Physicians have great opportunities to build wealth but must navigate a unique financial journey that includes delayed earnings, potential legal liability, and various compensation structures.
These considerations demand a specialized approach when it comes to financial planning. We developed this Insight based on our experience working with physicians to develop personalized financial life plans.
After 10+ years of rigorous education and training, new physicians can earn a significant income from the jump, deservedly so. Despite that exciting prospect, physicians often feel like they are getting a late start and that they need to play catch-up financially.
In addition, those practicing in certain geographies (states without strong tort protections) may feel like everything they have worked so hard for could be taken away overnight.
Taking the high stakes and high-pressure nature of this career path into account, we have developed a two-part framework to provide physicians with financial peace of mind. It focuses on two straightforward goals: asset protection and asset growth.
For physicians, safeguarding assets from legal liability is a central priority. A well-structured asset protection plan helps ensure that years of education, training, and income are not vulnerable to unforeseen claims.
In this section, we outline five foundational strategies to help physicians protect their wealth for the long term.
A comprehensive insurance strategy is one of the most important tools physicians can use to protect their income and assets. Several distinct types of coverage may be beneficial.
Coordinating across these insurance types can help physicians protect both their current lifestyle and progress toward long-term financial goals.
In certain states, the way you title your accounts can provide an added layer of asset protection. One potentially attractive option for married couples is Joint Tenancy by the Entirety (TBE), a form of ownership in which both spouses are considered to own the entire asset.
Under this structure, if one spouse is subject to a lawsuit or creditor claim, the asset is generally protected because it is wholly owned by the other spouse.
TBE is permitted in several states (including Florida, Maryland, New Jersey, and Virginia) for a range of assets such as bank accounts, brokerage accounts, and real estate. In New York, the protection applies only to real estate.
While physicians tend to be risk-conscious individuals, divorce remains a meaningful financial vulnerability, affecting roughly one in four marriages among physicians.
Planning ahead can help preserve assets and ensure a more equitable outcome if a marriage ends. Prenuptial and postnuptial agreements are among the most direct tools available, enabling couples to clarify ownership and expectations before or during marriage.
These agreements can define how personal and professional assets (including practice interests) are handled in the event of divorce. We take a deeper look at the tax implications of a divorce and working through an equitable split here.
Qualified retirement accounts can serve as an effective layer of asset protection.
Plans governed by the Employee Retirement Income Security Act (ERISA), such as 401(k)s, offer strong protection from creditors under federal law. IRAs and other non-ERISA accounts may also provide protection, though the extent varies by state. While primarily intended for long-term savings (see below), these accounts can also help safeguard assets from certain legal claims.
While not specific to physicians, maintaining an up-to-date estate plan is essential for protecting and preserving assets. We recommend reviewing your plan regularly and updating key documents every 5–10 years or after major life changes.
Additional strategies may apply depending on a physician’s specific circumstances. These tools are more specialized but may complement the core strategies outlined above.
For new physicians, the first priority is to establish a cash reserve and develop a plan to pay down and/or refinance student debt. Once that plan is in place, the real money is made by effectively tailoring a retirement savings strategy to a physician’s compensation structure.
Physicians often earn income through varying compensation structures, and each arrangement comes with distinct retirement planning opportunities:
Beyond employer-sponsored retirement plans, physicians should take advantage of other tax-efficient vehicles, such as Health Savings Accounts (HSAs) and backdoor Roth IRA contributions. Building savings across multiple tax “buckets” (pre-tax, Roth, taxable, and tax-free) can improve tax efficiency during working years and offer valuable flexibility when drawing income in retirement.
At Wealthstream Advisors, we believe physicians can achieve lasting financial peace of mind by focusing on two core goals: protecting what they’ve earned and positioning their assets for long-term growth.
Whether you are just entering practice or planning for retirement, a well-structured financial plan can help align your decisions with both your professional responsibilities and personal values.
If you are interested in a more personalized conversation about your financial planning needs, we invite you to schedule a complimentary 30-minute consultation with a member of our advisory team.