SAEM - Vanderbilt Em
Download
Report
Transcript SAEM - Vanderbilt Em
Financial Planning
For Residents
Society for Academic Emergency Medicine
GOALS
Society for Academic Emergency Medicine
GOALS
Society for Academic Emergency Medicine
GOALS
Society for Academic Emergency Medicine
GOALS
Society for Academic Emergency Medicine
GOALS?
Stuck
in ED at age 80
Society for Academic Emergency Medicine
GOALS?
Society for Academic Emergency Medicine
GOALS?
Society for Academic Emergency Medicine
Financial Planning
Ag
Inv gres
est sive
me
nts
The Pyramid Approach
to Financial Planning
Nice to Do
(Greater Wealth Potential)
Absolutely
Necessary
(Survival)
Ma Ris
na k
ge
me
nt
Must Do
(Save for
Opportunities)
Ac Wea
cu
mu lth
lat
ion
Ac Cap
i
cu
mu tal
lat
ion
Should Do
(Strive to Beat Inflation)
Speculative
Investments
J. Strong Growth
Investments
I. Conservative Retirement
Investments
H. College Education Funding
G. Savings (3-6 Mos.), Vacations, Etc..
F. Home Ownership
Insure the “What If’s”
A. Medical Coverage B. Disability Insurance C. Life Insurance
D.
Auto/Homeowners/Liability E. Emergency Cash Fund
F. Debt Management G. Early Retirement Planning H. Estate Planning
Securities offered Through NFP Securities, Inc., Member NASD/SIPC
Society for Academic Emergency Medicine
Absolutely Necessary
Insure Against “What If”
Absolutely
Necessary
(Survival)
• Insurance Protection • Emergency Cash Fund
• Debt Management • Retirement Planning • Estate Planning
Society for Academic Emergency Medicine
Debt Management
Get in the Habit of
PAYING
YOURSELF
FIRST!!!
Society for Academic Emergency Medicine
Budgeting
“Income minus Expenses”
Society for Academic Emergency Medicine
Budgeting Goals
Must
Define and Articulate
*Student loan repayment
*Retirement planning
*Education funding for kids
*Cash savings
*Buying home
*Eliminating BAD debt
*Buying into group
*Fancy Car and Toys
Society for Academic Emergency Medicine
Assign Value/Priorities
Importance
to you/family
Timeline
Intelligent
repayment of debt
Fear of debt
Need for toys
*Beware of Golden Handcuffs
Financial
Independence
Avoiding Frustration
Society for Academic Emergency Medicine
Debt Management
Which
should you pay off first?
*$100,000 Student loan at 3%
*$5,000 Credit Card at 18%
*$250,000 Mortgage at 6% fixed
Society for Academic Emergency Medicine
Fear of Debt
Not
all debt is bad
Realize that on average the stock market
makes 8-12% a year historically
Realize that as a resident you don’t make much
*Compare you student loan debt in relation to 10 of
working as a physician
*Defer you student loans
*Stretch out you repayment periods
*Pay yourself first!!
Society for Academic Emergency Medicine
Emergency Cash Fund
Experts
say 3-6 months of expenses
This depends on your comfort
zone/situation
Do you have short term disability?
Long term disability doesn’t kick in for 3-9
months
Cash keeps you in control
Society for Academic Emergency Medicine
Emergency Cash Fund
Make
use of a money market account
*Higher yield and easily liquid
*Some are tax free
Should
develop systematic and disciplined
method to build cash reserves
*Monthly budgeted draft
Goal
is to try and avoid bad debt (credit
cards)
Society for Academic Emergency Medicine
Credit Cards
Try
to get rid of this debt first
*Worst kind of debt
*Transfer money lowest credit cards
*Goal is to ALWAYS pay off at end of month
*Only use cards that give you something back
with no yearly fees
Free
Fund
Cash back cards are out there
Retirement First?!?!?!
Society for Academic Emergency Medicine
Retirement
Can EM Residents Save For Retirement?
Yes!
Society for Academic Emergency Medicine
Why Invest Now?
Here are the monthly investments required at different ages
to accumulate $1,000,000 by age 65, assuming a 10%*
compounded rate of return.
Age When
Investments
Begin
25
Monthly
Investments
Required to
Reach Goal
$158
35
45
55
$442 $1,316 $4,882
Society for Academic Emergency Medicine
Why Invest Now?
Illustration of the
growth of an
assumed $10,000
investment
compounded
annually over a 30year period at
differing rates of
return.*
$500,000
$400,000
$299,599
$300,000
$200,000
$100,000
$0
$174,494
$100,627
$57,435
6%
8%
10%
12%
Society for Academic Emergency Medicine
Save, Save, Save
Can
you put aside $333+ a month?
*Moonlighting?
*Not paying school loans
*Not overpaying credit cards?
*Not drinking Starbucks daily
*Limiting expenses
Society for Academic Emergency Medicine
Credit Cards
Roth IRA (10% each Year)
Yr 1 $4000 $400 $4400
Yr 2 $4000 $840 $9240
Yr 3 $4000 $1324 $14564
Yr 4 $4000 $1856 $20420
Graduate
No more contributions
Break even in ~62 months
Keeps growing tax free
Credit Card (20% each Yr)
Yr 1 $-4000 $-800 $-4800
Yr 2 $-4000 $-1760 $-10560
Yr 3 $-4000 $-2912 $-17472
Yr 4 $-4000 $-4294 $-25766
Graduate
Payoff $1000 a month
Done 33 month
~$33262 total payment
Society for Academic Emergency Medicine
Where to Invest?
ROTH
IRA
*Up to $4000/year -- After Taxes
401k/403b
*Up to $15,000/year --Before Taxes
SEP IRA
*20% of moonlighting income up to $44,000
*Tax deductible
Society for Academic Emergency Medicine
Three Phases of Investment
1 401(k)s & 403(b)s
TRADITIONAL IRAs
SEP & SIMPLE IRAs
KEOGH, PSP & MPP
ESOPs
DEPOSIT
ACCUMULATION
DISTRIBUTION
Tax Deductible
(Before Tax $’s)
Tax Deferred
(Funds not Available)
Taxable
(Income & Estate)
IRS penalties for retirement withdrawals
prior to age 59 ½ !
2 LIFE INSURANCE
ANNUITIES
MUNICIPAL BONDS
ROTH IRAs
529/COVERDALE IRAs
Not Deductible
(After Tax $’s)
Tax Deferred
(Funds Available with
Municipal Bonds)
Can be Tax Free or
Taxable…
You Choose
Possible IRS penalties for withdrawals
prior to age 59 ½!
3 CDs, SAVINGS,
MUTUAL FUNDS
STOCKS, BONDS
PARTNERSHIPS
Not Deductible
(After Tax $’s)
Partially Tax
Deferred
and
Partially Tax Free
Partially Taxable
And
Partially Tax Free
The Value of Tax Deferred
Society for Academic Emergency Medicine
700,000
600,000
Assumptions:
$100,000 investment
Growth if tax-deferred
$672,750
10% net annual compounded rate of return*
39.6% tax bracket
Taxdeferred
after taxes
500,000
$445,941
400,000
300,000
$323,143
Growth
if taxable
$303,467
200,000
100,000
Years
5 yrs
10 yrs
15 yrs
20 yrs
*Hypothetical rate of return for illustrative purposes only. Return is net of expense.
Society for Academic Emergency Medicine
Goal is to Understand and
Minimize Income Taxes
7%
8%
9%
Tax Deferred
EQUALS
11.66% 13.33% 15%
Taxable
Society for Academic Emergency Medicine
ROTH IRA
Should
be your first place to put money!!
*Money is tax deferred and Tax Free in Distribution
*Can only put money into Roth as a resident
Cannot
fund if make more that $110,000 single or
$160,000 jointly
*Can pull out for down payments on first home, higher
education, some rare other reasons (don’t
recommend).
*Pull out at age 59 ½
Society for Academic Emergency Medicine
Louisiana Deferred Compensation Plan (457b)
You should all be in this NOW!!!
You can take the 7.5% you pay to Social Security
and put this into your own portfolio
All Pre-Tax Money
Max of $15,000 a year
Can offset contribution with moonlighting pay or
recent raise
Can take it with you to other job or financial
institution
No Matching
Society for Academic Emergency Medicine
401k/403b/457
For
Future Job
*Pretax money placed into investment
*All growth Tax Deferred
*Some Jobs Match (always at least put match
percentage or you are giving away free money)
*Hope that your tax bracket will be lower when you
are older
*Distribution at age 59 ½
*Can take it with you to other job or financial
institution
Society for Academic Emergency Medicine
Why 401k/403b/457?
No
Investment
*Salary $3000/month
*25% tax bracket is $750/month
*Take home pay $2250/month
Investing $500/month
*Salary $3000/month - $500/month contribution
*New Salary $2500/month
*25% tax bracket is $625/month
*Take Home pay $1875/month
*$375 less take home but $500 into retirement ($125 less
taxes paid)
Society for Academic Emergency Medicine
SEP IRA
In
most cases, third option for resident
Can only invest if Moonlighting
(Independent Contractor—Form 1099)
Most of times, fund if Roth IRA and
matched 401k/403b fully funded
Then 401k/403b/SEP IRA act the same just
depends on what kind of job you have
Society for Academic Emergency Medicine
Insurance
Medical
Disability
Life
Other
*Auto
*Home/Rental
*Umbrella
Society for Academic Emergency Medicine
Medical Insurance
COBRA
*Do not let your insurance lapse (especially if
you or your family have pre-existing
conditions)
*GME must provide
*Usually have 30-60 days to pay premiums
*Important to know when exactly your contract
begins
Society for Academic Emergency Medicine
Disability Insurance
Most Important Thing to do BEFORE
Residency Ends!!!
Society for Academic Emergency Medicine
Disability Insurance
Everything you own, plan to own, or
plan to pay off, depends on your
ability to earn an income.
Society for Academic Emergency Medicine
Disability Insurance
GME
provides
*Usually either 50-60-66 2/3-80% of your current
paycheck
*$3000/month pretax—your benefit would be $1800
*This money is taxable
*Payable to age 65
WARNING:
Not all plans are created equally!!
Society for Academic Emergency Medicine
Disability Insurance
There
are special Disability Insurance plans
that are only available for residents!!!
Benefits
*Usually starts at $4000/month benefit (more
than you make now)
*Can get a rider that allows you to increase to
$10,000/month benefit
*Can take it with you after you graduate
*Can stack on top of your job’s current disability
plan
Society for Academic Emergency Medicine
Disability Insurance
Options for Long Term Disability Protection
Prepared for: 1st Year Physician
Specialty:
Initial Monthly Salary:
Emer. Medicine
Assumed Tax Bracket:
Contract Date: August 1st, 2005
Net Monthly Income:
Group LTD:
Group Limits:
$15,000
35%
$9,750
60%
$10,000
Income at Disability:
Option
Group LTD
Individual LTD
Total Net Income Income Replacement
1.
$5,850
$0
$5,850
60%
2.
$5,850
$2,000
$7,850
81%
3.
$5,850
$3,600
$9,450
97%
4.
$5,850
$4,000
$9,850
101%
Options 3 and 4 assume qualification under a Residency and Fellowship Purchase Program.
Benefit must be applied for prior to graduation from program.
Option 4 assumes the maximum monthly benefit that can be purchased under the Residency
and Fellowship purchase Program.
Society for Academic Emergency Medicine
Disability Insurance
Must
have these Characteristic
*Cannot be dropped or amended by the insurer
*The premiums cannot be increased
*Protects your right to work in your own medical
specialty
*Ability to control benefits through Guaranteed Purchase
options (Rider to increase amount)
*Cost of living adjustments features
*Consider catastrophic or long term care provisions
$181-418
a month depending on coverage
Society for Academic Emergency Medicine
Disability Insurance
Carriers
*Guardian
*MetLife
*Standard
*Union Central
*Principal Financial
Society for Academic Emergency Medicine
Life Insurance
Why
do you need it now?
*The younger you are, the cheaper it is
*The healthier you are, the cheaper it is
*Lock it in now at the youngest and healthiest
you will ever be
*Prepares you for future need at today’s prices
Married
or kids later in life
Society for Academic Emergency Medicine
Life Insurance
2
Types of Life Insurance
*Term Life Insurance
Limited
Term (10, 20, 30 years)
Cheap (32 year old--~$450/yr for $1,000,000
coverage)
Good to cover for early unexpected death
*Permanent Life Insurance
Lasts
for life
More expensive
Many types: Whole Life, Universal Life, Variable
Life
Good as a method of saving more money
Society for Academic Emergency Medicine
Life Insurance
Variable
Life Insurance
*You can add to the cash value
*Grows Tax Deferred in an account inside your life
insurance
*You can pull cash out (that you put in) at any time
and use it but your relatives won’t get that
*You die—Family gets your death benefit and
whatever you put in—Jackpot
*You don’t die—You can pull it out as you need it
like a loan (emergency cash fund?)
Society for Academic Emergency Medicine
Other Insurance
Auto
Insurance
*Don’t forget to cover appropriately as net worth
goes up, (can come after salary if not
covered)
Homeowner
Insurance
*Don’t forget to cover for appropriate cost of
rebuilding home
Umbrella
Insurance
*Extra insurance that protect for catastrophe
attached around car and home
Society for Academic Emergency Medicine
Estate Planning
Decisions are easier to make
while you are ALIVE!
Society for Academic Emergency Medicine
Estate Planning
Basics
*Will
*Living Will
*Durable Power of Attorney
*Healthcare Power of Attorney
Advanced
*Trusts
*Inheritance planning
*Gifts
Society for Academic Emergency Medicine
Financial Planner/Team
Do you really know
what you are doing?
Society for Academic Emergency Medicine
Financial Planner/Team
If yes, Proceed
If no, Consider hiring someone you TRUST!
*Remember that poor investments or poor
allocation could cost you $1000s-$10,000s.
Especially as you get older
*Do you have the time to manage this?
*Do you know all the legal loopholes
*Is it worth your time?
*Can you work one shift a year for the comfort of
mind
Financial Planner/Team
Society for Academic Emergency Medicine
MORTGAGE BROKER
CERTIFIED PUBLIC
ACCOUNTANT
ESTATE PLANNING
ATTORNEY
GME OFFICE
FINANCIAL
GENERAL MANAGER
Coordinates Team on Your Behalf
PROPERTY & CASUALTY
AGENT
Home/Auto/Umbrella
INVESTMENT
ADVISOR
CONTRACT ATTORNEY
INSURANCE
SPECIALIST
Society for Academic Emergency Medicine
Final Thoughts
Define
what you want
Pay Yourself FIRST
Purchase disability insurance before leaving
residency
Keep medical insurance—Cobra
Maximize retirement savings
Minimize income tax
Make your student loans a long term deal
Delegate non-medical skills
Plan your estate while you can
Society for Academic Emergency Medicine
Author Credit – Financial Planning
Armando Hevia MD
Questions
Society for Academic Emergency Medicine
Postresidency Tools of the Trade CD
1) Career Planning – Garmel
2) Careers in Academic EM – Sokolove
3) Private Practice Career Options - Holliman
4) Fellowship/EM Organizations – Coates/Cheng
5) CV – Garmel
6) Interviewing – Garmel
7) Contracts for Emergency Physicians – Franks
8) Salary & Benefits – Hevia
9) Malpractice – Derse/Cheng
10) Clinical Teaching in the ED – Wald
11) Teaching Tips – Ankel
12) Mentoring - Ramundo
13) Negotiation – Ramundo
14) ABEM Certifications – Cheng
15) Patient Satisfaction – Cheng
16) Billing, Coding & Documenting – Cheng/Hall
17) Financial Planning – Hevia
18) Time Management – Promes
19) Balancing Work & Family – Promes & Datner
20) Physician Wellness & Burnout – Conrad /Wadman
21) Professionalism – Fredrick
22) Cases for professionalism & ethics – SAEM
23) Medical Directorship – Proctor
24) Academic Career Guide Chapter 1-8 – Nottingham
25) Academic career Guide Chapter 9-16 – Noeller