As doctors we lead busy lives and financial planning — both short and long-term — isn’t always a priority. Doctors should be worrying about their patients, workload, and work-life balance, not the latest tax legislation. This month we asked Darren Scott- Guinness to tell us how financial advisers help doctors, whether they be F1s, soon to retire GPs or Consultants.
It’s not feasible to keep your medical knowledge up to date and stay abreast of the latest developments that might disrupt your finances at the same time. But still, it’s crucial that you don’t neglect financial planning and you should consider working with an Independent Financial Adviser that helps doctors every step of the way from graduation to retirement.
As you progress in your field, your financial situation evolves.
Your considerations and priorities fresh out of medical school won’t be the same as when you’re settled in your career and looking to purchase a home, start a family, or when retirement is just around the corner. Every period of life will have different areas to focus on – whether it’s paying off debts, starting a savings plan, or building an investment portfolio.
Let’s take a look at what your financial priorities will be at different stages of your medical career.
Post-graduation/Junior doctor
If you weren’t lucky enough to have financial assistance from your family for medical school, you might have debt awaiting you as soon as you qualify. If, like many post-grads, you are living beyond your means you will likely be racking up credit card debt after you graduate. It’s important to create and stick to a budget to ensure you’re meeting all your financial goals and paying off debts.
Of course, even though planning for retirement is often the last thing many people want to think about when they’re first starting their career, the earlier you begin saving, the better. Even small contributions to a tax efficient vehicle, like an ISA, early on can make a huge difference when it’s time to retire. Also, seriously consider the NHS pension scheme, which The British Medical Association (BMA) says most doctors would be ‘financially unwise’ to opt out of.
As a junior doctor you’ll need to balance paying off loans with saving for the future – all the while trying to enjoy post-university life. Seeking financial advice to help you prioritise how to spend your earnings will save you time and money.
Mid career doctor
At this point in your career, you’ll have a few years of experience in your field and hopefully will be enjoying a successful personal life as well. After saving up enough for a deposit (or perhaps with the help of family members’ generosity) many doctors are looking to get onto the property ladder. At this stage you have to worry about getting your finances in order for your mortgage application.
Working in the medical field might mean you require a mortgage broker, someone who understands your circumstances and can connect you with a specialist provider. Even with dual incomes, it might still be hard finding the time to select the best deal, but you don’t have to go through the entire process alone.
Aside from house hunting, you should also be considering:
- pension planning,
- ISA savings,
- any additional wealth protection and preservation plans such as life cover or income protection.
Essentially, you should be planning your ‘rainy day’ fund.
Another potential milestone you’ll be hitting around this time is starting a family, which comes with its own set of financial obligations and considerations. One thing to think about is covering any expenses that you’ll incur while you or your partner is on parental leave, especially if a second salary is crucial for the household to run smoothly.
You’ll also want to prepare financially for the extra costs of children – clothes, toys, private schooling, higher education, etc. Don’t forget to discuss ways to start saving for your kids – like JISAs or child pensions – with your IFA.
Pivot toward retirement
Around about the middle of your career, if you’re not already, you should be seriously planning and saving for retirement. Start by reviewing your NHS pension and any private pensions you may also have then take a close look at your investment portfolio to ensure all facets of your financial plan are performing well. Be sure to regularly meet with your adviser to touch base and change strategy if needed.
As you get closer to retirement, health issues may pop up more frequently. If you didn’t select any wealth protection plans earlier in life, now is the time to take out policies. Ideally, you might just need to add critical illness cover if you’re already set up with life cover and income protection, but if not, carefully review the advantages of each type of plan and secure coverage. It’s important to maintain your health as the premiums for these policies are determined by an individual’s circumstance.
At this point, you should start preparing for what happens after you’re no longer around. A will is essential to ensure you’re supporting your family long into the future, but since children and grandchildren are born and families expand, make sure it stays current and updated.
Inheritance Tax planning is crucial to ensuring your assets are passed efficiently to the next generation. Trusts could be another option to preserve and distribute your wealth. A financial adviser will be able to help you plan out how to do all this and ensure these plans are kept in mind when developing a plan for your overall financial goals. Also, be sure to assign someone you trust to have lasting power of attorney in case you’re not able to make decisions for yourself.
Plan for anything
Life might not always follow the expected trajectory and you might get thrown a curveball or two, but it’s important to face things head-on. Even if you hadn’t planned for something – such as divorce, death, separation, and other family issues – your specialist financial adviser can help you through. Knowing you have a professional in your corner to get you through tough times will make all the difference.
Getting expert financial advice from IFAs that specialise in the medical industry is hugely beneficial, as they’re aware of everything that could potentially impact you specifically and use that knowledge to help you save as much tax and money as possible. An impartial expert can also help ensure you can retire when you want and live the lifestyle you want and accomplish all your financial goals throughout the years.
Note: This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority. Please remember that your home may be repossessed if you do not keep up repayments on your mortgage, so make sure you get it right.
