Physicians face many problems. Most of these problems are the health problems of their patients. Since the physician trained for years, maybe even a decade, he or she is fully equipped to solve these types of problems. But what about their own personal problems? The interesting thing about medical professionals is they face unique financial problems that the general population does not. If you're thinking about going to medical school to become a doctor, take into consideration the following financial situation you will face.

Medical School is Expensive

Is medical school worth it? That is a common question for those interested in medicine but weighing the pros and cons. After all, the student loan debt crisis affects millions of people, but doctors deal with more debt than most. The average student loan debt for non-medical students in America is approximately $32,731. Meanwhile, doctors face approximately $215,900 in medical school debt alone, not including undergrad. Unlike most professions, physicians will not graduate medical school and suddenly start making $300k a year in salary. Instead, their salaries start off low and the average doctor doesn't start collecting a large paycheck until his mid-30's. When the large paycheck arrives, it is thrilling, but unfortunately most of it will go towards their debt for many, many years. You could look into medical school loan forgiveness programs but the acceptance rate tends to be low.

Traditional Financing Not Available

As mentioned, it could be 10+ years before a doctor starts collecting a serious paycheck. How will you finance your life until then? You could turn to credit cards for doctors, and some banks offer residency relocation loans, which are both great. But credit cards come with super high APYs and a residency relocation loan is only temporary. And what if you want to buy a house? Or start your own medical practice? Or maybe you just need money to pay for rent, groceries and other living essentials? Loans for doctors has historically always been a problem because who is going to lend to someone $300k in debt, making only $70k a year? The good news is financial institutions are coming out of the woodwork with financing solutions designed just for doctors. Check out the following articles to learn more:

Insurance (all kinds) is a MUST

Medical professionals require by law, and in some cases just common sense, to purchase various kinds of insurance. The job of a doctor is risky, and your financial situation is such that your life outside of work is also risky, requiring insurance.

Medical malpractice insurance

Upwards of 60% of all doctors over the age of 55 have been sued for malpractice, according to the American Medical Association, so it’s more likely than not that a doctor will face a suit during their career. And even if a case is eventually dropped, the bills can still be quite expensive. That's why it's important to put a reliable medical malpractice insurance policy in place.

Physician disability insurance

According to the Social Security Administration, twenty-five to thirty percent of American workers will suffer a disabling injury or illness at some point during their careers that prevent them from earning an income. As a doctor or medical professional with a huge amount of student debt, this can be a very sobering reality. Missing out on work for any large amount of time can significantly impact a doctor’s lifestyle. Between potential missed loan repayments, lifestyle maintenance, and staying up-to-date in your field, a lot can be lost if you’re out of work due to a disability. This makes long term physician disability insurance a no-brainer.

Term life insurance

Term life insurance is another necessity for doctors. While it doesn’t put as much financial strain on a medical professional as whole life insurance would, it still adds another financial burden. Term life insurance allows doctors and other professionals to insure their lives for a set period of time, which is why it is so much cheaper than the whole-life alternative. Average payments for a 20-year term life policy at $500,000 still run around $200 per month.

Lifestyle Creep is Real Among Physicians

While doctors are in school or training, their friends in other careers jumped straight into the workforce and saved money to afford all the things you could want in life. Once doctors complete their programs and begin making substantially more money than they used to, it can be easy to fall into the trap of lifestyle creep. Lifestyle creep is purchasing stuff that you can't technically afford or need, but make you feel good. A good way to avoid this is to follow this physician checklist for new doctors and have a financial plan for life after residency.

Likely to Fall Behind on Retirement and Estate Planning

Financial planning for physicians is tough. Because of how long it takes to reap the benefits of their work, many doctors tend to put off estate planning or saving for retirement than it does the rest of the population. Most doctors don’t begin thinking about saving for retirement or planning their estates until they’ve started a family and are earning a higher salary. But because of how late in the game doctors reap the rewards of their schooling and debt, most have begun building their lives around their families and don’t begin investing in their retirements or estate until later. Instead, they spend their money on weddings, their kids’ school, new cars, and countless other necessities that just put off their retirement savings and estate planning longer and longer, often resulting in doctors having to work past the average retirement age to make up for the lost savings.

Jack Wolstenholm - Head of Content Marketing

Jack is a Creighton University graduate and former advertising creative who has written extensively about topics in personal finance, employee benefits, and technology. You can find Jack's writing on Calendar.com, StartupNation, and Muck Rack.

Financial PlanningPublished January 15, 2021