The first quarter of the year is when most doctors are flush with bonus checks and maybe even a little guilt about last year's spending habits.
It's the perfect time to get your financial house in order before life gets in the way. Whether you're just finishing residency or thinking about retirement, here's what you need to do now when the year is still fresh.
Also read: A Post-Holiday Financial Wake-Up Call from Mount Crumpit
For New Attendings
The average resident salary is around $65,000 depending according to Medscape, depending on your year and location, so that first attending paycheck hitting your account feels like winning the lottery.
Congrats, you're no longer broke! In 2026, the median physician salary across all specialties is around $427,000, ranging from $330,000 at the 25th percentile to $800,000 at the 90th percentile.
Don't miss: Physician Compensation: Modest Gains and Deeper Financial Pressures
But here's something most new attendings mess up. They see that big number and immediately finance a house that costs four times their income, or lease a car they don't need. Then they wonder why they're still living paycheck to paycheck two years later.
Max Out Your Retirement Accounts Before You Do Anything Else
In 2026, you can contribute $24,500 to your 401(k) or 403(b). If you're 50 or older, add another $8,000 catch-up contribution. Ages 60–63 get a super catch-up of $11,250. It's important to note that if you earned more than $150,000 in FICA wages in 2025, those catch-up contributions must now be Roth (after-tax) contributions.
Do a backdoor Roth IRA next. The contribution limit is $7,500 for 2026 ($8,600 if you're 50+). Since you'll blow past the income limits for direct Roth contributions (they phase out between $153,000–$168,000 for single filers), the backdoor method is your play.
If your hospital offers a 457(b) plan, max that out as well. It's another $24,500. Unlike a 401(k), you can access 457(b) money penalty-free if you leave your employer, even before age 59½.
If you have access to an HSA through a high-deductible health plan, put aside $4,400 ($8,750 for family coverage) into it. The HSA is the only triple-tax-advantaged account that is tax-deductible going in, grows tax-free, and comes out tax-free for medical expenses. After 65, you can use it for anything penalty-free (though you'll pay income tax on non-medical withdrawals).
A new attending making $300,000 who maxes out their 401(k) ($24,500), backdoor Roth ($7,500), and HSA ($4,400) saves $36,400 pre-tax. That's already 12% of gross income before we even talk about 457(b) plans or employer matches.
Financially successful physicians save at least 20% of their income for retirement. If you're starting in your early 30s and want to retire by 60, 20% is the floor, not the ceiling.
Buy a House for Less Than Two Times Your Income
The mortgage-to-income ratio is the single biggest predictor of whether you'll build wealth or stay broke. Smart doctors finance less than two times their gross annual income.
If you're making $300,000, your mortgage should be under $600,000. Not the purchase price, the mortgage amount. So if you buy a $700,000 house and put down $100,000, you're good. If you buy a $700,000 house and put down $20,000, you've already lost.
Sure, in San Francisco or New York, that might get you a cardboard box. Tough luck. The laws of financial stability don't care about your zip code. You either live in a smaller place, move to a cheaper city, or accept that you'll work longer than your peers.
Get Disability Insurance Now, Not Later
Own-occupation disability insurance is non-negotiable. You spent 11+ years after high school training for a very specific job. If you can't do that exact job, you need to get paid somehow.
The average doctor graduates with $250,000+ in student loans by the time residency ends. Your ability to earn is literally your most valuable asset. Disability insurance costs roughly 2–3% of your income annually, which is a bargain considering it protects 100% of it.
Get it now while you're young and healthy. Wait until you have hypertension, diabetes, or a back problem, and you'll either pay double or get rejected entirely.
Get Umbrella Liability Insurance
Most doctors have no idea their car insurance caps out at $500,000 in liability coverage.
You rear-end someone on the highway, they get a spinal injury, and they sue you for $2 million because they Googled your name and saw you're a doctor? Your car insurance covers $500,000. You're personally on the hook for the other $1.5 million.
An umbrella policy covering $2–5 million costs, maybe $300–500 per year. It's the cheapest asset protection you'll ever buy.
Learn more: Your 2026 Financial Reset
For Mid-Career Doctors
For docs who are 10–15 years in, the story is slightly different. Your income is stable. Maybe you've got kids, a mortgage, and some retirement savings. This is where doctors either accelerate toward financial independence or plateau indefinitely.
Diversify Your Investments and Stop Chasing Returns
The best-performing accounts in a Fidelity study were owned by people who forgot about them or were literally dead. People who didn't touch their money had better results than active traders.
Stop chasing the hot stock. Stop putting 30% of your portfolio into crypto because your brother-in-law made money on it. Build a boring, diversified portfolio of index funds and leave it alone.
The physicians who are happiest with their investments take the simple approach. Spread risk across multiple asset classes (stocks, bonds, real estate, international holdings), rebalance once or twice a year, but otherwise ignore it.
Earmark Retirement Money for Retirement (Not Renovations)
Money set aside for retirement should only be touched in retirement. If you raid your 401(k) to remodel the kitchen, it's no longer retirement money. It's kitchen money.
You can borrow for almost anything, like student loans, mortgages, home equity lines, and auto loans. Nobody loans money for retirement. Once you're 65 and done working, there's no do-over.
Most physicians earn enough to accomplish any single goal they want. They don't earn enough to accomplish every goal simultaneously. Prioritize accordingly.
Consider Advanced Tax Strategies if You're Self-Employed
From Physician Tax Deductions, self-employed doctors can deduct virtually unlimited business expenses including travel, lodging, equipment, CME, licensing fees, and membership dues.
W-2 employed docs get nothing.
If you do locums work or consulting, form an LLC or sole proprietorship to receive that income. Now those expenses become deductible.
Self-employed physicians with kids can hire them and pay wages up to the standard deduction ($16,100 in 2026). If you're in the 37% federal bracket, shifting $16,000 of income to your child's tax return saves roughly $5,920 in federal taxes alone. Do this with three kids, and you're looking at nearly $17,760 in annual tax savings.
Defined benefit plans (pension plans) allow contributions up to $290,000 for 2026, depending on age and income. For doctors approaching retirement, this can defer $50,000–$100,000+ in federal taxes annually.
Use the Tax-Loss Harvesting Strategy in Taxable Accounts
If you have investments in a regular brokerage account (not retirement accounts), sell losing positions to realize the loss. You can use the first $3,000 of losses to offset ordinary income, saving $1,000–$1,500 in taxes. Losses beyond $3,000 carry forward indefinitely.
You can also donate appreciated securities instead of cash. If you bought stock years ago for $5,000 and it's now worth $20,000, donate the stock directly to charity. You get a $20,000 tax deduction and avoid paying capital gains tax on the $15,000 gain. That's a double tax benefit.
Read more: How to Beat the 4% Rule
For Late-Career Doctors
For those who find themselves within 5–10 years of retirement, you're likely past the rigamarole. Your kids are likely out of the house. Your mortgage might be paid off. This is when you shift from accumulation to preservation.
Make Sure Your Estate Plan Actually Exists
Most doctors don't have a proper estate plan, which is insane. Without one, a judge decides what happens to your kids, your assets, and your medical wishes if you're incapacitated.
At minimum, you need:
- A will
- Advanced directives (living will)
- Power of attorney (financial and medical)
- Possibly a trust, depending on your estate size and goals
In 2026, the federal estate tax exemption is $15 million per individual ($30 million for married couples). The annual gift tax exclusion remains at $19,000 per recipient ($38,000 for married couples using gift-splitting).
Even if you're under the federal exemption, some states have much lower thresholds. Without proper planning, your heirs could get hammered with unnecessary taxes.
Maximize Life Insurance if You Still Need It
If you have dependents, you need life insurance. The rule of thumb is at least $3 million in coverage, more if your spouse doesn't work or if you have multiple kids under 18.
Term life insurance is dirt cheap when you're young and healthy. A 40-year-old non-smoking doctor can get $3 million in 20-year term coverage for maybe $1,500–2,000 annually.
If you're approaching retirement and your kids are independent, you might not need as much coverage. But if you've got a non-working spouse or dependents with special needs, lock in coverage now before health issues make it expensive or impossible.
Consider Roth Conversions Before Retirement
After you retire and your income drops, you're in a lower tax bracket. But once you hit 73 (in 2026), you're forced to take Required Minimum Distributions (RMDs) from your traditional IRA and 401(k), which could push you back into a high bracket.
In the years between retirement and RMDs, convert chunks of your traditional IRA to a Roth IRA. You'll pay taxes on the conversion amount, but at a lower rate than you would've paid during peak earning years. Once it's in the Roth, it grows tax-free forever and has no RMDs.
Run the numbers with a CFP or CPA to figure out how much to convert each year without jumping into a higher bracket.
Review and Adjust Your Asset Allocation
As you get closer to retirement, you generally want to shift away from aggressive growth to preservation. That doesn't mean going 100% bonds, but you should probably dial back from 90% stocks to maybe 60–70% stocks, depending on your risk tolerance and time horizon.
The old rule was “your age in bonds” (so a 60-year-old would have 60% bonds, 40% stocks). That's too conservative for modern life expectancies. A better rule is 110 minus your age in stocks. So at 60, you'd be 50% stocks, 50% bonds/cash.
Adjust based on your personal situation, but the point is not to get caught in a market crash three years before retirement with 90% stocks.
Now's The Time
The doctors who hit financial independence aren't necessarily the ones making the most money. They're the ones who made smart decisions when it mattered:
- They bought reasonable houses
- They maxed out tax-advantaged accounts early and often
- They protected their income with disability insurance
- They diversified their investments and left them alone
- They planned their estates before it was too late
Q1 2026 is your window. Use it.
In case you missed it: Wicked Is The Yellow Brick Road to Retirement
Frequently Asked Questions
What percentage of income should doctors save for retirement?
Financially successful physicians save at least 20% of their gross income for retirement. This is higher than the typical 10–15% recommendation because doctors start saving a decade later than their peers due to extended training. If you're starting in your early 30s and want to retire by 60, treat 20% as your minimum, not your target.
How much house can a doctor afford?
Smart doctors finance less than two times their gross annual income. If you earn $300,000, your mortgage should be under $600,000. Not the purchase price, the mortgage amount. This mortgage-to-income ratio is the single biggest predictor of whether you'll build wealth or stay broke, regardless of your location.
What are the 401(k) contribution limits for doctors in 2026?
The 2026 contribution limit is $24,500 for anyone under 50. Ages 50–59 can add $8,000 in catch-up contributions. Ages 60-63 get a super catch-up of $11,250. Important note: if you earned over $150,000 in FICA wages in 2025, catch-up contributions must be Roth (after-tax).
Do doctors need disability insurance if they work at a hospital?
Yes, absolutely. Own-occupation disability insurance is non-negotiable because it protects your ability to work in your specific specialty. Employer-provided coverage is often limited and may not be portable if you change jobs. With $250,000+ in student loans and 11+ years of training invested, your earning ability is your most valuable asset. Get coverage while you're young and healthy it'll only cost 2–3% of income annually.
What is umbrella liability insurance and why do doctors need it?
Umbrella liability insurance provides additional coverage beyond your car and home insurance liability limits, which typically cap at $500,000. If you're sued for $2 million after an accident, your car insurance covers $500,000 and you're personally liable for the remaining $1.5 million. An umbrella policy covering $2–5 million costs only $300–500 annually making it the cheapest asset protection available.
Should doctors use a Roth IRA or traditional IRA in 2026?
Most doctors earn too much to contribute directly to a Roth IRA (income limits phase out at $153,000–$168,000 for single filers in 2026). The solution is a backdoor Roth IRA: contribute $7,500 to a traditional IRA, then immediately convert it to a Roth. This works best if you don't have any existing pre-tax IRAs.
What is the HSA contribution limit for doctors in 2026?
For 2026, you can contribute $4,400 to an HSA with individual coverage or $8,750 with family coverage. If you're 55 or older, add another $1,000 catch-up contribution. The HSA is the only triple-tax-advantaged account: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.
Can self-employed doctors hire their kids to save on taxes?
Yes. Self-employed physicians can pay their children wages up to the standard deduction ($16,100 in 2026) and deduct it as a business expense. If you're in the 37% federal tax bracket, this saves roughly $5,920 per child annually in federal taxes. The work must be legitimate and age-appropriate, and wages must be reasonable and well-documented.
When should doctors start Roth conversions?
Start Roth conversions in the years between retirement and age 73, when Required Minimum Distributions (RMDs) begin. During this window, your income is typically lower, so you pay taxes on the conversion at a reduced rate. Once money is in a Roth IRA, it grows tax-free forever with no RMDs. Work with a CFP or CPA to determine optimal annual conversion amounts.
What's the estate tax exemption for doctors in 2026?
The federal estate tax exemption is $15 million per individual ($30 million for married couples) in 2026. The annual gift tax exclusion is $19,000 per recipient ($38,000 for married couples using gift-splitting). However, some states have much lower estate tax thresholds, so you need a proper estate plan even if you're under the federal exemption.
Should doctors invest in index funds or pick individual stocks?
An older Fidelity study found that the best-performing accounts were owned by people who forgot about them or were dead, meaning people who didn't touch their money had better results than active traders. Build a diversified portfolio of index funds across multiple asset classes (stocks, bonds, real estate, international holdings), rebalance once or twice yearly, and otherwise leave it alone.
What's the biggest financial mistake new attending physicians make?
Buying too much house. The amount you spend on housing is the number one predictor of wealth accumulation. New attendings often finance homes at four times their income when they should stick to less than two times their income. A $300,000 earner should have a mortgage under $600,000, even in expensive cities.
How much life insurance should doctors carry?
If you have dependents, carry at least $3 million in term life insurance coverage. More if your spouse doesn't work or you have multiple kids under 18. Term life insurance is cheap when you're young and healthy — a 40-year-old non-smoking doctor can get $3 million in 20-year coverage for roughly $1,500–2,000 annually. Lock in coverage before health issues make it expensive or impossible.
Can doctors deduct business expenses if they're W-2 employees?
W-2 employed doctors get almost no tax deductions for work-related expenses. However, if you do locums work, consulting, or receive payments from pharmaceutical companies or medical device manufacturers, form an LLC or sole proprietorship to receive that income. Then you can deduct travel, lodging, equipment, CME, licensing fees, and membership dues as business expenses.
What's the defined benefit plan contribution limit for 2026?
Defined benefit plans (pension plans) allow contributions up to $290,000 for 2026, depending on your age and income. Younger physicians might contribute $50,000 while doctors approaching retirement could contribute the full $290,000, potentially deferring $50,000–$100,000+ in federal taxes annually. This strategy requires working with a pension actuary or third-party administrator.
Should doctors max out 401(k) or 457(b) first?
Max out your 401(k) or 403(b) first to get any employer match, then contribute to a 457(b) if available. The 457(b) has a unique advantage: you can access funds penalty-free when you leave your employer, even before age 59½, unlike a 401(k). Both have the same $24,500 contribution limit for 2026, and you can max out both in the same year.
