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Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
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Making the transition from medical training to your first attending position is a huge milestone. It’s also a time when big financial decisions come into play. From contracts and bonuses to insurance and retirement accounts, there are key considerations every new attending needs to keep in mind. You’ve put in years of hard work and training—don’t let avoidable financial missteps cloud this exciting time.
Whether you’re about to sign your first contract or already have an offer on the table, here are essential financial tips to keep you on track.
Your first attending contract sets the tone for your entire career. It’s critical to get this right and not just “go with the flow” because an employer says “it’s a standard contract.” There’s no such thing as a “cookie-cutter” contract, and every detail is negotiable to some degree. That said, hire a contract attorney. Yes, it’ll cost you anywhere from a couple of hundred to a couple of thousand dollars, but the value you get back is huge.
An attorney who specializes in physician contracts knows what to look for and will help you navigate the legal jargon. They’ll uncover things you wouldn’t have thought to negotiate. They’ll also ensure you don’t sign something that restricts your future options—like a terrible non-compete clause or an absurd intellectual property agreement. Think of this as an investment in yourself and your future earnings.
Remember, this isn’t just about your base salary. The contract will include things like bonuses, benefits, retirement contributions, insurance coverage, and more. It’s easy to be tempted by a big paycheck, but make sure you're looking at the whole package.
Bonuses can be tricky, and that “free” money has strings attached. You might be offered a signing bonus, a student loan payment bonus, or even a relocation bonus. While these offers are great, don’t let the excitement take over. Pay attention to how the bonus will be delivered and taxed. Most bonuses are taxable and can artificially propel you into a higher tax bracket if you’re not careful.
Some employers pay these bonuses as 1099 income, which means no taxes are withheld up front. In that case, you’ll need to set aside around 40% of your bonus to cover the taxes yourself. If you get a $50,000 signing bonus and forget about taxes, it could leave you scrambling to pay a huge tax bill later.
Be sure to thoroughly read up on the terms for these bonuses. Is the bonus fully vested right away, or will you have to stay with your employer a certain number of years to keep the full amount? If you leave early, you might have to pay part of it back. Always understand how long you need to stay to earn that money for good.
Another critical item in your contract is tail insurance. Tail insurance covers you for malpractice claims that come after you’ve left a job. For instance, if you leave a practice where you treated a patient during that time and they later file a claim, tail insurance ensures you’re still protected.
This is especially important for certain specialties like OB/GYN, where liability can extend for years (as long as the child is a minor). Tail insurance can be expensive, sometimes costing tens of thousands. So, make sure your contract clearly states whether your employer will cover it. If they won’t, you need to budget for this cost or negotiate it into your contract.
While salary is important, don’t get tunnel-vision. Your benefits package could be worth more than you think. Look at the full list of benefits before you sign anything.
Do they offer disability insurance? Life insurance? How about a 401(k) or a 403(b) with a company match? Does the institution have a 457(b) as well? You might be surprised how much adding a good retirement contribution match—along with strong insurance benefits—can sweeten the deal.
When deciding between two job offers, the overall benefits package can tip the scales in favor of one organization, even if the headline salary is lower. Compare apples to apples by factoring in all the extras like contributions to retirement accounts, insurance premiums, and continuing education reimbursements.
This one might seem minor or not even cross your mind if you’re focused purely on clinical work, but be aware of the intellectual property clause in the contract. If you’re planning to conduct research, develop a product, or contribute to any invention that’s remotely related to your specialty, make sure that your employer doesn’t automatically own everything you create.
In some cases, contracts may sneak in clauses that say any work related to your field, even if done outside of the clinic or hospital, belongs to your employer. If intellectual property matters to you, and you’re working on something on the side, have this clause reviewed and negotiated.
Non-compete clauses can affect your career mobility. These clauses dictate how far away you must practice if you leave your current job, and they can cover huge geographic distances if you’re not careful. Make sure you understand the non-compete restrictions.
Additionally, pin down details about call responsibilities—how often you’ll be on call, for how long, and what compensation looks like during those periods. Call schedules can directly impact your work-life balance, so make sure the terms are clear.
As you're transitioning into your new role with a higher salary, it’s essential to rethink how you contribute to retirement accounts like a Roth IRA. If you’re still contributing the standard way, you may end up over the income limit, which could lead to complications with taxes. Instead of making direct Roth IRA contributions, use the backdoor Roth IRA strategy if your income for the year will exceed the limits.
You can still put away the same amount of money but without the issues that come from income limits. This is one area where speaking with a financial planner is a good idea. You’ll want to ensure you're handling this properly, especially if your 2023 income falls in two drastically different categories—half resident, half attending.
Lastly, even though your income has spiked, don’t put off retirement savings. You’ve been working hard for years, and while it’s tempting to treat yourself to something nice with your bigger paycheck, saving for retirement needs to be a top priority.
Set aside contributions to your 403(b), 457(b), or 401(k) as soon as you start your attending job. Make these contributions automatic so you don’t even have to think about it. If you can max out your retirement contributions, it will set you off on the right foot financially. Remember, the compounding benefits of early investing are huge.
Transitioning from residency or fellowship to your first attending position is exciting, but don’t let the excitement cloud your judgment. Take time to understand your contract, negotiate key terms, and set yourself up for long-term financial success. Hiring a contract attorney and financial advisor can provide peace of mind and ensure you’re making informed decisions from the very start.
This is your career, your financial well-being, and your future—it’s worth the time and consideration to do it right.
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
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