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5 Investment Strategies for Doctors for a Comfortable Retirement

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As you get older, it’s essential to think about investing. You don’t need a rich uncle or a family business that has done well over the years: Anyone can invest their hard-earned money.

Doctors are often disadvantaged regarding retirement planning because they’re always busy taking care of patients and can’t afford the time or money required for investing options like real estate or stocks.

However, if you have some extra cash lying around, consider these five investment strategies for doctors who want a comfortable retirement:

Investing in a 401(k) or 403(b) retirement plan

If you’re a doctor, two retirement plans can help you save for the future: 401(k) and 403(b). Both are tax-deferred, meaning the money that goes into them isn’t taxed until withdrawn.

And while they work similarly in some ways, they have different rules and benefits depending on whether they’re offered through an employer or at a nonprofit organization like a hospital or university.

These plans allow doctors to contribute up to $19,000 per year (in 2019), which reduces their taxable income – and therefore helps reduce their tax burden. If you want to know how dentists invest their money and how to invest in general, read on. We’ll explain what 401(k) and 403(b) are, how they work, and their differences.

Investing in alternative investments

If you’re looking to invest in alternative investments, there are a few things to keep in mind:

  • Alternative investments are not for everyone. They can be riskier than traditional investments and should only be part of a diversified portfolio.
  • Be sure that the fund manager has the experience that aligns with your investment goals, such as investing in real estate or hedge funds. You want someone who understands how these markets work so they can help you achieve your financial goals without taking on unnecessary risk or overpaying for services (like those offered by many mutual funds).

Using life insurance as an investment strategy

You may be surprised to learn that life insurance can be a good investment. It is tax-free and can also be used for college tuition, estate taxes, and other expenses you might not have considered.

Life insurance is often thought of as providing financial security for your family if something happens to you. Still, it can benefit your finances beyond just providing money upon death.

If you choose the right policy and invest wisely with the proceeds from the sale of your policy (or even keep them invested), this could become one of your greatest assets over time!

Making the most of your HSA

If you are a doctor, you are likely familiar with HSAs: Health Savings Accounts. These accounts allow you to save money for medical expenses tax-free. If your employer offers an HSA and allows pre-tax contributions out of your paycheck, this can be an excellent way to build up savings that can later be used for retirement.

However, if employees make withdrawals from their HSAs before age 65 without being eligible for an exception-for example, because Medicare does not yet cover them-they will face a 20% penalty on the amount withdrawn plus taxes on that amount at ordinary income rates (which could be as high as 37%).

Additionally, if someone uses funds from their HSA for nonmedical purposes before age 65 or after age 65 when they’re eligible for Medicare coverage (or their spouse is), those amounts will also be subject to taxes at ordinary income rates (again potentially up to 37%).

Getting a booster shot from your spouse’s employer

If your spouse has a 401(k) plan, you can contribute to that plan. The maximum amount you can contribute to an employer-sponsored retirement plan is $18,500 for 2019 (plus an additional $6,000 if over 50).

So, in addition to contributing to your own solo 401(k), if both of you have access to a “family” account through work and meet specific other requirements, then one of the strategies for doctors would be getting a booster shot from their spouse’s employer.

There you go!

We hope we’ve given you some ideas on investing your money as a doctor. Investing can be intimidating, but it doesn’t have to be! The more you know about your options and how they work together, the more confident you’ll feel about making intelligent decisions with your retirement savings.