Earning a lot of money does not ensure a prudent financial strategy. While doctors are knowledgeable about health status, they often struggle with monetary strategies. Additionally, developing long-term financial planning for retiring may be challenging. There is no single answer that fits everybody.

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Ironically, many doctors mistakenly think that having a high salary would make financial planning simpler for them; nevertheless, obtaining a good salary does not ensure prudent personal finance. Even doctors make financial errors from time to time.

The following are typical retirement planning errors made by doctors that may jeopardise a timely and effective retirement:

No immediate begining

Since medical school and residency keep many doctors from commencing their working career until their mid-thirties, they have much less time to save and their funds have less time to grow in the real economy. However, for many doctors fresh out of residency, saving for retirement takes second place to buying a house, raising a family, or just being able to live more comfortably.

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Lack of savings

As doctors create a greater salary, they often have a better quality of life in retirement that they want to retain. This fact, along with a long delay, poses a massive problem: doctors have little time to amass wealth. To maintain a similar standard of living over a prolonged retirement term, they will need to hasten their assets.

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Collecting retirement money prior to retirement

The objective of retirement strategy is to collect sufficient funds to support your post-working life without going broke, not to pay quick desires such as homeownership or college tuition for your kid. However, occasionally myopic focus overcomes will, and doctors are forced to withdraw from their retirement account).

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Ignoring medical expenses

Even doctors are prone to underestimate the rising expense of healthcare, which may surprise you. According to the Finance Commission, over 70% of health cost is paid by individuals, pushing approximately 60 million Indians into poverty each year. India's public health spending (union and state combined) as a proportion of GDP has averaged about 1%. (1.25 per cent). Indians spend twice as much on healthcare out of their own pockets than the federal and state governments do. In FY2016, out of India's overall healthcare expenditure of Rs 5,28,484 crores, Indian families paid Rs 3,20,211 crores on their own. This amounts to approximately 60.6 per cent of overall health expenditure. The government is responsible for the remaining 30.6 per cent, or Rs 1,61,863 crores.

Medicine accounts for 67 per cent of Indians' healthcare expenditure. Other health-related expenses for an ordinary Indian include doctor's fees, hospitalisation, laboratory testing, injectables, vitamin supplements, and other over-the-counter medicines purchased at public and private health institutions and pharmacies. Despite the government's implementation of many public health initiatives, this remains the case. According to the Economic Survey, India has one of the highest levels of Out-of-Pocket Expenditures (OOPE), which contributes directly to the high prevalence of catastrophic expenditures and poverty.

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Inadequate asset protection papers

While many doctors are commended for managing and protecting essential papers in their offices, they are not necessarily recognised for being as diligent with their private asset protection documentation. While you are living, important papers include financial powers of attorney and medical directives, as well as your intentions for your estate once you die.

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Working without the assistance of a financial planner

The choice to save for retirement is among the most significant and hardest financial choices we will ever make. And, as retirement durations lengthen in tandem with growing life expectancies, collecting sufficient means to outlast your assets becomes more difficult. And fitting all of the parts together is a difficult task. Most doctors just do not have the time to put up a credible retirement plan on their own. They don't have time to understand the pros and cons of saving choices and tax-saving techniques or to keep track of their portfolios to make sure they're on pace to achieve their objectives. What's the end result? Physicians will either put off preparing or arrive at their desired retirement date unprepared.

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Whether you're just getting started in medicine or have been practising for years, one thing is certain: you don't want to work indefinitely. Regardless of how much you like practising medicine, there may come a moment when you want to depart the hospital and enjoy more family time. Regrettably, since so many doctors struggle with saving for retirement, they are compelled to work further than they would want to in order to earn enough money to live comfortably during their retirement years.

This article was originally published on 17 September 2021.

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Disclaimer- The views and opinions expressed in this article are those of the author's and do not necessarily reflect the official policy or position of M3 India.

The author is a practising super specialist from New Delhi.