As a doctor, you intuitively understand the concept of investing: After all, medical school is one of the biggest investments there is. So, when it comes to saving for retirement, many doctors are ahead of the game and start maxing out their 401(k) contributions as soon as possible.

Beyond that foundation, are there other valuable steps you should take? And what should you do after you’ve maxed out your 401(k)? For many doctors approaching retirement, digging further into financial planning can feel overwhelming. Fortunately, it doesn’t have to be.

Here are six financial steps you can take in addition to 401(k) contributions to secure your retirement.

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1. Develop a financial plan

When you’re ready to dive deeper into retirement planning, the first step is to ensure you have a comprehensive financial plan in place. At Earned, we work directly with doctors to help secure your future retirement by helping you through the entire financial planning process – from establishing clear goals to providing a roadmap for how to achieve them.  Here are some of the benefits financial planning can offer doctors:

• Tax efficiency: A financial plan enables you to optimize your tax strategies, maximize deductions, and take advantage of tax-efficient investment vehicles.

• Wealth accumulation: The financial planning process includes opportunities to build wealth beyond your medical practice, including evaluating the impact of taking on a side gig, starting a business, or diversifying your investment portfolio.

• Peace of mind: Having a financial plan in place provides peace of mind, with the knowledge that you’re taking proactive steps to secure your financial future. No one wants to get to retirement after a career of hard work and realize they must make lifestyle changes for financial reasons. A well-crafted plan can reduce financial stress, allowing you to focus on your career and personal well-being.

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2. Secure an emergency fund

Maxing out contributions to your 401(k) helps build your long-term financial future, but it’s also important to secure your finances for today and into the near future. An emergency fund is a critical safety net that can cover unexpected expenses or income disruptions. We recommend having at least three to six months of living expenses tucked away in a high-yield savings account for emergencies. Check in on your fund periodically to ensure it reflects your current costs and expenses.

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3. Pay off high-interest debt

Even before maxing out your 401(k) contributions, you should make sure that you are prioritizing any debt with an interest rate above 7%. This includes credit card debt and personal loans, which can be a burden on long-term finances.

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4. Maximize employer-sponsored benefits

Now that your emergency fund is secure and your high-interest debt has been paid off, it’s time to explore other ways to enhance your retirement planning.

You may have the luxury of additional financial benefits offered by your employer, and it’s important to take advantage of them while you’re aiming to max out your 401(k) contributions. This might include a Health Savings Account (HSA) or a Flexible Spending Account (FSA) for out-of-pocket medical expenses.

An HSA is particularly valuable since contributions are tax-deductible, earnings grow tax-free, and qualified medical expenses can be withdrawn tax-free.

You may also be able to take part in an Employee Stock Purchase Plan, which allows employees to purchase stock from your employer directly and at a discount.

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5. Explore other retirement savings options

As a doctor, there are a wide range of other unique retirement savings options that may be available to you. Many non-profit hospitals offer retirement benefits beyond a traditional 401(k) or 403(b) plan and medical expense benefits; in some cases, doctors can nearly double their retirement savings if their hospital offers additional opportunities to save. (The 457(b) program for University of California employees is one example.)

As a high earner who likely won’t have access to a typical Roth IRA, you may also consider whether a backdoor Roth IRA or a mega backdoor Roth is a fit for your financial plan. These retirement accounts can enable you to withdraw funds tax-free at retirement, unlike with a 401(k).

Finally, you should review your insurance coverage, including life, disability, and malpractice insurance. These coverages can protect against unforeseen circumstances and offer peace of mind. 

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6. Invest in taxable brokerage accounts

Once you’ve maxed out your 401(k) and Roth IRA contributions and have taken advantage of any additional employer-sponsored retirement benefits, it’s time to take your investing one step further by investing in taxable brokerage accounts.

Separate from your tax-advantaged retirement accounts, taxable brokerage accounts can provide an additional stream of investing returns come retirement that can be withdrawn anytime without restrictions.

At Earned, we work with doctors to employ tax-efficient investment strategies, including tax-loss harvesting and tax-efficient funds. This can minimize tax liabilities and optimize investment returns.

Don’t navigate retirement planning alone

You’re busy enough caring for patients and enjoying free time with family and friends; navigating the ins and outs of financial planning can feel even more exhausting. Our financial planning is tailored specifically for doctors, which means we understand your unique financial needs and know how to ensure your financial plan meets them.

Interested in learning more about retirement savings beyond your 401(k)? Get in touch with us today.

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