The debt question

Though physicians come out of school with a lot of debt, Utley recommends looking at it more as a speed bump than a roadblock to savings. The big debt—student loans—typically comes with competitive rates. If it doesn’t, consolidation loans with better rates are usually available once you start practicing, he said.

It would be a mistake to pay off debts like student loans before starting to save for retirement, he said. You will have more money when you retire if you begin investing what you can while still paying off loans.


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Greenwald tells people to make a spreadsheet of all of their debt: credit cards, what they owe their parents, school loans, car loans, and mortgages, and so on. Put it all on one page and see what they get.

“Sometimes it is a painful exercise and they are in denial,” he said. “They don’t like seeing it all in once place.”

But once you have debt in order, you can see where your money is going and if you are paying off debt in the most effective manner. For instance, Greenwald has seen clients who take an extra $1,000 a month and spread it evenly between all of their debt. Instead of doing that, he recommends paying the whole amount to the debt with the highest interest rate and getting it paid off. When that is at zero, put the money toward the debt with the next highest rate.

“If you have student loans or a mortgage that has a lower rate, you can stretch that out,” he said.

Another debt rule is to pay it all off before retiring. “I haven’t let any clients retire with debt yet,” Greenwald said. “I tell them they have to keep working. It is too crazy to pay off debt and have mortgage in retirement.”

Cold, hard facts

Even the best laid plans can sometimes be derailed. For this reason, it’s best to understand your needs might change and plan for them as best you can. Take some time on occasion to sit down and think about what money you are really going to need long before you receive the bill. Will you have a big or unexpected cash outlay at any time like helping your kids pay for college or helping your parents when they retire? You likely won’t get financial aid with a doctor’s salary, so what happens if you want your kids to go to a state school and they have their eyes on the Ivy Leagues? Or if you have three kids and the first two costs more than you anticipated?

“This is very individualized and it is a discussion I have early with clients,” Greenwald said. “What is important is that a couple talks it through and then communicates early and often with their children.”

Another well-laid plan that can change is your retirement schedule. Young doctors are hungry to work and make money and usually love the pace. A few years down the road, after doctors have paid off their house, been sued once or twice, and purchased electronic medical record systems, the glory of work starts to wane. This is the time they begin thinking that early retirement looks better than it did at 30. “Young physicians often assume they will retire later than they are actually going to,” Utley said.