Whether you are a physician, a dentist, a nurse or a hospital administrator, you may be trying to balance paying off your student loans with saving and planning for retirement. If so, you are not alone.

Student Loan Debt

The Federal Reserve estimated that in the third quarter of 2020, Americans owed more than $1.7 trillion in student loans—an increase of nearly 4% compared to Q3 of 2019—with an average debt per student of around $29,900. Student debt has been increasing for decades, and the problem is even larger for medical and health care professionals.

The average medical school debt for the class of 2019 is $201,490, according to the most recent data from the Association of American Medical Colleges.

Because of the pandemic, since March of 2020 student loan payments and interest accrual on federal student loans have been suspended, but are set to resume September 30, 2021.

While some people are taking this opportunity to pay down student loan principal, this may not be advisable for everyone. It’s important to take your whole financial situation as well as your short- and long-term goals into account when choosing between loan payments versus savings or retirement.

The Need for Savings

In 2019, news headlines amplified the fact that many Americans are living paycheck to paycheck when it was found that most would be hard-pressed to cover a $400 emergency. The pandemic has made the need for emergency savings reserve funds even more apparent.

The size of your emergency fund should be based on your circumstances (and comfort level), but some experts say you should have at least three to six months’ worth of living expenses in liquid accounts.

Retirement Preparedness

The amount of money you should be putting away for retirement each year depends on your desired lifestyle and anticipated monthly expenses in retirement, along with projected income taxes, Social Security and other sources of income, anticipated inflation and interest rates, as well as many other factors.

As an example of a general lack of retirement awareness, some people file for Social Security at age 62, the earliest allowable age, not understanding that by waiting they can increase their benefit amount by 8% per year, plus any COLAs (Cost of Living Adjustments), up to age 70.

Another thing many people don’t think about is that all their 401(k) money will be taxed at ordinary income tax rates when they start withdrawing money. And money has to be withdrawn from 401(k)s, traditional IRAs, and similar tax-deferred accounts every year precisely by midnight each December 31st starting at age 72 based on strict withdrawal formulas. Not withdrawing money correctly can result in 50% tax penalties on top of taxes owed!

Work with an Advisor

Working with a financial advisor to address your financial and retirement planning needs is critical, especially for high-earning health care professionals. Starting when you are young can help you reduce debt, establish emergency funds, mitigate taxation, and meet short-term and long-term goals like retirement.


If you would like to discuss your financial situation, or get a second opinion on your current financial or retirement plan, please do not hesitate to contact us. You can reach C7 Capital Group in San Clemente, California at (800) 540-8619.