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4 FINANCIAL CHALLENGES FOR NEW PHYSICIANS

This is it—you are finally ready to launch your career in medicine. But after years of training, you may face financial challenges that are particular to new physicians.

1. TACKLING (ANY) MEDICAL SCHOOL DEBT

With a jump in income as a new physician, you’ll have to decide how quickly you want to pay down your medical school debt—if you have any.

How much debt do medical school students expect to have at graduation?

17% No debt
37% $1 to $99,999
29% $100,000 to $199,999
17% over $200,000

Source: MD Physician Loyalty Survey, December 2016

2. FIGURING OUT TAX INSTALMENTS

As a new physician who is self-employed, you’ll have to make quarterly income tax payments to the government yourself. Work with your tax advisor to get organized.

“I send nothing in the first year of practice?”

“When are my instalment payments due?”

3. SAVING AND INVESTING FOR RETIREMENT

Most physicians are self-employed and may not have government or company pension plans to rely on. The earlier you save and invest, the more time your money has to grow.

How much will you need to save for 30 years of retirement?

Annual income desired at
retirement (before tax)
Need to save
$70,000 $1.2 million
$80,000 $1.4 million
$90,000 $1.5 million
$100,000 $1.7 million

Assumption: Investment portfolio earns 4% compounded annually.

Source: MD Financial Management

4. DECIDING ABOUT INCORPORATION

About 60% of physicians incorporate their practice1, but incorporation may or may not make sense, depending on your own situation. Here’s an example of the potential difference incorporating your medical practice can make.

Unincorporated physician earning $325,000 in professional income

Net salary $190,000
Personal taxes $135,000

Incorporated physician earning $325,000 in professional income2

Net salary $92,500
Corporate net income available for deferral $164,000
Corporate taxes $29,000
Personal taxes $39,500

ACCESS TO MD FINANCIAL MANAGEMENT

As a member of the Canadian Medical Association, you benefit from having access to MD Financial Management. MD is the only financial management company dedicated to the financial well-being of Canada’s physicians and their families.

As a resident and new-in-practice physician, you have access to MD MedEd Counsel™—a team of MD Advisors and Early Career Specialists.

Learn more about MD MedEd Counsel or find an MD Advisor near you at md.cma.ca/meded.

1Source: Canadian Medical Association

2This example uses Ontario’s 15% corporate tax rate. Calculations are rounded off to the nearest hundred. Initial setup costs are not included in this example, nor are annual legal and accounting fees.

MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies. MD Financial Management Inc. is owned by the Canadian Medical Association. MD MedEd Counsel™ services are provided by MD Management Limited, a CMA company. MD MedEd Counsel™ is a trademark of the Canadian Medical Association, used under licence.