Hi folks, welcome to New Year Fresh Starts Physician Financial Planning for 2025. My name is Matt Fisera. I am a certified financial planner and partner with Generational Financial Partners. We're 90 plus percent of our clients are physicians and we are really excited to be here with you today to talk about some of the financial planning principles that are really important for physicians and things that I think are maybe exceptionally actionable here towards the beginning of the year as we might be thinking about our financial future, our financial outlook. Now, what I will say is it is not lost on me that this is a new year fresh start and by the time many of you are probably seeing this, it's middle of February or later. So rest assured that the content we're going to go through today is good, whether it is January, February, or December, but we think that this is a good reminder as well that your financial plan is not set it and forget it. So coming back to this regularly is important, not necessarily relying on January 1st as the impetus to do that is probably a good lesson that we can take away regardless. So for our agenda today, we are going to be talking about setting realistic financial goals, tax-smart retirement contributions, so really understanding what are the different types of retirement accounts and what kind of tax benefits do they come with, establishing a savings rate, which I think is one that is probably pretty important because it's easy to overlook, it's easy to rely on a rule of thumb, and just kind of miss some of the intentionality behind what a savings rate can and should be. And then we're going to use these last two of kind of maximizing HSAs, FSAs, other benefits, budgeting and cash flow strategies as kind of a catch-all to say we're going to talk about where you may want to be saving relative to various stages of your career and various goals. So I'll pause here for a moment and just say this information, I'm sorry, this presentation is for informational purposes only, so we're going to be talking about what is something hopefully broadly applicable and something you can take away and apply to your personal situation. However, if you are looking for something that looks and feels and smells a little bit more like advice, we at Generational Financial Partners are happy to have an initial consult at no cost to answer any questions you have and go over your financial situation, and we can explore whether we may be a good fit or partner in your financial planning. But as we dive into it, one of the things that I think is at least half obvious, but we should spend some time discussing, is why financial planning matters or is important for physicians. And so the half obvious part is I think financial planning is pretty important for most people, right? We spend money, most of us, pretty much every day, and so having a good understanding and a healthy relationship with money is a big deal. But physicians specifically face a number of unique challenges, and as a result I think a number of unique benefits to proactive financial planning. So on the challenges side, some of the really common things that we see is many physicians come out of training with large amounts of student debt, and that can be daunting. So what happens is you go through training, you come out, you get rewarded with this nice healthy income, but you have to figure out, well, how do I allocate that towards hopefully enjoying my well-earned income a little bit more than I've been able to in the past while paying down student debt, while trying to figure out how to save for your future? On top of that, there's the delayed start date to that healthy income, and so you go through medical school, you go through residency, you maybe go to fellowship, and you come out the other side and you've got this big healthy income, but you're probably a decade behind in terms of savings compared to your non-physician counterparts. And so making up for some of that lost time can be a challenge in figuring out how to do that in a way that is not detrimental to your future self. And then the last is balancing your demanding work with planning for your financial future. And so sometimes this is a matter of how much time, energy, and attention do you have to put towards your personal finances, and then for some, it's just a matter of how much you want to. So some people love to get into the weeds of their investments and their savings and all these different things, and others don't, and there's no right or wrong answer there, but there is kind of an awareness of which one you are and planning accordingly. And so the principles we go through today will hopefully give you all some perspective as to what are the things you might want to be thinking about, and we'll give you some insight into what those components of planning that you might be overlooking potentially are. Now when we turn to the benefits side, you know, we sort of alluded to it, but your job jobs are demanding, and there's stress, there's burnout, those are very real things. And so any steps that you can take towards reducing stress outside of the workplace I think does go a long way, probably more so than it does in many careers. And so having a financial plan, you know, understanding where your dollars are going, for what purpose, and just having some kind of clarity into what that's going to produce for you in the future, I think can go a long way in terms of freeing up some mental space to be more present at work, be more present with your family, be more attentive to the things that are important to you. You know, it obviously improves financial security and improves the likelihood of achieving long-term goals, but this last one I think is hyper salient for physicians, which is kind of avoiding the common mistakes and misinformation, because for physicians specifically, this is not so much a question of do you have access to good information or enough information when it comes to financial planning matters, it's more so the discernment of what's right, what's relevant, and what's actionable for you. So there's a lot of information out there, you have to sift through all of it to figure out is it right, and then you have to figure out does it make sense for me, and part of that can stem from the fact that it is not lost on us that with a white boat and a big salary, you probably have a lot of financial services people, you know, reaching out. And so discerning between who's got your best interests at heart, I think is a real challenge for physicians that we don't take lightly. So you know, moving through here to kind of the goals section, this is not necessarily how to make goals. This is more about the principles on which your goals might want to sit. So I think that there are four really important components here, and the first one I think is the most important, which is the alignment of your goals with your values and then aligning the use of your money with those goals and values. And so taking time to think about what's really important to you, you know, what do you prioritize, and how are you going to structure your financial life in a way that serves those purposes? So there's no right or wrong answer here. You might be very family oriented, you might be looking to grow your career, start a practice, end a practice, fill in the blank. You might be looking to retire as soon as you possibly can, or you might be kind of indifferent as to when you retire and you're looking for more balance along the way. Again, none of those are good, bad, or otherwise, it's just a matter of really understanding what your core principles are, and then figuring out, well, how do I build a financial plan in service of those things? Now the other one here, which is kind of relevant, as I mentioned that we're now at least in February when you're seeing this, is leveraging the power of fresh starts. So we are past the new year, new you resolutions stage of 2025, and we are now in that period that kind of relies a little bit more on processes and or discipline. And so leveraging fresh starts, which could be new month, new week, new day, this webinar, or birthday, fill in the blank, but using these kind of micro periods of time to just recommit to some of the things that you have said that you want to do that are still important to you is really important, is a much better way, at least from a success standpoint to setting your goals is to kind of revisit them and recommit to them every so often, because it can be hard to just say the beginning of the year, I'm going to do this and then do that thing for 12 consecutive months. The next is having a long term vision. So I don't think physicians have much problem with this particular one, or probably less than many others do, which is just kind of thinking about the future and making sure that you are taking an approach that is set out over a reasonable amount of time. This last one is extra important in that regard, which is flexibility. So having a long term vision, important, right? Got to be thinking about, you know, what are the things I'm doing today that are preparing myself five years, 10 years, 20, 30, 40, 50 years down the road. But we also need to make sure that whenever we do that, we have a level of flexibility that says, hey, I want permission to change my mind, because we all inevitably do in many, many areas of our lives. And we want to have flexibility because life changes in unpredictable ways. So sometimes it's our minds that change. And sometimes it's just situations, circumstances, you know, life goes on and we want to be able to adjust as our lives change. So keeping these things in mind as you're setting your financial goals, I think, creates a good framework for establishing your personal direction. Now, retirement is one of those kind of default goals, right? Whether you really care about retirement or whether you maybe don't care about retirement so much at your particular stage of life, it is one of those things that we all need to be doing at least a baseline in terms of preparing for. And so understanding the tax benefits that are available in terms of our retirement accounts, I think, is critical, especially as a physician where taxes are a really hot topic for many of us. And so I'm going to first talk about strategy. So pre-tax versus Roth contributions. And then we'll touch on tax diversification, employer matches, and how you use those to your advantage. And then I'll spend just a couple of minutes going over the 2025 contribution limits that you need to be aware of. So as far as pre-tax versus Roth. So these are the two big tax buckets that retirement accounts fall into. So pre-tax, you know, pre-tax 401k, 403b, IRA, you know, etc. Anything that either has the word traditional in front of it or doesn't have the word Roth in front of it is generally safe to say that is a pre-tax account. And the way that pre-tax accounts work is when you make contributions to them, the contributions, the money you put in is tax deductible. So it comes off of your taxable income for the year. So let's say that I am, I'm going to make my math easy. Let's say that I'm a physician, I make $300,000 and I put $20,000 into my pre-tax 401k at the end of the year, instead of being taxed on my $300,000 income, I am taxed on $280,000 because I made a pre-tax contribution to my retirement account. And then what happens is those money go into your 401k, in my example, it gets invested and it grows tax deferred. So you're not paying taxes on it while it grows. And then when you distribute it in retirement, that money is taxable as ordinary income. Okay. Now Roth contributions are going to have the opposite tax principles. So in that same scenario, I make $300,000. I put $20,000 into my Roth 401k. So no tax benefit to the money going in at the end of the year, I am still taxed on the full $300,000. My money gets invested in the 401k, it grows and grows and grows, still maintaining the tax deferral benefit. And then the difference is when I take money out of my Roth account in retirement, that money is income tax free. Okay. So with a pre-tax account, I get a tax benefit in the year I make the contribution and I pay taxes later when I distribute. With a Roth, I have no tax benefit to the contribution, but I get the money back plus the growth tax free in retirement. Okay. So one of the really common questions is, well, which one is better? And there is no right answer to that question. They are, they're different. And one of the ways that we would encourage you to think about this is you want to give the tax benefit to the version of yourself who's paying more in taxes on a percentage basis. And so at a very simple level, if I think that I am in a higher tax bracket today, then I will be in the future. So I am paying more in taxes now than I will in the future. I would want to take the tax benefit today, which would be a pre-tax contribution. If I think that I am in a lower tax bracket now than I will be in the future, then I would want to take advantage of a Roth contribution and give the tax benefit to my future self. Now we obviously don't know anything really other than what our tax bracket is this year, right? We don't know how much money we're going to make next year, five years, 20 years down the road. We don't know what tax policy is going to be at those times. And so we want to take educated guesses to figure out, well, how do I contribute to each of these accounts in any given year? Now tax diversification refers to having your money spread out among the different tax buckets. So pre-tax and Roth. Because the reality is, if you're a physician pre-retirement, so whether that's 30 or whether that's 60, you're going to go through a number of tax cycles while you're working and or while you're retired. And so we aren't trying to guess definitively what your entire retirement outlook looks like. We want to have the ability to draw from different buckets as situations change, whether in your income or in policy at those given times. So you want to take educated guesses to figure out what the skew on your contributions might look like. So if you feel like you are in a very high earning year, you might skew towards pre-tax. If you feel like there are many more high earning years to come, you might skew towards Roth. But having some money in all of these buckets is typically advisable. And then the employer match, which we're going to touch on a little bit more in a bit as well. If your employer offers a match to your retirement account, you want to take advantage of it. Regardless of where you are in your career, you should always be contributing to your retirement account up to whatever employer match is provided. Where you go from there, it could vary, which we'll get into that later. Now, without going into a ton of detail, and these numbers are included in the worksheet that you were provided ahead of the call. If you don't have access to that, it should be available to you. If it's hard to find, just send us a note and we'll get it to you. But in 2025, you have the contribution limits for some of the more common accounts for physicians. So 401k, 403b, if you are under the age of 50, you can put 23,500 into that type of account. Important, sometimes overlooked, is there is no income limit on Roth 401k or 403b contributions. So unlike Roth IRAs, you can make a million dollars a year or more and still put money into a Roth 401k or 403b and you can go up to that $23,500 limit. Now, if you are over the age of 50, you get what's called a catch-up contribution. And catch-up contributions for 2025 are $7,500. That's on top of the normal $23,500 limit for a total of 31,000. And then in 2025, you have what's called a super catch-up contribution. And that is for folks between the ages of 60 and 63, where instead of 7,500, that super catch-up contribution is 11,250, which means you can put in a total of $34,750 for folks between the ages of 60 and 63. Now, traditional IRAs and Roth IRAs, certainly not as widely used in the attending community, but depending on your situation and a whole bunch of other factors, you may be utilizing a Roth or a backdoor Roth, which is beyond the scope of what we're gonna talk about today functionally, but the Roth IRA and traditional IRA contribution limit is $7,000. Catch-up contributions for those over 50 is $1,000. SEP IRA, which is for self-employed individuals typically or independent contractors, depending on compensation and earnings, that number could be as high as $70,000 going into a SEP IRA. And then HSAs or health savings accounts, which are savings plans for healthcare for those covered by high deductible health insurance plans an individual can put in 4,300 for 2025, a family could be 85, 50 with the $1,000 catch-up contribution over the age of 50. So again, these are all in your guide. You do not need to write those down or remember them necessarily, but just kind of thinking through or using this as a guideline, where are those dollars getting saved and how much can you put into each of these different types of accounts? So now, spending a little bit of time on establishing a savings rate. And as I alluded to earlier, I think this is an area where it's very easy to fall prey to some false security found in a rule of thumb and to kind of go through this without a ton of intentionality. So first things first, 10 to 20% is a guideline. So that is a rule of thumb that is sometimes valuable for physicians. Now, because of the delayed start, we are typically seeing physicians in the 15% or more range as far as their personal savings rate. But everybody's situation here is gonna be a little bit different and this will be highly dependent on a couple of things. One of which would be employer match. So, hefty employer match might mean less stress on your requirements to save. How much you have saved currently. So this relates to both how well or not you've saved so far. It also kind of speaks to stage of career, right? If you are in your mid 40s and you haven't really done a whole lot of saving up to this point and you wanna retire on time, your savings rate might be substantially more than 20% versus if you are a first or second year attending and you did a pretty good job of saving during residency and you've got a long time horizon, your number might be closer to that 10% threshold. Investment risk and risk tolerance will play a role. How much risk are you willing to take in your investments speaks to how much of a tailwind or not you may be getting from the long-term performance of your investments. When you wanna retire, that goes back to time horizon. And then whether you have other sources of income. So, do you have a pension that you'll be relying on? Do you have a spouse who has some sort of retirement plan that will be contributing to your situation? All of these different things. Are you gonna work part-time for a period of time? All of these things will kind of inform where that savings rate maybe needs to be. But as we are thinking about the components of the savings rate, I'm gonna turn to a very simple, overly simple in some ways, but informative formula that helps to put a little bit of context around this. And this is gonna be useful for a few different reasons, which I'll get into here. So, gross income is your total income before taxes. So, what is the total amount of money that you make? What does your contract say? What does your gross pay say? And then we're gonna subtract out taxes, right? And this doesn't have to be to the dollar. This is just gonna be something that gives you an idea of after the government gets their cut, what do you have available after that, which you can probably tell based on a tax return or a pay stub, just to kind of give yourself an idea. And then I want you to spend some time thinking about your baseline lifestyle expenses. So, this is not just your necessities, but this is what is your kind of normal life cost? And you might strip out some things that you deem to be extravagant or unnecessary and just kind of look at how much money do I need to kind of live a fulfilled life? And when you do that, you're gonna come to gross income minus taxes minus baseline lifestyle expenses. You'll get what we'll call for this presentation, your financial opportunity number. And your financial opportunity number really just tells you, in theory, how much money is quote unquote leftover, right? How much money could go to savings, go to additional debt repayment, go to enhancing your lifestyle. So, it gives you this idea of, well, what do I have to work with? Now, the baseline lifestyle expenses has two benefits. Benefit number one is it helps you inform that financial opportunity number. Benefit number two is that baseline lifestyle expenses gives us a much more, a much clearer target as far as what is your retirement potentially gonna look like? Because how much you make is kind of irrelevant in terms of your retirement planning, depending on how you live, right? If you live at or above your means, how much money you make doesn't mean anything for retirement. If you live well, well, well below your means, how much you make doesn't mean anything for retirement. It's about how much you spend. So, taking the time to understand that baseline lifestyle number gives you some valuable insight into, well, how much income do I need to recreate to have a retirement that is enjoyable for myself, right? So, going through this exercise and then using an online calculator or working with a financial advisor or however you wanna go about it, but going through this very simple exercise provides a much more accurate savings rate because we know how much is available, we know how much can be saved, we know how much you're trying to get to because we know how much your lifestyle costs. And then what's really important here, and I don't think I've mentioned it yet, is once you establish these savings rates, and retirement is the big example we're gonna go over today, but once you've figured out how much you need to set aside for retirement, how much do you need to set aside for the car you wanna buy or the house you wanna buy or the practice you wanna buy into or whatever that thing or things are, once you back out those savings rates from your opportunity number, your financial opportunity number, that is hopefully gonna leave you feeling really empowered to spend the rest, right? So, use that money to enhance your lifestyle, use that money to pay down debt if that's a priority for you. This is not just another layer of delayed gratification, this is a balance of how do we set some savings mechanisms in place so that you don't have to think about them very much, and how do we free you up to spend more of your hard-earned money in a responsible way? So, the kind of last thing that we're gonna go through today, which is in your financial foundation checklist, is the savings waterfall. And so the savings waterfall is not an end-all, be-all, it is not going to be a perfect guide for every single person, but this is gonna provide a pretty good framework for how do you kind of move through levels of saving or kind of if you're saving, how does the incremental dollar get saved? So, first things first, which we haven't talked about really, is an emergency fund, right? So, don't wanna gloss over that. Having an emergency fund to insulate you from things that either could go wrong or are out of the ordinary is important. And for physicians and for most people, that number should be about three to six months of expenses. So, three to six months of expenses is generally suitable in an emergency fund. If you're more conservative, you might want more. If you're less conservative or more aggressive, you may want less. If you have a lot of job security, you may want less. If you have less job security, you may want more. So, setting aside an emergency fund somewhere safe, liquid, accessible, that is typically going to be among your first priorities. The next one I already hinted at, contributing to your 401k, 403b employer-sponsored plan, if you have one, up to the match. So, if your employer is offering a match, you want to use your next savings figure to take advantage of that, right? Get the free money. From there, and this one kind of depends on your situation and sometimes where you are in your career, paying down high-interest debt. High-interest is intentionally vague. It is oftentimes thought of as somewhere between 8% and 10% or more. But paying down high-interest debt is a way to remove drag from your savings efforts, right? Because if I am contributing to my 401k and I'm potentially earning 7%, 8%, or 9%, but I have a credit card that is charging me 22%, you know, I'm in the red there. I'm in the negative. So, we want to make sure that whenever we are making these kind of savings decisions, we are also paying down debt that may be producing a drag on our overall financial wellness. Now, I said that number is kind of intentionally vague, so it does have something to do with how much investment risk and how much potential investment return you may be able to achieve relative to the interest that you are paying on the debt. From there, many physicians will go to really a backdoor Roth IRA. So, they might be looking for some additional tax-free savings in a backdoor Roth IRA, which I alluded to earlier, is a great vehicle to potentially pursue there. From there, it might go to a health savings account. Health savings accounts are really unique in the sense that they are triple tax-free, or potentially triple tax-free, in the sense that when you make your contributions to an HSA, the contributions are tax-deductible in the year that they are made. The money can be invested. A lot of people don't realize that, but the money in your HSA can be invested and it grows tax-deferred, so no tax while it's growing. And when you distribute for qualified healthcare expenses, that money does come back income tax-free. So, in theory, an HSA used for healthcare expenses never really touches the tax system. Now, what makes health savings even more dynamic is if you take money out for a non-healthcare expense prior to 65, you will pay income tax and penalty on that distribution. However, if you wait until after age 65, so if you get to and into retirement age, you can withdraw from your HSA with no penalty. You just have to pay taxes at that time. So, instead of being triple tax-free, instead it works more like a pre-tax retirement account where you got a deduction up front, it grew tax-deferred, and you pay income tax when you distribute. So, health saving accounts really, really dynamic because they can be used triple tax-free for healthcare expenses. They could also be used like an additional pre-tax retirement account post-65. From there, probably gonna max out our 401K, 403B, SEP IRA, whatever it is. So, take advantage of as many tax-advantaged accounts as you're able to. And from there, we might start to look at after-tax savings, which would be something like a brokerage account or other investment account where you're not necessarily reaping the tax benefits that we've talked about so far, but you are establishing money that is liquid, money that could be used to support an early retirement, and frankly, just money that has fewer restrictions around how and when it gets used. So, this framework, again, is a great starting point if you haven't given this a whole lot of thought or if you don't really know what kind of quote-unquote what's next in your savings plan, this gives you a lead as far as what you might look to. So, I've alluded to it, and you should all have access to this Financial Foundations Checklist, which we provided as a support document to our session here today. Maybe you filled it out already, maybe you're filling it out now, maybe you're gonna look at it after the call. Regardless, this is gonna include some kind of helpful prompts and a couple of notes, especially on page three, which isn't shown here, as far as what we went over today. But this will also give you some really applied questions to go back and ask yourself, and they could be questions about your goals and what have you done, what haven't you done in that arena? It could also be questions about what do you have access to and what do you not have access to, and have you looked into those things yet? What is your employer match? Do you have access to an HSA? All that fun stuff. So, I'd really encourage you to go through this, and if you've already completed it, maybe revisit it after having listened to our talk here today, and use this to, if not, make some changes, figure out are there changes that you might want to visit with some point down the road. Now, with that said, I hope this was valuable. It was an absolute pleasure to kind of put this together and kind of share with you all this afternoon, or whenever you're watching it, I should say. On the screen here, we do have a QR code. If you are having more questions, having questions that you'd like to ask that are maybe kind of more personal to your situation, you can scan this QR code, you can schedule an initial consult. There is no cost or fee associated with doing that. There are also no expectations to work with us. We want to be a resource for this community, and we do hope that you found some of the information that we provided today here valuable. So, I'll leave that up for just another second, and then I will kind of close out by saying thank you so much for taking time out of your day to listen to this. I do hope it was valuable. On the screen is all of my information and our founder, Ben Yin's information. You can reach out to us directly. You can use the website, you can use the QR code, but we really appreciate your time, and thank you so much for taking yours to join the session.

financial planning

physicians

tax-smart retirement

savings framework

financial goals

Matt Fisera

Generational Financial Partners