in your community to see if they’re open to the idea of merging their practice with yours. This helps split up the cost of running the clinic, allowing you and your partners to save more.


  • Automate Your Savings — The temptation to spend extra money is reduced if it isn’t available at all. Set up a direct debit into a savings account for a certain percentage of your salary every month, and maximize your contributions to an IRA or pension plan too.


  • Learn about Financial Planning — Consult an advisor to understand the best ways to cut down expenses, invest your nest egg and save on taxes. Check out different options, compare them to your financial goals, and select those that match your needs.


With the high cost of education and setting up a practice, as well as hectic schedules and poor financial decisions, proper money management is critical for medical professionals and students. Prioritize your savings today if you want to become financially independent to enjoy a secure and comfortable retirement tomorrow!


Author Bio:

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly writes for numerous sites including MoneyForLunch, Biggerpockets, SocialMediaToday, NuWireInvestor & his own blog. If you need help and guidance with traditional or alternative investments, you can email him at rick@sdretirementplans.com.


[PoF: While there isn’t any revolutionary information in today’s post, Mr. Pendykoski clearly understands the challenges we face and has reasonable suggestions. If it’s not yet obvious, the self-directed IRA is his specialty, and he certainly knows more about them than I do. I remain intrigued by the idea of crowdfunded real estate within one.

A number of us won’t have to be concerned with the costs of opening and operating a practice, but the costs can be substantial for those that are in that position.

Regarding lifestyle inflation and poor planning, I’m doing all I can to help you there. I can’t help you from growing those student loan balances, but I can help you get a lower interest rate as a resident or attending.]



Readers, what are the biggest barriers to saving for retirement for you? What other tips do you have for us? I look forward to your comments.

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7 thoughts on “Retirement Planning for Doctors: Why It’s Tough and How to Get It Right”

  1. I’m big on automating savings. Just like 401k contributions get taken out of your paycheck without your knowledge, doing the same for a taxable account, HSA/IRA (if you don’t lump sum), and even mid-long term spending priorities is money you can’t fritter away on the next toy.

    This was a nice basics post!


    Psy-FI MD

  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Those who build or buy into a medical practice do end up delaying their financial offense in hopes of getting a bigger cut or better lifestyle in the future. I see that in many outpatient specialties. It’s not always a guaranteed return, as our revenue is essentially dependent upon healthcare reimbursement schedules.

    Good financial sense is much more important now than it was decades ago because of this.

    • I hear you, SMMD. There’s more risk and more potential reward in being a business owner.


  4. Longing for a big house. Alas….

    Nice post. I think the loans and the lifestyle inflation are the two butt kickers for physicians. Most docs are becoming employees now and so the practice buy in is less of an issue.

    Finally, financial planning can be a killer. Most docs aren’t taking the time to learn and just hire the first person who comes by. Big mistake.

    • True. As an anesthesiologist, I’ve worked as both an independent contractor and an employee, but I’ve never had startup or buy-in costs.

      I did have the big, expensive house, though. And I do dream about someday living in a Frank Lloyd Wright designed home. I still haven’t ruled it out.


  5. Lack of Financial education is a big one.
    Not sitting down even once to run some basic numbers. (PoF’s killer spreadsheets should be permanently and prominently exhibited in every medical school & residency program, I suspect his early mathleticism has something to do with it)
    Not knowing the power of compounding – your money can earn more money than what you can earn at your job.
    Lack of willingness to learn.
    Over confidence and too much risk taking in “the next big one” that was pitched over free booze, or worse paid booze. (That reminds me I threw away a free booze & steak retirement planning event invite. I have to go look for it right after this.)
    And for others, lack of confidence and no risk taking unless someone else “guarantees that my money will be completely safe” – losing out to inflation, or buying products like whole life insurance because the agent said “it is safe”.

    • Once you’re empowered with some knowledge, going to the free steak dinner is an entertaining event. You can pick apart the presentation in your mind while chewing on some medium rare filet and enjoying a tasty beverage.

      I hope you find that invite.



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