The Key Detail Many Medical Professionals Forget

Are you a medical professional who is very passionate about your work? Day in and day out, you are fulfilled by helping others — but at times, your commitment to your work might not leave you much time to focus on yourself, let alone your finances.

Here are a few tips to help you enhance your personal and financial wellbeing:

Understand Your Employee Benefits

If you work for a hospital or a large organization, your employee benefits booklet is probably the size of a college textbook. Okay, it’s probably not quite as big, but it can be intimidating.

My advice? Don’t start on page one — start with the table of contents instead. You can narrow down the most relevant topic first, or start with the most interesting topic to get the ball rolling. Also, don’t just listen to what others say; depending on your employment start date, your benefits may be very different from your colleagues’ benefits.

The Key Detail Many Medical Professionals Forget

Here is a list of items you should look for when reviewing the table of contents:

1. Retirement Plans

There are two types of retirement plans: the defined benefit plan, also known as a pension plan, and the defined contribution plan, such as a 403(b) plan or a 401(k) plan. You may be eligible for both! A few notes:

You do not contribute to a pension plan. Your employer is fully responsible for this piece, and your benefit is simply the formula that is stated in your employee benefits handbook. Read it thoroughly; make sure you understand the rules on eligibility, the vesting schedule and the formula that is used to calculate the benefit amount.

Let’s say you contribute to a defined contribution plan — either a 403(b) plan or a 401(k) plan. Your contribution is 100-percent yours. Your employer may also contribute to your plan or match a percentage of your salary. If that’s the case, make sure you know the requirements your employer sets for receiving this match. It’s free money so don’t leave it on the table!

You’re probably wondering if you are saving enough. You should be saving as much as you can reasonably afford. If you have excess cash after accounting for your expenses and your short-term goals — and you already have an emergency fund set aside — then put as much as possible into your retirement plan. Another rule of thumb is to aim for more than 10 percent of your income.

Should you consider a traditional contribution or a Roth contribution? This decision depends entirely on your unique financial situation. You can learn more about the differences between the two contributions and their respective benefits here.

Medical Professionals

2. Life Insurance

Some employers will provide a death benefit of one-to-two-times an employee’s compensation. This coverage could really help your family if something happens to you.
If you have a mortgage, or if you take care of young children or elderly parents, you should know the benefit amount your employer offers to ensure that you are adequately covered. Also, make sure your beneficiary information is up-to-date.

3. Long-Term Disability Insurance

Most people don’t pay attention to this coverage or think it isn’t necessary. But if you’re a significant contributor to your family’s income, you’ll want to ensure those assets are protected in case something happens to you and you’re no longer able to work.
Long-term disability insurance is one of the most important benefits you can have to protect against situations like this.

Again, if you work for a hospital or a large organization, this type of coverage may be a part of your employee benefit. If you do have access to long-term disability coverage, make sure you know the benefit amount, the elimination period, and most importantly, the definition of disability.

The benefit amount: This is normally a percentage (typically 50 percent to 100 percent) of your monthly salary.

The definition of disability: Disability can be defined a number of ways, but two of the most common are “own occupation” and “any occupation.” Own occupation means that if you cannot perform the material and substantial duties of your job, then you are considered totally disabled, and you can claim your disability benefit. Any occupation means that if you cannot perform the duties of any job, based on your education, experience or age, then you are considered totally disabled.

Focus on your employee benefits for the time being and then try to evaluate other aspects of your financial plan. Here are a few additional resources that can help answer your most pressing financial questions:

Now that I’ve found a job in healthcare and am settling into the working world, I want to tackle my student loan debt. How do I get started?

I’m starting my own medical practice and want to find a retirement plan that’s right for me and my professional needs. What should I consider?

I’ve heard it’s important to start building an estate plan, but I’m not sure what that entails. What’s the first step?

 

Ready to start tackling these planning items?

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins 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 Hewins 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. Hewins does not provide tax, accounting or legal services.
Thuong Thien
Thuong Thien

CFP® | Senior Financial Advisor

Thuong Thien, CFP®, is a Senior Financial Advisor with Hewins Financial Advisors in Redwood City and San Francisco, CA. Thuong focuses on developing comprehensive financial and investment strategies for high-net-worth investors; she also specializes in socially responsible investing (SRI) strategies and deferred compensation planning for technology executives.

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The Key Detail Many Medical Professionals Forget

time to read: 3 min