Financial Planning for Indian Doctors: A Comprehensive Guide Across Life Stages

Yesterday, on 29th December 2024, we successfully conducted the Financial Freedom for Doctors Webinar Program. The participants greatly appreciated our efforts and the valuable knowledge we shared. Therefore, we are delighted to present some essential financial planning insights for doctors through this blog.

Financial planning is important in the life of every professional; however, it is a bit more significant for the doctors of India, who generally start their career much later than the rest of their peers owing to years of education and training. In each and every stage of life, doctors have a different trajectory of earnings, commitments to family, and professional practice to maintain; a carefully tailored financial strategy would be required. A comprehensive guide on how to navigate financial needs across life stages is presented below.

Financial independence starts after years of education and internships in the early career phase (20-30 years). Most doctors start earning either during their residency or at the beginning of their practice. The main focus in this phase should be to address education loans and set up a strong financial foundation. Paying off education loans on time avoids high-interest accumulation, and an emergency fund should also be in place for six months to cover any contingency. Health and term insurance are other important ways to secure against risks. Now is the time to begin investment-small steps into mutual funds through SIPs and tax-saving investment instruments like PPF and ELSS funds mark the beginning of long-term financial growth. Besides, expenses related to professional development, conferences, and certification also support career growth.

These are the family-building years, ranging from 30 to 40 years, a time when most doctors have already gained a stable practice or employment. This stage can also be characterized by family building, buying a house, or opening a private clinic. Planning for children’s education starts becoming one of the important financial goals, and savings are started through Sukanya Samriddhi Yojana or education-specific mutual funds. Home loans must be managed with affordable EMIs (30-40% of monthly income) so that the financial balance can be maintained. Upgrading health and life insurance to cover the whole family and obtaining professional indemnity insurance in order to guard against malpractice claims are some of the key steps in this stage. One should diversify the investment portfolio into equity, real estate, and gold. Further tax benefits could be availed of through NPS or ULIPs. Doctors should invest in modern medical equipment, interior development of the clinic, or staff training for increasing their practice and improving the income generation.

The peak earning for doctors usually occurs during the age bracket of 40-50 years, and it should be utilized properly for building good wealth and securing the future. The most important thing is the preparation for higher education for children, which, in case of overseas, is quite expensive, and this has to be done through fixed deposits or child-specific insurance plans for assured returns.

Retirement planning becomes all the more imperative with the need to create a sizeable corpus through long-term instruments like PPF, EPF, or balanced mutual funds. Periodic review and enhancement of insurance cover, including critical illness insurance against sudden expenses on contingencies. These are the years that cater to lifestyle upgrades, family vacations, and other discrete indulgences in upscale living without breaking into vital financial goals. Strategic income tax planning with HUF structures or investment instruments, while keeping tax efficiencies in line, will help augment savings.

Pre-retirement, age 50-60 is considered the time for consolidation, in which earnings are retained as wealth with reduced borrowing and liabilities for a seamless transition into retired life. Paying off most of the big loans, such as home loans, will reduce the stress in retired life. Investments need to safely be placed in fixed deposits, debt mutual funds, or annuity plans. Pension schemes also need a review and change according to requirements after retirement. A major concern now will be healthcare, with increased health insurance cover and a separate medical emergency fund.

This means devising a strategy for how the wealth of an individual is allocated to heirs after one is gone through will writing or trust setup. The transferring of cash or assets to the children, taking tax consequences into consideration, may be one more piece of financial planning. If the doctors operate a private practice, now is the time to consider scaling back or transferring that practice to another party.

The retirement years include 60+ years-when the fruits of income independence are enjoyed, often hard-earned by decades of work. Health-related expenses often account for a substantial component of the budget; hence, comprehensive health insurance and critical illness riders become quintessential. The daily living expenses can be met through passive incomes such as pensions, rentals, or annuity payoffs. Strategic gifting of assets or funds to children or grandchildren, along with the support of philanthropic activities, is in concert with the values of many doctors at this stage. The pursuit of hobbies and travel, along with the simplification of finances through account consolidation and automation of recurring expenses, ensures a relaxed and fulfilling retirement.

In all these stages, some principles remain universal: budgeting to track expenses and not overspend; tax efficiency can be achieved by leveraging the expertise of professional tax consultants. Maintenance of an emergency fund is important, and so is staying informed about all financial instruments and policies. Professional advice from financial planners ensures that investment strategies are tailored to individual goals. Financial planning is not a one-time event that grows with the stages of life. The balancing of the personal and professional aspirations, along with financial goals for the doctors, will certainly bring long-term stability in the career and success thereof. With a proper and disciplined approach, doctors themselves and their families will have financial security that will lead to fulfilling professional aspirations in turn. It’s never late to take charge of finances; start planning today with a secure and prosperous future.

Dr. Prahlada N.B
MBBS (JJMMC), MS (PGIMER, Chandigarh). 
MBA in Healthcare & Hospital Management (BITS, Pilani), 
Postgraduate Certificate in Technology Leadership and Innovation (MIT, USA)
Executive Programme in Strategic Management (IIM, Lucknow)
Senior Management Programme in Healthcare Management (IIM, Kozhikode)
Advanced Certificate in AI for Digital Health and Imaging Program (IISc, Bengaluru). 

Senior Professor and former Head, 
Department of ENT-Head & Neck Surgery, Skull Base Surgery, Cochlear Implant Surgery. 
Basaveshwara Medical College & Hospital, Chitradurga, Karnataka, India. 

My Vision: I don’t want to be a genius.  I want to be a person with a bundle of experience. 

My Mission: Help others achieve their life’s objectives in my presence or absence!

My Values:  Creating value for others.