Physician Practice Owner Planning
The Situation
A 52-year-old physician practice owner came to Ivory Oak Capital feeling behind on retirement planning despite high income. She earned $450,000 annually from her practice but had limited retirement savings due to late career start (medical school debt), practice startup costs, and lack of coordinated financial strategy. She had significant malpractice insurance costs, complex tax situation with practice income, and uncertainty about retirement plan options for her practice. Key concerns included: how to maximize tax-deferred retirement contributions through her practice, whether her disability and life insurance coverage was adequate, how to structure her practice for eventual sale or transition, how to catch up on retirement savings, and how to coordinate personal and business financial planning.
Our Approach
Dylan T. Franzten created a comprehensive strategy coordinating personal financial planning with practice management. The planning process included analysis of retirement plan options for the practice (401(k), cash balance plan, defined benefit plan) to maximize tax-deferred contributions, comprehensive insurance review including disability, life, malpractice, and business overhead expense coverage, tax planning strategies to optimize practice income and personal compensation, practice valuation and transition planning for eventual sale or succession, catch-up retirement savings strategy leveraging high income and tax-advantaged accounts, and coordination with her CPA and attorney to implement the integrated strategy.
The Outcome
The physician now has a comprehensive strategy that coordinates her practice and personal finances. She implemented a cash balance plan for her practice, allowing annual contributions of $200,000+ in tax-deferred retirement savings. Her insurance coverage was optimized with appropriate disability coverage protecting her income, increased life insurance for family protection, and business overhead expense insurance. The tax-optimized compensation structure saves approximately $40,000 annually in taxes. She established a practice transition plan with clear valuation methodology and potential succession options. Her accelerated retirement savings strategy, combined with continued high income, projects she will accumulate sufficient assets to retire comfortably at age 67. She now has quarterly meetings with Dylan to review progress and adjust the strategy as her practice and personal circumstances evolve. The coordinated approach provides confidence that she's on track for retirement despite her late start.
What This Means for You
If you're a physician or practice owner with high income but limited retirement savings, comprehensive planning that coordinates personal and business finances can help you catch up and build wealth efficiently. Every physician's situation is unique, but the process of optimizing practice retirement plans, managing taxes, ensuring adequate insurance, and creating a coordinated strategy can help you achieve financial security. This case demonstrates how specialized planning addresses the unique challenges physicians face in building wealth and planning for retirement.
Ready to Optimize Your Practice and Retirement Planning?
If you're a physician or practice owner who wants to coordinate your business and personal finances for optimal wealth building, let's discuss your situation.