Life After the Practice: Retirement Planning for New-World Physicians

This article was co-authored by Nate Wenner, principal and regional director at Wipfli Hewins Investment Advisors, and Karl Schwartz, principal and senior financial advisor at Hewins Financial Advisors.

Economists and pundits call it a ticking time bomb. Future generations worry that it will eat up their portion of the Social Security pie. Policymakers claim it will strain resources and disrupt market stability.

What’s driving these concerns? We’re getting older, at rapid and unprecedented speeds — and the “graying” process shows no sign of slowing down. Nearly 10,000 people turn 65 every day, which adds up to more than a quarter million per month.1 And that’s only in the United States — on a global scale, people age 60 and older make up 12.3 percent of the population and will comprise almost 22 percent by 2050.2

The widespread and rapid aging of the world’s population has been a looming economic threat for years now, and members of both the public and private sectors have started to feel the pressure, especially the healthcare industry.

The demographic shift brings urgency for more innovation, services and accessible healthcare options — and physicians are rising to the challenge. But this intense focus also comes with a personal price: too often, physicians are so caught up in meeting the needs of their practice and patients that they forget to make plans for life after work. Some are saddled with sky-high medical school debt and faced with the challenge of making up for lost time, due to late entry into the workforce. All of these roadblocks can cause personal financial planning to take a backseat.

Life After the Practice: Retirement Planning for New-World Physicians

So how can physicians get in good financial health and improve their retirement readiness? Our advisors share three key insights:

Nate Wenner, CPA, PFS, CFP®, CIMA®
Principal, Regional Director at Wipfli Hewins

“Physician, save for thyself! Solo 401(k) plans can be tremendous wealth accumulation strategies for physicians, dentists and other self-employed individuals. These vehicles allow for high annual contribution limits and greater investment flexibility, combined with low administrative effort and cost. In the right situation, solo 401(k) plans can also lead to significant income tax deductions, at times exceeding $50,000 per year in combined payroll deductions and profit-sharing contributions.”

JeffBramschreiber_200x200px_circlesJeff Bramschreiber, CPA
Healthcare Partner at Wipfli LLP

“Many high-income physicians aren’t focused on maximizing their retirement savings through tax-deferred accounts — but they should be, in most cases.

With high student loan debt from undergraduate school, medical school and residency programs, it’s easy to understand why some physicians may be reluctant to commit large sums of money to a retirement that seems a long way off. However, physicians who don’t start their careers until their early to mid-30s may have some catching up to do with respect to retirement savings. Also, high income typically leads to high personal spending, which means most physicians will need to save even more money each year to maintain their current lifestyles in retirement.

Surprisingly, a 401(k) plan can be an affordable retirement savings option for high-income individuals, since the immediate income tax benefit of contributing to a tax-deferred retirement plan is about 40 percent of the amount invested. Therefore, making an elective contribution of $18,000 to a 401(k) plan would ‘cost’ the physician about $11,000 after considering the immediate tax benefit. Over a 20- or 30-year career, a 401(k) plan can help physicians save on income taxes and compound the earnings on their retirement funds — and ultimately, help them achieve their long-term financial goals.”

Karl Schwartz, CPA, CFP®
Principal, Senior Financial Advisor at Wipfli Hewins

Karl Schwartz Headshot“The solo 401(k) plan can help physicians diversify their growing wealth in different ways. They can open these plans with almost any custodian — such as Charles Schwab or TD Ameritrade — and invest in virtually any stock, mutual fund or exchange-traded fund (ETF) available on the open market. Physicians also have the ability to diversify their assets between taxable and non-taxable buckets by electing to make Roth contributions to their solo 401(k) plan, rather than traditional contributions. They won’t receive tax deductions for Roth contributions (at least not until they make withdrawals in retirement), but it’s one of the few ways a high-income-earning individual can get funds into this type of vehicle, due to the income limitations that exist with Roth IRAs.”

No matter where or how you choose to invest your retirement savings, it’s important that you do just that: invest them. Take some time to think about the retirement you want to have. What are your goals for the future, beyond your practice or small business?

What do you need to make those goals a reality? With the right plan and a team of trusted advisors working in your best interest, you can feel confident that you’re in sound financial health — and one step closer to the retirement of your dreams.

Does your financial plan need a checkup? 
Speak to a member of our advisory team


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Jeff Bramschreiber

CPA | Healthcare Partner, Wipfli LLP

Jeff Bramschreiber, CPA, is a Healthcare Partner with Wipfli LLP, based in Green Bay, WI. For three decades, Jeff has specialized in medical practices of all sizes and specializations — from sole practitioners to large medical groups — improve revenue, reduce costs and enhance profitability to sustain future growth.

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Life After the Practice: Retirement Planning for New-World Physicians

time to read: 3 min