This is by far one of the most difficult questions to answer! The reason is because there is no one size fits all for financial planning. What may be totally doable for one person is way over the top for another and vice versa. The key is knowing concepts and being able to utilize those concepts per each person’s individual scenario and goals. When beginning the journey of creating a financial plan for your future one of the biggest questions to begin considering is what would you like your retirement to look like? This question is not all encompassing, there are many sub questions to it, but this hits the main points to establish early in creating a plan.
Prior to diving into this it’s important to establish a plan for paying off medical school loans (can investigate income driven repayment plans, loan forgiveness, refinancing of loans, etc), establishing an emergency fund (6-9 months of expenses), and protecting your income. This post isn’t directed to get into specifics on each of these topics but meant to provide the basic structure (if you would like to talk more about your specific circumstances feel free to book a meeting!). When approaching these three items it’s important not to lean too heavily on one over the other. Often people will only want to put every dime into paying off student loans just to get out of debt completely. The numbers speak for themselves, that is not the best way to approach it. A much better option is to pay on your student loans while also contributing to an emergency fund as well as disability insurance to protect yourself in the case of emergencies popping up or even a disability (see previous post for more info regarding disability insurance). If you’re putting every dollar into paying your loans, you’re top heavy and will easily fall over if anything doesn’t go perfectly, not to mention you’re forfeiting retirement planning for the next couple years to pay off debt.
When considering retirement, it’s important to ask yourself what you would like to do? If you would like to sit on the beach every day and surf, it’s important to plan for that specifically and know the expenses surrounding that. If you’d only like to work for 20 years and never work again, it’s essential to get started planning now! Most often I hear people saying they don’t want to retire and just work until they are 80 yrs old. That is totally fine, in that case consider retirement as a point where you do not need to continue working, but you chose to because you love what you’re doing. Once you have that locked down it’s essential to lay out what benefits you get from your hospital as well as if there’s any matches the hospital provides (it’s always a good idea to contribute enough to get the hospital’s full match into their retirement fund). After that it is important to diversify between different investments (where you can combine tax efficiencies to maximize the decumulation of your assets in retirement) as well as permanent life insurance (to not only provide a legacy for future generations but to allow safe dollars to access in case of a down market year). These are two of the biggest tools to use in retirement, often investments are touted as the only way to save for retirement, but permanent life insurance provides a large benefit to your financial future people often misunderstand. To talk through more of those details, feel free to book a time to talk with me!
