Physician Retirement Planning: Complete Guide for Doctors

Physicians face a unique retirement planning challenge: starting a career in their 30s with massive debt but exceptional earning potential:

• **Compressed earning window:** Only 20-30 years of peak income before retirement
• **Student loan burden:** $200,000-$500,000 average medical school debt
• **Lifestyle inflation:** High income can lead to delayed savings
• **Aggressive catch-up needed:** Must save 20-30% of income to retire comfortably
• **Specialty matters:** Proceduralists earn more but have higher overhead

Doctors have access to powerful retirement vehicles that allow massive tax-deferred contributions:

• **Defined Benefit advantage:** Older physicians can contribute 3-5x more than 401k
• **Combination strategy:** Stack Solo 401k + Defined Benefit for maximum deferrals
• **Mega Backdoor Roth:** After-tax 401k contributions to Roth (up to $69,000 total)
• **Partner track physicians:** Understand vesting schedules before job changes
• **Academic physicians:** 403b plans with 15-year catch-up provisions

Private practice physicians must plan for practice transition or sale:

• **Valuation methods:** Typically 3-6x EBITDA depending on specialty
• **Primary care:** Generally 2.5-4x EBITDA (lower due to reimbursement pressures)
• **Specialty practices:** Dermatology, ophthalmology may command 6-8x EBITDA
• **Hospital employment:** Selling to health system provides guaranteed income but lower control
• **Private equity roll-ups:** Highest multiples but often require earnout period
• **Associate succession:** Internal sales preserve patient relationships
• **Asset vs stock sale:** Impacts taxation - consult CPA specialized in medical practices

One of the most overlooked retirement costs for physicians is malpractice tail insurance:

• **What is tail coverage:** Insurance covering claims after you stop practicing
• **Cost:** Typically 1.5-3x your final annual malpractice premium
• **Specialty variation:** Surgeons may pay $100,000-$500,000+ for tail
• **Primary care tail:** $20,000-$75,000 depending on location
• **Employment contracts:** Review who pays tail if leaving employed position
• **Retirement planning:** Budget for this major expense 5 years before retirement
• **Options:** Full tail vs extended reporting period endorsement
• **State requirements:** Some states require tail coverage

High-income physicians face top marginal tax rates - strategic planning is essential:

• **Maximize retirement contributions:** Defined Benefit + 401k combination can defer $250,000+
• **Backdoor Roth conversions:** Build tax-free retirement income
• **Qualified Business Income deduction:** 20% deduction for pass-through entity owners
• **Real estate professional status:** Spouse can unlock passive loss deductions
• **Charitable giving:** Donor-advised funds in high-income years
• **State tax planning:** Consider no-income-tax states for retirement
• **Practice entity structure:** S-corp vs LLC affects payroll tax
• **Health Savings Account:** Max out $8,300 family contribution (2024)

1. 1**Years 40-50:** Maximize tax-deferred contributions (Defined Benefit, 401k)
2. 2**Years 50-60:** Backdoor Roth conversions, build tax-free bucket
3. 3**Years 60-65:** Transition practice, consider Roth conversions before RMDs
4. 4**Age 65+:** Coordinate RMDs, Social Security, Medicare IRMAA brackets

After decades of delayed gratification and hard work, protecting your assets is critical:

• **Asset protection trusts:** Shield wealth from malpractice lawsuits
• **Retirement account protection:** ERISA accounts have strong creditor protection
• **Umbrella insurance:** $5-10 million coverage for high-net-worth physicians
• **Gold IRA allocation:** 10-20% in physical gold for inflation protection
• **Tax diversification:** Traditional, Roth, taxable accounts provide flexibility
• **Estate planning:** Bypass trusts, ILIT for life insurance, family LLCs
• **Avoid concentration risk:** Don't invest retirement in medical office REITs only