CASH BALANCE PLANS: Hybrid Retirement Savings for Physicians

Posted on November 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd

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Retirement planning has evolved significantly over the past several decades, with employers and employees seeking solutions that balance security, flexibility, and predictability. Among the various retirement plan options available today, cash balance plans stand out as a hybrid design that combines features of both traditional defined benefit pensions and defined contribution plans. Their unique structure makes them an attractive choice for employers aiming to provide meaningful retirement benefits while maintaining financial predictability.

At their core, cash balance plans are a type of defined benefit plan. Unlike traditional pensions, which promise retirees a monthly income based on years of service and final salary, cash balance plans define the benefit in terms of a hypothetical account balance. Each participant’s account grows annually through two components: a “pay credit” and an “interest credit.” The pay credit is typically a percentage of the employee’s salary or a flat dollar amount, while the interest credit is either a fixed rate or tied to an index such as U.S. Treasury yields. Although the account is hypothetical—meaning the funds are not actually segregated for each employee—the structure provides participants with a clear, understandable statement of their retirement benefit.

One of the primary advantages of cash balance plans is their transparency. Employees can easily track the growth of their account balance, much like they would with a 401(k). This clarity helps workers better understand the value of their retirement benefits and fosters a sense of ownership. Additionally, cash balance plans are portable: when employees leave a company, they can roll over the vested balance into an IRA or another qualified plan, ensuring continuity in retirement savings.

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From the employer’s perspective, cash balance plans offer several benefits as well. Traditional pensions often create unpredictable liabilities, as they depend on factors such as longevity and investment performance. Cash balance plans, by contrast, provide more predictable costs because the employer commits to specific pay and interest credits. This predictability makes them easier to manage and budget for, particularly in industries where workforce mobility is high. Moreover, cash balance plans can be designed to reward long-term employees while still appealing to younger workers who value portability.

Despite these advantages, cash balance plans are not without challenges. Because they are defined benefit plans, employers bear the investment risk and must ensure the plan is adequately funded. Regulatory requirements, including nondiscrimination testing and funding rules, add complexity and administrative costs. Additionally, while cash balance plans are generally more equitable across generations of workers, transitions from traditional pensions to cash balance designs have sometimes sparked controversy, particularly among older employees who may perceive a reduction in benefits.

In recent years, cash balance plans have gained popularity among professional firms, such as law practices and medical groups, as well as small businesses seeking tax-efficient retirement solutions. These plans allow owners and highly compensated employees to accumulate larger retirement savings than would be possible under defined contribution limits, while still providing benefits to rank-and-file workers. As such, they serve as a valuable tool for both talent retention and financial planning.

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EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com

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VARIABLE ANNUITIES: Retired Physicians Beware!

Posted on October 4, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By A.I. and Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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After a lifetime of hard work practicing medicine and saving, you’re at the retirement finish line. Instead of a paycheck, you’re relying on your nest egg and investment income to cover the bills. Picking the right investments is even more important, as you won’t have much chance to recover as a retired MD, DO, DPM or DDS.

“You made it to the top of the mountain through a systematic approach and are trying to make your way down safely,” says retirement planner John Gillet John Gillet in Hollywood, Fla. “Why throw all caution to the wind and try something different now?”

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Definitions

An annuity is an insurance contract designed to grow your money and then repay it as income. There are different versions. An immediate annuity turns your lump sum into future guaranteed income payments, like your own personal pension. They are simple to understand with no or small fees.

Fixed annuities pay a guaranteed interest rate over a set period to grow your money, like 5% a year for five years. These options could make sense as part of a retirement plan.

A variable annuity, on the other hand, invests your savings in mutual funds. While you can buy riders that guarantee a minimum income, you’ll be paying very much for it. “All in, the annual fees can be 3% or more of your balance,” says Jeff Bailey, an advisor from Nashville. “That’s a huge withdrawal rate from your portfolio versus investing on your own.”

The variable annuity will lock up your money for years. If you cancel early, you owe a surrender charge that could start at 7% or more of your annuity balance before gradually going down as time goes by. “Clients believe they can walk away with their contract value, but that’s often not true,” says Bailey.

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Financial Planning for Physicians: Achieve Your Goals

Posted on September 30, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By: http://www.MarcinkoAssociates.com

Your medical practice. Your personal goals. Your financial plan. Our experienced confirmation guide.

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When you know exactly where you are today, have a vision of where you want to be tomorrow, and have trusted counsel at your side, you have already achieved so much success. Marcinko Associates works to keep you at that level of confidence every day. We use a comprehensive economic process to uncover what’s most important to you and then develop a financial strategy that gives you the highest probability of achieving your monetary goals.

We assess, plan, and opine for your success

To accurately see where you are today, chart a strategic path to your goals and help you make the most informed decisions to keep you on financial track, our key services for physicians and high net worth medical clients include:

Investment Portfolio Review
Fee, Charge and Cost Review
Comprehensive Financial Planning
Insurance Reviews
Estate Planning
Investment and Asset Management Second Opinions

We take a deep dive into your financial retirement plans

Physicians and dental employers now have options for how to design and deliver retirement benefits and we can help you make the best choice for your healthcare business. Our services for retirement plans include:

Fee, Charges & Fiduciary Review
Portfolio Analysis
Single Employer Retirement Plan Advisory
Retirement Plans Risk Analysis
Capital Funding and Financing
Business Planning and Practice Valuations
Career Development
and more!

We take a broad and balanced look at your financial life life

We coordinate our recommendations with your other advisors, including attorneys, accountants, insurance professionals and others, to ensure each decision is consistent with your goals and overall strategy. For example, through our partnerships we offer physician colleagues deeper expanded advisory services, like:

Estate, Gift, and Trust Planning
Tax Planning and Compliance
Medical or Dental Practice Worth
Business Succession Planning
Practice Exit Planning
Transaction Advisory Services
and more!

EDUCATION: Books

CONTACT US TODAY: Ann Miller RN MHA at: MarcinkoAdvisors@outlook.com

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Fiduciary Financial Colleagues Advising Medical Colleagues … in Turbulent Times!

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PHYSICIANS: Determine Your Retirement Vision

Posted on August 4, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko; MBA MEd CMP™

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Determining Retirement Vision

There’s an aspect to retirement that many physicians do not plan for … the transition from work and practice to retirement. Your work has been an important part of your life. That’s why the emotional adjustments of retirement may be some of the most difficult ones.

For example, what would you like to do in retirement? Your retirement vision will be unique to you. You are retiring to something not from something that you envisioned. When you have more time, you would like to do more traveling, play golf or visit more often, family and friends. Would you relocate closer to your kids? Learn a new art or take a new class? Fund your grandchildren’s education? Do you have philanthropic goals? Perhaps you would like to help your church, school or favorite charity? If your net worth is above certain limits, it would be wise to take a serious look at these goals. With proper planning, there might be some tax benefits too. Then you have to figure how much each goal is going to cost you.

If you have a list of retirement goals, you need to prioritize which goal is most important. You can rate them on a scale of 1 to 10; 10 being the most important. Then, you can differentiate between wants and needs. Needs are things that are absolutely necessary for you to retire; while wants are things that still allow retirement but would just be nice to have.

RETIREMENT SCAMS: https://medicalexecutivepost.com/2025/04/15/online-scams-retirement-accounts/

Recent studies indicate there are three phases in retirement, each with a different spending pattern [Richard Greenberg CFP®, Gardena CA, personal communication]. The three phases are:

The Early Retirement Years. There is a pent-up demand to take advantage of all the free time retirement affords. You can travel to exotic places, buy an RV and explore forty-nine states, go on month-long sailing vacations. It’s possible during these years that after-tax expenses increase during these initial years, especially if the mortgage hasn’t been paid off yet. Usually the early years last about ten years until most retirees are in their 70’s.

Middle Years. People decide to slow down on the exploration. This is when people start simplifying their life. They may sell their house and downsize to a condo or townhouse. They may relocate to an area they discovered during their travels, or to an area close to family and friends, to an area with a warm climate or to an area with low or no state taxes. People also do their most important estate planning during these years. They are concerned about leaving a legacy, taking care of their children and grandchildren and fulfilling charitable intent. This a time when people spend more time in the local area. They may start taking extension or college classes. They spend more time volunteering at various non-profits and helping out older and less healthy retirees. People often spend less during these years. This period starts when a retiree is in his or her mid to late 70’s and can last up to 20 years, usually to mid to late-80’s.

Late Years. This is when you may need assistance in our daily activities. You may receive care at home, in a nursing home or an assisted care facility. Most of the care options are very expensive. It’s possible that these years might be more expensive than your pre-retirement expenses. This is especially true if both spouses need some sort of assisted care. This period usually starts when the retiree is their 80’s; however they can sometimes start in the middle to the late 70’s.

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[A] Planning issues – early career

Most retirement lifestyle issues do not have to be addressed at this point. Keeping a healthy, balanced lifestyle will help to ensure a more productive retirement. This is the time to focus on the financial aspects of retirement planning.

[B] Planning issues – mid career

If early retirement is a major objective, start thinking about activities that will fill up your time during retirement. Maintaining your health is more critical, since your health habits at this time will often dictate how healthy you will be in retirement

[C] Planning issues – late career

Three to five years before you retire, start making the transition from work to retirement.

Try out different hobbies;
Find activities that will give you a purpose in retirement;
Establish friendships outside of the office or hospital;
Discuss retirement plans with your spouse.
If you plan to relocate to a new place, it is important to rent a place in that area and stay for few months and see if you like it. Making a drastic change like relocating and then finding you don’t like the new town or state might be very costly mistake. The key is to gradually make the transition.

RETIREMENT INCOME: https://medicalexecutivepost.com/2024/10/18/fast-facts-retirement-income-in-the-usa/

Conclusion

For physicians, like most folks, retirement is the stage in life when one chooses to leave the workforce and live off sources of income or savings that do not require active work. The age at which a person retires, their lifestyle during retirement, and the way they fund that lifestyle, will vary from one person to the next, depending on individual preferences and financial planning. Usually it is age 65.

Some doctors may opt for early retirement to enjoy their hobbies and travel, while others may continue working part-time to stay engaged and supplement their income. Effective retirement planning often involves a combination of savings, investments, and possibly pension benefits to ensure a comfortable and secure post-work life.

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EDUCATION: Books

SPEAKING: ME-P Editor Dr. David Edward Marcinko MBA MEd will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com

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PARADOXES: Beware Financial and Investing Contradictions

Posted on July 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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As we plan for our financial future, I think it’s helpful to be cognizant of these paradoxes. While there’s nothing we can do to control or change them, there is great value in being aware of them, so we can approach them with the right tools and the right mindset.

Here are just seven of the paradoxes that can bedevil financial planning and investment decision-making:

There’s the paradox that all of the greatest fortunes—Carnegie, Rockefeller, Buffett, Gates—have been made by owning just one stock. And yet the best advice for individual investors is to do the opposite: to own broadly diversified index funds.
There’s the paradox that the stock market may appear overvalued and yet it could become even more overvalued before it eventually declines. And when it does decline, it may be to a level that is even higher than where it is today.
There’s the paradox that we make plans based on our understanding of the rules—and yet Congress can change the rules on us at any time, as it did just a few weeks ago.
There’s the paradox that we base our plans on historical averages—average stock market returns, average interest rates, average inflation rates and so on—and yet we only lead one life, so none of us will experience the average.
There’s the paradox that we continue to be attracted to the prestige of high-cost colleges, even though a rational analysis that looks at return on investment tells us that lower-cost state schools are usually the better bet.
There’s the paradox that early retirement seems so appealing—and has even turned into a movement—and yet the reality of early retirement suggests that we might be better off staying at our desks.
There’s the paradox that retirees’ worst fear is outliving their money and yet few choose the financial product that is purpose-built to solve that problem: the single-premium immediate annuity.

Assessment

QUESTION: How should you respond to these paradoxes? As you plan for your financial future, embrace the concept of “loosely held views.” In other words, make financial plans, but continuously update your views, question your assumptions and rethink your priorities.

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Can You Contribute to Both a Roth IRA & 401(k)?

Posted on July 18, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters, AI and the Linqto Team

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Yes, you can contribute to both a Roth IRA and a 401(k), provided you don’t exceed annual contribution limits for each account.

Determining whether to contribute to a Roth IRA, 401(k), or both can be an important step in planning for your retirement. Here are the key differences, including tax advantages, employer contributions, and investment options.

Eligibility requirements are the first consideration when contributing to a Roth IRA and a 401(k). For Roth IRA contributions, your eligibility is determined by your income. Specifically, if your modified adjusted gross income (MAGI) exceeds certain thresholds, your ability to contribute to a Roth IRA may be reduced or eliminated. However, there are no income limits for contributing to a 401(k), making it accessible to anyone with earned income.

IRS rules do allow for contributions to both a Roth IRA and a 401(k), provided you adhere to the annual contribution limits for each account.

This means you can take advantage of the higher contribution limits of a 401(k) while also benefiting from the tax-free growth of a Roth IRA. This dual approach can be a strategy for maximizing your retirement savings. The advantages to contributing to both accounts present some key benefits, such as:

Tax diversification in retirement, allowing for better management of taxable income.
Potential reduction of overall tax burden.
Maximization of savings potential by taking full advantage of the benefits each account offers.³

Balancing contributions between a Roth IRA and a 401(k) requires careful planning. You might start by contributing enough to your 401(k) to receive the full employer match, which is essentially free money, if your employer offers this. Once you’ve secured the match, consider maxing out your Roth IRA contributions, if you’re eligible.

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FINANCIAL LIFE PLANNING? For Physicians and Medical Professionals

Posted on May 29, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

By Dr. David Edward Marcinko; MBA MEd CMP™

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Life planning and behavioral finance as proposed for physicians and integrated by the Institute of Medical Business Advisors Inc., is unique in that it emanates from a holistic union of personal financial planning, human physiology and medical practice management, solely for the healthcare space. Unlike pure life planning, pure financial planning, or pure management theory, it is both a quantitative and qualitative “hard and soft” science, with an ambitious economic, psychological and managerial niche value proposition never before proposed and codified, while still representing an evolving philosophy. Its’ first-mover practitioners are called Certified Medical Planners™.

Life planning, in general, has many detractors and defenders. Formally, it has been defined by Mitch Anthony, Gene R. Lawrence, AAMS, CFP^© and Roy T. Diliberto, ChFC, CFP^©of the Financial Life Institute, in the following trinitarian way.

Financial Life Planning is an approach to financial planning that places the history, transitions, goals, and principles of the client at the center of the planning process. For the financial advisor or planner, the life of the client becomes the axis around which financial planning develops and evolves.

Financial Life Planning is about coming to the right answers by asking the right questions. This involves broadening the conversation beyond investment selection and asset management to exploring life issues as they relate to money.

Financial Life Planning is a process that helps advisors move their practice from financial transaction thinking, to life transition thinking. The first step is aimed to help clients “see” the connection between their financial lives and the challenges and opportunities inherent in each life transition.

But, for informed physicians, life planning’s quasi-professional and informal approach to the largely isolate disciplines of financial planning and medical practice management is inadequate. Today’s practice environment is incredibly complex, as compressed economic stress from HMOs managed care, financial insecurity from insurance companies, ACOs and VBC, Washington DC and Wall Street; liability fears from attorneys, criminal scrutiny from government agencies, and IT mischief from malicious electronic medical record [eMR] hackers. And economic bench marking from hospital employers; lost confidence from patients; and the Patient Protection and Affordable Care Act [PP-ACA] more than a decade ago. All promote “burnout” and converge to inspire a robust new financial planning approach for physicians and most all medical professionals.

The iMBA Inc., approach to financial planning, as championed by the Certified Medical Planner™ professional certification designation program, integrates the traditional concepts of financial life planning, with the increasing complex business concepts of medical practice management. The former topics are presented in this textbook, the later in our recent companion text: The Business of Medical Practice [Transformational Health 2.0 Skills for Doctors].

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For example, views of medical practice, personal lifestyle, investing and retirement, both what they are and how they may look in the future, are rapidly changing as the retail mentality of medicine is replaced with a wholesale and governmental philosophy. Or, how views on maximizing current practice income might be more profitably sacrificed for the potential of greater wealth upon eventual practice sale and disposition.

Or, how the ultimate fear represented by Yale University economist Robert J. Shiller, in The New Financial Order: Risk in the 21st Century, warns that the risk for choosing the wrong profession or specialty, might render physicians obsolete by technological changes, managed care systems or fiscally unsound demographics. OR, if a medical degree is even needed for future physicians?

Say, what medical license?

Dr. Shirley Svorny, chair of the economics department at California State University, Northridge, holds a PhD in economics from UCLA. She is an expert on the regulation of health care professionals who participated in health policy summits organized by Cato and the Texas Public Policy Foundation. She argues that medical licensure not only fails to protect patients from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible. Institutional oversight and a sophisticated network of private accrediting and certification organizations, all motivated by the need to protect reputations and avoid legal liability, offer whatever consumer protections exist today.

Yet, the opportunity to revise the future at any age through personal re-engineering, exists for all of us, and allows a joint exploration of the meaning and purpose in life. To allow this deeper and more realistic approach, the informed transformation advisor and the doctor client, must build relationships based on trust, greater self-knowledge and true medical business management and personal financial planning acumen.

[A] The iMBA Philosophy

As you read this ME-P website, we hope you will embrace the opportunity to receive the focused and best thinking of some very smart people. Hopefully, along the way you will self-saturate with concrete information that proves valuable in your own medical practice and personal money journey. Maybe, you will even learn something that is so valuable and so powerful, that future reflection will reveal it to be of critical importance to your life. The contributing authors certainly hope so.

At the Institute of Medical Business Advisors, and thru the Certified Medical Planner™ program, we suggest that such an epiphany can be realized only if you have extraordinary clarity regarding your personal, economic and [financial advisory or medical] practice goals, your money, and your relationship with it. Money is, after only, no more or less than what we make of it.

Ultimately, your relationship with it, and to others, is the most important component of how well it will serve you.

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EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com

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ANNUITIES: Three Types of Insurance Products

Posted on April 23, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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An annuity is a contract between you and an insurance company. When you purchase an annuity, you make a lump-sum contribution or a series of contributions, generally each month. In return, the insurance company makes periodic payments to you beginning immediately or at a pre-determined date in the future. These periodic payments may last for a finite period, such as 20 years, or an indefinite period, such as until both you and your spouse are deceased. Annuities may also include a death benefit that will pay your beneficiary a specified minimum amount, such as the total amount of your contributions.

The growth of earnings in your annuity is typically tax-deferred; this could be beneficial as you may be in a lower tax bracket when you begin taking distributions from the annuity.

Warning: A word of caution: Annuities are intended as long-term investments. If you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company as well as tax penalties to the IRS and state.

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There are three basic types of annuities — fixed, indexed, and variable

1. With a fixed annuity, the insurance company agrees to pay you no less than a specified (fixed) rate of interest during the time that your account is growing. The insurance company also agrees that the periodic payments will be a specified (fixed) amount per dollar in your account.

2. With an indexed annuity, your return is based on changes in an index, such as the S&P. Indexed annuity contracts also state that the contract value will be no less than a specified minimum, regardless of index performance.

3. A variable annuity allows you to choose from among a range of different investment options, typically mutual funds. The rate of return and the amount of the periodic payments you eventually receive will vary depending on the performance of the investment options you select.

READ: SEC’s publication, Variable Annuities: What You Should Know.

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Feel free to submit education content to the site as well as links, text posts, images, opinions and videos which are then voted up or down by other members. Comments and dialog are especially welcomed.

Daily posts are organized by subject. ME-P administrators moderate the activity. Moderation may also conducted by community-specific moderators who are unpaid volunteers.

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BENEFICIARY DESIGNATIONS: Top 10 Tips for Medical Professionals

Posted on April 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Beneficiary designations can provide a relatively easy way to transfer an account or insurance policy upon your death. However, if you’re not careful, missing or outdated beneficiary designations can easily cause your estate plan to go awry.

Where you can find them

Here’s a sampling of where you’ll find beneficiary designations:

Employer-sponsored retirement plans [401(k), 403(b), etc.]
IRAs
Life insurance policies
Annuities
Transfer-on-death (TOD) investment accounts
Pay-on-death (POD) bank accounts
Stock options and restricted stock
Executive deferred compensation plans
In several states, so-called “lady bird” deeds for real estate

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10 tips about beneficiary designations

Because beneficiary designations are so important, keep these things in mind in your estate planning:

Remember to name beneficiaries. If you don’t name a beneficiary, one of the following could occur:
- The account or policy may have to go through probate. This process often results in unnecessary delays, additional costs, and unfavorable income tax treatment.
- The agreement that controls the account or policy may provide for “default” beneficiaries. This could be helpful, but it’s possible the default beneficiaries may not be whom you intended.
Name both primary and contingent beneficiaries. It’s a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you. Depending on your situation, you may have only a primary beneficiary. In that case, consider whether it may make sense to name a charity (or charities) as the contingent beneficiary.
Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.
Read the instructions. Beneficiary designation forms are not all alike. Don’t just fill in names — be sure to read the form carefully. If necessary, you can draft your own customized beneficiary designation, but you should do this only with the guidance of an experienced attorney or tax advisor.
Coordinate with your will and trust. Whenever you change your will or trust, be sure to talk with your attorney about your beneficiary designations. Because these designations operate independently of your other estate planning documents, it’s important to understand how the different parts of your plan work as a whole.
Think twice before naming individual beneficiaries for particular assets. For example, you may establish three accounts of equal value initially and name a different child as beneficiary of each account. Over the years, the accounts may grow or be depleted unevenly, so the three children end up receiving different amounts — which is not what you originally intended.
Avoid naming your estate as beneficiary. If you designate a beneficiary on your 401(k), for example, it won’t have to go through probate court to be distributed to the beneficiary. If you name your estate as beneficiary, the account will have to go through probate. For IRAs and qualified retirement plans, there may also be unfavorable income tax consequences.
Use caution when naming a trust as beneficiary. Consult your attorney or CPA before naming a trust as beneficiary for IRAs, qualified retirement plans, or annuities. There are situations where it makes sense to name a trust — for example if:
- Your beneficiaries are minor children
- You’re in a second marriage
- You want to control access to funds
Be aware of tax consequences. Many assets that transfer by beneficiary designation come with special tax consequences. It’s helpful to work with an experienced tax advisor to help provide planning ideas for your particular situation.
Use disclaimers when necessary — but be careful. Sometimes a beneficiary may actually want to decline (disclaim) assets on which they’re designated as beneficiary. Keep in mind that disclaimers involve complex legal and tax issues and require careful consultation with your attorney and CPA.

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MEDICAL PRACTICE: As a Financial Asset Class?

Posted on April 13, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

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By Dr. David Edward Marcinko; MBA MEd CMP™

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What Is an Alternative Investment?

An alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash. Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.

QUESTION: But what about a medical, podiatric or dental practice?

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An Alternate Asset Class Surrogate?

A medical practice is much like an alternative investment [AI], or alternate asset class in, two respects.

First, it provides the work environment that generates personal income which has been considered generous, to date.

Second, it has inherent appreciation and sales value that can be part of an exit (retirement) or succession planning transfer strategy.

Conclusion

So, unlike the emerging thought that offers Social Security payments as a surrogate for an asset classes; or a federally insured AAA bond – a medical practice might also be considered by some folks as an asset class within a well diversified modern investment portfolio.

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com

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ROTH: Conversion Considerations for Physicians

Posted on April 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

Why would a doctor consider a Roth IRA conversion?

By Staff Reporters

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A Roth conversion involves transferring funds from a traditional retirement account—such as a 401(k), 403(b), or individual retirement account (IRA) funded with pre-tax dollars—into a Roth IRA.

The biggest benefit lies in the tax treatment of the converted funds. Once the funds are in the Roth IRA, future growth of those assets is tax-free. Withdrawals in retirement are also tax-free, assuming they meet certain criteria. As with any strategy, there are important considerations to keep in mind.

When you convert funds to a Roth IRA, the amount converted is taxable income in that tax year. For example, if you convert $100,000 from a traditional IRA to a Roth IRA, that $100,000 will be added to your taxable income in the conversion year.

Converting large amounts can result in a significant tax bill and may push you into a higher tax bracket. Even so, using retirement funds to pay taxes may make sense for those looking to convert large IRAs to reduce their future required minimum distributions (RMDs).

The timing of your Roth conversion matters too. Generally, it’s a good idea to convert when your income is lower—for example, after you’ve retired and before you begin drawing Social Security. You may also choose to convert over the course of several years to spread out the tax impacts. But if you can get comfortable with these considerations, a Roth conversion can provide you with benefits beyond tax-free growth and withdrawals.

Some of these benefits are:

Tax diversification. Having both traditional and Roth accounts allows you to manage your tax liability in retirement. For example, if your income in a given year is higher than expected, you can withdraw from the Roth IRA without increasing your taxable income.
No RMDs. Traditional IRAs and 401(k)s require you to begin taking RMDs at age 73. Roth IRAs have no RMD requirement during your lifetime. With a Roth account, you have more control over your retirement withdrawals and can leave the funds to grow for your heirs.
Benefits for heirs. Roth IRAs can be passed on to beneficiaries, who can inherit the account income tax-free. This means your heirs can enjoy the tax-free growth and withdrawals if the Roth IRA has been held for five years or more—a significant advantage, especially if your beneficiaries are in a higher tax bracket.

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OBTAIN: An Unbiased Second Financial Planning Opinion

Posted on April 2, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Ann Miller RN MHA CPHQ CMP™

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Finally … Fiduciary second investing and financial planning opinions right here!

Telephonic or electronic advice for medical professionals that is:

Objective, affordable, medically focused and financially personalized
Rendered by a pre-screened financial consultant for doctors and medical professionals
Offered on a pay-as-you-go basis, by phone or secure e-mail transmission

The iMBA Discussion Forum™ is a physician-to-financial advisor telephone or e-mail portal that connects independent financial professionals to doctors, nurses or healthcare executives desiring affordable and unbiased financial planning advice.

Medical professionals and healthcare executives can now receive direct access to pre-screened iMBA professionals in the areas of Investing, Financial Planning, Asset Allocation, Portfolio Management, Insurance, Mortgage and Lending, Human Resources, Retirement Planning and Employee Benefits. To assist our medical professional and healthcare executive members, we can be contracted with per-minute or per-project fees, and contacted by client phone, email or secure instant messaging.

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http://www.MARCINKOASSOCIATES.com

E-mail CONTACT: MarcinkoAdvisors@outlook.com

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HEDGE FUNDS: In Individual Retirement Accounts?

Posted on April 2, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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QUESTION: What is a Hedge Fund?

A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.

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QUESTION: Can I invest my Individual Retirement Account [IRA] in a Hedge Fund?

This is up to the manager, but there is no legal restriction on a hedge fund accepting individual retirement account (IRA) assets. IRA accounts are not well suited for funds that make extensive use of leverage, however. In such cases, the fund is likely to generate significant amounts of unrelated business taxable income (UBTI) – profits of the fund attributable to the use of leverage. The holder of an IRA account must pay taxes on UBTI, even if the UBTI was generated in an IRA account.

But, today’s hedge funds may or may not use leverage. Many hedge funds are not hedged at all, but rather are just specialized versions of regular long stock portfolios. If such funds do not use much leverage, IRA investors will not encounter much difficulty with UBTI and should not hesitate in considering these funds.

In considering whether to accept IRA money, hedge fund managers must consider several factors. If the only type of retirement money accepted by the hedge funds is IRA money, then the manager has no limit on how much retirement money the fund can accept. If, however, there are other types of retirement money invested in the fund, such as pension funds, IRA money will be counted towards a total of 25 percent of fund assets that can be invested in retirement accounts before the fund becomes subject to the Employment Retirement Income Security Act of 1974 (ERISA). Funds subject to ERISA regulations face a heavy administrative burden and more restrictions than most fund managers like.

Finally, IRA distributions from a hedge fund are subject to the standard 20 percent withholding unless the funds are directly rolled over to other qualified plans.

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MERGER ARBITRAGE: Risk Arbitrage Defined

Posted on March 30, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko; MBA MEd CMP™

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Sponsor: http://www.CertifiedMedicalPlanner.org

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Merger Arbitrage (a.k.a. Risk Arbitrage)

Merger risk arbitrage, while a subset of a larger strategy called event-driven arbitrage, represents a sufficient portion of the market-neutral universe to warrant separate discussion.

Merger arbitrage earned a bad reputation in the 1980s when Ivan Boesky and others like him came to regard insider trading as a valid investment strategy. That notwithstanding, merger arbitrage is a respected strategy and when executed properly, can be highly profitable. It bets on the outcomes of mergers, takeovers and other corporate events involving two stocks which may become one.

Example:

A classic example is acquisition of SDL Inc. (SDLI) by JDS Uniphase Corp (JDSU). On July 10, 2010 JDSU announced its intent to acquire SDLI by offering to exchange 3.8 shares of its own shares for one share of SDLI. At that time, the JDSU shares traded at $101 and SDLI at $320.5. It was apparent that there was almost 20 percent profit to be realized if the deal went through (3.8 JDSU shares at $101 are worth $383 while SDLI was worth just $320.5).

This apparent mispricing reflected the market’s expectation about the deal’s outcome. Since the deal was subject to the approval of the U.S. Justice Department and shareholders, there was some doubt about its successful completion.

Risk arbitrageurs who did their homework and properly estimated the probability of success bought shares of SDLI and simultaneously sold short shares of JDSU on a 3.8 to 1 ratio, thus locking in the future profit. Convergence took place about eight months later, in February 2011, when the deal was finally approved and the two stocks began trading at exact parity, eliminating the mis-pricing and allowing arbitrageurs to realize a profit.

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Hedge Fund Research defines the strategy as follows:

Merger Arbitrage,also known as risk arbitrage, involves investing in securities of companies that are the subject of some form of extraordinary corporate transaction, including acquisition or merger proposals, exchange offers, cash tender offers and leveraged buy-outs. These transactions will generally involve the exchange of securities for cash, other securities or a combination of cash and other securities. Typically, a manager purchases the stock of a company being acquired or merging with another company, and sells short the stock of the acquiring company. A manager engaged in merger arbitrage transactions will derive profit (or loss) by realizing the price differential between the price of the securities purchased and the value ultimately realized when the deal is consummated. The success of this strategy usually is dependent upon the proposed merger, tender offer or exchange offer being consummated.

When a tender or exchange offer or a proposal for a merger is publicly announced, the offer price or the value of the securities of the acquiring company to be received is typically greater than the current market price of the securities of the target company. Normally, the stock of an acquisition target appreciates while the acquiring company’s stock decreases in value. If a manager determines that it is probable that the transaction will be consummated, it may purchase shares of the target company and in most instances, sell short the stock of the acquiring company. Managers may employ the use of equity options as a low-risk alternative to the outright purchase or sale of common stock. Many managers will hedge against market risk by purchasing S&P put options or put option spreads.

Cite: https://www.hfr.com See § 23.03[E].

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FINANCIAL PLANNING: Specifically for Physicians and Medical Professionals

Posted on February 1, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By http://www.MarcinkoAssociates.com

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(“Informed Voice of a New Generation of Fiduciary Advisors for Healthcare”)

For most lay folks, personal financial planning typically involves creating a personal budget, planning for taxes, setting up a savings account and developing a debt management, retirement and insurance recovery plan. Medicare, Social Security and Required Minimal Distribution [RMD] analysis is typical for lay retirement. Of course, we can assist in all of these activities, but lay individuals can also create and establish their own financial plan to reach short and long-term savings and investment goals.

But, as fellow doctors, we understand better than most the more complex financial challenges doctors can face when it comes to their financial planning. Of course, most physicians ultimately make a good income, but it is the saving, asset and risk management tolerance and investing part that many of our colleagues’ struggle with. Far too often physicians receive terrible guidance, have no time to properly manage their own investments and set goals for that day when they no longer wish to practice medicine.

For the average doctor or healthcare professional, the feelings of pride and achievement at finally graduating are typically paired with the heavy burden of hundreds of thousands of dollars in student loan debt.

You dedicated countless hours to learning, studying, and training in your field. You missed birthdays and holidays, time with your families, and sacrificed vacations to provide compassionate and excellent care for your patients. Amidst all of that, there was no time to give your finances even a second thought.

Between undergraduate, medical school, and then internship and residency, most young physicians do not begin saving for retirement until late into their 20s, if not their 30s. You’ve missed an entire decade or more of allowing your money and investments to compound and work for you. When it comes to addressing your financial health and security, there’s no time to waste.

And you may be misled by unscrupulous “advisors”.

MORE: https://marcinkoassociates.com/financial-planning/

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MARCINKO ASSOCIATES: Physician Wealth Advisors and Practice Management Consultants

Posted on December 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

FIDUCIARY MEDICAL COLLEAGUES – FEE ONLY – NO PRODUCT OR SALES COMMISSIONS

SPONSOR: http://www.MarcinkoAssociates.com

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DEAR MEDICAL COLLEAGUES

Achieving your financial, wealth and medical practice management goals is important, but handling everything on your own can be overwhelming. That’s where we come in. At D. E. Marcinko & Associates, our team of dual degree experienced physician advisors and medical consultants is here to guide you every step of the way. We believe in providing unbiased, high-quality financial and business advice.

For example, we offer a one-time written financial plan with oral evaluation for a flat fee with no ongoing sales or assets under management fees or commissions. Together, we can create a personalized financial plan tailored to your unique goals, empowering you to make confident, informed decisions as you navigate your financial future.

Other Services Include:

Estate Planning We have a network of qualified legal professionals that we can refer you to for state specific estate planning needs.
Tax Strategy We can work alongside your CPA for tax planning purposes. If needed, we can refer you to a qualified tax professional.
Investment Analysis If you have investments, we review your accounts to make sure they are aligned with your long-term goals.
401-k Allocations We evaluate your 401(k) allocations and provide recommendations that align with your goals.
Education Savings We help you explore the various ways to plan and save for education expenses.
Insurance & Risk Management We assess your insurance coverage to ensure it adequately protects you against potential risks; as well as evaluate and provide expert litigation witnesses, as needed.
Medical Practice Management We evaluate your current or potential medical practice to determine value and/or private equity offers or physician practice management formats [PPMC] for new, mid-career or retiring physicians, nurses and dentists.

D. E. Marcinko & Associates is unique and fully committed to all phases of a medical professionals personal and business life cycle. We are at your service 24/7: Email MarcinkoAdvisors@outlook.com

ANN MILLER RN MHA CMP™

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USA: Contact

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Some Retirement Statistics and Questions for Physicians

Posted on November 23, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Transitioning to the End of Your Medical Career

SPONSOR: https://marcinkoassociates.com/

BY DR. DAVID EDWARD MARCINKO MBA MEd CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

With the PP-ACA, increased compliance regulations and higher tax rates impending from the Biden administration – not to mention the corona pandemic, venture capital based healthcare corporations and telehealth – physicians are more concerned about their retirement and retirement planning than ever before; and with good reason. After payroll taxes, dividend taxes, limited itemized deductions, the new 3.8% surtax on net investment income and an extra 0.9% Medicare tax, for every dollar earned by a high earning physician, almost 50 cents can go to taxes!

Introduction

Retirement planning is not about cherry picking the best stocks, ETFs or mutual funds or how to beat the short term fluctuations in the market. It’s a disciplined long term strategy based on scientific evidence and a prudent process. You increase the probability of success by following this process and monitoring on a regular basis to make sure you are on track.

General Surveys

According to a survey from the Employee Benefit Research Institute [EBRI] and Greenwald & Associates; nearly half of workers without a retirement plan were not at all confident in their financial security, compared to 11 percent for those who participated in a plan, according to the 2014 Retirement Confidence Survey (RCS).

In addition, 35 percent of workers have not saved any money for retirement, while only 57 percent are actively saving for retirement. Thirty-six percent of workers said the total value of their savings and investments—not including the value of their home and defined benefit plan—was less than $1,000, up from 29 percent in the 2013 survey. But, when adjusted for those without a formal retirement plan, 73 percent have saved less than $1,000.

Debt is also a concern, with 20 percent of workers saying they have a major problem with debt. Thirty-eight percent indicate they have a minor problem with debt. And, only 44 percent of workers said they or their spouse have tried to calculate how much money they’ll need to save for retirement. But, those who have done the calculation tend to save more.

The biggest shift in the 24 years has been the number of workers who plan to work later in life. In 1991, 84 percent of workers indicated they plan to retire by age 65, versus only 9 percent who planned to work until at least age 70. In 2014, 50 percent plan on retiring by age 65; with 22 percent planning to work until they reach 70.

Physician Statistics

Now, compare and contrast the above to these statistics according to a 2018 survey of physicians on financial preparedness by American Medical Association [AMA] Insurance. The statistics are still alarming:

The top personal financial concern for all physicians is having enough money to retire.
Only 6% of physicians consider themselves ahead of schedule in retirement preparedness.
Nearly half feel they were behind
41% of physicians average less than $500,000 in retirement savings.
Nearly 70% of physicians don’t have a long term care plan.
Only half of US physicians have a completed estate plan including an updated will and Medical directives.

Retired MD Doctor Retirement Gift Idea Retiring - Doctor ...

Thoughts to Ponder

And so, to help make your golden years comfortable and worry free, here are ten important retirement questions for all physicians to consider:

How much money do you need to retire?
What is your retirement cash flow?
What is your retirement vision?
How to stay on retirement track?
How to maximize retirement plan contributions such as 401(k) or 403(b)?
How to maximize retirement income from retirement plans?
What are some other retirement plan savings options?
What is your retirement plan and investing style?
What is the role of social security in retirement planning?
How to integrate retirement with estate planning?

The opinion of a competent Certified Medical Planner® can assist.

ASSESSMENT: Your thoughts, comments and input are appreciated.

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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DAILY UPDATE: 401[k] and Wamco as Stock Markets Crash!

Posted on November 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“

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Daily Update Provided By Staff Reporters Since 2007.
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Your Referral Count -0-

The Internal Revenue Service (IRS) ruled that employees at an unnamed company can designate a portion of their employer match to student debt repayments or health reimbursement accounts, in addition to their traditional 401(k).

CITE: https://www.r2library.com/Resource

STOCKS UP

Warren Buffett’s Midas touch gave a boost to Domino’s Pizza and Pool Corp. after Berkshire Hathaway announced it has bought shares of both companies. Domino’s popped to start the day but dropped 1.27%, while Pool climbed just 0.54%.
Palantir is jumping ship, moving from the NYSE to the Nasdaq. Shareholders liked the move, pushing the stock up 11.14%.
Bloom Energy…bloomed 59.19% on the news that the renewable energy company reached an agreement to provide utility company American Electric Power with 1 gigawatt worth of fuel cells.

STOCKS DOWN

What Buffett giveth, Buffett taketh away: Apple sank on the news that Berkshire Hathaway has sold shares of the company, and almost completely eliminated its position in Ulta Beauty. Apple fell 1.41%, while Ulta Beauty dropped 4.60%.
Shareholders were expecting the worst from Chinese online retailer Alibaba, and although the company actually beat earnings forecasts, it wasn’t enough—shares still sank 2.20%.
Applied Materials tumbled 9.20% after beating both top and bottom line expectations, but shareholders balked at the slowdown in several key businesses.
AST SpaceMobile plummeted 9.59% after reporting bigger losses and smaller sales than Wall Street wanted to see.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major stock market benchmarks ended:

The SPX fell 78.55 points (–1.32%) to 5,870.62 to end the week down 2.08%; the Dow Jones Industrial Average^® ($DJI) lost 305.87 points (–0.70%) to 43,444.99 to end the week down 1.24%; and the NASDAQ Composite^® ($COMP) decreased 427.52 points (–2.24%) to 18,680.12 to end the week down 3.15%.
The 10-year Treasury note yield rose one basis point to 4.43% but added 12 basis points for the week. Shorter-term yields rose less.
The CBOE Volatility Index^® (VIX) climbed sharply to 16.11 as stocks fell.

CITE: https://tinyurl.com/tj8smmes

The problems at storied bond manager Western Asset Management keep growing. Clients have pulled about $55 billion from Wamco, as the division is known, since mid-August, representing about 15% of its assets. Franklin Templeton, its 77-year-old parent company and one of the largest asset managers in the U.S., recently reported its steepest quarterly outflows on record.

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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ECONOMIC: Paradoxes all Financial Advisors Should Know

Posted on November 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

BY DR. DAVID EDWARD MARCINKO MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

SPONSOR: http://www.CertifiedMedicalPlanner.org

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A paradox is a logic and self-contradictory statement or a statement that runs contrary to one’s expectation. It is a statement that, despite apparently valid reasoning from true or apparently true premises, leads to a seemingly self-contradictory or a logically unacceptable conclusion. A paradox usually involves contradictory-yet-interrelated elements that exist simultaneously and persist over time. They result in “persistent contradiction between interdependent elements” leading to a lasting “unity of opposites”.

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And so, as we plan for our financial future thru a New Year Resolution for 2025, it’s helpful to be cognizant of these paradoxes. While there’s nothing we can do to control or change them, there is great value in being aware of them, so we can approach them with the right tools and the right mindset.

According to Adam Grossman, here are seven [7] of the paradoxes that can bedevil financial decision-making, clients and financial advisors, alike:

There’s the paradox that all of the greatest fortunes—Carnegie, Rockefeller, Buffett, Gates—have been made by owning just one stock. And yet the best advice for individual investors is to do the opposite: to own broadly diversified index funds. More: https://tinyurl.com/285vftx4
There’s the paradox that the stock market may appear over valued and yet it could become even more overvalued before it eventually declines. And when it does decline, it may be to a level that is even higher than where it is today.
There’s the paradox that we make plans based on our understanding of the rules—and yet Congress can change the rules on us at any time, as the recent 2024 election results attest.
There’s the paradox that we base our plans on historical averages—average stock market returns, average interest rates, average inflation rates and so on—and yet we only lead one life, so none of us will experience the average.
There’s the paradox that we continue to be attracted to the prestige of high-cost colleges, even though rational analysis that looks at return on investment tells us that lower-cost state schools are usually the better bet.
There’s the paradox that early retirement seems so appealing—and has even turned into a movement—and yet the reality of early retirement suggests that we might be better off staying at our desks.
There’s the paradox that retirees’ worst fear is outliving their money and yet few choose the financial product that is purpose-built to solve that problem: the single-premium immediate annuity.

CITE: https://www.r2library.com/Resource/Title/0826102549

How should you respond to these paradoxes? As you plan for your financial future, embrace the concept of “loosely held views.”

In other words, make financial plans, but continuously update your views, question your assumptions and rethink your priorities.

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DAILY UPDATE: Boeing, NASDAQ and 401(k)s V. Pension Plans

Posted on October 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Boeing is exploring a sale of its space business, the Wall Street Journal reported, as part of a strategy to streamline.

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Dr. Marcinko Interviewed on Physician Retirement and Succession Planning

Posted on October 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Physicians Have Unique Challenges and Opportunities

ENCORE PRESENTATION

http://www.MarcinkoAssociates.com

By Ann Miller RN MHA CMP

[Executive-Director]

Medical Executive-Post Publisher-in-Chief, Dr. David Edward Marcinko MBA CMP™, and financial planner Paul Larson CFP™, were interviewed by Sharon Fitzgerald for Medical News, Inc. Here is a reprint of that interview.

Doctors Squeezed from both Ends

Physicians today “are getting squeezed from both ends” when it comes to their finances, according Paul Larson, president of Larson Financial Group. On one end, collections and reimbursements are down; on the other end, taxes are up. That’s why financial planning, including a far-sighted strategy for retirement, is a necessity.

Larson Speaks

“We help these doctors function like a CEO and help them quarterback their plan,” said Larson, a Certified Financial Planner™ whose company serves thousands of physicians and dentists exclusively. Headquartered in St. Louis, Larson Financial boasts 19 locations.

Larson launched his company after working with a few physicians and recognizing that these clients face unique financial challenges and yet have exceptional opportunities, as well.

What makes medical practitioners unique? One thing, Larson said, is because they start their jobs much later in life than most people. Physicians wrap up residency or fellowship, on average, at the age of 32 or even older. “The delayed start really changes how much money they need to be saving to accomplish these goals like retirement or college for their kids,” he said.

Another thing that puts physicians in a unique category is that most begin their careers with a student-loan debt of $175,000 or more. Larson said that there’s “an emotional component” to debt, and many physicians want to wipe that slate clean before they begin retirement saving.

Larson also said doctors are unique because they are a lawsuit target – and he wasn’t talking about medical malpractice suits. “You can amass wealth as a doctor, get sued in five years and then lose everything that you worked so hard to save,” he said. He shared the story of a client who was in a fender-bender and got out of his car wearing his white lab coat. “It was bad,” Larson said, and the suit has dogged the client for years.

The Three Mistake of Retirement Planning

Larson said he consistently sees physicians making three mistakes that may put a comfortable retirement at risk.

The first is assuming that funding a retirement plan, such as a 401(k), is sufficient. It’s not. “There’s no way possible for you to save enough money that way to get to that goal,” he said. That’s primarily due to limits imposed by the Internal Revenue Service, which allows a maximum contribution of $49,000 annually if self-employed and just $16,500 annually until the age of 50. He recommends that physicians throughout their career sock away 20 percent of gross income in vehicles outside of their retirement plan.
The second common mistake is making investments that are inefficient from a tax perspective. In particular, real estate or bond investments in a taxable account prompt capital gains with each dividend, and that’s no way to make money, he said.
The third mistake, and it’s a big one, is paying too much to have their money managed. A stockbroker, for example, takes a fee for buying mutual funds and then the likes of Fidelity or Janus tacks on an internal fee as well. “It’s like driving a boat with an anchor hanging off the back,” Larson said.

Marcinko Speaks

Dr. David E. Marcinko MBA MEd CPHQ, a physician and [former] certified financial planner] and founder of the more specific program for physician-focused fiduciary financial advisors and consultants www.CertifiedMedicalPlanner.org, sees another common mistake that wreaks havoc with a physician’s retirement plans – divorce.

He said clients come to him “looking to invest in the next Google or Facebook, and yet they will get divorced two or three times, and they’ll be whacked 50 percent of their net income each time. It just doesn’t make sense.”

Marcinko practiced medicine for 16 years until about 10 years ago, when he sold his practice and ambulatory surgical center to a public company, re-schooled and retired. Then, his second career in financial planning and investment advising began. “I’m a doctor who went to business school about 20 years ago, before it was in fashion. Much to my mother’s chagrin, by the way,” he quipped. Marcinko has written 27 books about practice management, hospital administration and business, physician finances, risk management, retirement planning and practice succession. He’s the founder of the Georgia-based Institute of Medical Business Advisors Inc.

Succession Planning for Doctors

Succession planning, Marcinko said, ideally should begin five years before retirement – and even earlier if possible. When assisting a client with succession, Marcinko examines two to three years of financial statements, balance sheets, cash-flow statements, statements of earnings, and profit and loss statements, yet he said “the $50,000 question” remains: How does a doctor find someone suited to take over his or her life’s work? “We are pretty much dead-set against the practice broker, the third-party intermediary, and are highly in favor of the one-on-one mentor philosophy,” Marcinko explained.

“There is more than enough opportunity to befriend or mentor several medical students or interns or residents or fellows that you might feel akin to, and then develop that relationship over the years.” He said third-party brokers “are like real-estate agents, they want to make the sale”; thus, they aren’t as concerned with finding a match that will ensure a smooth transition.

The only problem with the mentoring strategy, Marcinko acknowledged, is that mentoring takes time, and that’s a commodity most physicians have too little of. Nonetheless, succession is too important not to invest the time necessary to ensure it goes off without a hitch.

Times are different today because the economy doesn’t allow physicians to gradually bow out of a practice. “My overhead doesn’t go down if I go part-time. SO, if I want to sell my practice for a premium price, I need to keep the numbers up,” he noted.

Assessment

Dr. Marcinko’s retirement investment advice – and it’s the advice he gives to anyone – is to invest 15-20 percent of your income in an Vanguard indexed mutual fund or diversified ETF for the next 30-50 years. “We all want to make it more complicated than it really is, don’t we?” he said.

QUESTION: What makes a physician moving toward retirement different from most others employees or professionals? Marcinko’s answer was simple: “They probably had a better shot in life to have a successful retirement, and if they don’t make it, shame on them. That’s the difference.”

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Conclusion

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Filed under: "Ask-an-Advisor", CMP Program, Experts Invited, iMBA, Inc., Interviews, Marcinko Associates, Retirement and Benefits, Risk Management | Tagged: CMP Program, divorce planning, Dr. David Edward Marcinko MBA CMP™, paul larson cfp, physician succession planning, retirement planning, www.CertifiedMedicalPlanner.org | 2 Comments »

OPINIONS: Secure Unbiased Financial Planning -or- Economic Practice Management Advice

Posted on October 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

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FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

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PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

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FEE-ONLY

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CONTACT: Ann Miller RN MHA CMP®

EMAIL: MarcinkoAdvisors@msn.com

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2nd OP

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ADVICE: Financial, Investment or Medical Practice Management Second Fiduciary Opinions

Posted on September 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

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EMAIL: MarcinkoAdvisors@msn.com

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2nd OPINIONS

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Why Physicians Need to Deal with Debt

Posted on July 15, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding the Impending Retirement-Planning Crisis

[By Somnath Basu PhD, MBA]

A serious retirement-planning crisis is looming in the US with many Baby Boomer physicians, and others, having already spent a portion of their nest egg and undermining any hope for a comfortable lifestyle unless they continue to work. Notwithstanding medical professionals, look no further than an annual “retirement confidence” survey conducted by the Employee Benefit Research Institute and Mathew Greenwald & Associates in each of the past 17 years. Nearly two in five of working Americans responding to the latest survey indicated that they have taken no action in the face of reductions in their employer-provided retirement benefits.

Consumption Equals Happiness?

The population is constantly told that consumption equals happiness. At the same time they are not being asked to understand about the implications of borrowing to fund for such consumption. Before we can expect to effect a change in the ensuing pattern of a vicious cycle, the population mass must have a clear understanding of the difference between needs (e.g., retiring with peace of mind) and desires (e.g., cruises or living the high life).

Negative Savings Rate

When savings first dipped into negative territory during the Great Depression in 1932 and 1933, people didn’t have enough to eat, whereas there has been no such urgency to raid nest eggs since the repeat of this performance in 2005 when the rate fell to minus 0.5 percent. Our grandparents were shining stars in the way they worked hard to build this country’s infrastructure and manufacturing sector, saved every red cent they could get their hands on and created affluence on a mass scale. Today we’re able to enjoy the fruit of their labor. But, somehow their values were lost on future generations.

Changing American Culture

Many of the nation’s top engineers and scientists now hail from China, India and other Asian countries as American culture has undergone a dramatic change to the point where jocks and cheerleaders are more valued than computer geeks and science nerds in our schools. We inherited so much affluence that it made us lazy as a society. The seeds of our destruction have been sown, but it’s up to our politicians, educators and other leaders, including financial advisors, to help reverse this disturbing pattern before it’s too late.

Many people fall into the trap of rushing through dinner and unwinding in front of the TV where a big part of the problem lies in slick and subtle, and hard to resist, primetime advertising and marketing messages (prime time for subtle messages) that seduce viewers into purchasing luxury cars or flying to far-flung resorts where they can sip umbrella-clad cocktails alongside affluent vacationers.

Americans in Debt

A recent wave of foreclosures has put Americans deeper in debt, with the sub-prime crisis exposing despicable predatory lending practices. But, research has shown the wreckage also could be found strewn across in the mid-prime and prime markets as middle-class borrowers struggled to pay adjustable rate mortgages. High hopes have been pinned on the stock market helping people crawl out from this crisis just like when the real estate market had softened the blow when the tech-bubble burst at the turn of this century. So far, this has happened, to an extent. But, if the stock market starts reeling again, then it will spell even bigger trouble. Add to this the international trade imbalance, which implies foreign governmental funding of our conspicuous consumption, and which comes with high interest rates that need to be paid to the lenders, again to such countries as China, India and other emerging economies, and a bigger, worse picture emerges.

Personal Bankruptcies

Personal bankruptcies have an even more devastating effect on an individual’s ability to plan for the future, particularly since the laws pertaining to this area were toughened to a point where reckless spenders will need to muster fiscal and financial discipline as never before. The doomsday scenario is that children now run the risk of inheriting debt instead of wealth, and it’s unconscionable to think future generations would have a standard of living that’s worse than their parents or grandparents.

Assessment

The true grit associated with being an American is to rise up in the face of adversity – a frontier spirit that drew me this remarkable country. We’ve weathered numerous storms and can do it again. But, it requires a serious commitment to stopping mindless consumption of goods and services, as well as understanding there’s a difference between basic needs and pie-in-the-sky desires.

NOTE: Dr. Somnath Basu is a Professor of Finance at California Lutheran University and the Director of its California Institute of Finance. He is also the creator of the innovative AgeBander technology www.agebander.com for planning retirement needs.

Conclusion

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Filed under: Experts Invited, Financial Planning, Retirement and Benefits, Risk Management | Tagged: California Institute of Finance, california lutheran university, Employee Benefit Research Institute, Negative Savings Rate, Personal bankruptcies, physician debt, retirement planning, Somnath Basu, www.agebander.com | 3 Comments »

SECOND OPINIONS: Secure Investment Advisory -OR- Medical Practice Management Advice

Posted on July 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

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FEE-ONLY CONSULTATIONS

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PHYSICIANS: Is $2.5 Million “Really” Enough to Retire at Age 65?

Posted on June 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Is $2.5 Million Really Enough to Retire?

A retirement nest egg of $2.5 million can likely produce an annual income of $100,000 for as long as you are likely to live. This is using the 4% withdrawal rate many financial advisors consider standard. After starting with the first withdrawal of 4% of the total, the annual withdrawal will adjust for inflation. For example, if inflation runs at the target 2% rate of federal policymakers, during retirement the retiree will withdraw:

^$100,000

in the first year

^$102,000

in the second year

^$104,040

in the third year and so on …

According to this model and conventional wisdom, a 4% withdrawal rate will allow a portfolio to last for at least 30 years. This would permit a 65-year-old retiree to maintain consistent purchasing power until age 95 and beyond.

For most retirees, this will likely be adequate to maintain a satisfying standard of living. Only about 3% of 2,000 retirees surveyed by the Employee Benefit Research Institute in 2022 spent $7,000 or more per month, equivalent to $84,000 in annual spending.

This model does not include a number of other factors. For instance, nearly all retirees are eligible for Social Security. For 2023, the maximum monthly Social Security benefit for people who claim benefits at full retirement age is $3,627. That’s equal to more than half the spending of the top 3% of retirees surveyed by EBRI. And, like the standard withdrawal rate, Social Security benefits are indexed to inflation.

5 Variables for Retiring With $2.5 Million at Age 65

While $2.5 million could seem like enough to retire at 65, many factors could change the outlook.

1. Unexpected Healthcare Costs

The Fidelity Retiree Health Care Cost Estimate suggests an average 65-year-old couple could need (approximate, after taxes): Unexpected Healthcare Costs

This assumes both spouses are enrolled in traditional Medicare, which between Medicare Part A and Part B covers expenses such as hospital stays, doctor visits and services, physical therapy, lab tests and more, and in Medicare Part D, which covers prescription drugs.

This figure does not include long-term care (“custodial care”), most dental care, eye exams and more, so your estimated healthcare costs in retirement could be considerably more.

2. Inflation

Inflation can powerfully influence retirees’ financial well-being. When inflation occurs, it reduces the purchasing power of money withdrawn from your retirement account. You can increase withdrawals to maintain purchasing power, but this risks more quickly depleting your savings.

3. Market Downturns

Inflation isn’t the only cause of market downturns. Business cycles and financial crises can exaggerate normal fluctuations in stock market valuations. If you’re selling investments to generate income for living expenses, you may want to sell more if valuations are down.

4. Longevity

While living a long life is positive, you could outlive the money you’ve saved for retirement. Many financial planners use life expectancy to age 95 or 100 when developing plans for funding retirement.

The Social Security Administration says an average 65-year-old male can live to age 83, while the average woman can live to age 86. However, people in their 80s and 90s also generally reduce their spending, with the exception of healthcare costs.

5. Estate Planning

Retiring at 65 with $2.5 million likely involved generating high income and savings, so there’s a chance you could have assets to pass on. With estate planning, adding members of your family as beneficiaries for homes you paid off with a mortgage may have long-term positives.

You may also want to think about any additional income streams. For example, if you own a medical practice or business, you may want to add your family as a beneficiary so they can decide to keep the business running or sell it.

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Filed under: Estate Planning, Financial Planning, iMBA, Inc., Investing, LifeStyle, Retirement and Benefits | Tagged: EBRI, elderly, estate, Estate Planning, healthcare costs, Investing, Medicare A, Medicare B, Medicare C, Medicare D, retirement, retirement planning | Leave a comment »

RETIREMENT: Can Doctors Afford It?

Posted on April 19, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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You’ve got a sense of your ideal retirement age. And you’ve probably made certain plans based on that timeline. But what if you’re forced to retire sooner than you expect? Aging baby-boomers, corporate medicine, the medical practice great resignation and/or the pandemic, etc?

RESIGNATION: https://medicalexecutivepost.com/2021/12/12/healthcare-industry-hit-with-the-great-resignation-retirement/

Early retirement is nothing new, but it’s clear how much the COVID-19 pandemic has affected an aging workforce. Whether due to downsizing, objections to vaccine mandates, concerns about exposure risks, other health issues, or the desire for more leisure time, the retired general population grew by 3.5 million over the past two years—compared to an annual average of 1 million between 2008 and 2019—according to the Pew Research Center.¹ At the same time, a survey conducted by the National Institute on Retirement Security revealed that more than half of Americans are concerned that the COVID-19 pandemic has impacted their ability to achieve a secure retirement.²

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There’s no need to panic, but those numbers make one thing clear, says Rob Williams, managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. Flexible and personalized financial planning that addresses how you’d cope if you had to retire early can help you make the best use of all your resources.

So – Here are six steps to follow. We’ll use as an example a person who’s seeing if they could retire five years early, but the steps remain the same regardless of your individual time frame.

For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension. However, taking benefits early will mean that you get smaller monthly benefits for the rest of your life. That can matter to your bottom line, even if you expect Social Security to be merely the icing on your retirement cake.

On the Social Security website, you can find a projection of what your benefits would be if you were pushed to claim them several years early. But if you’re part of a two-income couple, you may want to make an appointment at a Social Security office or with a financial professional to weigh the potential options.

For example, when you die, your spouse is eligible to receive your monthly benefit if it’s higher than his or her own. But if you claim your benefits early, thus receiving a reduced amount, you’re likewise limiting your spouse’s potential survivor benefit.

If you have a pension, your employer’s pension administrator can help estimate your monthly pension payments at various ages. Once you have these estimates, you’ll have a good idea of how much monthly income you can count on at any given point in time.

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Step 2: Pressure-test your 401(k)

In addition to weighing different strategies to maximize your Social Security and/or pension, evaluate how much income you could potentially derive from your personal retirement savings—and there’s a silver lining here if you’re forced to retire early.

Rule of 55

Let’s say you leave your job at any time during or after the calendar year you turn 55 (or age 50 if you’re a public safety employee with a government defined-benefit plan). Under a little-known separation-of-service provision, often referred to as the “rule of 55,” you may be able take distributions (though some plans may allow only one lump-sum withdrawal) from your 401(k), 403(b), or other qualified retirement plan free of the usual 10% early-withdrawal penalties. However, be aware that you’ll still owe ordinary income taxes on the amount distributed.

This exception applies only to the plan (including any consolidated accounts) that you were contributing to when you separated from service. It does not extend to IRAs.

4% rule

There’s also a simple rule of thumb suggesting that if you spend 4% or less of your savings in your first year of retirement and then adjust for inflation each year following, your savings are likely to last for at least 30 years—given that you make no other changes to your withdrawals, such as a lump sum withdrawal for a one-time expense or a slight reduction in withdrawals during a down market.

To see how much monthly income you could count on if you retired as expected in five years, multiply your current savings by 4% and divide by 12. For example, $1 million x .04 = $40,000. Divide that by 12 to get $3,333 per month in year one of retirement. (Again, you could increase that amount with inflation each year thereafter.) Then do the same calculation based on your current savings to see how much you’d have to live on if you retired today. Keep in mind that your money will have to last five years longer in this instance.

Knowing the monthly amount your current savings can generate will give you a clearer sense of whether you’ll have a shortfall—and how large or small it might be. Use our retirement savings calculator to test different saving amounts and time frames.

Step 3: Don’t forget about health insurance, doctor!

Nobody wants to spend down a big chunk of their retirement savings on unanticipated healthcare costs in the years between early retirement and Medicare eligibility at age 65. If you lose your employer-sponsored health insurance, you’ll want to find some coverage until you can apply for Medicare.

Your options may include continuing employer-sponsored coverage through COBRA, insurance enrollment through the Health Insurance Marketplace at HealthCare.gov, or joining your spouse’s health insurance plan. You may also find discounted coverage through organizations you belong to—for example, the AARP.

Step 4: Create a post-retirement budget

To make sure your retirement savings will cover your expenses, add up the monthly income you could get from pensions, Social Security, and your savings. Then, compare the total to your anticipated monthly expenses (including income taxes) if you were to retire five years early and are eligible, and choose to file, for Social Security and pension benefits earlier.

Take into account various life events and expenditures you may encounter. You may not pay off your mortgage by the date you’d planned. Your spouse might still be working (which can add income but also prolong certain expenses). Or your children might not be out of college yet.

You’re probably fine if you anticipate that your monthly expenses will be lower than your income. But if you think your expenses would be higher than your early-retirement income, some suggest that you take one or more of these measures:

Retire later; practice longer.
Save more now to fill some of the potential gap.
Trim your budget so there’s less of a gap down the road.
Consider options for medical consulting or part-time work—and begin to explore some of those opportunities now.

To the last point, finding a physician job later in life can be challenging, but certain employment agencies specialize in this area. If you can find work you like that covers a portion of your expenses, you’ll have the option of delaying Social Security and your company pension to get higher payments later—and you can avoid dipping into your retirement savings prematurely.

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ORDER: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

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Step 5: Protect your portfolio

When you retire early, you have to walk a fine line with your portfolio’s asset allocation—investing aggressively enough that your money has the potential to grow over a long retirement, but also conservatively enough to minimize the chance of big losses, particularly at the outset.

“Risk management is especially important during the first few years of retirement or if you retire early,” Rob notes, because it can be difficult to bounce back from a loss when you’re drawing down income from your portfolio and reducing the overall number of shares you own.

To strike a balance between growth and security, start by making sure you have enough money stashed in relatively liquid, relatively stable investments—such as money market accounts, CDs, or high-quality short-term bonds—to cover at least a year or two of living expenses. Divide the rest of your portfolio among stocks, bonds, and other fixed-income investments. And don’t hesitate to seek professional help to arrive at the right mix.

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Many people are unaccustomed to thinking about their expenses because they simply spend what they make when working, Rob says. But one of the most valuable decisions you can make about your life in retirement is to reevaluate where your money is going now.

This serves two aims. First, it’s a reality check on the spending plan you’ve envisioned for retirement, which may be idealized (e.g., “I’ll do all the home maintenance and repairs!”). Second, it enables you to adjust your spending habits ahead of schedule—whichever schedule you end up following. This gives you more control and potentially more income.

Step 6: Reevaluate your current spending

For example, if you’re not averse to downsizing, moving to a less expensive home could reduce your monthly mortgage, property tax, and insurance payments while freeing up equity that could also be invested to provide additional monthly income.

“When you are saving for retirement, time is on your side”. You lose that advantage when you’re forced to retire early, but having a backup plan that anticipates the possibility of an early retirement can make the unknowns you face a lot less daunting.

CITE: https://www.r2library.com/Resource/Title/082610254

References:

¹Richard Fry, “Amid the Pandemic, A Rising Share Of Older U.S. Adults Are Now Retired”, Pew Research Center, 11/04/2021, https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/.

²Tyler Bond, Don Doonan and Kelly Kenneally, “Retirement Insecurity 2021: Americans’ Views of Retirement”, Nirsonline.Org, 02/2021, https://www.nirsonline.org/wp-content/uploads/2021/02/FINAL-Retirement-Insecurity-2021-.pdf.

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PEP: What is a Pooled Employer “Defined Contribution” Plan?

Posted on March 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

RETIREMENT PLANNING

By Staff Reporters

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A PEP is a defined contribution plan, such as a 401(k), in which multiple employers can participate. When employers join a PEP, they delegate their named fiduciary role to a third-party pooled plan provider (PPP). PEP fiduciary oversight falls on the PPP rather than the employer. And although each PPP may set its own eligibility requirements, businesses joining a PEP benefit plan needn’t operate in the same industry or geographical area.

PEP plans provide viable 401(k) alternatives for small business owners who may otherwise struggle to compete for talent against large organizations with comprehensive benefits packages.

CITE: https://www.r2library.com/Resource/Title/082610254

Other advantages include: Less in-house administration: The PPP assumes responsibility for much of the plan administration, handling all plan documentation, governmental filings and ongoing compliance. Employee payroll deductions are left to the employer, but these can be efficiently managed with the help of a payroll service provider that integrates payroll and benefits.

Tax credits can help offset PEP start-up costs. For the first three years of participation, employers may be eligible for a tax credit of $5,000 annually, with an additional $500 available to those who set up automatic enrollment. Under Secure Act 2.0, an additional credit of up to $1,000 per employee for eligible employer contributions may apply to employers with up to 50 employees for the preceding taxable year. This credit phases out from 51 to 100 employees.

Businesses participating in single-employer retirement plans (SEP) must independently communicate and coordinate with their record-keeper, custodian, investment advisor, trustee and auditor. With PEP, all these tasks and services are bundled into one, saving employers time and money.

Despite its advantages, a PEP does have some drawbacks, particularly when compared to an SEP. Unlike a PEP, an SEP gives employers more of the following:

Flexibility: Employers can customize the design of their plan to meet their retirement goals and the needs of their employees.
Control: Employers are not dependent on the actions or decisions of others and can access information and resolve problems directly without the need of a third party.
Choice: Employers have the unilateral freedom to choose a different service provider, move their plan or negotiate better pricing if they are unsatisfied with the cost or quality of service.

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DAILY UPDATE: New IRS Contribution Limits as IBM Launches Retirement RBAs, Sam Bankman-Fried Found Guilty and Stock Markets Rocket Up

Posted on November 3, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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The IRS has increased the 401(k) plan contribution limits for 2024, allowing employees to defer up to $23,000 into workplace plans, up from $22,500 in 2023. The agency boosted contributions for individual retirement accounts to $7,000 for 2024, up from $6,500. The employee contribution limit for 401(k) plans is also increasing to $23,000 in 2024, up from $22,500 in 2023, and catch-up contributions for savers age 50 and older will remain unchanged at $7,500. The new amounts also apply to 403(b) plans, most 457 plans and Thrift Savings Plans.

CITE: https://www.r2library.com/Resource

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IBM just informed its US workers that starting on January 1st, 2024, the corporation will no longer match employee contributions to their 401(k) retirement plans. Instead, it will offer a new benefit called a Retirement Benefit Account (RBA).

“Each eligible employee’s RBA will be credited monthly with an amount equal to five percent of their eligible pay – no employee contribution required,” a leaked internal memo reads, the content of which was confirmed by The Register’s sourcing. “IBMers will also receive a one-time salary increase to offset the difference between the IBM contributions they are currently eligible to receive in the 401(k) plan and the new five percent RBA pay credit. This is separate from the annual salary plan later in the year.”

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A jury on Thursday convicted FTX co-founder Sam Bankman-Fried of fraud, conspiracy and money laundering, the culmination of a month-long trial that saw the former crypto mogul take the stand in his own defense after his inner circle of friends-turned-deputies provided damning testimony against him.

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Here is where the major benchmarks ended:

The S&P 500 Index was up 79.92 points (1.9%) at 4,317.78; the Dow Jones Industrial Average (DJI) was up 564.50 points (1.7%) at 33,839.08; the NASDAQ Composite was up 232.72 points (1.8%) at 13,294.19.
The 10-year Treasury note yield was down about 13 basis points at 4.663%.
CBOE’s Volatility Index (VIX) was down 1.21 at 15.66.

Nearly every sector participated in Thursday’s rally, with banks and other financial companies leading gainers. The KBW Regional Banking Index (KRX) surged more than 5%. Energy and retail shares were also strong. Small-cap stocks outpaced their larger counterparts, with the Russell 2000 Index (RUT) jumping 2.5%.

***

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RETIREMENT PLANNING: The Financial Numbers and Social Security?

Posted on June 29, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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The new magic number for retirement is up slightly from last year, when U.S. adults said they believed they needed $1.25 million to retire comfortably, according to new findings from Northwestern Mutual. High-net-worth individuals – those with more than $1 million in investible assets – believe they’ll need $3 million to retire comfortably.

There’s quite a gap, however, between what people have now and what they think they’ll need. The average amount that U.S. adults have saved for retirement is only $89,300, up 3% from $86,869 in 2022, Northwestern Mutual found.

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Interestingly, more than four in 10 Americans (42%) said they could imagine a time when Social Security no longer exists, according to the research. And yet, people are relying on Social Security to provide 28% of their overall retirement funding. That’s more than personal savings (22%) and equal to retirement savings (28%).

Gen Z and millennials have tempered expectations – they anticipate Social Security will provide 15% and 19% of their overall retirement funding, respectively. That’s a significant drop from what boomers+ say – 38%.

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FIDUCIARY OPINIONS: Secure Investment Advisory -OR- Medical Practice Management Advice

Posted on June 21, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

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MARCINKO & ASSOCIATES, Inc.

Dr. David Edward Marcinko MBA CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

***

CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

https://medicalexecutivepost.com/schedule-a-consultation/

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FIDUCIARY: Obtain an Unbiased 2nd Financial Advisory -or- Economic Practice Management Opinion

Posted on June 1, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

***

Dr. David Edward Marcinko MBA CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

***

CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

2nd OP

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DAILY UPDATE: Business News Briefs Plus TESLA and the Markets

Posted on April 25, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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1. Regional banks’ plight was Morgan Stanley’s perk. The bank saw nearly $20 billion in new client assets in the wake of the banking crisis that rocked smaller banks like First Republic. Why the bank became a “destination of choice” amid the crisis.

2. Taylor Swift was the only one asking the right question on FTX. The mega star didn’t sign a $100 million sponsorship deal with the crypto exchange because, unlike seemingly everyone in Silicon Valley, she did some form of due diligence.

3. The new-age pension plan. Fidelity and State Street are rolling out annuity options within their 401(k) products, The Wall Street Journal reports. But it comes with a hefty price tag, and not everyone is sold on it.

4. It’s starting to get scary in the housing market. Foreclosure filings were up 22% in Q1 compared to last year, and repossessions are headed in the wrong direction as well.

Finally, Fintel reports that on April 21, 2023, Goldman Sachs maintained coverage of Tesla (NASDAQ:TSLA) with a Buy recommendation. As of April 6th, 2023, the average one-year price target for Tesla is $203.14. The forecasts range from a low of $24.58 to a high of $315.00. The average price target represents an increase of 24.63% from its latest reported closing price of $162.99. The projected annual revenue for Tesla is $118,517MM, an increase of 37.75%. The projected annual non-GAAP EPS is $5.70.

CITE: https://www.r2library.com/Resource

***

The S&P 500^® Index was up 3.52 points (0.1%) at 4137.04; the Dow Jones industrial average was up 66.44 (0.2%) at 33,875.40; the NASDAQ Composite was down 35.25 (0.3%) at 12,037.20.
The 10-year Treasury yield was down about 7 basis points at 3.50%.
CBOEs Volatility Index was up 0.12 at 16.89.

Real estate and financials were among Monday’s weakest-performing sectors, while energy companies led gainers thanks to a jump of about 1% in crude oil futures. The U.S. dollar index fell to about 101.37, its weakest level since mid-April, while Treasury yields eased slightly.

***

CITE: https://www.amazon.com/Dictionary-Health-Information-Technology-Security/dp/0826149952/ref=sr_1_5?ie=UTF8&s=books&qid=1254413315&sr=1-5

***

ORDER: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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Capital Market Expectations, Asset Allocation and Safe Portfolio Withdrawal Rates

Posted on July 31, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

From: Munich Personal RePEc Archive [MPRA]

Economist Wade Donald Pfau wrote an article called, “Capital Market Expectations, Asset Allocation, and Safe Withdrawal more than a decade ago. Today, is is still a vital read.

Abstract

Most retirement withdrawal rate studies are either based on historical data or use a particular assumption about portfolio returns unique to the study in question.

But, financial advisors and planners may have their own capital market expectations for future returns from stocks, bonds, and other assets they deem suitable for their clients’ portfolios. These uniquely personal expectations may or may not bear resemblance to those used for making retirement withdrawal rate guidelines. The objective here is to provide a general framework for thinking about how to estimate sustainable withdrawal rates and appropriate asset allocations for clients based on one’s capital market expectations, as well as other inputs about the client including the planning horizon, tolerance for exhausting wealth, and personal concerns about holding riskier assets.

The study also tests the sensitivity of various assumptions for the recommended withdrawal rates and asset allocations, and finds that these assumptions are very important. Another common feature of existing studies is to focus on an optimal asset allocation, which is expected either to minimize the probability of failure for a given withdrawal rate, or to maximize the withdrawal rate for a given probability of failure. Retirement withdrawal rate studies are known in this regard for lending support to stock allocations in excess of 50 percent.

Assessment

This study shows that usually there are a wide range of asset allocations which can be expected to perform nearly as well as the optimal allocation, and that lower stock allocations are indeed justifiable in many cases.

Link: MPRA_paper_32973

About MPRA: http://mpra.ub.uni-muenchen.de/information.html

NOTE: Wade Donald Pfau is an Associate Professor of Economics at the National Graduate Institute for Policy Studies (GRIPS) in Tokyo, Japan. His PhD in economics was from Princeton University.

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OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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SECURE Act 2.0 and Retirement Planning?

Posted on May 16, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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On March 29, the House of Representatives voted 414-5 in favor of the Securing a Strong Retirement Act of 2022. If passed by the Senate, and then signed into law by President Joe Biden, the act could represent a massive economic policy shift regarding retirement savings and investment.

The retirement savings legislation, also known as SECURE Act 2.0, expands on the original SECURE Act and includes provisions to boost the required minimum distribution (RMD) age from 72 to 75 over time, broaden automatic enrollment in retirement plans, and enhance 403(b) plans.

READ: https://waysandmeans.house.gov/?s=secure+act

***

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PODCAST: How Modernized Self-Directed IRAs Help Democratize [Physician] Retirement

Posted on May 4, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

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In this podcast, host Dara Albright and guest, Eric Satz, Founder and CEO of Alto IRA, discuss how modern Self-Directed IRAs (SDIRAs) are democratizing retirement planning by providing all Americans with the ability to add non-correlated alternative asset classes to tax-advantaged accounts.

The single greatest – and free – investment tool is also disclosed.

***

What are the Advantages of Rolling the Money of My Retirement Plan into an IRA? - Protection Point Advisors, Inc.

Discussion highlights include:

How SDIRAs offer wealth building opportunities for “not-yet accredited investors”;
How SDIRAs have evolved to accommodate micro-sized alternative investments;
Why alternative assets belong in retirement vehicles;
Three reasons most retirement savers are underweighted in non-correlated assets;
Trading cryptocurrencies without tax consequences;
Why RIAs are looking to ALTO for clients’ crypto allocation;
How to open a cryptoIRA account.

PODCAST: https://dwealthmuse.podbean.com/e/episode-12-how-modernized-selfdirected-iras-help-democratize-retirement-1623424270/

Your comments are appreciated.

THANK YOU

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SOME TAX BENEFITS: Senior Healthcare Professionals

Posted on February 1, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Tax planning can be quite a tedious process, but there are benefits for all seniors to make it less taxing. And senor medical professionals should take particular note:

Free Advice: IRS-certified volunteers will help older taxpayers with tax return preparation and electronic filing between January 1st and April 15th each year.
No Withdrawal Penalties: Anyone aged 59 years or over can withdraw money from an IRA, without incurring the common 10% tax.
Catch-Up Contributions: Healthcare Workers aged 50 or older can defer income tax on an extra $6,500 or a total of $26,000 if contributed to a 401(k) plan, resulting in a tax savings of $6,240 for an older worker in the 24% tax bracket.
Additional IRA Contribution: Workers age 50 and older can contribute an additional $1,000 to an IRA, or a total of $7,000 in 2020.
CITE: https://www.r2library.com/Resource/Title/082610254

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What is the IRS RULE of 55?

Posted on September 16, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

ON Retirement PLANS AND Planning

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Taking a distribution from a tax qualified retirement plan, such as a 401(k), prior to age 59 1/2 is generally subject to a 10 percent early withdrawal tax penalty.

However, the IRS rule of 55 may allow you to receive a distribution after attaining age 55 (and before age 59 1/2 ) without triggering the early penalty if your plan provides for such distributions.

What is the rule of 55? https://www.experian.com/blogs/ask-experian/what-is-the-rule-of-55/

The distribution would still be subject to an income tax withholding rate of 20 percent, however. (If it turns out that 20 percent is more than you owe based on your total taxable income, you will get a refund after filing your yearly tax return.)

CITE: https://www.r2library.com/Resource/Title/0826102549

It’s important to note that the rule of 55 does not apply to traditional or Roth IRAs.

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The TRI-PHASIC Road from Medical Practice to Retirement Planning for Doctors

Posted on September 14, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

BY DR. DAVID E. MARCINKO MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

Determining Your Retirement Vision

For example, what would you like to do in retirement? Your retirement vision will be unique to you. You are retiring to something not from something that you envisioned. When you have more time, you would like to do more traveling, play golf or visit more often, family and friends. Would you relocate closer to your kids? Learn a new art or take a new class? Fund your grandchildren’s education? Do you have philanthropic goals? Perhaps you would like to help your church, school or favorite charity? If your net worth is above certain limits, it would be wise to take a serious look at these goals. With proper planning, there might be some tax benefits too. Then you have to figure how much each goal is going to cost you.

If have a list of retirement goals, you need to prioritize which goal is most important. You can rate them on a scale of 1 to 10; 10 being the most important. Then, you can differentiate between wants and needs. Needs are things that are absolutely necessary for you to retire; while wants are things that still allow retirement but would just be nice to have.

CITE: https://www.r2library.com/Resource/Title/0826102549

Recent studies indicate there are three phases in retirement, each with a different spending pattern [Richard Greenberg CFP®, Gardena CA, personal communication]. The three phases are:

The Early Retirement Years. There is a pent-up demand to take advantage of all the free time retirement affords. You can travel to exotic places, buy an RV and explore forty-nine states, go on month-long sailing vacations. It’s possible during these years that after-tax expenses increase during these initial years, especially if the mortgage hasn’t been paid off yet. Usually the early years last about ten years until most retirees are in their 70’s.

Middle Years. People decide to slow down on the exploration. This is when people start simplifying their life. They may sell their house and downsize to a condo or townhouse. They may relocate to an area they discovered during their travels, or to an area close to family and friends, to an area with a warm climate or to an area with low or no state taxes. People also do their most important estate planning during these years. They are concerned about leaving a legacy, taking care of their children and grandchildren and fulfilling charitable intent. This a time when people spend more time in the local area. They may start taking extension or college classes. They spend more time volunteering at various non-profits and helping out older and less healthy retirees. People often spend less during these years. This period starts when a retiree is in his or her mid to late 70’s and can last up to 20 years, usually to mid to late-80’s.

Late Years. This is when you may need assistance in our daily activities. You may receive care at home, in a nursing home or an assisted care facility. Most of the care options are very expensive. It’s possible that these years might be more expensive than your pre-retirement expenses. This is especially true if both spouses need some sort of assisted care. This period usually starts when the retiree is their 80’s; however they can sometimes start in the mid to late 70’s.

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Planning Issues – Early Career

Planning Issues – Mid Career

Planning Issues – Late Career

Three to five years before you retire, start making the transition from work to retirement.

Try out different hobbies;
Find activities that will give you a purpose in retirement;
Establish friendships outside of the office or hospital;
Discuss retirement plans with your spouse.
If you plan to relocate to a new place, it is important to rent a place in that area and stay for few months and see if you like it. Making a drastic change like relocating and then finding you don’t like the new town or state might be very costly mistake. The key is to gradually make the transition.

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When Will You Retire?

Posted on December 8, 2019 by Dr. David Edward Marcinko MBA MEd CMP™

Where Will Your Money Come From?

By Rick Kahler CFP®

The list is fairly short: Social Security, a pension, working, your assets, children, or public assistance.

According to an April 22, 2019 Bloomberg article by Suzanne Woolley, entitled “America’s Elderly Are Twice as Likely to Work Now Than in 1985“, only twenty percent of those age 65 or older are working. The rest either can’t work physically, can’t find work, or don’t want to work. According to the ADA National Network, over 30 percent of people over 65 are disabled in some manner.

According to the Center on Budget and Policy Priorities, Social Security provides the majority of income for most elderly Americans. It provides at least 50% of income for about half of seniors and at least 90% of income for about one-fourth of seniors. The average Social Security retirement benefit isn’t as high as many people think. In June 2019 it was about $1,470 a month, or about $17,640 a year.

And, as per the Pension Rights Center, around 35% of Americans receive a pension or VA benefits. The greatest percentage of pensions are government. This would include retired state and federal workers like teachers, police, firefighters, military, and civil service workers. In 2017 the median state or local government pension benefit was $17,894 a year, the median federal pension was $28,868, and the median military pension was $21,441.

Working provides the highest source of retirement income for the 20 percent of those who are over 65 and are still working. According to SmartAsset.com, Americans aged 65 and older earn an average of $48,685 per year. However, in a NewRetirement.com article dated February 26, 2019, “Average Retirement Income 2019, How Do You Compare“, Kathleen Coxwell cites a figure from AARP that the median retirement income earned from employment is $25,000 a year.

About 3% of retirees receive public assistance.

This leaves around 20% of those over 65 who depend partially or fully for their retirement income on money they set aside during their working years. According to TheStreet.com, “What Is the Average Retirement Savings in 2019“, by Eric Reed, updated on Mar 3, 2019, the average retirement account for those age 65 to 74 totals $358,000. That amount will safely provide around $15,000 a year for most retirees’ lifetime. The median savings is $120,000, which will produce only about $5,000 a year. In order to retire at age 65 with an annual investment income of $30,000 to $40,000, someone would need a retirement nest egg of over $1 million.

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My conclusion from this data is that most Americans are woefully underprepared to live a comfortable lifestyle when they can no longer work. Between Social Security, pensions, and retirement savings, a retiree can expect a median income of $18,000 to a maximum of $52,000 a year. According to data I compiled from NewRetirement.com, the average median retirement income of those over age 65 is around $40,000.

What are some things you can do to increase your chances of enjoying a comfortable retirement income?

If you are under age 50, begin setting aside 15% to 25% of your income for retirement.

If you are over 60, keep working as long as you can. If you retire early, your monthly Social Security benefit is lower for the rest of your life.

Consider ways to stretch your retirement income by downsizing, sharing housing, or relocating to an area of the US or even outside the country with a lower cost of living.

Research what you can reasonably expect from Social Security and other sources of retirement income. Base your retirement expectations on informed planning, not on vaguely optimistic expectations.

Assessment: Your thoughts are appreciated.

Conclusion

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Two Different Personal IRA Investing Strategies?

Posted on March 11, 2019 by Dr. David Edward Marcinko MBA MEd CMP™

Based on Tax Considerations?

By Dr. David Edward Marcinko MBA

LINK: https://medicalexecutivepost.com/schedule-a-consultation/

One personal investing strategy is to place more conservative investments (those with lower expected returns) in a tax-deferred traditional IRA, 401-k, 403-b or similar, and more aggressive (higher-earning) assets in a taxable brokerage account or Roth IRA.

WHY? Each account is thus working hard but in very different ways.

HOW? The conservative funds in the traditional IRA or retirement accounts would fill any needs for safety as they grow more slowly – and the higher tax rate won’t take out as big of a bite.

Meanwhile, the more aggressive funds in a taxable brokerage accounts would grow more quickly, but be taxed at a lower rate.

Assessment: Any thoughts?

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***

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“Roll Out the Rollover”

Posted on November 25, 2018 by Dr. David Edward Marcinko MBA MEd CMP™

More on Retirement Planning

By Rick Kahler CFP®

If your employer offers a 401(k) or other retirement plan, contributing to that plan is a foundation of your retirement savings. However, as you approach retirement age, you might consider moving some of your retirement funds out of your employer’s plan and into an IRA at a custodian like TD Ameritrade or Fidelity; etc.

Such a rollover is often done when you leave an employer, though many employers give you the option of keeping your retirement account with them. What isn’t popularly understood is that you also can do a rollover while you’re still employed, as long as you are over 59 ½.

Why Rollover?

One reason to consider leaving your employer’s plan is that most of them have higher overall fees than an IRA, especially if you choose from low-cost index mutual funds or exchange traded funds from a company like Vanguard or Dimensional Fund Advisors. It’s not uncommon to save up to 1% annually by making a rollover into these mutual funds.

However, the costs of an IRA are not always cheaper. If you have a Thrift Savings Plan (TSP) through the federal government, the total costs are .03% a year. This is far cheaper than the average equity fund that charges 1.3% or even Vanguard and DFA that charge .09% on some funds.

The disadvantage with a TSP, like most employer plans, is their very limited investment options. The TSP offers about six options. Most 401(k)s will offer several times that—still a pittance compared with the 13,000 available at most discount brokers.

Another reason for a rollover is what happens when you retire and need to withdraw funds from your account. You can withdraw money from an IRA at any time without penalty after age 59 ½, but withdrawing money from a past employer’s 401(k) plan will require jumping through a few more hoops.

One issue that surprises most people is that the required minimum distributions (RMD) rules are reversed for employer plans. A RMD is never required with a Roth IRA. However, a RMD must be taken from a Roth 401(k) when you turn 70 ½. For this reason I recommend you roll over a Roth 401(k) before you turn 70 ½. The flip side of this is that when you turn 70 ½ you do have to take RMDs from a traditional IRA, but you do not from a traditional 401(k). Only a committee could have made up these rules.

The new tax code has made charitable giving less tax advantageous. However, if you are over 70 ½, you can give to charity tax-free from your IRA via a qualified charitable distribution (QCD). Employer plans don’t allow QCDs.

Another advantage of IRAs is that you can consolidate a number of employer accounts into one IRA. You can also withdraw funds from an IRA at any age without penalty for college expenses, which you cannot do from an employer plan.

Yet, another big advantage to an IRA is the ability to do Roth conversions, which cannot be done with an employer’s plan. It’s especially important to do such conversions before turning 70 ½ when your RMDs and Social Security benefits (assuming you wait until 70) kick in and raise your taxable income and possibly your tax bracket. Taking advantage of lower tax brackets prior to age 70 to convert part of traditional IRAs to Roths can lower your RMDs, which lower your tax liability, and let some of your retirement funds grow tax free forever.

***

Assessment

Done properly, a rollover from an employer’s plan to an IRA is free of any tax consequences. However, it’s important to evaluate the advantages and disadvantages carefully before you act.

Conclusion

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“Getting Old is Better than the Alternative”

Posted on December 11, 2017 by Dr. David Edward Marcinko MBA MEd CMP™

More on Retirement Planning

By Rick Kahler CFP®

At the gym where I work out it’s not uncommon to hear us old guys complaining in the locker room about our aches and pains. When the complaining subsides, inevitably someone will remark, “Well, at least getting old is better than the alternative.”

If you are fortunate enough not to die prematurely, you are going to grow old one day. As youth begins to gradually fade and health limitations increase, the reality that you will not be able to earn a living forever will present itself. At some point in time your financial support will need to come from something other than your job or business.

It’s very easy to dismiss this when we are young, because we’ve never known anything but being young. We take our health, vigor, and capabilities for granted. Just like anything that is “normal,” only when it’s gone do we tend to really appreciate it.

Normalacy

I never gave any thought to opening a door, drinking a cup of coffee, or cutting up the food on my plate—until I tore my rotator cuff and my right arm was rendered useless. A few weeks of doing without it taught me a whole new appreciation for the value and ease a functioning right arm brings to my life.

Unfortunately, many of the capabilities we lose with aging do not return after a few weeks of healing. The harsh reality is that eventually most of us will not be able to take care of ourselves in the ways we are used to.

Retirement planning

So when you think about “retirement planning,” here is what that really means: When you can’t earn an income, how will you be provided for? Where is the money for rent and utilities going to come from? How are you going to get to doctor appointments and the store when you can’t drive anymore? Who will help you pay your bills when your eyesight or your mind aren’t as clear as they once were? Who is going to help you with meal preparation or remind you to take your medications?

If you have fully funded your retirement, you can feel secure that, no matter what care and assistance you may need, you will have the means to pay for it. If you haven’t saved adequately, you will need to rely on others to take care of you financially as well as physically.

The “others”

For many people, “others” mean first spouses, then children, and finally governmental or charitable organizations. These all have limitations.

Spouses. What happens if you don’t have a partner? Or when they can no longer care for you? Or when both of you need care?

Children. Unlike many other countries and cultures, “living with the kids” is not necessarily expected or accepted in the U.S. Most children are not equipped emotionally or especially financially to become caretakers for aging parents.

According to studies I’ve read, the cost of caring for a parent who has not provided for themselves ranges from $250,000 to $700,000 in lost wages, opportunities, and out-of-pocket expenses. People may have to quit jobs to care for a parent or hire care at a cost of up to $100,000 a year. Few in American can afford that.

Government and charities. Social Security provides only a minimal income. Medicaid pays for only basic care such as shared living space. Services like public transportation, subsidized elder housing, and reliable in-home services are not available everywhere, especially in rural areas.

***

https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

***

Assessment

This is not a pretty picture of retirement. Unfortunately, it is reality for millions of Americans. The consequences of neglecting to prepare financially for old age are all too real.

Conclusion

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements.

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***

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On Pre-Retirement Planning

Posted on December 20, 2016 by Dr. David Edward Marcinko MBA MEd CMP™

By Charles Schwab

A 12-Month Playbook

***

More:

Conclusion

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Retirement Planning and Physicians [An Oxymoron]?

Posted on December 19, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

Confidence Eluded

By Shikha Mittra MBA CFP® AIF® http://www.feeonlynetwork.com/Shikha-Mittra

Retirement Money

Debt

Shifting Demographics

***

***

Physician Statistics

Now, compare and contrast the above to these statistics according to a 2013 survey of physicians on financial preparedness by American Medical Association [AMA] Insurance.

The statistics are still alarming:

The top personal financial concern for all physicians is having enough money to retire.
Only 6% of physicians consider themselves ahead of schedule in retirement preparedness.
Nearly half feel they were behind
41% of physicians average less than $500,000 in retirement savings.
Nearly 70% of physicians don’t have a long term care plan.
Only half of US physicians have a completed estate plan including an updated will and Medical directives.

Assessment

More:

Physicians and Retirement Planning

Conclusion

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How Physicians Prepare for Retirement?

Posted on November 18, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

ME-P SPECIAL REPORT

On Physician DIY’s

[By Vicki Rackner MD]

Dear ME-P Readers and Subscribers,

Employed physicians who use professional financial advisors v.s. physician financial do-it-yourself-ers):

Did you know the following:

Feel better prepared for retirement
Have more in emergency savings
Have more diverse financial investments and
Feel more confident about their personal financial decisions?

Did you also know:

57% of employed physicians use a professional financial advisor; 43% do not?
The biggest unanswered question that keeps more physicians from working with an advisor is, “How do I find an advisor whom I can trust?” These numbers come from the 2014 AMA Insurance Agency Report on Employed Physicians’ Retirement Preparedness.

Here are some other key survey findings:

60% of practicing physicians are employed by hospitals, groups and medical schools.
42% of of employed physicians are behind where they would like to be in retirement planning.
Employed physicians” #1 financial goal is to enjoy a comfortable retirement. Other top concerns include funding long-term care, minimizing losses and ensuring an inheritance for children/ grandchildren.
Half of employed physicians believe they have unique or more complex financial needs than other professionals.These finding affirm the intuitively obvious: experts get better results than dabblers.
Patients get the best medical outcomes when they work with physicians whom they trust; physicians get the best financial results when they work with financial advisors whom they trust.

***

What this means for you

These finding affirm the intuitively obvious: experts get better results than dabblers.

Patients get the best medical outcomes when they work with physicians whom they trust; physicians get the best financial results when they work with financial advisors whom they trust; as a fiduciary advisor.

Assessment

Enter the Certified Medical Planners

About the Author

Vicki Rackner MD, author, speaker and President of Targeting Doctors, helps financial advisors accelerate their practice growth by acquiring more physician clients. She calls on her experience as a practicing surgeon, clinical faculty at the University of Washington School of Medicine and nationally-noted expert in physician engagement to offer a bridge between the world of medicine and the world of business.

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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How Obama’s 2015 Proposed Budget Impacts Retirement Accounts

Posted on April 8, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

Fore Warned is Fore Armed!

By Lon Jefferies MBA CFP®

President Obama recently unveiled his proposed budget for 2015. Included in the proposal were the following potential changes to investor retirement accounts:

Apply Required Minimum Distribution Rule To Roth IRAs

There are currently two main reasons to invest in a Roth IRA – to pay taxes at your current rate in anticipation of being in a higher tax bracket in the future, and to invest in an account that does not require minimum distributions when the investor reaches age 70½. However, President Obama’s 2015 budget calls for Roth accounts to be subject to the same RMD requirements as other retirement accounts.

This change would make Roth IRA accounts much less appealing for a good portion of the investment community. Additionally, if enacted, the rule would dramatically reduce the benefit for many individuals to convert their traditional retirement accounts to Roth accounts. Lastly, this rule would essentially betray all investors who already converted their accounts to Roths by taking away a benefit they were counting on.

Eliminate Stretch IRA

Non-spouse beneficiaries of retirement accounts currently have the option of either withdrawing the funds from the inherited retirement account within five years of the original IRA owner’s death or stretching IRA distributions over their expected lifetime. Stretching distributions is considered favorable because it allows the investor to spread the tax liability from the income over their lifetime and continue taking advantage of the tax-deferral provided by the retirement account. However, Obama’s proposal would eliminate non-spouse beneficiaries’ ability to stretch distributions over a period of more than five years.

If implemented, this change would have severe tax implications on people inheriting a retirement account and drastically reduce the value of tax-deferred accounts as estate planning tools.

Cap on Tax Benefit for Retirement Account Contributions

Currently, investors obtain a full tax-deferral benefit on all contributions to retirement accounts. Under Obama’s proposal, the maximum tax benefit that would be allowed on retirement contributions would be 28%. Consequently, an investor in the 39.6% tax bracket would only be able to deduct 28% and would still need to pay taxes at 11.6% (39.6% – 28%) on all contributions made.

Eliminate RMDs For Retirement Accounts Less Than $100k

Currently, investors over the age of 70½ must begin taking taxable distributions from their retirement accounts in the form of required minimum distributions (RMDs). Under Obama’s proposal, individuals whose retirement accounts have a total value of less than $100k would no longer be subject to required minimum distribution rules. This would enable retirees with less in their retirement accounts to take greater advantage of the tax-deferral benefit an IRA provides.

Retirement Account Value Capping New Contributions

Under the new proposal, once an individuals’ retirement account value grew to a certain cap, no further contributions would be allowed. This cap would be determined by calculating the lump-sum payment that would be required to produce a joint and 100% survivor annuity of $210,000 starting when the investor turns 62. Currently, this formula would indicate a cap of $3.2 million. This cap would be adjusted for inflation.

Proposal, Not Law…

Keep in mind that these potential changes are currently just proposals and are not certain to be implemented into law. In fact, with the exception of RMDs for Roth accounts, all of these suggested adjustments were proposed by Obama last year and none were approved by congress. Consequently, history suggests that Obama may have a hard time getting these changes implemented. Still, examining the proposals provides some insight into the direction President Obama would like to proceed.

Conclusion

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Physicians and Retirement Planning

Posted on March 30, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

More than Brokerage Accounts and Insurance Policies

By Shikha Mittra; AIF®, CFP®, CRPS®, CMFC®, MBA

Many physicians think that by having a few brokerage accounts or a few insurance products, they are doing retirement planning. Just as when a patient visits the physician with a heart condition, or a severe ailment, s/he would not rush into surgery or prescribe the most popular heart medication on the market without a detailed medical analysis.

Similarly, retirement planning is not cherry picking the best stocks or mutual funds It’s similar to the process of diagnosing a major medical condition, finding alternatives and then charting the best course of action; through medications, surgery if required, and regular checkups.

Integrated with Financial Planning

Retirement Planning involves an in depth analysis of your needs, wants and resources; and looking at alternative scenarios and then developing a long term strategy to achieve those goals. It takes into account all other areas of your financial planning situation such as cash flow, insurance needs, investments, taxes and estate planning. It’s based on your risk tolerance, time frame, annual savings and your prioritized goals.

And, you increase the probability of success by following this process and monitoring it on a regular basis to make sure you are on track. All assumptions made are strictly unique and there is no one size fits all retirement strategy!

###

Assessment

The more time you have to plan for your retirement, the less risks you have to take near retirement, and the easier it gets to make your retirement vision a reality!

More: http://www.medicalnewsinc.com/retirement-and-succession-planning-cms-351

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IRA v. 401(k)-?

Posted on March 18, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

On Retirement Vehicles

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Which is the better choice for retirement saving, an IRA or a 401(k)? And what’s the difference between the two?

Either an IRA (Individual Retirement Account/Arrangement) or a 401(k) plan is a great place to start investing for retirement. They are more alike than different, and which one to choose depends on your particular circumstances.

Basics

Here are some of the basics you need to know.

1. Who can use these plans?

You can open an IRA if you or your spouse has income earned from working. This includes wages, commissions, and self-employment income but not income from sources like rental property or pensions.

Since 401(k)s are only offered through employers, these plans are not available to everyone. IRAs can only be opened by individuals and are never available through employers.

2. How much can you contribute?

For 2014, the maximum annual contribution for an IRA is $5,500, or $6,500 if you’re 50 or older. The maximum annual contribution for a 401(k) is $17,500, or $23,000 if you’re 50 or older. Spouses eligible to participate in their own plans can each contribute the maximum.

3. Is there employer matching?

With an IRA, no. But many employers match part of employees’ contributions to 401(k) accounts. This is why a 401(k), if available, is often the best place to start your retirement saving. Part of the money you put into the account is doubled even before it earns any kinds of investment return.

4. What about taxes?

With a traditional IRA or 401(k), all or part of the contributions you make are usually tax-deductible but you pay taxes on the money you withdraw at retirement. The money you contribute to a 401(k) is not taxed; it is taken out of your paycheck before tax withholding is figured. Any matching 401k contribution from your employer is not taxed, either. You do pay taxes on the money you withdraw.

If you choose a Roth IRA or 401(k), your contributions are not tax-deductible. However, the money you withdraw after retirement is not taxed.

With both traditional IRAs and 401(k)s, if you withdraw funds from the account before age 59 1/2, you generally have to pay taxes on that money, plus a penalty of 10% of the amount withdrawn.

5. What if you leave a job and have money in a 401(k)?

Any money you have contributed, plus its earnings, is yours. Usually you have to stay with a company for several years before the employer match is fully vested, meaning it’s yours to keep even if you change jobs. You can roll over the amount in your account to an IRA or to a new employer’s 401(k) without paying penalties. This rollover amount doesn’t count toward your annual contribution limit.

6. Is a 401(k) or an IRA a better investment?

This is something that confuses a lot of people. Neither IRAs nor 401(k)s are investments in themselves. Instead, they are accounts, serving as containers to put investments in. A 401(k) plan will usually have several different investment options to choose from. IRAs typically have many more investment options. My advice is to pick mutual funds that include the greatest variety of asset classes like US stocks, international stocks, US bonds, international bonds, real estate, and natural resources. In either an IRA or a 401(k), it’s wise to diversify your retirement funds among as many asset classes as you can.

Assessment

In sum, either a 401(k) or an IRA is a good retirement savings choice. Some taxpayers can contribute to both. What matters most, though, is choosing to make regular contributions to a retirement account in order to provide for your future.

Conclusion

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Education versus Retirement

Posted on March 12, 2014 by Dr. David Edward Marcinko MBA MEd CMP™

Not An “all-OR-nothing” Proposition

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

I recently had the opportunity to share an evening out with some friends, new parents with six-month-old twins.

The conversation centered on birthing, breastfeeding, and burping!

Thinking Education

One topic we didn’t discuss was baccalaureate degrees. Most people might think it’s premature to consider college education while your kids aren’t even crawling.

Actually, that’s the perfect time to think about it, especially if you intend to fund all or a significant part of your children’s education. Don’t wait till kids are 17, 14, or even 11 to settle on a philosophy of “who pays what” toward their education. If you do, you risk becoming a financial burden to your children in retirement.

Most parents perceive paying their children’s college expenses as a loving act. They believe it will help give their children a good start on a career and chance to get ahead. The facts suggest it actually may accomplish just the opposite. The reason? Most American parents who fund their children’s college education underfund their own retirement.

Parents who fail to fully fund their own retirement may dearly cost their children later. Such parents often rely on their children to take care of them in their final years. Research indicates that looking after parents in their old age comes at a great financial price.

The Research

According to Alan Blaustein, the founder of CarePlanners, elderly parents who underfunded their retirement cost their children an average of 18 hours a week, $30,000 a year in hard costs, and a total of $300,000 in forfeited wages and benefits. Most studies put the total cost from $250,000 to $750,000, depending on the length of time the parents needed care.

Considering that the tuition at many four-year colleges averages around $100,000, most children would be much further ahead to pay for their own education while parents fully funded their own retirement.

Not only does paying for kids’ college education potentially hurt them financially, it also can hurt them academically. I reported last year on research that found children whose parents pay the tab for college have lower GPA’s than those who earn scholarships, borrow, or work their way through college.

[Retirement-OR- Educational Funding?]

The Psychology

Clearly, the logical and loving approach for parents is to focus on retirement first, even if that means letting children pay for their own education. Yet the average American parent recoils from the thought, finding it unloving, selfish, or irresponsible even in the face of clear evidence that the opposite is true.

Such “illogical” emotional responses to factual data actually make perfect sense. The Nobel Prize-winning psychologist, Daniel Kahneman, discovered that we make 90% of all financial decisions emotionally, not logically. Moreover, the more complex the financial decision, the higher the probability is that we rely on our emotions to make it. Sadly, evolution wired our brains to make poor financial decisions.

So, Start Early

Do yourself and your children a favor and assess your ability to save for retirement when your children are very young. Fully fund your retirement first with maximum contributions to 401(k) plans or IRAs. If there is anything left over, start 529 college savings plans when kids are babies. This will allow the tax-free earnings to grow and multiply by the time they set off to college.

Assessment

Remember, too, that college funding isn’t an “all or nothing” proposition. Many parents choose to pay some college expenses and help the kids find ways to fund the rest through scholarships, jobs, and loans.

More:

Conclusion

In any case, early planning is the key to supporting both your kids’ futures and your retirement. Making logical college funding decisions, rather than emotional ones, creates a win/win for everyone.

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10 tips about beneficiary designations

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What Is an Alternative Investment?

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Physicians Have Unique Challenges and Opportunities

ENCORE PRESENTATION

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Understanding the Impending Retirement-Planning Crisis

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Is $2.5 Million Really Enough to Retire?

$100,000

in the first year

$102,000

in the second year

$104,040

in the third year and so on …

5 Variables for Retiring With $2.5 Million at Age 65

1. Unexpected Healthcare Costs

2. Inflation

3. Market Downturns

4. Longevity

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Step 1: Think strategically about pension and Social Security benefits

Step 2: Pressure-test your 401(k)

Step 3: Don’t forget about health insurance, doctor!

Step 4: Create a post-retirement budget

Step 5: Protect your portfolio

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^$100,000

^$102,000

^$104,040