Vol.:(0123456789)
Head and Neck Pathology (2024) 18:30
https://doi.org/10.1007/s12105-024-01640-7
COMMENT
Seven Steps toFinancial Health
LesterD.R.Thompson
1
· PamelaA.Thompson
1
Received: 28 February 2024 / Accepted: 18 March 2024
This is a U.S. Government work and not under copyright protection in the US; foreign copyright protection may apply 2024
Abstract
Physicians and dentists have a very limited exposure to personal financial management and yet find themselves in the top
10% of earners in the United States of America. Education loans, practice expenses, and high standards of living obligate
them to be good financial stewards to succeed financially. Anecdotal personal experience and review. The article establishes
seven steps to implement as medical/dental students, interns, residents, or practicing doctors to move towards financial
health and security. The steps include (1) saving enough; (2) good debt management; (3) being tax savvy; (4) obtaining the
correct insurance; (5) making wise investments; (6) if choosing to marry, avoid divorce; and (7) keeping track with periodic
progress assessment. Each of these steps contains several components that can aid and guide physicians and dentists in their
financial arc of development over their professional career and into retirement, considering generational wealth transfer or
charitable donation as ultimate goals. This brief guide is based on my own financial journey to achieve long-term financial
independence: start early, use simple tax deferred investments without chasing trends while keeping fees down, live within
your means, and adequately insure your income.
Keywords Retirement· Goals· Students· Medical· Financial management· Physicians· Dentists· Marriage
Introduction
I enjoy watching movies and often get insights out of them
that are not always intended or obvious. To this end I would
like to suggest seven movies to illustrate seven steps to
achieve financial health and security (movie source informa-
tion: internet movie databaseimdb.com, accessed Decem-
ber 2023). This “Wolf of Pathology” (homage to The Wolf
of Wall Street) hopes you can learn from my mistakes and
experiences to move closer to your own financial independ-
ence. Personal financial education is vanishingly rare in
medicine [1], but is a critical element required for financial
success.
Materials andMethods
This “Beyond the Scope” collection for theHead and Neck
Pathology journalis a series of manuscripts designed to
encompass topics not usually published in healthcare jour-
nals, and are subjects that need to be more thoroughly under-
stood. Anecdotal evidence from my personal experience as
a practicing pathologist over the past several decades is the
basis for this educational effort (something that is seldom
given in medical school, residency or fellowship [2, 3]).
I operated several investment clubs over the years, while
obtaining my undergraduate bachelors of science degree
in business administration with a finance emphasis (while
doing all pre-med requirements). I took an interest in work-
place financial literacy while serving 20years in the United
States Navy, seeing how much assistance I was able to give
to fellow enlisted and officers who generally had only limited
financial knowledge but were a common target of members
of the financial community. I served on the Retirement Com-
mittee of Southern California Permanente Medical Group
for 15yearsas a fiduciary for investment selection, over-
sight, and strategy for more than $7 billion in assets, giv-
ing me the unique opportunity to observe more than 10,000
physician participants’ financial behaviors and practices.
* Lester D. R. Thompson
1
Head andNeck Pathology Consultations, 22543 Ventura
Blvd, Ste 220 PMB1034, WoodlandHills, CA91364, USA
Head and Neck Pathology (2024) 18:30 30 Page 2 of 15
Financial success is achieved with the power of a dynamic
marriage relationship—as I am happy to have experienced.
My coauthor and wife (disclosure: the authors are married),
has walked every step of this financial journey, using her
unique financial background and computer skills to aid in
our success. She created many of the graphics and helped
to make this a more well-rounded financial aid. Review of
pertinent literature was undertaken along with general web-
based searches to augment the information provided herein.
These principles apply equally to physicians (medical
doctors), doctors of osteopathy, dentists, veterinarians, phar-
macists, optometrists, podiatrists, chiropractors, psycholo-
gists, social workers, therapists, and others with advanced
degrees in the allied health care fields. No one term ade-
quately covers this group, and so my choice of “physician/
dentist” throughout is used as a shorthand for all these fields.
In full disclosure the following disclaimer is offered: I am
not a certified financial planner. I am giving you anecdotal
experience from my own life. Past performance is no predic-
tor of future outcome. I am not giving financial advice but
simply providing education.
Key Considerations
Save Enough
The Pursuit of Happyness is a movie about a person who has
a dream and doesn’t let anybody stop his pursuit of it. The
dream of financial security is one most people aspire to, and
physicians and dentists are no exception. Doctors generally
earn a good income, but many do not know how to save, or
more importantly, grow the money. We are accustomed to
delayed gratification, where we have put off our own enjoy-
ment and needs in pursuit of our dreams. As a group, we put
in extra hours of study in high school, volunteered within our
communities, and joined clubs to improve college opportu-
nities rather than laying out by the pool or hanging out at
the mall. In college, we did all the extra credit assignments,
worked multiple jobs, joined academic and social clubs
ortook advanced classes to enhance our application to medi-
cal/dental schools—rather than taking vacations or watching
the latest movies. During medical/dental school, we worked
up yet another patient, did scut work for the chief resident,
and volunteered at clinics, in the hope of matching into a
first-choice residency—instead of keeping up with the latest
soap operas, reading novels, or indulging in a hobby. Dur-
ing residency, we stayed late, did extra cases, volunteered
for research projects, worked on presentations, and covered
call just so we would get a good fellowship. We have delayed
our gratification for so long that when we finally start earn-
ing a big paycheck, we devolve into frivolous spending and
waste money. Importantly, physicians/dentists generally have
had to wait to start saving for their future, only beginning
to earn a real income 7–10years later than contemporar-
ies who did not go through graduate education, residency
and/or fellowship(s). We have less time to accumulate and
compound assets.
Physicians/dentists need to save more than their peers,
because as earnings increase, so does the tendency to enjoy
a higher standard of living with associated higher expenses
[4]. Planning is THÉ single most important step to achieving
a financial goal since, let’s face it, if you don’t have a goal,
you won’t achieve it. Physicians/dentists are usually excel-
lent at setting goals, so set up a plan of saving that takes
into consideration compound interest. Interest you earn on
your investment should also earn interest. Imagine you have
two magic pennies that double every day. How much would
you have at the end of just one month? $21,474,836.48!
While this is an extreme example of compound interest, it
underscores that with time the interest you earn on interest
becomes larger than the amount originally invested. But it
also means that for every decade you delay saving, it requires
proportionately more to get the same result: At 6% annual
rate of return for 30years, a 35-year-old saving $1000 a
month will have just under $1 million at age 65years, while
a 55-year-old would have to save $6,100 a month to yield
about the same amount.
The single best place to invest is any plan where your
employer matches your contribution. In essence you are
receiving free money [5]. Depending on the account type,
contributions may be tax-deductible, all grow tax-deferred,
and then may be tax-free or taxed at your rate based on
retirement income (Fig.1)—but tax-deferred growth is
optimal as Fig.2 shows the amount of money accumulated
with tax-deferral is far greater over plans where taxes are
due annually. There are many tax-deferred plans: health sav-
ings account (HSAs), individual retirement accounts (IRAs),
Roth IRAs (tax-free), SIMPLE IRAs, SEP IRAs, single K,
Roth 401(k) (tax free), 529 plans (college savings), non-
qualified annuities, and deferred compensation (457 plans).
Conversions between account types can be made with
careful attention to the rules and limitations which change
annually. IRAs, 401(k), and Roth type accounts are nearly
always available to all and thus form the foundation of retire-
ment planning [2], recognizing more complex plans exist.
Defined benefit plans (traditional pension) are not commonly
offered but would be a major consideration when selecting
an employer if they offered one.
In retirement preparedness, it is important to recognize
and overcome the statistical fact that women do not partici-
pate as often, nor for the same duration, nor for the same
investment allocation. Women are more likely than men to
have no retirement savings at a statistically significant level,
and lag men when they do have savings: only 22% of women
have more than $100,000 saved compared to 30% of men
Head and Neck Pathology (2024) 18:30
Page 3 of 15 30
(census.gov/library/stories/2022/01/women-more-likely-
than-men-to-have-no-retirement-savings.html; accessed
01/2024). Interestingly, 64.9% of never-married men have
no retirement savings, while only 54.5% of never-married
women have no savings. The rate is even more significant for
a never-married individual who has multiple partner fertility
(children with more than one partner), where 81.7% have
no retirement savings (84.9% for women; 77.7% for men).
There are several contributing risk factors to consider
such as: time horizon (length of opportunity to save), infla-
tion rates, withdrawals, asset allocation, marital status, and
healthcare costs. Erosion of spending power by inflation
(Fig.3)is significant over the long run despite being his-
torically steady around 3%, as well as being affectedby
“shrinkflation,” where the actual size or quantity of the item
in standard packaging is reduced while the price remains the
same. You will be paying more for less.
There are also generational differences, where priorities
are different and unique to each generation at different points
in their life cycle. Health care costs are significant and rise
during retirement when illness is more prevalent. A 65-year-
old couple will need about $315,000 for medical expenses
during retirement—in today’s dollars(newsroom.fidelity.
com/pressreleases; accessed 01/2024). Costs for long-term
Fig. 1 Adiagrammatic repre-
sentation of general groups of
savings accounts and tax pref-
erenced treatment of contribu-
tions, growth, and distributions
Fig. 2 The graph shows the difference between the amount of money
accumulated over a 30-year time horizon invested in tax-deferred
(green) versus taxable (red) vehicles based on $23,000 invested per
year with a 6% return using a 25% federal income tax bracket. The
$23,000 was selected as it is the 401(k) general limit in 2024, not
considering catch-up contributions that are possible starting at age
50. Further, an average 25% Federal marginal tax rate was applied,
recognizing tax efficient allocation, where bond interest and unquali-
fied dividends would have higher marginal Federal tax rates than
would qualified dividends and long-term capital gains
Head and Neck Pathology (2024) 18:30 30 Page 4 of 15
care coverage vary significantly by geographic location but
can be reduced with long-term care insurance.
I have found a few numbers as useful guides in planning
for retirement, so when you run scenarios or calculations you
can compare between options in a meaningful way as you
Pursue Your Own Happiness:
•
95: Plan to live to this age in retirement
•
80: Percent of pre-retirement income you will need in
retirement
•
6 : Percent average annual rate of return for investments
•
3 : Percent maximum withdrawal from savings per year
during retirement
•
3 : Percent annual inflation rate
Good Debt Management
Margin Call is a movie about investment bankers who have
over-leveraged their bank at the beginning of the 2008 finan-
cial crisis, facing an intense 24hours with incredible losses.
It is obviously about debt and its management. Physicians/
dentists are often encumbered with significant debt, with
college and medical school loans added to the more typical
financial obligations incurred throughout life. Average medi-
cal school debt is $202,453, butthat individual’s total stu-
dent debt is $250,995 (educationdata.org/average-medical-
school-debt#; accessed 01/2024), with about three quarters
of doctors burdened with education debt, an average of 6
times the average college graduate [6].
Add on practice costs (overhead, employees, equipment,
rent, compliant computer/medical records systems), a mort-
gage on your primary residence, car loans, and consumer
credit card debt balances. This volume of debt leads to loan
interest costs substantially different from other professions or
consumers [7]. Census data shows those with no high school
diploma have a median total secured debt of $27,000, while
those with a graduate/professional degree have $197,000.
Those in the lowest quintile of annual household income
have a total median debt of $32,000 while those in the high-
est quintile have $240,000. Millennials have a median home
debt of $200,000, while Baby Boomers have $116,000 (cen-
sus.gov/data/tables/2021/demo/wealth/wealth-asset-owner-
ship.html; accessed 01/2024). All this supports the notion:
the more you earn, the more debt you are likely to incur.
Understanding and learning how to not be overwhelmed by
debt is critical.
Average physician salaries are $251,000 for primary care
and $351,000 for specialists (physiciansthrive.com/physi-
cian-compensation/report/; accessed 01/2024), with patholo-
gists earning $305,100 (salary.com; accessed 01/2024). The
cost of living in a geographic area (the real estate adage of
“location, location, location” is true), the type of car to buy
or lease, various lifestyle choices, etc., all affect debt totals,
but education debt is particularly unique and significant for
physicians and dentists [8]. Statistically, there is more than
$1.76 trillion in school debt owed by 45 million people,
with 92% of debt owned by the United States Department
of Education; women have more debt than men; 4.8 million
borrowers are in default while 25.6 million are in forbear-
ance and only 400,000 in repayment (nerdwallet.com/article/
loans/student-loans/student-loan-debt#average-student-loan-
debt; access 01/2024). The rules about medical school debt
change frequently but several factors are significant: how
much the loans are; is the interest rate fixed or variable;
if the interest rate is variable, is it linked to prime; what
are the terms of repayment; are there prepayment penalties;
is federal or private loan consolidation better; can part of
the loan be forgiven; does interest accrue during residency?
Fig. 3 The buying power of US
$100 based on inflation from
1900 to 2020, with major events
that may have contributed to
inflationary pressures. The red
shaded areas represent reces-
sions in the economy
Head and Neck Pathology (2024) 18:30
Page 5 of 15 30
Unless emotions prompt you to repay a loan early (i.e.,
wanting to be debt free; not sleeping well because of high
debt load; anxiety about making payments), it is mathemati-
cally better to keep a low interest fixed rate, 30-year loan. If
your loan interest is < 4%, average inflation is 3% and your
marginal income tax rate is about 35%, it is best to pay the
loan over the full 30year term, recognizing you are paying
with money reduced as inflation erodes buying power (hel-
lowallet.com/student-loans-calculator; accessed 01/2024).
Instead, pay off higher interest rate debts and, after that,
invest in safe but higher-rate earning opportunities. Note that
deferral of interest or principal payments during residency/
fellowship versus paying interest only during this period
may change this calculation. Repayment options (standard,
graduated, extended or income sensitive) alter payments.
Critically, though, payments must be made correctly and are
best achieved through automatic bank draft. If a payment is
late, you may lose privileges and then are severely limited
in future options, so make certain there are sufficient funds
in the account to meet draft amounts.
Loan consolidation can often simplify repayment, low-
ering monthly payments by increasing the loan repayment
time length which can decrease the risk of default, but this
is only advantageous if the interest rate is favorable, since
the lengthened repayment period might increase the overall
interest paid. Importantly, if consolidating personal debts
with a spouse, you are jointly and severally liable for the
new loan.
Loan forgiveness programs may be available from fed-
eral or state backed programs (such as National Institutes
of Health; National Health Service Corps Loan Repayment
Program; and Association of American Medical Colleges)
that offer partial to full forgiveness for choosing certain
careers, geographic locations, military service, and even
volunteer work.
Because change is inevitable, be prepared to cope with
a financial crisis. Marriage, raising children, changing
jobs, purchasing a house, divorce, disability and even death
greatly impacts your financial goals. Having an emergency
fund (generally 3–6months’ worth of total living expenses)
in an immediately available form (i.e., saving/checking
account) that doesn’t incur penalties for withdrawal is highly
recommended.
Part of good debt management involves budgeting. Estab-
lish goals, identify income and outflows. Specify anticipated
expenses that can be changed and prioritize desired but less
significant expenses [6]. There are many online free budget-
ing services (GoodBudget.com; EveryDollar.com; Person-
alCapital.com; and Simplifi.com, as just some examples).
Using the 50–20-30 quick budget guide (Fig.4) helps estab-
lish an easy pathway to money management. Importantly for
physicians/dentists, the debt ratio 28/36 rule (total housing
costs not to exceed 28% of gross income and total household
debt not to exceed 36%) will be difficult to achieve given the
high burden of education debt, recognizing these ratios are
agnostic of where you live and your individual circumstance.
To this end, it may be difficult to qualify for a traditional
mortgage if you have high student debt combined with lim-
ited to absent savings. Medical professional mortgage loans
(for MD, DDS, DVM, DPM, DMD) are a unique opportu-
nity as they have more lenient qualifications and underwrit-
ing standards, take future earnings into consideration, reduce
the down-payment percentage, and often spread repayment
over a shorter time, with fixed-rate or adjustable-rate terms
indexed to your credit score.
Fig. 4 A general budget guide
using the 50-20-30 principle,
identifying essentials, lifestyle
choices, and savings
Head and Neck Pathology (2024) 18:30 30 Page 6 of 15
Avoid common credit mistakes of overspending, hold-
ing too many credit cards, making only minimum payments,
carrying a permanent balance, assuming introductory low
interest rates stay the same, using them for extra cash, paying
a higher interest rate than necessary, paying off the wrong
credit cards first, and ignoring extra fees or penalties. Before
buying anything on credit ask yourself (a) what is the cost
of this credit; (b) what is the risk of the credit; (c) what is
the obligation incurred. Shop around for a credit card with
the best terms: no annual fee; a low annual percentage rate;
and possibly a rewards program. Pay statements on time,
don’t use the credit card’s full limit, track your purchases,
and pay off as much as possible every month. Several strate-
gies (debt avalanche versus snowball methods) can be used,
prioritizing interest rate versus balance, each with their own
intrinsic psychological benefits. Knowing your credit score
also affects overall debt and credit management. There are
many companies that evaluate your credit risk (Equifax,
TransUnion, Experian are the largest) and the FICO score
developed by Fair Isaac Corporation is one of the most
common credit scoring companies (Fig.5). The average
score is 678, with several factors going into the determina-
tion. Obtain a free report from each company each year via
annualcreditreport.com, checking for mistakes or fraudulent
activity. Many financial services companies will give you
your actual score for free if you have an account with them.
Since this score is used to determine credit risk, it impacts
not only your ability to get loans but also your interest rate.
Remember, compound interest on loans is just as significant
as it is with savings. You never want to experience your own
Margin Call.
Be Tax Savvy
The Shawshank Redemption is a movie wherein the lead
character gives advice to the prison guard captain about the
spousal gift tax exclusion, which sets in motion his ultimate
freedom. The United States tax code is amazingly complex
and annual legislative changes usually make it even more
labyrinthian. To see where your federal income tax payments
go (Fig.6) and how much debt the country incurs every
second is somewhat mind blowing (usdebtclock.org). High
income earners are affected by taxes, even taking shelters
and beneficial regulations into consideration. Specifically,
the top 10% of income earners paid 73.7% of all federal
income taxes while receiving 49.5% of all reported earned
income, paying an average tax rate of 20.3%. This equates to
6.5 times the average rate of the bottom 50% of income earn-
ers. This top 10% is defined by households earning a median
income of $152,321, while top 5% earners are defined at
$220,521, clearly encompassing all physicians as a group
(taxfoundation.org/data/all/federal/summary-latest-federal-
income-tax-data-2023-update; accessed 01/2024). The way
the majority of the rich get rich is based on hard work, edu-
cation, smart investing, risk taking, and frugality—though
luck, entrepreneurship, and inheritance may also contribute
(bloomberg.com/news/articles/2013-04-22/how-did-the-
worlds-rich-get-that-way-luck; accessed 01/2024). Physi-
cians/dentists are very accustomed to hard work, education,
risk taking, and frugality, so are well suited to enter this
status.
The marginal top tax rates change frequently, influenced
by economic factors, political scenarios, and public policy
(Fig.7). Legitimate tax shelters allow for reduced taxes.
Tax deferred plans (IRAs, SEPs, Keogh, 401(k), 529, 457,
and HSAs) are augmented by tax efficient investments like
municipal bonds and tax-free investments. There are also
differences between tax-advantaged plans when considering
a Roth IRA (taxes are paid before the money is invested, but
the distribution is not taxed) versus a traditional IRA (poten-
tially pre-tax contribution but distributions are taxed). In
general, investments with the highest taxes (bonds, REITs)
should be held in tax-deferred accounts, while investments
with the best capital appreciation (stocks) should be in
held in taxable accounts. Donor-advised funds (charitable
investment accounts created for the purpose of supporting
charitable organizations) create the opportunity to donate
appreciated assets with an immediate tax deduction for you.
The fund grows tax-free and you decide which charitable
organizations are granted amounts from it.
During your professional career, saving for college
through 529 plans should be considered. While each state
has its own maximum contribution limits, these plans allow
tax-deferred accumulation and qualifying distributions are
tax free when used for education and/or training. Ownership
Fig. 5 There are several different ways of assessing credit risk, with
the FICO® score one of the most popular. The inner circle indicates
the factors and their weighting in calculating the overall score, while
the outer sunburst demonstrate the major score brackets and what per-
centage of people fall within that category
Head and Neck Pathology (2024) 18:30
Page 7 of 15 30
and beneficiaries can be changed as circumstances develop.
Funds can even be used for private grade school and high
school expenses, with certain amounts of unused funds
even potentially rolled over into a Roth IRA (tax- and
penalty-free).
Estimated tax payments made quarterly for federal (and
state) income taxes are usually required as physicians/den-
tists are seldom “employees” (eftps.com is the free Elec-
tronic Federal Tax Payment System [EFTPS] offered by the
U.S. Department of the Treasury). Given the complexity, it
is imperative to work with a tax advisor and preparer who
understands health care industry deductions and your tax
bracket to best optimize taxes paid without leaving money
on the table. Tax preparation software is available, although,
depending on your circumstances, may be challenging and
tedious to complete. Generally, use a tax preparer that
charges a flat fee rather than by the form, and above all else,
do not complete your tax returns manually. The margin for
error is high and far more costly than the tax preparer’s fee
or a software program. My most recent federal tax return
had 17 forms and countless supporting documents. Even
though I did a year as a general surgery resident, I would not
Fig. 6 A diagrammatic representation of how United States Federal
income tax is spent (in percentages) for the most recent year available
(although generally only fractionally different year to year). Major
categories (Medicare, social security, and military) dwarf spending
on education, energy and science
Fig. 7 The various top marginal
United States income tax rate
from 1915 to the present. The
number indicates the top rate
that year. The horizontal axis
only lists the year in which a tax
change was implemented
Head and Neck Pathology (2024) 18:30 30 Page 8 of 15
perform surgery today. Likewise, I would not try to complete
a tax return that a certified public accountant took years of
training and ongoing educational classes to be licensed and
accredited to do. As part of Shawshank means “shelter”,
allow yourself a legal tax shelter.
Appropriate Insurance
Double Indemnity is a film about an insurance salesman
who falls in love with a client’s wife. They plan her hus-
band’s murder to look like an accident on a train—which
pays double.
Insurance provides a safety net for a price. This is
achieved through risk management where a company iden-
tifies, analyzes, quantifies, and prioritizes risk that can be
spread out across other clients with similar underwriting
characteristics, with payment if a loss occurs. There are
dozens of insurance categories, but life, health, disability,
property, auto, personal liability, excess liability (umbrella),
professional liability (malpractice), and homeowner’s insur-
ances are several of the most common generally purchased
by physicians/dentists [6]. A few will be briefly covered,
recognizing several books and websites on the topics may be
of further interest (educba.com/insurance-books; accessed
01/2024).
Life insurance (really death insurance, but who wants to
call it that) comes in two basic types: term (pure protection)
and cash-value (whole life). Generally, term insurance is
the best value. The benefit amount to purchase generally
depends on many factors (number of dependents, funding
requirements, special-needs dependents, mortgage or debt
structure, lifetime income needs of surviving beneficiary)
and, in general, is dependent on the insured age at the time.
Typically, those between 20 and 39years of age would insure
for 8–14 times their annual income, while those between 40
and 60 would insure for 4–10 times annual income. Those
above 60years, would consider the above factors. Shop
around for the best premiums with the most reputable com-
pany that has been in business for long enough to be a reli-
able payee. The younger your age at the time of purchase, the
lower the premium. Purchasing a level-payment plan guar-
antees the same monthly payment for the life of the policy.
It is important to name beneficiaries, including alternate or
contingency beneficiaries and immediately update if your
situation changes (birth/adoption of a child, divorce, death).
Entities such as retirement accounts, trusts, and charitable
organizations can also be named as beneficiaries. There are
significant issues with naming a minor, so consider ramifica-
tions carefully.
Umbrella insurance (excess personal liability) is cov-
erage beyond the liability limits on existing policies. It is
important for physicians/dentists as you are more vulnerable
to lawsuits for a host of reasons and, generally, have more
valuable assets to lose. Nationally, nearly 1 in every 6 jury
awards for personal negligence tallied more than a mil-
lion dollars, with an average of $1,814,094, although with
a median of $114,305 (lawsuit-information-center.com;
accessed 01/2024). You need to have sufficient personal
liability coverage that expands beyond usual policy limits of
other policy types. Defense costs are usually covered as part
of the premium. Generally, it is obtained from the same com-
pany as your homeowner or auto insurance policy, where
it is often between $600–900/year for a $3 million policy.
Professional liability coverage (malpractice) is manda-
tory for medical errors of commission or omission. Typi-
cally, the group you work for will provide it as a benefit as
there are rate reductions for groups. However, it is critical to
understand that professional liability coverage will not cover
criminal acts. Assault, aggravated assault, battery, sexual
crimes (rape, attempted rape, unwanted/non-consensual sex-
ual contact), driving while intoxicated (from either alcohol
and/or drugs), forgery, counterfeiting, fraud, theft, burglary,
larceny, or arson are just a few noncovered acts. Therefore,
if a patient accuses you of battery during a physical exam
or procedure (such as fine needle aspiration), it is quite pos-
sible the lawsuit would not be covered and you would have
to cover the cost of defending such an accusation.
Disability insurance is an exceptionally challenging cov-
erage to understand and compare, with more fine print than
any other insurance type (Fig.8). Disability insurance is
based on your medical subspecialty, your age, the benefit
period, the elimination period, how much you work, the
amount of income (the higher your earnings the higher the
premium), partial disability rider, future increase options,
and cost of living rates. Pay special attention to riders, exclu-
sions and specific clauses. It would be regrettable to dis-
cover options for additional coverage may have been avail-
able when it is too late to do anything about it. This is the
one time in your life when you must read every word of the
contract and understand it before you invest in it—and it is
an investment.
You are never too young to protect your income even
though you may think you are young and healthy and feel
any “disability” is way too far in the future to worry about
now when you already have so many expenses. In your early
career, 50% of disabilities are caused by accidents while over
the long term about 90% are caused by illness or disease. At
least one in four physicians become disabled at some point
in their career, with back disorders the most common reason.
If a policy is obtained when you are young and healthy, the
premium will be lower. Consider coverage through select
groups that allow you to lock in your premiums and the
policy goes with you if you change jobs. Generally, disabil-
ity insurance costs somewhere between 2 and 5% of gross
income, and payouts cannot be for an amount higher than
Head and Neck Pathology (2024) 18:30
Page 9 of 15 30
you actually earn. It is important to recognize elimination
periods (the longer the time between disability date and
the first payment, the lower the cost), critical to understand
clauses specific to your occupation, and to obtain insurance
from a large, reputable company that will be there when
claims are made. Get noncancelable, guaranteed coverage
that can still be modified by you. Finally, premiums for
women are about 60% higher than men for a whole host of
actuarial reasons that are not just based on genetic sex alone.
Do yourself a favor, seek out expert opinion before signing
up and read about it (e.g., money.com/best-disability-insur-
ance-for-physicians; accessed 01/2024) so you will receive
Triple Indemnity: security, payment, and peace of mind.
Wise Investments
Boiler Room is a ribald and foul-mouthed look at brokers
who cheat customers into buying worthless penny stocks
with unwitting investors losing big time, but ultimately
Fig. 8 Disability insurance is a complex selection process, with many
different factors highlighted that must be considered before making a
decision. Age, income, industry and occupation are the cornerstones
of cost determination, recognizing the types of disabilities experi-
enced and key factors to consider
Head and Neck Pathology (2024) 18:30 30 Page 10 of 15
the brokers do, too. If an investment sounds too good to be
true—then it probably isn’t legitimate, and you should pass.
As a high earner, everybody will try to sell you an invest-
ment idea, many times of the most exotic and convoluted
type—especially patients! Because they work for the com-
pany, they believe they are “helping you out” by giving you
private information. Not true. Stock analysts spend all day
scouring company data and frequently know more than even
the employees do. Don’t take any suggestions seriously.
The best performing stocks of the pastcentury include
Monster, Netflix, Tractor Supply, Equinix, and Intuitive Sur-
gical (markets.businessinsider.com/news/stocks/the-10-best-
performing-stocks-of-this-century-2019-6-1028264220;
accessed 01/2024), but to have known that at the time of ini-
tial investment is basically impossible. Choose investments
that are simple, easy to understand and to explain to others.
Diversification across many different types of assets and with
different financial risk levels is the most effective strategy.
Investments in medical ventures or companies are not always
the best when you work within the industry. If something
happens with the field of medicine (think artificial intel-
ligence), you are doubly affected. Diversification spreads
money across different investments to reduce your risk of
loss, dampening the effect of fluctuations without sacrific-
ing too much potential gain (Fig.9). United States Treasury
Bonds are one of the most stable investments, followed by
money market accounts, municipal bonds, preferred stock,
common stock, and real estate investment trusts. Precious
metals (e.g., gold), collectibles, futures contracts and crypto
currencies are considered the most speculative.
Asset allocation is one of the most significant contribu-
tors to portfolio performance (around 90%), even over indi-
vidual investment selection, investment location, periodic
rebalancing, or market timing. Your rate of return is based
on your risk tolerance, financial goals, time horizons, invest-
ment selection, expenses, and tax strategies (Fig.10).
It is never wise to try to time the market. Instead, utilize
dollar-cost averaging with systematic periodic investments
(every two weeks or every month). The potential to miss
either the best or the worst performing days when trying to
time the market is illustrated nicely by comparing total S&P
500 returns to someone who missed the best performing
days over a 20-year time horizon (Fig.11). It is interest-
ing that the Dow Jones Industrial Average had both its best
and worst point changes within a 3-week period in 2020.
Fear and greed drive the financial markets but if you stick to
your plan, long-term outcomes will be in your favor. Over a
20-year time horizon, average annual rate of returns of the
S&P 500 have never had a negative return (Fig.12). How-
ever, in the 42years leading up to 2022, the S&P 500 has
had intra-year declines in every year that average -14% and
yet, still yielded an average annualized return of about 14%
per year (source: FactSet, Standard & Poor’s, and J.P. Mor-
gan Asset Management). Portfolios work over time but not
every time. Be aware that choice overload leads to paralysis
by analysis. An index fund is based on owning all the hold-
ings in a particular index, giving you a similar return to the
index itself (net of fees). Target Date Retirement Funds (in
retirement accounts only) automatically rebalance and adjust
risk based on a predetermined age at retirement.
Fig. 9 This heat map shows the real investment returns for various classes of assets for that year, shown in 5-year intervals over the past 50years.
The data show that no asset class regularly outperforms any others, and thus a well-balanced portfolio yields the best long-term results
Head and Neck Pathology (2024) 18:30
Page 11 of 15 30
Fig. 10 The annual returns
(shown in 3-year intervals) of
stocks (represented by the S&P
500 index; red line), bonds (rep-
resented by a highly rated bond
index; blue line), and United
States Treasury bills from 1928
to 2023(green line). The erratic
(ventricular fibrillation-like)
pattern underscores return vari-
ations by year
Fig. 11 Time in the market is a
much more important long-term
consideration when evaluat-
ing returns than trying to time
the market. If you were out
of the market for the various
days listed, the % shows the
annualized return over the
20-year time horizon. The total
dollar value of the investment
of $500,000 is shown above the
respective column to show the
difference in final value
Fig. 12 This graphic dem-
onstrates the best and worst
percentage returns for stocks
over specified periods. The
illustrations shows that over
longer time horizons (15years
or more), US large capitaliza-
tion stocks have not had a nega-
tive return
Head and Neck Pathology (2024) 18:30 30 Page 12 of 15
Investment expenses (management, administrative, trans-
action, and distribution fees) should be examined, with funds
that are < 0.1% usually good choices, although funds focused
on small capitalization and international companies may
have higher fees on average.
A study published in the New England Journal of Medi-
cine noted that the more chocolate a society eats, the higher
the cognitive function and the more likely the country is
to produce Nobel laureates [9]. This article was mocking
false assumptions as it illustrated that context and under-
standing are critical to evaluating information. Seeking out a
knowledgeable advisor is one of the keys to a good financial
outcome. A great advisor will encourage you to save more,
save appropriately, stay engaged, and work towards a target.
Find one who follows the 80:20 rule—you talk 80% and
they talk 20%. Your advisor needs to truly understand you,
your goals and financial habits to keep you from making
stupid mistakes, to talk to you about things you don’t know
or didn’t consider. They should be a fiduciary to you, which
means your best interest is their goal, not racking up their
own fees. Know up front what your costs will be and get
it in writing. Generally, the more complex an investment
strategy, the worse it is for you. Boiler Plate simplicity in
investing is best.
One Marriage
It’s impossible to only consider one movie about marriage
or divorce, but The War of the Roses, Kramer vs. Kramer,
and Mrs. Doubtfire are several favorites that each highlight a
different aspect of relationships. Suffice it to say that amar-
riageor legal civil partnership is one of the most significant
financial decisions of your life—with divorce a close runner
up. It is said that love is grand, but divorce is a hundred
grand.
Lawyers have a divorce prevalence of about 26.9% while
physicians are around 24.3%, just below dentists at 25.2%
[10], but are, in general, lower than other groups of profes-
sionals [11, 12]. Notably, women physicians have a higher
divorce rate. A higher number of weekly hours worked were
only associated with an increased divorce prevalence for
female physicians and not male physicians [10]. The low-
est divorce rates are in family medicine, increased slightly
in pathology, higher still in internal medicine, then general
surgery, and the highest in psychiatrists [13, 14].
Crude divorce rates don’t tell the story meaningfully,
however, asthere is one divorce every 45seconds in the
United States with 4 divorces finalized in the time that
it takes to recite the wedding vows (census.gov/library/
stories/2023/07/marriage-divorce-rates.html; accessed
01/2024). Divorce is the end of a marriage “error”. Statisti-
cally, 66% of divorces are filed by women; 50% of children
in the US will see their parents’ divorce in their lifetime;
41% of first marriages end in divorce; the median first mar-
riage lasts 7years; you are more likely to get divorced if your
parents got divorced, you fight about money, one person
does all the chores, you met in a bar, and you got married
before age 25; you are less likely to get divorced if you are
religious, have a college degree, and watch romantic movies
together (grazianolaw.com/blog/divorce-statistics; accessed
01/2024). There are quite significant race and ethnicity dif-
ferences [15], suggesting cultural factors affect marriage and
divorce (Table1).
Starting over is a major financial hit. You have changes
to your housing, retirement accounts, future income
stream, and taxes. There will likely be alimony, child sup-
port, and the actual cost of a divorce: Divorce expenses for
Table 1 Various characteristics of divorce with negative and positive statistics
Source: forbes.com/advisor/legal/divorce/divorce-statistics
Negative Divorce Statistic Characteristic Positive Divorce Statistic
Maldives highest crude divorce rate (5.52) Country Sri Lanka lowest crude divorce rate (0.15)
Nevada: Highest divorce rate (4.2/1,000 marriages) USA State Massachusetts: Lowest divorce rate (1/1,000 marriages)
Lack of commitment: #1 reason Divorce Reasons Religious differences: Uncommon cause
Blacks: Highest divorce rate Ethnicity Asian Americans: Lowest divorce rate
Boomers: Highest divorce rate Generation Gen Z: Lowest divorce rate
60% are first marriages for both partners Marriage 6% of divorced couples remarry each other
Divorced men: High mortality rate (1,772/100,000) Longevity Married couples: Live longer (779/100,000)
Highest divorce rate: Gaming manager, bartender, flight
attendant
Occupation Lowest divorce rate: Actuaries, physical scientists, clergy
Nurses: 37.0% divorce rate Healthcare Professions Pharmacists: 21.5% divorce rate
Below poverty line: Highest divorce rate Income ~ $600,000 household income: Lowest divorce rate
Hindus: Lowest divorce rate Religion Evangelical protestants: Highest divorce rate
Head and Neck Pathology (2024) 18:30
Page 13 of 15 30
professionals often exceed $30,000, and when contested or
if children are involved, expand up to $100,000 (whitecoat-
investor.com/finances-divorce; accessed 01/2024).
Before marriage, it is important to protect yourself with
a prenuptial agreement. If it is too late for that, try to get
a postnuptial agreement (although don’t create a divorce
in the process). If you can’t talk about finances before you
get married, you won’t be able to after you get married. Be
aware that common law marriage (a relationship between
two people who cohabitate and present themselves as a
married couple without the benefit of a legal ceremony and
marriage certificate) will often have similar laws and regula-
tions governing separation and divorce. Divorce is 50:50, but
marriage is 100:100. Work at it.
A final note, with the average cost of a wedding in 2023
at $29,000, don’t take out a loan for it (currently one of the
faster growing loan categories) (zola.com/expert-advice/
the-first-look-report-2024; accessed 01/2024). Don’t bank-
rupt yourself getting the Instagram®-perfect wedding. Plan
a smaller event; delay the marriage until later; only have
close family; don’t do a destination event; consider eloping
to reap the tax benefit of filing jointly and use those tax sav-
ings to help fund a full wedding the next year. Have Four
Weddings (but no Funeral) to the same person over your
decades together.
Keep Track
The Matrix is a mind-twisting look at a virtual world but
demonstrates that income is not the only indicator of overall
wellbeing. You need to know where you are and what you
are doing to get there, or you may just end up being a cog
in a machine.
People are concerned the social security trust fund won’t
be available to them when they become eligible for distri-
butions. In context, the balance on 12/31/2023 was $2.641
trillion, currently with annual income of $1.167 trillion and
expenses/outflow of $1.237 trillion, which is a net yearly
decrease of $70 billion (ssa.gov/oact/STATS/Table4a1.
html; accessed 01/2024). So, while there are fluctuations in
value and how much is paid in, alterations in eligibility age,
and potential for reduced benefits based on income limits
and assets set by future law, social security is here to stay.
Do you have a will, a trust, durable powers of attorney for
financial as well as health care decisions, and advance health
care directives drawn up, signed, and filed? Only about 1 in
3 Americans has a will, citing a lack of assets as the major
reason for neglecting estate planning (caring.com/caregiv-
ers/estate-planning/wills-survey; accessed 01/2024). As a
physician/dentist, you will have assets and should create
all these documents immediately, if you don’t have them
already. Make sure they are kept up to date whenever your
circumstances change or laws change. Utilizing a licensed
legal professional is best but even using an online service
(such asQuicken WillMaker & Trust) is better than nothing.
In general, estate planners will suggest considering benefi-
ciaries in the following order: a charity before an individual;
younger before older; and those with low income versus
those with high income. Consider the value of different types
of trusts as you plan for generational wealth transfer, factor-
ing estate and gift taxes, financial needs, beneficiaries’ as
they age, and those with special needs. Most importantly,
after a divorce, re-analyze what you own and update these
documents: make sure retirement accounts are correctly
titled or transferred; amend beneficiaries; and reassess where
you stand on retirement preparedness (whitecoatinvestor.
com/financial-chores-to-complete-after-divorce; accessed
01/2024).
Part of having a good plan is knowing where everything is
located. The “average” internet user has 240 online accounts
that require a password (I have 314). These “digital assets”
require diligence in maintaining cybersecurity and protect-
ing yourself from adverse events. There are several online
password management software companies available that
can potentially aid in digital asset management and security
(a few examples in alphabetic order: dashlane.com; ipass-
word.com; keeper.com; nordpass.com; roboform.com).
Make sure to keep an up-to-date physical list (printout
or handwritten) of all your online accounts and associated
passwords—it can’t be hacked—but do store the paper log
securely. Real estate addresses, lists of assets, information
on all types of accounts with the companies holding them
should also be printed out. Store these and other important
financial documents in a binder or file folder (no 3-hole
punches in original documents), including deeds, car titles,
trusts, birth and marriage certificates, immigration docu-
ments, stock or bond certificates, password lists, etc., in a
fire-resistant personal safe at home for easy access. Create
a second copy of this set and give it to your future executor
(a trusted friend or relative or a conservatorship company).
Finally, upload a digital copy to an encrypted online vault.
If catastrophe befalls your digital storage (malware, hacking,
hard drive failure, cloud storage company failure) or your
primary physical location (fire, flood, hurricane, tornado),
backups are available quickly.
I keep a monthly financial calendar (Fig.13) to stay
on track and make adjustments. Doing a little each month
keeps the process from feeling overwhelming while stay-
ing current. In general, Americans spend less than two min-
utes a day managing their finances but 168min watching
television. Put differently, people spend an hour reading
restaurant reviews to choose a place to spend $100 on din-
ner, but will plonk down $20,000 on a stock after hearing a
30-second pitch (awealthofcommonsense.com/2019/10/how-
much-time-should-you-spend-on-your-finances; accessed
01/2024). Thus, set aside at least an hour each week or a
Head and Neck Pathology (2024) 18:30 30 Page 14 of 15
few hours each month (with your spouse) to align and track
your financial health to keep you out of The Matrix.
Conclusions
Spend the same amount of time over the next year organ-
izing your financial life as you would spend watching the
seven recommended movies. Start building wealth early.
Save for retirement now, ideally using tax-deferred accounts
like a 401(k), IRA, or HSA. Keep it simple. Don’t try to beat
or time the market. Don’t chase trends. Make your saving/
investment deposits automatic. Go heavy on stocks. Hold
down fees. Ditch credit card debt. Live below your current
earnings. Defer taxes when you can. Insure your income
appropriately. Read or listen to a few interesting and unusual
books about finances (Millionaire Next Door; Freakonomics;
Intelligent Investor; Common Sense Investing; One Up On
Fig. 13 This monthly financial calendar is an example of a periodic approach to financial matters performed routinely giving an excellent chance
of accurately monitoring and adjusting your financial health plan
Table 2 Selection of financial resources
Website Description
Money.com General information about money and wealth management
Takechargeamerica.org Financial education nonprofit
Moneyinstructor.com General money guide
Fool.com Motley fool investment strategies
Whitecoatinvestor.com Personal finance focused on medical professionals
Ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm Federal trade commission consumer advice
Tools.finra.org/fund_analyzer Compare costs of owning mutual funds
Quicken.com Suite of money management and tax software
Dinkytown.net Online financial calculators
Debtadvice.org Debt management
Annualcreditreport.com Free credit reports
Bankrate.com Interest rate guide
Mortgagenewsdaily.com Mortgage and housing data
Eftps.com/eftps/ Federal tax payment system
Millionaire Next Door; Freakonomics; Intelligent Investor; Common Sense Invest-
ing;One Up On Wall Street
Books to consider reading
Head and Neck Pathology (2024) 18:30
Page 15 of 15 30
Wall Street). Avail yourself of free resources to evaluate your
financial plans (Table2) and then seek advice from a fiduci-
ary financial planner to keep you on track towards financial
health and success.
Acknowledgements I would like to thank several friends and col-
leagues who reviewed this manuscript for glaring errors of commis-
sion or omission, with special thanks to Dr. Brenda L. Nelson, Dr.
Francis H. Gannon, Dr. Michael S. Amann, David Walters, and Scott
Salaske(FirstMetric.com).
Author Contributions Author LDRT wrote the manuscript text and
developed illustrations. PAT reviewed manuscript and prepared graph-
ics. Both authors reviewed the final manuscript.
Funding None.
Data Availability No datasets were generated or analysed during the
current study.
Code Availability Not applicable.
Declarations
Conflict of interest The authors certify that they have no affiliations
with or involvement in any organization or entity with any financial
interest or non-financial interest in the subject matter or materials dis-
cussed in this manuscript.
Ethical Approval No human participants were included in this invited
review.
Consent to Participate Not applicable.
Consent for Publication Not applicable.
References
1. Grewal K, Sweeney MJ (2021) An innovative approach to educat-
ing medical students about personal finance. Cureus 13(6):e15579
2. Dhaliwal G, Chou CL (2007) A brief educational intervention
in personal finance for medical residents. J Gen Intern Med
22(3):374–377
3. Royce TJ, Davenport KT, Dahle JM (2019) A burnout reduction
and wellness strategy: personal financial health for the medical
trainee and early career radiation oncologist. Pract Radiat Oncol
9(4):231–238
4. Roberts WC (2020) The importance of acquiring financial security
for physicians. Am J Med 133(12):1403–1405
5. Teichman JM, Cecconi PP, Bernheim BD, Novarro NK, Monga
M, DaRosa D etal (2005) How do residents manage personal
finances? Am J Surg 189(2):134–139
6. Ramme AJ, Patel M, Patel KA, Montag WH, Schau AJ, Sabo SI
etal (2021) Personal finance primer for the future orthopaedic
surgeon: a starting point. JB JS Open Access. https:// doi. org/ 10.
2106/ JBJS. OA. 20. 00006
7. Teichman JM, Tongco W, MacNeily AE, Smart M (2000)
Personal finances of urology residents in Canada. Can J Urol
7(6):1149–1155
8. Gray K, Kaji AH, Wolfe M, Calhoun K, Amersi F, Donahue T
etal (2020) Influence of student loan debt on general surgery
resident career and lifestyle decision-making. J Am Coll Surg
230(2):173–181
9. Messerli FH (2012) Chocolate consumption, cognitive function,
and Nobel laureates. N Engl J Med 367(16):1562–1564
10. Ly DP, Seabury SA, Jena AB (2015) Divorce among physicians
and other healthcare professionals in the United States: analysis
of census survey data. BMJ 350:h706
11. Doherty WJ, Burge SK (1989) Divorce among physicians. Comp
Occup Groups Jama 261(16):2374–2377
12. Garvey M, Tuason VB (1979) Physician marriages. J Clin Psy-
chiatry 40(3):129–131
13. Lund KS, Aabenhus RM, Arreskov AB (2016) Medical spe-
ciality, belief in Santa and the risk of divorce. Ugeskr Laeger
178(50):V68832
14. Zil EAA, Awana MT, Aadil M (2017) Relationship issues
and high divorce rate among surgeons. J Coll Phys Surg Pak
27(11):739–740
15. Brown SL, Lin IF (2022) The graying of divorce: a half century
of change. J Gerontol B Psychol Sci Soc Sci 77(9):1710–1720
Publisher's Note Springer Nature remains neutral with regard to
jurisdictional claims in published maps and institutional affiliations.
