Four financial tips for new attendings

September 9, 2019

Todd Shryock, contributing author

How to plan for long-term success, even when faced with massive school loans.

According to the American Medical Association, 81 percent of physicians in their 30s are paying back student loans. As a new attending, making some commitments now can mitigate the pain of those payments while boosting your chances for long-term financial success.

Daniel Orlovich, MD, PharmD, a resident physician in the Stanford University Department of Anesthesiology, Perioperative and Pain Medicine, provides the following tips:

Refinance from a government loan to a private loan

Using a debt load of $180,000 as an example, refinancing from a government lender to a private one will save you approximately $36,000 by the time the loan is paid off. Government loan rates of 6.8 percent can be reduced to 2 or 3 percent, and the more money you owe, the more you’ll save once you refinance.

Choosing a variable rate, especially if the loan is for less than 10 years, will save you the most money, as fixed rates are almost always higher.

Protect your income

Your lifetime earnings as a doctor will range between about $5 million and $10 million, depending on specialty. But what would happen if something prevented you from working? Consider disability insurance that guarantees an income if you should become disabled. Add life insurance to guarantee income for your family, and umbrella insurance-a policy that kicks in after your other insurances are tapped out-for a final layer of protection.

Pay yourself first

Maximize contributions to any 401(k) or 403(b) plans. Pay yourself first by having the money deducted from your paycheck directly into a passive index fund with a low expense ratio. Over 25 years, a passive fund with low expenses can save you more than $100,000. Build a portfolio with the adage of holding your age in bonds, so a 35-year-old would have 35 percent of investments in bonds, which are less volatile than stocks.

Create a health savings account

A health savings account offers a double tax benefit: Money deposited in it is not taxed either when it is added or withdrawn. However, you need a high-deductible insurance plan to qualify for an HSA, and when you reach age 65, you’ll have a choice of using it to pay for medical expenses tax-free or as a retirement fund that is taxed as a traditional IRA.