Retirement Planning for Doctors: What You Need to Know

Doctors face unique challenges when it comes to retirement planning. The result? You may feel behind financially, even while earning a generous salary. And because your career often demands long hours and high stress, you may want to retire earlier than other professionals—but without careful planning, you may find yourself stuck working longer than you had hoped.

The key to financial freedom? A strategic approach that balances savings, investments, and asset protection while avoiding common pitfalls. Here’s what doctors need to know about retirement planning.

Why Retirement Planning Is Different for Physicians

Delayed earning years postpone retirement savings

Unlike most professionals who start earning a full salary in their early 20s, doctors spend years in medical school and residency. By the time you reach your 30s, you’re making good money—but also playing financial catch-up. Houses, weddings, kids, and other financial milestones happen earlier in your career than for most professionals, colliding with other goals. Add in medical school debt (averaging $243,000), and your retirement savings timeline starts to feel the squeeze.

Higher income brings bigger expenses

Once doctors start making real money, lifestyle inflation can become a major challenge. It’s easy to feel the need to upgrade to a bigger house, drive a nicer car, and enroll kids in private school, especially after years of financial sacrifice.

I get it, you’ve worked hard to get where you are, and you deserve to enjoy the fruits of your labor. The problem? Despite earning multiple six figures, many doctors find themselves living paycheck to paycheck. You didn’t work this hard to wind up feeling broke!

Burnout can reduce earnings and savings A 2023 survey by the American Medical Association found that roughly 48% of physicians are experiencing some form of burnout. Over time, burnout may lead you to reduce your hours, change roles, or even retire early – having a major impact on your income and retirement savings.

Future retirement income is restricted by contribution limits

Doctors earning more than $500,000 a year face a unique problem: the maximum contribution limit for a 401(k) or 403(b) plan is $23,500 (in 2025). That’s just 4.7% of your salary – not even close to the

15% savings rate we often recommend to support future income replacement. If you want to maintain your standard of living in retirement, you’ll need to save and invest beyond common employer-sponsored plans.

Asset protection is key

Physicians need strong malpractice and personal liability insurance. Employer-provided coverage may not be enough, especially as personal wealth grows. Your personal insurance policies are crucial, too. Because of your high income and high net worth, you may need additional auto, home, or umbrella insurance to fully protect your assets.

Retirement Goal Setting for Physicians

Determining your ideal retirement lifestyle

Before you can calculate how much money you need to save for retirement, you have to decide how much you’ll spend in retirement. · What expenses do you expect to grow, shrink, or stay the same?

Do you plan to fully retire or work part time? And will you maintain your medical license?

• Will you downsize?
• What hobbies will you pursue?
• Are you expecting to make big purchases or take luxury vacations?

Establishing your target retirement age as a doctor

Early retirement is uncommon for physicians. In fact, 58% of doctors delay retirement until after age 65, according to a survey by American Medical Association Insurance Agency. In comparison, just 30% of all American workers retire after age 65.

However, the ideal retirement age is different for everyone. In order to successfully plan for your retirement, you should consider how long you want to work. Some things to consider:

• Your health
• Job satisfaction
• Changing capabilities · What you’re hoping to achieve after you retire
• Whether you’ll continue to practice part-time or as a volunteer in retirement

Determining Your Retirement Number

Because doctors earn more during their careers, Social Security is likely to cover a smaller percentage of your pre-retirement income, meaning you need more savings. That, combined with the following factors, will all impact your “retirement number,” or the amount of money you need to retire comfortably.

Taxes in retirement

Up to 85% of Social Security retirement income is taxable at regular income tax rates. Pair that with withdrawals from your retirement accounts, and your tax bills could add up fast! A tax-efficient withdrawal strategy can make a big difference for doctors and other high-income professionals, which is why I always recommend seeking professional advice before you reach retirement.

Medicare premiums

The price of Medicare premiums is directly tied to income, meaning that the more income you draw in retirement, the more you’ll pay for health care. This makes income planning extremely valuable for doctors and other high earners, especially when it comes to large one-time expenditures.

Lifestyle expectations

As a high-earning professional, your lifestyle is going to be more expensive than that of someone making $80,000 a year. How much you plan to spend in retirement on housing, travel, family, and hobbies will determine how much you need to save.

Part-time work in retirement

Many doctors plan to work part time in retirement, and there’s nothing wrong with that. However, I will say that, in my experience, a lot of doctors who try to transition into part-time work find themselves pressured to take on more hours than they originally intended, which can add a lot of unexpected stress to your retirement. Be aware of this potential, and if your plan for retirement involves part-time work, set a strategy for protecting your valuable time.

Retirement account options for high-earning physicians

Employer-Sponsored Retirement Plans

403(b) Plans

403(b) plans are offered at many non-profit medical organizations, like our local Berkshire Health Systems. The annual contribution limit is $23,500 (as of 2025) of pre-tax income, not including your company match. If you’re over 50, you can make additional catch-up contributions of $7,500/year. Your 403(b) functions just like a 401(k) would at a for-profit company. The money you and your employer add are held in trust for you to withdraw in the future. 403(b) plans are subject to an early withdrawal penalty (with some exceptions) for distributions made before age 59.5, which factors into income planning decisions for doctors hoping for early retirement.

401(k) Plans

If you’re working in a for-profit office, your employer may offer a 401(k). The annual contribution limit is $23,500 (as of 2025) of pre-tax income, not including your company match. If you’re over 50, you can make additional catch-up contributions of $7,500/year.

The money you and your employer add are held in trust for you to withdraw in the future. 401(k) plans are subject to an early withdrawal penalty (with some exceptions) for distributions made before age 59.5, which factors into income planning decisions for those envisioning an early retirement.

Non-Government 457(b) Plans

This program for high earners at non-profit organizations allows additional tax-deferred savings beyond your 403(b), but with a key risk—these funds technically belong to the employer until they’re withdrawn. If the hospital faces financial trouble, this money could be at risk. (On the other hand, if your assets are ever at risk of seizure, these funds are completely off the table). You should carefully evaluate your employer’s financial stability and withdrawal options before overcommitting to a 457(b) plan.

Your 457(b) doesn’t have the same early withdrawal penalties as your 403(b), 401(k) or IRA. Once you leave your job, you are free to make distributions from your 457(b) penalty-free – but keep in mind that income will still be subject to income tax and some plans require a full distribution when you separate from service.

If you are eligible for a 457(b) plan, you may contribute $23,500 each year in addition to the $23,500 you can contribute to your 403(b). If you’re over 50, you may add another $7,500 in catch-up contributions to your 457 plan annually.

Increased contribution limits under SECURE 2.0

Under the SECURE 2.0 act, pre-retirees ages 60 to 63 may be eligible for even larger catch-up contributions starting in 2025. If you meet the criteria, you may be able to increase your catch-up contributions to your 401(k), 403(b), and 457(b) from $7,500 to $11,250.

Additional Retirement Savings Options for Physicians

Individual Retirement Arrangement (IRA)

In addition to your 403(b) or 401(k) and 457(b), you can also set up your own traditional or Roth IRA with a bank or other financial institution. Like your other employer-sponsored options, IRAs impose early withdrawal penalties for distributions made before age 59.5.

IRAs have different rules for tax deductions and withdrawals and have a smaller contribution limit than most employer-sponsored options. In 2025, the total contribution limit for IRA accounts was $7,000 (or $8,000 if you’re age 50 or older).

Backdoor Roth IRA

This tool allows high earners to contribute to a Roth IRA via a non-deductible traditional IRA conversion, but I would be careful with this option since it can be complex and isn’t the right choice for everyone. Talk to a trusted financial advisor and a good tax professional to make sure this option makes sense for you.

Solo 401(k) or SEP IRA

Solo 401(k) and SEP IRA accounts are ideal for doctors with 1099 income from consulting or private practice work. These plans allow you to defer as much as $69,000 in compensation, depending on whether you meet all the requirements, making these valuable retirement savings tools for self-employed practitioners.

The new doctor’s dilemma: paying off student loans vs. investing

If you graduate medical school with the average $243,000 of student debt, your monthly loan payments may be north of $2,000, leaving you struggling to decide whether to pay down debt or invest in your future. In my opinion, you should always contribute enough to your employer-sponsored retirement account to get your employer’s maximum match and avoid leaving free money on the table. For example, locally, Berkshire Health Systems will provide a match of up to 4.5% of your salary when you contribute 4% – a guaranteed 112% return (compare that to the interest rate on your student loans and you’ll see why you should be paying yourself first!).

After making your employer’s retirement match, focus on the following steps:

• Prioritize paying off high-interest student loans (10%+).
• Balance investing with loan repayment for mid-range interest rates (4-6%).
• Consider the future impact of Public Service Loan Forgiveness if working at a qualifying non-profit hospital – if you’ll qualify for forgiveness, it doesn’t make sense to aggressively pay off your federal loans.

Common Financial Mistakes Doctors Make

Not Having Enough (or the Right) Insurance

Many physicians are the sole earners in their families, making life and disability insurance critical. The biggest insurance mistakes I see doctors make are:

Not having enough insurance coverage.

Buying enough insurance coverage is vital for doctors and other high-earning professionals because your potential earnings between now and retirement are in the millions. If you’re gone, all of that potential wealth is gone, too, greatly reducing your family’s quality of life. I’m sure that’s not the position you want to put them in.

Choosing the wrong type of life insurance.

Many doctors are sold expensive permanent life insurance policies that cost thousands per month when a simple term policy could provide millions in coverage for a fraction of the cost. You’ll want

to consider the pros and cons here – term life insurance eventually expires, potentially leaving you without coverage when you’re in your later years, but permanent life insurance is expensive (and definitely not the “investment” salespeople will try to tell you it is).

Not having adequate disability insurance.

Sometimes, injury or illness will disqualify someone from their profession while still leaving them able to work. For example, an orthopedic surgeon may lose their ability to perform surgery and be forced into a different role for significantly less pay. Without the right disability coverage, this can be financially devastating for your family.

Saving Only in Retirement Accounts

Many doctors focus all their savings in 401(k)s, 403(b)s, or 457(b)s—but this can limit your flexibility. Retirement accounts have restrictions on when money can be withdrawn, and you may need access to funds before traditional retirement age. Saving in non-retirement accounts (such as a brokerage account) allows for greater financial flexibility. And of course, you need to make sure you have a hefty cash cushion available in case of emergency.

Underestimating Taxes in Retirement

If all of your retirement savings are in pre-tax accounts, you may face a significant tax burden when you start withdrawing your money. A $2 million 401(k) balance isn’t really $2 million because every dollar withdrawn is taxed as income. I recommend doctors and other high-earning professionals consider a mix of pre-tax, Roth, and taxable savings to allow them to manage taxes effectively in retirement.

Overleveraging Themselves with Lifestyle Inflation

As I mentioned above, while doctors make a lot more money than most, they frequently find themselves overleveraged.

How can you tell if you’re overspending?

• you feel like you’re living paycheck to paycheck despite a high income
• you’re relying on bonuses to cover basic expenses
• you don’t have enough left over to save beyond your retirement accounts

You don’t want to reach a point in your career where you’re ready to cut back on work but can’t because your expenses are too high and you don’t have enough saved. Keeping lifestyle inflation in check early on creates priceless financial flexibility later.

Your action plan: taking steps toward a confident retirement

Step 1: Assess your financial health

Know your debts, savings, and monthly cash flow to see where you stand.

Step 2: Outline your short- and long-term goals

The delay of your peak earnings years may have put goals like homeownership and starting a family on a collision course with retirement savings. Identify what matters most to you today and in retirement and consider what you need to do to achieve each goal.

Step 3: Build a retirement roadmap

For this step, I recommend you work with a CERTIFIED FINANCIAL PLANNER® professional (like myself) to create a tailored plan for achieving your goals and adjust it regularly.

Step 4: Use professional resources

As a physician, you’re busy. Partnering with financial advisors, accountants, and estate planning attorneys ensures you’re making informed, strategic decisions to protect and grow your wealth.

Secure Your Future: Physician Retirement Planning Made Simple

Planning for retirement as a doctor isn’t just about hitting a number—it’s about creating financial freedom so you can work because you want to, not because you have to. At Berkshire Money Management, we specialize in physician retirement planning, helping doctors like you maximize 401(k), 403(b), and 457(b) plans, invest tax-efficiently, and create a secure future.

Schedule your free 15-minute consultation to get started!