financial wellness for physicians presentation final wellness fo… · getting started 7 • create...
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Financial Wellness for PhysiciansRobert Tucker, MD, MBA, AIF®
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This material has been prepared for informational purposes only and should not be used asinvestment advice. All investing involves risk. Indices are not available for direct investment.Their performance does not reflect the expenses associated with the management of an actualportfolio. Past performance is no guarantee of future results. Diversification does not ensure aprofit or guarantee against a loss. Plancorp does not provide tax, legal or accounting advice. Thismaterial is not intended to provide, and should not be relied on for, tax, legal or accountingadvice. You should consult your own tax, legal and accounting advisors.
Disclosures
Goals of this Discussion
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Common decisions at various stages of you career
Identify a few key steps to take – “pearls”
Caution against mistakes to avoid
It’s Different for Doctors and Their Families
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• Substantial income <--> Delayed gratification
• Training emphasizes self-reliance <--> Knowing when to get help
• Relationships built on mutual trust <--> An easy target
• Role as a respected adviser <--> Apply discipline and objectivity at home
Keys to Future Success
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• Take advantage of what is offered (employer, government)
• Avoid or eliminate burdensome debt (loan forgiveness, refinancing)
• Prepare for the unexpected (risk management, asset protection, estate documents)
• Discipline yourself to develop and follow a plan (spending, targeted and general saving)
• Avoid mistakes (lack of investment strategy, paying too much for protection, starting too late)
Getting Started
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• Retirement plans – 401k/403b, 457b, 457f• Asset allocation
Managed accountSelf-selected – diversification, low cost
• Automatic rebalancing • Section 125
• Insurance – health, life, disability
• Choose beneficiaries carefully and review annually
RETIREMENT BENEFITS
Getting Started
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• Create a cash reserve – high yielding MM accountAllow for known future expenses – don’t take short term market risk
• Start saving/investing automatically• Start debt reduction plan
Refinance student loans if not eligible for debt forgivenessPay credit card balance monthlyPay highest interest loans firstConsider use of bonus, tax refund
• Track expenses
HOUSEHOLD CASH FLOW
Estate Planning Basics
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• Will
• Durable power of attorney
• Healthcare power of attorney/ HIPAA declaration
• TOD/POD designations
MINIMUM DOCUMENTS NEEDED
Estate Planning Basics
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• Joint Tenants by the Entirety in Missouri
• Revocable living trust
• Consider life-time trusts for beneficiaries
• Review roles and terms annually
NEXT STEPS
Risk Management
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• Discuss with an attorney if a major concern• Maintain cash reserve• Re-assess life, disability insurance as income changes
Term insurance for inexpensive protectionCombine personal and employer-sponsored coverage for maximum benefits
• Re-assess property and casualty insurance as assets growUmbrella coverage Be sure to list related entities, e.g., trust
• Consider holding rental property in a separate entity
Income Tax Awareness
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• What’s deductible?• What’s not deductible?• Charitable giving (appreciated securities, donor advised
fund)• Estate planning - (income tax considerations versus estate
tax considerations)
CONSIDERATION OF THE TAX CUTS AND JOBS ACT OF 2017
Income Tax Awareness
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• “Back door” Roth IRA
• Simplified Employee Pension IRA
• Roth IRA for employed children
ADDITIONAL RETIREMENT FUNDING OPTIONS
Income Tax Awareness
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• Missouri state tax deduction (reciprocal with other states’ plans)
• Ownership by parent, grandparentParental asset – 5.64% reduction for need-based aidStudent asset – 20% reduction for need-based aidOther owner – 50% reduction for need-based aid
• Work aroundsYearly roll-over to parent or student-owned plan after FAFSA is filedDefer distributions until January 1 of Junior year
529 COLLEGE SAVINGS PLAN
Income Tax Awareness
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• Contribution limits - $3,500 single, $7,000 family, $1,000 catchup (age 55)
• HDHP minimum deductible - $6,750 single, $13,500 family• Uses other than current medical expenses
Retirement expenses after age 65 (income taxes may apply)Medicare premiums (not Medigap premiums)Long term care
HEALTH SAVINGS ACCOUNT
Income Tax Awareness
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• Parents act as the bank, but providing loan at a lower rate than traditional sources
• Careful documentation needed• Interest reportable by “lender”, potentially deductible by the
“borrower”
INTRA-FAMILY LOANS
Investment Basics
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• Diversification
Investment Basics
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• Diversification• Evidence based investing
Investment Basics
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• Diversification • Evidence based investing• Control costs – expense ratio, taxes, trades
Investment Basics
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• Diversification • Evidence based investing • Control costs – expense ratio, taxes, trades• Take appropriate level of risk
Investment Basics
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• Diversification • Evidence based investing • Control costs – expense ratio, taxes, trades• Take appropriate level of risk • Stick with a plan and maintain a long view
Summary
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• Defines goals, objectives and values• Changes focus from reactive to proactive• Takes advantage of compounding of earnings• Enforces discipline, mitigates emotions
[we are built to react to recent trends]
THE REASONS FOR HAVING A PLAN
Summary
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• Greater chance of success• Keep abreast of changing regulations• Transition plan in place• Concentrate on what is most important
THE BENEFITS
Summary - Next Steps
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• Set retirement account to automatically rebalance• Consider Joint Tenants by the Entirety, lifetime trusts for
beneficiaries• Transfer/Pay on Death Designations• Regularly review all insurance coverage• Retirement supplements – back-door Roth, SEP, Roth for
employed children
Summary - Resources
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www.plancorp.com/physicians