Flexibility Is Crucial to Meeting Physicians’ Long-Term Wealth-Building Goals: Part I
David B. Mandell, JD, MBA
Jason M. O'Dell, CWM
In the first installment of this two-part article, we will examine the important factors for which a physician’s financial plan (what we call a “wealth plan”) must provide flexibility. The first two factors to take into account are the possibility of changes in a physician’s income and changes in the rate at which that income is taxed.
Planning for Change
As authors of four books for doctors, including state-specific books for physicians in California, Ohio, Georgia and New York, we have consulted with thousands of doctors of all specialties during our combined three and a half decades in practice. From this experience, we have become intimately familiar with how most physicians build their wealth plans. Too often, we have found that physicians ignore the most important factor in a sophisticated long-term plan: flexibility.
Because so much of life doesn’t work out exactly how one plans, it would seem obvious that flexibility should be fundamental to a wealth plan. This is especially true in the financial arena, since many factors that may make the difference between a physician hitting his or her financial goals or not are beyond his or her control.
Changes in Income
Changes to a physician’s income or cash flow are probably the main factors they think of when considering their ability to accumulate wealth. With the federal government cutting reimbursements to physicians, private insurers following suit, and inflation continuing to cause practices’ overhead costs to rise, it is not surprising that this would be on doctors’ minds. Add to this the increasing number of doctors who are becoming employed, where their incomes will be dictated by a hospital or health system, and cash flow becomes the most important factor where flexibility is required. Most doctors ....
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