top of page
  • Writer's pictureMark Fonville, CFP®

5 Smart Retirement Investment Strategies for Physicians

Top 10 Retirement Planning Book Reviews

Retirement planning is tricky for everyone, but it holds a particular struggle for those with a high income such as physicians. You may be used to a higher quality of life that may be difficult to maintain after retirement. It opens the door to thinking about the details – how you will live your life without the constant worry that your money will run out.

Everyone needs a clear plan for retirement, but you may find that there are some physician retirement investment strategies that work better than others to achieve your financial goals.

Here are our top five tips to help you achieve financial freedom and peace of mind when it comes to your retirement savings account.

1. Set Goals for After Retirement

The ability to live your life comfortably while in retirement is only the first step toward making sure that you have the money you need.

While budgeting for current expenses is important, you also need to think about additional goals like travel or paying college expenses for grandchildren. You should have a quick snapshot of how much money you need to retire comfortably.

Physicians still need to stick closely to their budget, even if they are high earners. Everyone needs a budget to help them define their expenses and accurately forecast their financial future. The key here is to align your budget with your goals so that you ensure that you have enough money for everything that matters to you.

2. Prioritize Your Health

Your finances are not the only thing that you should be planning for when it comes to retirement. In the present, you need to invest in yourself through things like exercising and eating healthy. This is especially true for physicians who often work long hours and are more prone to burnout.

The question is: what does this have to do with your retirement investment strategy?

Health costs are a top expense for people in retirement. Unexpected medical bills can seriously derail your retirement plans, so minimize your risk by prioritizing yourself in the here and now. You may even want to consider maxing out your HSA contributions that can be used to cover any unexpected medical bills in retirement.

3. Max Out Employer-Offered Retirement Accounts

It might seem like common sense or obvious advice, but many people put off contributing to their retirement accounts. No matter what type of retirement savings plan your employer offers, consider maxing out your contributions. This is even more important when your employer offers to match contributions up to a certain percentage.

Whether you have a 403(b), a 401(k), a 457(b), or a 401(a), you should take advantage of these types of accounts. A health savings account (HSA) is also a great tool to contribute pre-tax dollars that will grow tax-free, and can be withdrawn to cover healthcare expenses without taxes. Many physicians incorrectly use their HSA which can be a big mistake. Here’s how to use an HSA for retirement.

If you can, be sure to take advantage of catch-up contributions that increase your savings once you reach a certain age. You can make catch-up contributions at age 50 for 401(k)s and IRAs or at age 55 for HSAs.

4. Diversify Your Investment Accounts

You’ve heard about proper investment diversification. But, have you heard about diversifying your investment accounts as well? Taxes in retirement will sneak up on you if you haven’t prepared in advance. That’s why it’s important to think about the types of accounts that you invest in over time.

There are three major categories of investment accounts from a tax perspective:

  • Tax deferred accounts - 401(k), 403(b), IRA

  • Taxable accounts - Brokerage account, savings account, or revocable trust account

  • Tax-free accounts - Roth IRA, Roth 401(k), or Health Savings Account

Diversifying your investment savings across these three buckets is crucial for helping you access money whenever you need it most. To this end, you should look for investment options beyond those that are offered by your employer, such as taxable accounts and tax-free accounts. Doing so will help you better manage your taxes in retirement because taxation of withdrawals differs depending upon the type of account you own.

Be sure to take your tax bracket into account when maxing out some of these accounts to ensure that you will not be placing yourself in a position to pay more taxes upon withdrawal.

Why does this matter?

Consider this scenario: you are experiencing high rates of burnout and want to retire early. If all of your funds are in a 401(k), you will have to pay early withdrawal penalties that you could avoid if you had some of your retirement savings located in taxable brokerage accounts or trusts. You should also consider maintaining adequate liquidity within these accounts by having some money invested in cash or CDs.

Consider what would happen if you had a surprise emergency expense and all of your money was tied up in the stock market. You might be forced to sell shares during an unfavorable market just to cover your expenses.

Keeping money in different types of accounts can help you better manage your risk and make your savings last longer.

5. Work with a Financial Advisor

Are you having a hard time figuring out what physician retirement investment strategies are the right fit for you? This can be a complex topic for anyone to navigate, especially if they are trying to do it on their own. Instead, work with a financial advisor to analyze your current portfolio and help you estimate if you are on the right track to retire on your own terms.

A solid financial adviser can use tools like the Monte Carlo simulation to help you determine your odds of meeting your retirement spending goals. While a one-time strategy session might be a great way to start, you need more than a “one and done” financial planning session. For the best results, you need to meet with an advisor multiple times leading up to retirement so that you can stay flexible and make adjustments to your savings plan as needed.

Are You Considering Early Retirement?

The chance to retire early is an exciting prospect for anyone, but especially for physicians who work long, demanding hours and dream of a well-deserved break.

Are you dreaming about early retirement but aren’t sure how feasible it is with your current assets? Are you looking for financial resources to put you on track when planning early retirement? Download our free guide, The Financial Planning Kit for Doctors Considering Early Retirement.

Our all-in-one retirement planning kit includes a printable worksheet and checklist to identify considerations for retirement planning and actionable strategies to help you plan for an early retirement. Grab your free copy now!


Author: Mark Fonville, CFP®

Mark is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors specializing in helping individuals aged 50 plus plan, invest, and enjoy retirement without the stress of money.

Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.


Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.


Don't Miss Out

Join 8,067+ individuals who receive our retirement insights by email and get a free copy of "Key Issues To Consider Before You Retire."

bottom of page