Retirement planning has never been a one-time event. It is a living, breathing process that evolves as your career changes, markets shift, tax laws get updated, and your family's needs move in new directions. In 2026, pre-retirees are navigating a familiar mix of excitement and uncertainty. You might be thinking, “I’m close enough that I can see the finish line”. But also, “I’m not close enough that I can afford a major mistake.”

For medical professionals, that tension can be even sharper. Physicians, dentists, nurse practitioners, PAs, nurses, and healthcare administrators often have high incomes and the ability to save aggressively. At the same time, many started later due to education and training, carry student loans longer than other professionals, and experience volatile schedules and burnout. Add in complex benefit packages such as 401(k), 403(b), 457(b), pension options, stock plans, partnership distributions, and you can quickly end up with a retirement plan that looks “good on paper” but is not coordinated.

This article is designed to help pre-retirees and medical professionals think clearly about retirement readiness in 2026. Not with generic rules of thumb, but with practical strategies you can apply. The goal is simple: help you protect the nest egg you have built, reduce unnecessary taxes, and retire with confidence and flexibility.

1) The Unique Retirement Challenges Facing Medical Professionals

Medical professionals often have a retirement profile that looks great from the outside. High income, stable career, strong demand. Under the surface, there are a few common challenges that I see with clients that quietly undermine long-term outcomes if you do not address them proactively.

Late start and “catch-up pressure”

Many physicians and other advanced clinicians do not hit their peak earning years until their late 30s, 40s, or even early 50s. That compresses the timeline to accumulate investments and creates a strong desire to “make up for lost time.” This can lead to two issues:

• Overconcentration in riskier investments because you feel behind.

• Over-saving in the wrong accounts (usually pre-tax) without thinking about future tax diversification.

A more durable approach is to create a savings plan that is aggressive but structured. This means funding accounts in a deliberate order based on taxes, liquidity needs, and flexibility.

Lifestyle inflation and the “invisible spending creep”

High income makes it easy to absorb bigger recurring expenses: larger homes, private school, luxury cars, travel, memberships, and ongoing family support. Many of these costs become semi-permanent, which reduces your flexibility later. The risk is not that you spend money. The risk is that you unintentionally build a lifestyle that forces you to work longer than you want to.

One useful exercise for pre-retirees is to separate spending into:

• Baseline (needs) lifestyle (what you want to maintain no matter what),

• Optional (wants) lifestyle (nice-to-haves that can be scaled up or down),

• Legacy/values (wishes) spending (giving, helping family, experiences).

This becomes extremely helpful when you start planning withdrawals and building an income strategy.

Complex benefits and multiple “buckets”

Medical professionals frequently accumulate accounts across multiple employers: old 401(k)s, 403(b)s, 457(b)s, HSAs, brokerage accounts, IRAs, and sometimes defined benefit plans. Complexity creates opportunity. It also creates risk: target allocation drift, overlapping funds, unnecessary fees, missed beneficiary updates, and tax planning that is not coordinated.

Strategies to consider in 2026

• Maximize tax-advantaged savings: 401(k), 403(b), 457(b), IRA, HSA where available.

• Use catch-up contributions if you are eligible (age-based rules apply).

• Consider Roth options strategically (Roth 401(k)/403(b) or Roth IRA via backdoor, if appropriate).

• Consolidate and simplify when it improves control, lowers fees, or improves investment choices (but do not consolidate blindly. Some plans have unique creditor protections or special distribution rules).

To learn more about these strategies, you can see our 401(k) blog and our Roth IRA recharacterization blog.

2) Planning for Healthcare and Long-Term Care Costs

Healthcare is one of the biggest “known unknowns” in retirement. You can estimate premiums. You can plan for deductibles. What is hard is projecting the cost of chronic conditions, long-term care, prescription changes, inflation, and the timing of major healthcare events.

Medical professionals understand better than most that health outcomes and cost outcomes are not always correlated. A person can be healthy until 82 and then need expensive care quickly. Another may have ongoing costs for decades.

Medicare is important, but it is not comprehensive

A common misconception among pre-retirees is that Medicare will cover “most things.” In reality, Medicare involves:

• premiums (Part B and potentially Part D),

• cost sharing and out-of-pocket exposure,

• gaps that many people fill with a Medigap plan or Medicare Advantage.

Also, higher-income retirees may be subject to income-related premium surcharges. That means your tax planning and withdrawal strategy can directly influence healthcare premiums later.

If you want to learn more, see our Medicare and Retirement Healthcare Planning blog.

Health Savings Accounts (HSAs) are a powerful planning tool

If you are eligible for an HSA while working, it can be one of the most tax-efficient accounts available because it can offer:

• tax-deductible contributions (or pre-tax via payroll),

• tax-free growth,

• tax-free withdrawals for qualified medical expenses.

Even if you do not use it as a “current spending” tool, many pre-retirees treat the HSA as a long-term medical reserve. This can be especially useful for early retirement healthcare gaps before Medicare starts.

To understand the difference between HSA and FSA, and how to optimize them, read our blog post on this here.

Long-term care. The planning conversation most people delay

Long-term care planning is not just about buying insurance. It is about understanding your choices and building a strategy that fits your values and balance sheet. Options can include:

• self-funding with dedicated assets,

• traditional long-term care insurance,

• hybrid life insurance with long-term care riders,

• structuring retirement income to preserve flexibility if a care event occurs.

Check our blog about the insurance most medical professionals overlook.

Strategies to consider in 2026

• Build a retirement plan that includes a realistic healthcare line item, plus a “surprise factor.”

• If eligible, treat HSA contributions as a priority savings vehicle.

• Evaluate long-term care risk early. Pricing and insurability are typically better before health issues appear.

• Coordinate healthcare planning with tax planning. The way you withdraw money later can affect Medicare costs.

3) Tax-Efficient Withdrawal Strategies for 2026

Most people focus on “How do I save enough?” The real game for many high earners and diligent savers becomes: How do I turn savings into retirement income without giving away unnecessary dollars in taxes?

For medical professionals, it is common to accumulate substantial pre-tax balances. 403(b), 401(k), and potentially large IRAs from rollovers. That can create a tax problem later if withdrawals are not planned.

Think in three buckets

A clean retirement income strategy often coordinates withdrawals from:
1) Taxable brokerage accounts (capital gains rules, dividend taxation, flexibility),
2) Tax-deferred accounts (ordinary income tax rates),
3) Tax-free Roth accounts (tax-free withdrawals if rules are met).

The goal is not to pay “zero tax.” The goal is to avoid paying unnecessarily high taxes and to reduce the risk of being forced into higher brackets later.

Roth conversions can be powerful. Timing matters

Roth conversions are often most effective in specific windows:

• early retirement before Social Security starts,

• before required distributions begin,

• during a temporary income dip (sabbatical, job change, reduced hours).

The key is to model it. Conversions can increase your current tax bill, and they can also affect healthcare premiums later. Done correctly, they can reduce lifetime taxes and improve long-term flexibility.

Charitable strategies for those who give

For charitably inclined retirees, certain strategies can reduce taxes while supporting causes you care about. For example, once eligible, some retirees use distributions directed to charity to reduce taxable income. Others donate appreciated securities rather than cash.

Strategies to consider in 2026

• Build a multi-year withdrawal plan, not a one-year plan.

• Stress test the plan for different market and inflation scenarios.

• Explore Roth conversions in years where your taxable income is lower than it will likely be later.

• If you give to charity, evaluate the most tax-efficient way to do it, rather than defaulting to writing checks.

(As always, coordinate tax strategy with your CPA and your broader financial plan.)

4) Investment Strategy: Protecting Your Nest Egg While Still Growing It

As retirement gets closer, the investment conversation often shifts from “How do I grow my portfolio?” to “How do I protect what I’ve built?” The key is to avoid extreme moves.

Two common mistakes:

• Getting too conservative too early, which can increase the risk of running out of money (inflation quietly erodes purchasing power).

• Staying too aggressive without a drawdown plan, which can expose you to sequence-of-returns risk (poor market returns early in retirement can do outsized damage).

Build a portfolio that matches your retirement income plan

Your investments should connect directly to how you plan to spend money in retirement. Many pre-retirees benefit from a “bucket” approach (or something similar conceptually):

• Short-term bucket (1–3 years): cash and high-quality short-term bonds for near-term spending.

• Intermediate bucket (3–10 years): high-quality bonds and balanced holdings designed to dampen volatility.

• Long-term bucket (10+ years): equities and growth assets to fight inflation and support later-life spending.

The details vary, but the goal is consistent: create resilience so you are not forced to sell volatile assets at the wrong time.

Rebalance with intention

Rebalancing is not just a maintenance task. It is a risk control system. In volatile years, rebalancing can help you:

• trim what has run up,

• add to what is temporarily down,

• keep your risk aligned with the plan rather than your emotions

5) Income Planning: Turning Assets Into Paychecks (Without Guessing)

Pre-retirees often focus heavily on the savings stage. Then retirement arrives and the question becomes: “How do I actually pay myself?”

An income plan should answer:

• Where will my income come from each year?

• What happens if markets drop early?

• When should I claim Social Security?

• How do taxes change across my 60s and 70s?

• How do I handle large one-time expenses?

Social Security timing matters

Claiming early vs. later is not just a “break-even age” decision. It can affect:

• survivor benefits for a spouse,

• tax planning,

• how much you need to withdraw from investments early on.

Many couples benefit from coordinating claiming strategies rather than deciding individually.

Withdrawal strategy. Guardrails often beat rigid rules

Rules like “withdraw 4%” can be a starting point, but real life is messy. A more practical approach for many retirees is using spending guardrails:

• increase spending modestly after strong markets,

• tighten discretionary spending after weak markets,

• keep essential spending covered by stable sources when possible.

This is especially relevant for medical professionals who may want semi-retirement (part-time clinical work, consulting, locums, teaching) to reduce portfolio strain and maintain purpose.

6) Risk Management and Estate Planning: The “Unsexy” Areas That Matter Most

You can have a great investment plan and still have retirement derailed by the wrong risks. The closer you get to retirement, the more important it becomes to audit your financial defenses.

Insurance review

Consider reviewing:

• disability coverage (if still working),

• term life needs (often decrease as you become financially independent),

• umbrella liability insurance (especially for high earners),

• property coverage and deductibles.

The goal is not to maximize insurance. It is to ensure that certain risk is transferred to the insurance company when it makes sense to do so.

Estate planning basics that are often outdated

Even for very responsible people, documents are often old. Life changes. Laws change. Beneficiaries get forgotten. A 2026 retirement-readiness checklist should include:

• updated will and/or trust documents,

• durable power of attorney,

• healthcare directives,

• updated beneficiary designations across all accounts,

• a clear list of accounts and a “where everything is” document for your family.

If you have minor children, a blended family, a private practice, or significant assets, this becomes even more important.

7) A Practical 2026 Retirement Readiness Checklist

If you want a simple way to turn the ideas above into action, here is a short checklist you can work through over the next 30–90 days:

1. Clarify your retirement timeline (ideal date, earliest possible date, and “work longer” date).

2. Estimate baseline retirement spending and separate needs vs. wants.

3. Inventory every account (401(k)/403(b)/457, IRA, brokerage, HSA, bank, pensions).

4. Review your investment allocation and stress-test it for a bad market early in retirement.

5. Build a tax map (current bracket, future expected brackets, Roth conversion window).

6. Estimate healthcare costs before Medicare and after Medicare.

7. Decide on a long-term care approach (insure, self-fund, hybrid, or blended).

8. Update beneficiaries and estate documents.

9. Create a retirement income plan (Social Security strategy, withdrawal approach, contingency plan).

10. Schedule a review and revisit annually. Retirement planning is not set-and-forget.

You can also download our 2026 Important Numbers guide to help you with important tax information.

Conclusion: Retirement in 2026 Is About Coordination

The big retirement wins in 2026 are less about finding a magic investment and more about coordinating the moving pieces: taxes, healthcare, investment risk, income timing, and the transition from accumulating wealth to living on it.

If you are a pre-retiree or medical professional, you likely have more complexity than the average household. That complexity can work in your favor. But only if you bring it together into a unified plan.

If you want help pressure-testing your retirement readiness, clarifying your tax opportunities, and building a plan that protects your nest egg, a short conversation can be a great first step.

👉 Schedule your introductory “Fit” meeting today and see if we’re the right partner for your financial journey.

Most medical professionals don’t struggle with discipline.

You show up on time. You handle long shifts. You manage stress that most people couldn’t tolerate for a week. And you’re usually pretty good at saving.

So when financial stress creeps in, it often feels confusing.

You’re earning well. Sometimes very well.
Yet there’s still that uneasy feeling that money is harder to control than it should be.

The reason usually isn’t spending.
It’s uncertainty.

Income that can change month to month.
Overtime that is unpredictable.
Side work, per-diem shifts, contract pay, or moonlighting.
Taxes that somehow feel fine… until they’re suddenly not.

That’s where most financial advice breaks down. It focuses on budgeting, when what medical professionals really need is to projection.

Why budgeting alone doesn’t work for medical professionals

Budgeting assumes your income and expenses are steady.

Many medical professionals in the Chicago area know that’s rarely true.

One month, you’re picking up extra shifts at Advocate.
Another month, your car needs repairs.
An FSA or HSA reimbursement gets deposited in March.
You owe taxes in April.

Traditional budgeting treats those changes as “problems” to smooth out. But they’re not problems - they’re the reality of how your income and expenses work.

When income fluctuates, the question isn’t:
“How do I spend less?”

It’s:
“How do I plan ahead so this doesn’t surprise me later?”

That’s where projections come in.

Paychecks look backwards. Projections look forward.

A paycheck tells you what already happened.

A projection tells you what’s coming - and how today’s decisions will affect your taxes, cash flow, and flexibility later in the year.

For nurse practitioners, anesthesiologists, dentists, and other healthcare professionals, this difference matters more than most people realize.

Without projections:

• You don’t know whether a strong month should be saved, invested, or used for something else

• You can’t tell if you’re on track with taxes until it’s too late

• Bonuses feel good now, but stressful later

• Estimated tax payments become guesswork

• April feels like a reckoning instead of a routine filing

With projections:

• You can see high-income months coming and plan around them

• You know whether you’re under-withholding before penalties appear

• You can adjust quarterly instead of scrambling once a year

• Taxes become predictable

Why quarterly projections matter more than annual plans

A once-a-year financial review doesn’t work well when income isn’t evenly distributed.

Quarterly projections give you checkpoints.

They allow you to ask four times a year:

• “Is my income tracking higher or lower than expected?”

• “Am I on pace with taxes?”

• “Should I adjust savings or spending?”

• “Is this a good time to make a bigger financial move?”

For someone working regular hours at a single employer, this might feel excessive.
For someone picking up shifts across Advocate, Rush, or private practices, it’s essential.

Quarterly planning turns uncertainty into information.

Estimated taxes: the part nobody enjoys, but everyone needs

Estimated taxes are one of the biggest stress points for medical professionals with variable income or side work.

They’re confusing.
They feel arbitrary.
And they’re easy to get wrong.

Many people either:

• Pay too little and get hit with penalties, or

• Overpay out of fear and tie up cash they could’ve used elsewhere

Neither feels good.

What makes estimated taxes manageable isn’t math - it’s expectation.

When you project income ahead of time:

• You can see whether estimated payments make sense

• You understand why a payment is higher or lower

• You’re less likely to be surprised by a tax bill

• You can plan cash flow around payment dates

This is especially relevant for:

• Medical professionals with 1099 income

• Dentists with uneven production months

• Anyone receiving bonuses or incentive pay

• Those working multiple roles or facilities

The goal isn’t perfection.
It’s no surprises.

Bonuses, side work, and “good” financial stress

A bonus should feel like a win.

But without planning, bonuses often come with hidden stress:

• Higher tax brackets

• Larger estimated payments

• Reduced deductions

• Cash flow issues months later

That doesn’t mean bonuses are bad. It means they need context.

Projections allow you to decide in advance:

• How much of a bonus should be set aside for taxes

• Whether it makes sense to increase retirement contributions

• If it’s safe to use part of it for lifestyle goals

• How it affects your overall year

Instead of reacting emotionally, you respond intentionally.

Why medical professionals often underestimate their tax exposure

Many healthcare professionals assume taxes are “handled” through withholding.

That works - until income changes.

Extra shifts.
Bonuses.
Side income.
Job changes mid-year.

Suddenly, withholding no longer matches reality.

Projections help reveal:

• Whether withholding is too low or too high

• If estimated payments are needed

• How income changes affect marginal tax rates

• What adjustments make sense before year-end

This is especially important for high-earning professionals whose income can quietly push them into higher brackets without obvious warning signs.

Planning income isn’t about restriction - it’s about freedom

There’s a fear that planning means limitation.

That it means saying “no” to things you enjoy.

In reality, projections do the opposite.

They give you permission.

When you know:

• What’s coming in

• What needs to be set aside

• What’s truly available

You can spend, save, and invest with confidence - not guilt.

For many medical professionals, that confidence is the missing piece.

Chicago-specific reality: cost of living + variable income

Chicago offers opportunity - and pressure.

Housing costs vary wildly by neighborhood.
Property taxes are really high.
Commuting costs add up.
Lifestyle inflation sneaks in quietly.

Combine that with variable income, and it’s easy to feel like money is always “spoken for” before you decide what to do with it.

Projections help you see:

• How fixed costs interact with variable income

• Whether certain months need more buffer

• When it’s safe to increase savings or spending

• How seasonal work patterns affect your year

It’s not about cutting back - it’s about seeing the full picture.

The emotional side of income planning

Here’s the part that rarely gets discussed.

Uncertainty is exhausting.

Even when you’re earning well, not knowing what’s coming next creates low-grade stress:

• “Am I behind?”

• “Am I overdoing it?”

• “Why does this still feel uneasy?”

Projections replace anxiety with awareness.

They don’t guarantee outcomes - but they give you something solid to work from.

And for people already carrying the emotional load of healthcare work, that matters.

What changes when you shift from budgeting to projecting

When medical professionals move from reacting to planning, a few things tend to change:

• Taxes stop being scary

• Bonuses feel intentional

• Savings become strategic, not accidental

• Cash flow feels calmer

• Financial decisions feel less emotional

Not because income magically stabilizes - but because expectations do.

The year ahead doesn’t have to be a guessing game

Planning income for the year ahead isn’t about predicting every detail.

It’s about building a framework that adjusts as life does.

For nurse practitioners, anesthesiologists, dentists, and other medical professionals across Chicago, that flexibility is the real advantage.

Your work is demanding.
Your income is earned the hard way.

Your financial life should feel supportive - not reactive.

When you move from paychecks to projections, you stop bracing for surprises…
and start making decisions with clarity.

And that alone can change how the entire year feels.

👉 Schedule your introductory “Fit” meeting today and see if we’re the right partner for your financial journey.

By the time November rolls into Chicago - with the rush of holiday shifts, colder commutes, and the familiar scramble inside Advocate, Northwestern Medicine, and Rush - most medical professionals are running on habbints and instinct. Schedules tighten. Hours stretch. And tax planning?

It tends to get pushed to “some time after New Year’s.”

But here’s the uncomfortable truth:
The financial decisions you make in November and December will directly shape your 2025 tax bill.

And for many nurse practitioners, anesthesiologists, dentists, and other high-earning healthcare workers across the Chicago area, that bill can be… substantial.

This is the moment - before December 31 - when the wisest moves happen. Just smart, timely adjustments that keep more of your hard-earned income working for you instead of disappearing into taxes.

This isn’t a checklist.
It’s a strategy window.
And it closes soon.

Why November Matters More Than You Think

Most people assume tax planning is something you do after the year ends. But the 2025 tax landscape is shifting, and many medical professionals are bracing for potentially higher taxes unless they take action early.

November gives you enough distance from the frenzy of year-end patient volumes and enough runway before December 31 deadlines to make moves that actually stick.

This is when you can:

• Correct course if your income came in higher than expected

• Maximize deductions you haven’t used yet

• Make (or increase) final retirement plan contributions

• Harvest investment portfolio losses

• Review charitable giving strategies with intention - not panic

And most importantly:
Align everything you do now with the 2026 tax picture you’ll be living in soon.

That’s the part most people ignore. And it’s where the biggest savings are usually found.

If you want a quick way to see your 2025 brackets, deductions, phaseouts, and key retirement limits at a glance, you can download our “2025 Important Numbers” guide.

1. First, Know Where You Stand - Don’t Guess

If you’re a medical professional in Chicago, your income often can vary.

• Extra shifts at Advocate.

• Weekend coverage at Swedish Hospital.

• Holiday hours at Rush.

• Additional income/side hustle income increase.

• Or a sudden spike in overtime because your unit was short-staffed.

These fluctuations matter more than people think.

Before making any strategic moves, you need a clear view of:

• Your total expected income for 2025

• How close you are to major tax cliffs

• Your current deduction usage

• Your progress on retirement contributions

• Whether bonuses (common in December) will affect your bracket

Most people walk into the final weeks of the year guessing - and guessing is where tax mistakes happen.

A simple year-end income projection can save thousands.

2. Maximize Retirement Contributions While You Still Can

Healthcare professionals in Chicagoland often have access to multiple retirement accounts depending on their employer:

• 403(b) for hospital employees

• 401(k) for those in private clinics or dental offices

• 457(b) plans are common at major not-for-profit hospitals and clinics.

November is the last month when you can realistically adjust contributions without scrambling.

Here’s what happens every year:

Someone realizes on December 29 that they’re thousands away from the maximum possible retirement plan contribution - and tries to adjust their final paycheck. The payroll system can’t process it. The opportunity is gone.

Don’t be that person.

For high-earning medical professionals, maximizing contributions is one of the most reliable ways to reduce taxable income before the year ends. This also applies if:

• You picked up significant overtime

• You switched hospitals mid-year

• You received a retention bonus or a relocation bonus

• You’re a dentist or an anesthesiology contractor working across multiple locations

And keep in mind: what you contribute now affects not just this year’s taxes, but how well-positioned you’ll be for 2026 - especially if tax brackets change.

3. Strategic Charitable Giving - Not the Last-Minute Kind

Chicago is one of the most generous cities in the country - but charitable giving often happens with little strategy. Someone donates on December 31 at 11:58 PM, gets a confirmation email, and hopes it “counts.”

But when your income is high?
Charitable giving is no longer just generosity - it’s a tax planning tool.

Consider:

Bunching Donations

Instead of sprinkling gifts throughout the year, consolidating contributions in a single tax year may push you past the standard deduction threshold - unlocking itemized deduction and greater tax savings.

Donor-Advised Funds (DAFs)

A DAF lets you get a deduction this year while distributing gifts over time. Useful if you're planning for potential 2026 tax changes.

Gifting Appreciated Investments

Instead of donating cash, gifting investments can simultaneously avoid capital gains taxes and provide a deduction.

This is especially powerful if you’ve held positions that performed well in the past few years.

Charitable giving isn’t just about writing a check.
It’s about lining up your generosity with your tax goals and your income reality.

4. Tax Loss Harvesting: The Quiet Strategy Most Medical Professionals Skip

Medical professionals in Chicago tend to be disciplined savers. But investing?
Many just “set it and forget it.” And that’s not always a bad thing.

But November and early December are the months when tax-loss harvesting can become a valuable move.

If you own positions that have dropped in value - and almost everyone does - selling them to realize the loss can help:

• Reduce capital gains

• Minimize portfolio rebalancing cost

• Future gains

• Offset up to $3,000 in regular income

• Future taxable events you already anticipate (bonus, RSUs vesting, etc.)

Even if your overall portfolio is properly allocated, locking in strategic losses now can set you up for a better 2026 tax year.

The key is to do it intentionally.
Not emotionally.
Not reactively.
Not because a headline scared you.

Investment losses can be turned into tools - if you use them strategically and before the time runs out.

5. Consider Flexible Spending Accounts Before Money Disappears

FSAs are wonderful… until they’re not.

Especially if you're juggling shifts and barely looking at the account.

Even though grace periods exist, November is the time to:

• Check remaining balances

• Schedule needed health visits

• Order eligible supplies

• Coordinate with dependents if applicable

• Use funds without rushing in late December

It’s a quiet but crucial part of year-end tax efficiency.

6. Understand How Your 2025 Moves Shape Your 2026 Taxes

This is where most blog posts stop. But this is where the real strategy begins.

For high-earning healthcare workers, the 2026 tax landscape may include:

• Higher marginal rates

• Reduced deductions

• Potential phaseout of certain tax benefits

This means the decisions you make in November and December aren’t just about “saving on taxes this April.”

They’re about preparing for a potentially more expensive tax future.

For example:

If you expect higher taxes in 2026:

You may want to shift more income into 2025 (e.g., strategic Roth conversions) and pull forward deductions now.

If your income is unusually high this year:

You might want to do the opposite - defer income, accelerate deductions, rebalance the picture.

Nobody can optimize this without understanding what your 2026 outlook is likely to be.
This is where personalized financial planning becomes essential.

7. Don’t Forget Your Professional Identity Comes with Unique Opportunities

Healthcare professionals in Chicago aren’t like other workers. You have unique financial realities:

• Income spikes during seasonal staffing shortages

• Multi-shift or multi-location work - sometimes with multiple employer plans

• Contract or 1099 income for certain specialties

• High exposure to tax cliffs because of high base pay

• Catch-up options if you're over 50

• Student loan considerations tied to taxable income

• Licensing and CME costs that may or may not be deductible

You do a type of work that requires constant vigilance and split-second decision-making.

Tax planning shouldn’t feel like that.

But there are deadlines.

8. The Most Overlooked Move: Reviewing Your Withholding and Estimated Taxes

If 2025 was a year of change for you—new job, new hospital system, contract work, bonus, more overtime - then your withholding may not match your actual tax liability.

This is one of the biggest year-end pitfalls for busy healthcare professionals.

A quick review now can prevent:

• A surprise tax bill

• IRS penalties

• Underpayment consequences

• Cash-flow headaches during the first months of 2026

This is especially important if you:

• Worked per diem at more than one hospital

• Made the move from private practice to a major medical system

• Took more night shifts than usual

• Received retention or sign-on bonuses

It’s simple, but it matters.

9. Year-End Is Also a Moment to Re-Align Your Goals

This isn’t just about deductions and deadlines.

It’s about direction.

Medical professionals often spend the entire year caring for others. The end of the year is one of the few moments where you can pause and ask:

• What am I actually building toward?

• What do I want my financial life to look like in 5 years?

• Am I using my income well?

• Am I overpaying taxes out of habit?

• Am I protecting myself and my family from future uncertainty?

November isn’t just a tax window.
It’s a clarity window.

10. The Final Word: Your Tax Strategy for 2026 Starts Right Now

The biggest mistake Chicago healthcare professionals make isn’t under-saving.

It’s waiting too long to make strategic financial decisions - losing options that were available only in November and early December.

Whether you’re working long shifts at Advocate Lutheran General, seeing patients at Rush Oak Park, handling dental cases in a suburban clinic, or balancing NP responsibilities at Northwestern Medicine, your income has leverage.
A lot of leverage.

But only if used intentionally.

Year-end planning isn’t about being perfect.
It’s about being early.

December 31 is coming fast.
Your 2026 tax bill is already taking shape.
And you still have time to influence it - right now, while November is still yours.

👉 Schedule your introductory “Fit” meeting today and see if we’re the right partner for your financial journey.

Retirement planning can sometimes feel like a game of chess. You think two or three moves ahead, but then life makes an unexpected move of its own. For medical professionals in Chicago - from nurse practitioners at Advocate Lutheran General, to anesthesiologists at Rush Medical Center, to dentists managing suburban practices - those surprises often come in the form of fluctuating income, tax law changes, or career shifts.

One retirement planning tool that doesn’t get nearly enough attention is the Roth IRA recharacterization. It’s a mouthful, but the concept is simple: it allows you to change the type of IRA contribution you’ve made, after the fact. For high earners in medicine, where tax brackets, bonuses, and side income can shift quickly, understanding this option is more than just trivia - it can be a real money-saver.

But here’s the twist: the rules changed a few years ago. Some strategies that used to work - like undoing a Roth conversion - are now off the table. That makes it critical to understand what recharacterization still allows, what it doesn’t, and when it makes sense to use it.

Roth IRA vs. Traditional IRA - Why the Choice Matters

Before diving into recharacterization, let’s revisit the playing field.

• Traditional IRA: Contributions may be tax-deductible (depending on income and whether you have a workplace plan). Growth is tax-deferred. Withdrawals in retirement are taxed as ordinary income.

• Roth IRA: Contributions are after-tax. Growth is tax-free. Withdrawals in retirement are tax-free if the rules are followed.
  
  

See our previous blog on this topic for a more detailed overview: “Navigating Traditional & Roth IRAs: What Health Professionals Need to Know”

For high-income medical professionals, Roth IRAs are especially appealing. They offer the promise of tax-free withdrawals in retirement - an advantage for those who expect their tax bracket to be the same or higher later in life. But the catch is income limits.

For 2025, the Roth IRA income phaseout for single filers starts at $150,000 and ends at $165,000. For married couples filing jointly, it starts at $236,000 and ends at $246,000. If your modified adjusted gross income (MAGI) is above that, you can’t contribute directly to a Roth IRA.

And here’s where many Chicago-area medical professionals run into trouble: bonuses, overtime shifts, or unexpected practice revenue can push income above those limits after Roth contributions have already been made.

What Is a Roth IRA Recharacterization?

A Roth IRA recharacterization lets you correct course.

If you contributed to a Roth IRA but later discover you don’t qualify because your income is too high, you can recharacterize that contribution as a traditional IRA contribution. It’s treated as if it had always been made that way.

This isn’t just paperwork; it’s a safeguard. Without recharacterization, excess Roth contributions can trigger 6% IRS penalties each year they remain uncorrected.

Think of it as an “undo” button - but only for contributions.

The Big Rule Change: Conversions Are Permanent

Here’s where many professionals (and even advisors) get confused.

Before 2018, you could also recharacterize a Roth conversion. For example, if you converted $50,000 from a traditional IRA to a Roth and then the market dropped by 20%, you could recharacterize and erase the tax bill on the now-depressed balance.

But the Tax Cuts and Jobs Act eliminated that option. Conversions are now irrevocable.

That means if you use the popular backdoor Roth IRA strategy - making a nondeductible traditional IRA contribution and then converting to Roth - you need to be certain. Once converted, there’s no undoing it.

This rule change has major implications for high earners in medicine, who often rely on backdoor Roth strategies because their income exceeds Roth contribution limits.

Why Recharacterization Still Matters for Medical Professionals

Even though conversions can’t be undone, contribution recharacterization remains a valuable tool.

1. Sudden Income Shifts

Nurse practitioners may find themselves pushed over the Roth income limit after receiving a promotion or retention bonus. Anesthesiologists can see their pay rise sharply with contract changes and overtime, and dentists may experience year-end revenue spikes in their practices — all of which can turn what looked like a Roth-eligible year in January into an ineligible one by December. Recharacterization gives you a way to correct that without penalties.

2. Managing Tax Surprises

A retention bonus, a spousal income increase, or higher-than-expected revenue in your dental office can all push you into higher tax territory. Recharacterization ensures you don’t get stuck with an excess contribution problem.

3. Preserving Flexibility for Retirement Planning

Medical professionals who aim for early retirement - common among anesthesiologists or nurse anesthetists who want to reduce stress later in life - often value Roth IRAs for their tax-free withdrawals. But if Roth contributions become ineligible, recharacterization helps keep the retirement strategy aligned.

Real-Life Examples

The Nurse Practitioner with an Overtime

Sarah, a nurse practitioner at Advocate Lutheran General, contributed $6,500 to a Roth IRA in March. By October, she had accumulated overtime pay that pushed her income above the Roth limit. Instead of paying penalties, Sarah recharacterized her contribution to a traditional IRA.

The Dentist with a Revenue Spike

Dr. Patel runs a dental practice in Lincolnshire. He expected $180,000 of income, comfortably under the Roth phaseout. But an end-of-year spike in practice revenue pushed him over the threshold. By recharacterizing his Roth contribution, he avoided a costly IRS penalty.

The Anesthesiologist and the Backdoor Roth

Carlos, an anesthesiologist at Rush, used the backdoor Roth IRA strategy. He made a nondeductible traditional IRA contribution and then converted it to a Roth. But because conversions can’t be undone, he had to be careful with timing. A misstep could mean an unexpected tax bill - with no option to recharacterize.

Step-by-Step: How Recharacterization Works

1. Make the Contribution: Suppose you contributed $6,500 to a Roth IRA.

2. Decide to Recharacterize: You realize your income is too high to qualify.

3. Contact the Custodian: Ask your IRA custodian or financial institution to request the recharacterization. They’ll handle the transfer for you.

4. Transfer Includes Earnings: Any earnings (or losses) tied to that contribution must also move to the new account.

5. Deadline: Recharacterization must be completed by your tax filing deadline, including extensions. For 2025 contributions, that could mean as late as October 15, 2026, if you file an extension.

6. Report to the IRS: You’ll need to note the recharacterization on your tax return using Form 8606.
   
   
   

Contribution Recharacterization vs. Excess Removal

Some professionals confuse recharacterization with withdrawing an excess contribution.

• Recharacterization: Changes the contribution type (Roth → Traditional). Treated as if it was always that way.

• Excess Removal: Pulls the contribution (and earnings) out of the IRA. The earnings may be taxable.

Recharacterization is often preferred for high earners because it preserves tax-advantaged savings.

The Mega Backdoor Roth Connection

Some large Chicago hospital systems (Rush, University of Chicago Medicine, Advocate Aurora) offer 401(k) plans that allow after-tax contributions beyond the standard $23,500 (2025 limit). This opens the door for the mega backdoor Roth strategy - converting tens of thousands of after-tax dollars into Roth accounts each year.

But remember: those conversions are also irrevocable. Once you move after-tax 401(k) contributions into a Roth, there’s no recharacterization option. That makes careful planning essential, especially if your income varies.

Pros and Cons of Recharacterization

Pros:

• Avoids IRS penalties for excess contributions.

• Preserves retirement savings in a tax-advantaged account.

• Provides flexibility when income changes unexpectedly.
  
  
  

Cons:

• Doesn’t apply to conversions - only contributions.

• Requires paperwork and IRS reporting.

• Timing is strict - must meet tax filing deadlines.

Practical Tips for Medical Professionals

• Monitor income throughout the year: If you’re close to Roth income limits, don’t make contributions until your year-end income is clearer.

• Consider backdoor strategies carefully: If you’re consistently above Roth limits, go directly to the backdoor Roth rather than risking excess contributions.

• Coordinate with spousal income: In two-income households, one spouse’s raise or bonus can unexpectedly eliminate Roth eligibility.

• Use extensions wisely: Filing an extension can buy time to recharacterize if you’re unsure about your final income.

• Leverage employer plans: Explore whether your hospital or practice’s 401(k)/403(b) allows after-tax contributions for mega backdoor Roths - but remember the irrevocability.
  
  

Final Thoughts

For medical professionals in Chicago, the Roth IRA remains one of the most powerful retirement savings tools. But it’s also one of the most misunderstood. The ability to recharacterize contributions provides valuable flexibility - especially when income is unpredictable.

Whether you’re a nurse practitioner balancing overtime at Northwestern Memorial, a dentist running your own clinic in Oak Brook, or an anesthesiologist at Rush planning for early retirement, knowing when and how to use recharacterization can make a meaningful difference.

The key takeaway: contributions can be recharacterized, conversions cannot. With that knowledge, you can navigate retirement planning with more confidence - and avoid costly mistakes along the way.

At Outside The Box Financial Planning, LLC, we work with medical professionals to make sense of complex retirement rules and turn them into clear, actionable strategies.

If you’re ready to explore whether a Roth IRA - or a recharacterization - fits into your bigger financial picture, we invite you to schedule a “Fit” meeting. It’s the first step toward building a plan that aligns your career, your taxes, and your future.

👉 Schedule your introductory “Fit” meeting today and see if we’re the right partner for your financial journey.

You spent years in training, sacrificed weekends, holidays, and sleep for your career. Now you’re earning what you’ve worked so hard for. But with rising taxes, student loans, and the pressure to plan for retirement and your kids' college at the same time, it can feel like your income is slipping through your fingers.

Trump’s One Big Beautiful Bill (OBBBA), signed on July 4th, 2025, just gave medical professionals like you a powerful, limited-time opportunity to legally pocket more of your hard-earned money.

Download “The OBBBA Comparison Guide” to see how the new law stacks up against previous rules - and where you can find your biggest savings.

Many of these opportunities expire as soon as 2029 - or even earlier.

Let’s unpack the smart moves high-earning nurse practitioners, dentists, and other medical professionals can make right now to save serious money and take advantage of OBBBA before the window closes

🔥 The SALT Cap Quadruples  -  But Only for a While

For years, you’ve been capped at deducting just $10,000 of state and local taxes (SALT) - a frustrating limit for medical professionals in high-tax states like Illinois, Wisconsin, and Michigan.

Under OBBBA, that cap jumps to $40,000 from 2025 to 2029.

What this means for you:
If you’re a homeowner paying high property and state income taxes, you can finally deduct a much larger portion - potentially saving thousands per year.

But here’s the kicker:
In 2030, the cap snaps back to $10k. If you delay, you’ll lose your chance to fully deduct large expenses like:

• Property taxes on your primary and/or second home

• State estimated income tax payments

• Pass-through entity tax (PTET) elections (which are still allowed!)

• Charitable contributions

Tax-Savvy Move:
Consider  "Bunching" your itemized deductions, such as property and state tax payments. Evaluate prepaying 2026 taxes in 2025 (where allowed) to increase your deductions while the $40k cap is in play.

And if your Adjusted Gross Income (AGI) falls in the $500k–$600k range, beware: you’ll face a phasedown of this SALT benefit with a painful 45.5% effective marginal tax rate within the phaseout range.

🏥 Practice Owners: Remodel, Deduct, and Win

If you own your practice or have self-employed income and have plans to expand or remodel, 2025 is your year.

Here’s why:

• 100% Bonus Depreciation is still here
  You can fully deduct the cost of qualifying equipment or property upgrades in the year you place them in service.

• Section 199A Pass‑Through Deduction is Permanent
  That’s a 20% deduction on qualified business income (QBI), still available for most practice owners below the phaseout thresholds:

• $197,300 (Single/HOH)

• $394,600 (Married Filing Jointly)
  
  
  

These thresholds are staying - for now - but starting in 2026, high-income earners face a more complex phaseout with stricter active business rules and even a minimum deduction requirement.

Self-Employed - Pro Tip:
If you’re planning an imaging suite upgrade, ASC build-out, or office remodel, consider the tax effects of doing it now. Not only do you reduce your tax burden, but you also reinvest in your patient experience and operational efficiency.

What qualifies?
Think MRI machines, dental chairs, HVAC improvements, even software systems - if it’s for the business, it likely counts.

💸 “No Tax on Overtime” and “No Tax on Tips”  -  What Shift Workers Need to Know

If you're a hospitalist, ER doc, CRNA, or any clinician receiving overtime pay, you’re in for a rare break.

Under OBBBA, you can now deduct the “bonus portion” of your overtime pay - that’s the amount you earn above your normal hourly rate. For example:

• Normal rate: $80/hour

• Overtime rate: $120/hour

• Deductible amount: $40/hour

You can deduct up to $25,000 (Married Filing Jointly) or $12,500 (Single/Head of Household) from 2025–2028.

The same goes for tips, if you’re in a tip-eligible healthcare setting (think concierge medicine, massage therapy, or cosmetic procedures).

⚠️ These deductions are below-the-line - meaning you don’t need to itemize to claim them.

However, they phase out at incomes over $300k (MFJ) or $150k (Single/HOH). If you’re near these levels, now’s the time to rethink your pay structure or shift scheduling to lock in these savings.

📊 Charitable Contributions Just Got Trickier

Giving back is second nature for many healthcare professionals. But starting in 2026, you’ll need to navigate a new rule: the 0.5% AGI floor.

In short, you must subtract 0.5% of your AGI from your charitable contributions before you even hit the usual 20–60% limits.

Example:

• AGI: $300,000

• You donate $30,000 of stock to a public charity

• First, subtract $1,500 (0.5% of AGI)

• Now, your starting deductible amount is $28,500

• But the 30% AGI limit may still reduce it to $90,000

Plan ahead:
If you’re considering a major gift or Donor Advised Fund contribution, consider doing so in 2025 before these floors apply.

👶 Thinking Long-Term? Trump Accounts and Expanded 529 Rules

OBBBA introduced the Trump Account, a new vehicle designed to give kids a $1,000 boost at birth and provide potential growth like a hybrid between a 529 account and Roth IRA.

But it comes with strings:

• Only index-fund investments are allowed

• Contributions until age 18

• Strict distribution rules

• Only $5,000/year allowed (with a $2,500 employer cap)
  
  
  

It’s a promising tool - especially for parents or grandparents looking to give their child a financial head start - but it’s no silver bullet yet.

Meanwhile, 529 plans are more flexible than ever:

• You can now use them for credentialing courses, exam prep, homeschool expenses, and even certain therapies for children with disabilities.

• Aggregate annual limits: $10k in 2025, $20k from 2026

If you’ve been putting off opening or funding a 529, this is your green light.

👀 What to Watch Out For

OBBBA’s hidden costs are real, especially for high earners.

• AMT creep is back: The phaseout thresholds for the Alternative Minimum Tax have dropped, with marginal tax  rates jumping to 42% in the “bump zone.”

• Itemized Deduction Cap: Starting in 2026, itemized deductions may be capped at 35% of benefit for those earning over $626k (MFJ) or $751k (S).

• "Permanent" Isn’t Permanent: Even provisions labeled as permanent can be reversed with the next tax bill.

🛠️ Your Next Steps (Start Now, Not Later)

Here’s what smart medical professionals are doing today:

1. Meeting with their CFP® to run projections for 2025–2029 tax years

2. Running cost-benefit analyses on practice upgrades or remodeling

3. Reassessing shift schedules or overtime plans to maximize deductions

4. Optimizing charitable giving before the 0.5% AGI floor hits

5. Refactoring AGI to avoid phaseouts - Roth conversions, HSAs, and more

6. Pre-funding SALT-heavy years while the $40k cap lasts

7. Opening 529s and Trump Accounts strategically for their children

Final Thoughts: Your Financial Health Deserves the Same Care You Give Your Patients

You already know how to diagnose and treat complex cases. Your financial life deserves that same level of precision and care.

The One Big Beautiful Bill offers a rare - and temporary - window of opportunity. It’s not flawless, and it won’t last. But for high-earning medical professionals, it’s packed with strategic moves that could significantly reduce taxes and accelerate long-term wealth.

The medical professionals who take action now will gain more control, keep more of what they earn, and build a stronger financial future.

Those who wait? They’ll be looking back in 2030, wondering why they didn’t act when the window was open.

At Outside The Box Financial Planning, LLC, we specialize in helping high-income medical professionals navigate complex tax law with clarity, strategy, and purpose.

Ready to pocket more and tax less - without the guesswork?

Schedule an introductory “Fit” meeting below and let’s find out if we’re the right partner for your financial journey.

You’ve worked hard to build a successful career. Long shifts, student loans, missed family dinners. But now, as you start planning for your child’s college, you’re faced with a new challenge:

How do you pay for college… without negatively impacting your eligibility for financial aid?

It’s a common dilemma for high earners, especially medical professionals. You make too much to qualify for most need-based financial aid, but not enough to write six-figure tuition checks like it’s no big deal.

So here’s the good news: there’s a smarter way to approach this. One that doesn’t involve overpaying by utilizing smart planning strategies.

Let’s walk through the strategies that can help you fund your child’s education while preserving your financial flexibility and (surprisingly) boosting your financial aid eligibility.

“We Make Too Much… But Not Enough”

If you’ve ever run your numbers through the FAFSA calculator, you know how brutal it can feel. You input your income and assets, and it spits out an Expected Family Contribution (EFC) that looks more like a luxury car price tag.

You’re not alone. Households making $250k+ often get zero need-based aid on paper - but that doesn’t mean there’s no room for strategy. In fact, how you hold and move your money could be the difference between a $0 and a $20,000 aid package.

Let’s unpack how the system works - and how to use that knowledge to your advantage.

Not All Dollars Are Treated Equally

To understand financial aid planning, you have to understand what colleges actually look at.

The FAFSA (Free Application for Federal Student Aid) uses a formula to determine how much your family is expected to contribute. Here’s what it considers:

• Parent income (heavily weighted)

• Parent assets (moderately weighted)

• Student income and assets (heavily penalized)

• Household size and number of students in college

Notice what’s missing?

👉 Your retirement savings.

👉 Your home equity (for FAFSA-based schools - some private colleges that use CSS Profile do count it).

This is where things get interesting. Because the difference between assets in a brokerage account and assets in a 401(k) can mean thousands in lost or gained aid, even if your net worth doesn’t change.

Strategy 1: Positioning Assets

One of the biggest mistakes high-income families make is keeping too many investable assets in the “wrong” places.

For example:

• A $100k brokerage account in your name? FAFSA might assess 5.64% of that each year toward your expected contribution.

• That same $100k in a 401(k) or Roth IRA? Ignored.

The trick isn’t to hide money - it’s to align your savings with the financial aid formula.

What You Can Do:

• Max out retirement contributions in the years leading up to college. Even if you don’t “need” to save more for retirement, it shelters funds from aid calculations.

• Avoid putting savings in your child’s name (e.g., custodial accounts like UGMA/UTMA). Student assets are assessed at a whopping 20%.

• If possible, shift taxable savings to your name, not your child’s, and prioritize asset types the FAFSA ignores.

A skilled financial planner can help with this reshuffling without tripping tax consequences or liquidity issues.

Strategy 2: The Grandparent-Owned 529 - Now Even Better

Until recently, using a grandparent-owned 529 plan required careful timing. That’s because any distributions used to pay for college counted as “student income” on the FAFSA - and since FAFSA looks back two years, that could unexpectedly reduce aid in later years.

But thanks to the FAFSA Simplification Act, that issue is gone.

What Changed:

Starting with the 2024–2025 academic year, the FAFSA no longer asks about cash support received by the student. That means distributions from a grandparent-owned 529 plan are now completely invisible - not reported as assets, and not counted as income.

What This Means for You:

If a grandparent wants to help pay for college, they can use a 529 from day one without worrying about aid consequences. This removes a major barrier and gives your family more flexibility:

• You can use parent-owned 529s in parallel, drawing down both accounts strategically.

• If your own financial plan is stretched thin, grandparent contributions can fill the gap without hurting aid eligibility.

• It also opens up a smart estate planning angle - grandparents reduce their taxable estate while helping fund education.

The key? Coordination. Families should still communicate openly to avoid overfunding or misalignment across accounts. But now, with the FAFSA change, there’s less complexity and more opportunity to get help from extended family without penalties.

Strategy 3: Understand “Need-Based” Doesn’t Mean “Low Income”

Even families making $300k+ can qualify for need-based aid - at the right schools.

Some elite private colleges have sky-high sticker prices but generous aid formulas. A family earning $275,000 with two kids in college could still qualify for tens of thousands in grants - if they play their cards right.

The key? Knowing which schools use which formula.

• FAFSA-only schools: Tend to ignore home equity and retirement accounts.

• CSS Profile schools: May count more types of assets, but often give larger aid packages.

Understanding these formulas helps you choose colleges that actually reward your financial strategy.

And let’s not forget merit aid - another avenue that’s not based on need but can be substantial, especially if your student is strong academically or brings something unique to the table.

Strategy 4: Watch Your Income Timing

If you’re self-employed, have a side business, or are due for a big bonus - timing is everything.

Because FAFSA looks at your tax return from two years prior, the income you report in your child’s sophomore year of high school affects the aid they receive in their freshman year of college.

That means:

• Deferring income or bonuses until after key FAFSA years could pay off.

• Bunching deductions or business expenses earlier might help.

• Selling appreciated assets? Watch the capital gains - they count as income.

This is another area where a coordinated plan (involving your CPA and financial planner) can save real money.

Strategy 5: Don’t Let Perception Stop You

Here’s something we see all the time:

“We won’t qualify anyway, so what’s the point?”

And sometimes… they’re right. But often, they’re not.

Even if you don’t qualify for federal aid, you might still get institutional grants - especially from private colleges. And these awards often use their own formulas and discretion.

Submitting the FAFSA and CSS Profile, even if you think you won’t get anything, can open the door to:

• Institutional aid

• Scholarships that require a completed FAFSA

• Emergency aid in future years

• Federal loans (which require the FAFSA even if you don’t plan to use them)

You don’t get what you don’t ask for.

Bonus: Don’t Sabotage Yourself With Emotion

When it comes to paying for college, high earners often make fear-based or pride-based decisions:

• “I don’t want my kid to have debt.”

• “I can afford it - I should pay.”

• “More expensive is better.”

And those are noble sentiments.

But if overpaying derails your retirement plan, triggers higher taxes, or reduces your family’s flexibility for decades… is that really the best legacy?

There’s no award for “parent who overpaid the most.”

Being strategic with aid isn’t about gaming the system - it’s about using the tools available to make smart, values-based decisions.

Final Thoughts: Be the Surgeon With the Scalpel, Not the Sledgehammer

Medical professionals are used to high-stakes decision-making. You don’t rush into procedures without imaging. You don’t pick treatments without reviewing history.

So why fund college without a plan?

There are ways to give your child the best education possible without detrimentally impacting your own finances or blindly leaving aid on the table.

The smartest high earners don’t just ask “Can I afford this?”

They ask: “What’s the most efficient way to do this - without wasting money or opportunity?”

If that’s you, now’s the time to get your plan in place. Because the earlier you act, the more options you’ll have when the acceptance letters start rolling in.

At Outside The Box Financial Planning, LLC, we help high-earning families make strategic decisions that protect both college dreams and long-term financial security.

Use the calendar below to book your introductory “Fit” meeting.

If you're a medical professional, odds are you’re no stranger to debt. Between student loans, mortgage, car loans, and day-to-day expenses, managing your financial life can feel like managing a second job. And yet, for all the long hours and high earning potential, many physicians, nurses, and healthcare workers still ask the same question:

“Am I doing this right?”

Specifically:

• How much should I spend on housing?

• Is my debt load normal?

• Am I falling behind financially and don’t even know it?

The truth is, debt isn’t inherently bad. But too much of the wrong kind - or not enough of the right kind of planning - can leave even high earners feeling trapped, stressed, and financially stagnant.

Let’s break down a simple, practical framework to help you evaluate your debt, spending, and savings - and get clear on whether your financial health is on track.

The 50/30/20 Rule—Adjusted for Medical Professionals

The classic budgeting rule suggests dividing your after-tax income like this:

• 50% for Needs – mortgage/rent, utilities, insurance, groceries, loan payments, child care

• 30% for Wants – dining out, travel, streaming, hobbies

• 20% for Savings/Debt Repayment – emergency fund, investments, extra debt payments

But here’s the catch: for high-income professionals, this breakdown often needs refinement. Your “needs” category can get overloaded with higher housing costs, childcare, student loan payments, and insurance premiums, especially if you live in an expensive urban area or support family members.

That’s why, after years of working with many medical professionals and clinicians, we suggest a 60/20/20 framework instead:

• 60% Needs and Debt Service

• 20% Long-Term Savings

• 20% Lifestyle and Leisure

Let’s use a realistic example:

After-tax income: $100,000/year (roughly $6,250/month)

• Essentials (60%) = $3,750/month

• Savings and investing (20%) = $1,250/month

• Lifestyle spending (20%) = $1,250/month

The goal isn’t perfection - it’s balance. This framework allows you to live comfortably while investing in your future and enjoying life along the way.

And if your after-tax income is higher - say $180K or $250K - the percentages still work. The dollar amounts adjust, but the framework stays the same.

Debt-to-Income Ratios: What’s Healthy?

Medical professionals often wonder: How much debt is too much? The answer depends on how your payments relate to your income.

Here are a few helpful guidelines:

📌 Housing (Mortgage or Rent):

• Should not exceed 28–30% of your gross monthly income

• For someone earning $100,000/year, that’s about $2,300–$2,500/month

📌 Total Monthly Debt Payments:

• Should stay under 36% of gross monthly income

• That includes mortgage, car loans, student loans, credit cards, etc.

• For $100K/year, that’s roughly $3,000/month in total debt obligations

This framework helps you keep your lifestyle in check, ensuring you have room for emergencies, savings, and your long-term goals without being over-leveraged.

If you’re well above those limits, it might be time to reevaluate spending and/or restructure your debt.

Good Debt vs. Bad Debt: What to Keep, What to Eliminate

Let’s get this straight: debt is not the enemy. Used wisely, it’s a tool, just like a scalpel or stethoscope. But when used carelessly or without a plan, it becomes a drag on your finances and your mental energy.

✅ Good Debt

This is debt that has the potential to increase your income, build long-term equity, or support essential needs.

• Student Loans

  • Especially federal loans with manageable interest and income-driven repayment plans

  • If they helped fund a career that’s now producing strong income, they’re worth respecting, not resenting

• Mortgage

  • Often cheaper long-term than renting, especially with tax deductions and potential equity appreciation

• Reasonable Auto Loan

  • If a car is required for commuting or on-call responsibilities, a modest auto loan may be justified - just don’t overbuy

❌ Bad Debt

This is high-interest, short-term debt used to fund lifestyle upgrades that don’t produce value.

• Credit Cards with Carrying Balances

  • Especially if used for discretionary purchases like gadgets, clothes, or dining out

  • Paying 20% interest on a $3,000 vacation can turn it into a $3,600 liability

• Buy Now, Pay Later Offers

  • These seem harmless, but can pile up fast and blur your true cash flow picture

• Personal Loans for Vacations or Events

  • These purchases should come from savings, not borrowed money

A quick rule of thumb: If the debt is helping you earn more, live securely, or increase your net worth, it may be worth keeping.
If it’s purely for comfort, convenience, or status, and it costs you in interest, it’s time to reconsider.

Don’t Let Debt Block These Financial Priorities

We often hear:

“Shouldn’t I pay off all my debt before saving or investing?”

Not necessarily. In many cases, trying to eliminate low-interest debt (like student loans or a mortgage) before investing can delay wealth-building.

Here are three things that should remain financial priorities even if you have debt:

🛑 Emergency Fund

• Aim for at least 3-6 months of living expenses

• Keep it liquid - in a high-yield savings account, not invested in the market

• This protects you from unexpected medical bills, job changes, or life events without adding more debt

📊 Tax Planning & Withholding

• If you regularly get large refunds or owe at tax time, your withholdings may need adjusting

• We covered this in our recent blog on Post-Tax Season Moves for medical professionals

💼 Roth IRA or 401(k)

• Tax-advantaged accounts are essential for long-term wealth

• Even small, consistent contributions add up

• Read our previous blog on Roth IRA strategies for medical professionals to dive deeper

The point: debt is just one part of your financial picture. Don’t let it dominate your decisions or delay your future.

Rebalancing Your Debt Strategy Mid-Year: What to Adjust and When

Debt isn’t static - and your plan to manage it shouldn’t be either. Medical professionals often experience financial changes throughout the year: substantial overtime, side income, or even life events like marriage or having a baby. That’s why July is a great time to pause and rebalance your debt strategy.

Here’s what to review:

🔁 Refinance Opportunities

• If you have federal student loans, are you on the most cost-efficient repayment plan based on your goals?

• Private loan? Look into refinancing at more favorable terms, or if your credit has improved.

🎯 Extra Cash? Target the Right Debt

• Windfall from overtime or a side gig? Apply it to the highest-interest debt first (typically credit cards).

• Consider the “debt avalanche” method: pay minimums on all debts, and put any extra toward the loan with the highest interest rate.

📆 Adjusting for New Goals

• Thinking of relocating, starting a family, or changing jobs? These affect your debt tolerance and monthly flexibility.

• Revisit your budget to ensure it still aligns with your real-life goals.

Proactively adjusting your plan helps you avoid reacting to financial stress later. It's not just about "paying things off" - it's about using your resources in a way that supports the life you want to build.

The Invisible Cost: How Debt Affects Your Mind

Debt doesn’t just impact your bank account - it can weigh on you mentally.

Many of our clients in healthcare don’t realize how much debt-related stress they’re carrying until they’ve offloaded it or created a clear plan to manage it.

Common symptoms of debt stress include:

• Guilt or anxiety when spending, even on essentials

• Avoiding financial conversations with a partner

• Trouble sleeping or staying focused due to money worries

• Feeling “stuck” despite a good income

In a field where burnout is already high, this emotional load can push people to the edge.

But here’s the good news: debt becomes far less stressful when it’s part of a larger, intentional plan. Even if you owe $250K+ in debt, seeing a path forward - knowing how it fits into your goals - gives you back a sense of control.

Final Thought

Debt doesn’t have to be a monster under the bed. When you understand what “healthy” looks like, you can start making decisions from a place of confidence, not confusion.

So if you're asking yourself, “Am I carrying too much debt?” - that’s not a sign of failure. It’s a sign you’re ready to take control.

Let’s build a plan that helps you use your income—not just to work hard—but to live well.

Ready to see where you stand?
Schedule an introductory “Fit” meeting with Outside the Box Financial Planning, LLC. We specialize in helping medical professionals create customized strategies to manage debt, save intentionally, and plan for the future with clarity and confidence.

You studied for years. Worked through weekends. Traded time, sleep, and sanity to become a medical professional. And now that you’re finally earning a good income, you’re starting to build something: a home, a family, a future.

But here’s the uncomfortable truth:

Your financial life could fall apart with one accident, one illness, or one missed plan. And it wouldn’t be because you didn’t work hard—it would be because you didn’t protect what you worked so hard to build.

Let’s talk about two forms of insurance that too many medical professionals either delay, misunderstand, or flat-out ignore: life insurance and disability insurance. These are the two pillars that quietly hold up everything else. If you get them right, you give yourself and your family a peace of mind. If you ignore them, everything you’re building stands on shaky ground.

Life Insurance – Why It Matters More Than You Think

Let’s start with the question no one wants to ask:

If something were to happen to you today, would your family be okay?

That’s not a scare tactic. It’s a basic financial planning question. Because if you’re the breadwinner, or even if you contribute to the household income, life insurance isn't about you—it's about the people who rely on you.

When Life Insurance Matters Most:

• You have young children who depend on your income

• You have a partner or spouse who would struggle to replace your income

• You carry significant debt (mortgage, student loans, etc.)

• You want to fund future education for your children

• You have a stay-at-home spouse who doesn't earn an income but supports the household

In these cases, life insurance is a financial safety net, not a luxury.

Term vs. Whole Life: What’s the Difference?

You’ve probably heard there are two major types of life insurance:

Term Life Insurance

• Coverage for a set period (10, 20, 30 years)

• Much more affordable than whole life

• Ideal for protecting against risks during your prime earning years

  ✅ Best for medical professionals who want coverage that aligns with their short-term goals, such as while raising children or paying off debt.

Whole Life Insurance

• Covers you for your entire life

• Much more expensive

• Can include a forced savings component (cash value)

It may be suitable in very specific estate planning situations, but not necessary for most people.

How Much Life Insurance Do You Need?

Forget the random online calculators. Start with this real-world question:

If you “got hit by a bus tomorrow” and were no longer here, how much would your family need to live comfortably and stay on track?

A good rule of thumb: 10-15x your annual income. But also factor in:

• Outstanding debts (student loans, mortgage)

• Daycare or caregiver costs for young children

• Future college tuition for children

• Income replacement until your spouse can adjust or retire

• Other goals you may want to fund for your family

Real-World Scenarios

• You’re a nurse practitioner (NP) with two kids under 10 in private school and a mortgage: term life insurance gives your spouse time and breathing room to figure out next steps without losing the house or moving your kids to a different school.

• You’re a nurse anesthetist (CRNA) married to a stay-at-home spouse: life insurance replaces your income, so your partner can afford daycare and remain present for your kids without rushing into a job.

• You’re single with no kids: life insurance may not be a priority now. Focus more on disability coverage (see below).

Tax Implications of Life Insurance

One of the most overlooked benefits of life insurance is how it's taxed.

• Life insurance death benefits are generally tax-free for your beneficiaries. That means if you purchase a $1 million term policy and something happens to you, your family receives that money without owing income tax on it.

• Premiums are paid with after-tax dollars, so you don’t get a deduction—but that’s what allows the benefit to come tax-free later.

Let’s put it into context:

• Say you pay $600 per year (just $50/month) for a $1 million policy.

• That’s less than the price of many monthly streaming + food delivery subscriptions combined.

• And the return? Your family could receive $1 million, tax-free, when they need it most.

That’s the kind of leverage most financial tools can’t match.

Bottom Line on Life Insurance

It’s not just about dying. It’s about leaving your family financially alive. And the earlier you get it, the cheaper it is.

Download “What Issues Should I Consider When Purchasing A Life Insurance Policy?” guide to help you determine which policy is best for you.

Disability Insurance – Protecting the Asset You May Take for Granted

Let’s say you get into an accident tomorrow. You survive, but your hands are never the same. You can’t perform your job or even chart for long periods. What happens then?

Your biggest financial asset isn’t your investments. It’s your ability to earn an income.

As a medical professional, your lifetime earning potential is massive. You invested years of education, thousands of hours, and likely six figures in training costs to build this career.

That income stream is worth millions. So why wouldn’t you insure it?

Short-Term vs. Long-Term Disability Insurance

• Short-Term Disability: Covers injuries or illnesses that prevent work for a few weeks/months. Usually 3-6 months of coverage. This is usually offered through employee benefits.

• Long-Term Disability: Kicks in when you're unable to work for an extended period (months to years). This may be offered through employee benefits.

The Crucial Detail: Own-Occupation vs. Any-Occupation

This is where most people get it wrong—and where the stakes are highest for medical professionals. The difference between how disability is defined in your policy can make a huge difference.

Own-Occupation Coverage

Pays benefits if you can’t work in your specific medical specialty, even if you can work in a different job.

Example: You’re a physical therapist. You develop a condition that limits your ability to stand for extended periods or assist patients with mobility. With own-occupation coverage, you still receive full disability benefits, even if you move into consulting or academic roles.

Any-Occupation Coverage

Only pays benefits if you can’t work any job at all. It makes it much harder to qualify for.

In the same example, if you could work in admin or education, your benefits could be reduced or denied.

Medical professionals should always aim for "own-occupation" coverage.

What to Look For in a Disability Policy

• Benefit amount: Typically covers 60-70% of your gross income

• Own-occupation clause (especially if you work in a high-skill, high-paying specialty)

• Non-cancelable and guaranteed renewable terms

• Residual benefits: Covers partial disability or reduced income

Why Disability Insurance Is Non-Negotiable

• You're more likely to face a long-term disability than an early death.

• Most group disability plans through hospitals or clinics are limited in coverage and pay taxable benefits.

• Your income is often higher than standard group policies cover, leaving you underinsured.

Tax Implications of Disability Insurance

Disability insurance also comes with important tax considerations:

• If you pay your premiums with after-tax dollars, any disability income you receive is generally tax-free.

• If you pay your premiums with pre-tax dollars, any disability income you receive is generally taxable.

• If your employer pays for the policy and does not include the premium in your taxable income, then the benefits you receive will be taxed.

Why it matters: Let’s say your long-term disability coverage promises to pay you $6,000 per month if you can’t work.

• If those benefits are taxed, your take-home pay might drop to $4,000 or less.

• If they’re tax-free, you keep the full amount, which can make a big difference in your ability to cover bills and maintain your lifestyle.

Key takeaway: Paying for your own private disability policy with after-tax money may cost more upfront, but it provides better protection when you need it.

Download “What Issues Should I Consider When Purchasing Disability Insurance?” guide to help you determine which policy is best for you.

Why These Two Policies Work Together

Life insurance protects your family’s future if you’re not around.

Disability insurance protects your income if you’re here but can’t generate the income you used to.

Together, they build a safety net strong enough to support everything you’ve built. Whether you're just starting out, deep into your career, or approaching retirement, having the right coverage can mean the difference between peace of mind and worry.

It’s about protection. It’s about honoring the work you’ve done and making sure it supports the people and future you care about.

Final Thoughts

You’ve already done the hard part: building a career in healthcare. Now it’s time to protect it.

At Outside The Box Financial Planning, LLC, as part of comprehensive financial planning, we help medical professionals choose insurance policies that make sense for their careers, families, and long-term goals.

Not sure if you’re covered the right way? Let’s talk.

Because what you’re building deserves to be protected.

You did it. You filed your taxes, maybe breathed a sigh of relief, and now you’re ready to get back to life. But before you close the books until next April, there’s something most medical professionals overlook: what you do right after tax season can shape your entire financial year.

This isn’t about obsessing over receipts or spreadsheets. It’s about stepping back, taking stock, and asking: Is my financial life really working for me?

Because when you're constantly on call, juggling patients, charting, certifications, and maybe even planning for retirement, your finances can end up on autopilot—which is exactly where costly mistakes hide.

Here’s your guide to a post-tax-season reset, created specifically for medical professionals who want to stay in control, not just compliant.

1. Use Your Tax Return as a Mirror

That tax return you just filed? It’s not just a form. It’s a snapshot of your financial behavior over the last year.

• Did you get a large refund? That might mean you're overpaying in taxes and giving the government an interest-free loan.

• Owed more than expected? Your withholdings or estimated payments may be off.

• Saw big income swings? This is key if you work per diem, moonlight, or have recently made a career change.

Action step: Schedule 30 minutes to review your return (yes, again). Ask: Where did my money actually go? What surprised me? What should change before next year?

2. Recalibrate Withholdings and Estimated Taxes

Medical professionals often have complex income streams—multiple W-2s, 1099s, bonuses, stipends, or self-employment income from consulting or part-time work.

After tax season, it’s the perfect time to adjust:

• Update W-4 forms to reflect your actual withholding needs.

• Adjust quarterly estimated taxes if you earn 1099 income.

• Account for any changes—marriage, kids, new job, business launch, or upcoming retirement.

Action step: Use the IRS withholding calculator or talk to your financial planner. A few changes now can save a big headache later.

3. Refresh Your Savings & Investment Strategy

You spend your days making critical decisions for others. But how often do you make those same calls for your own money?

Post-tax season is a natural time to ask:

• Am I contributing enough to my retirement accounts?

• Should I increase my HSA or FSA contributions?

• Are my investments aligned with my goals, timeline, and risk tolerance?

And if you're within 2-5 years of retirement:

• Has my risk tolerance changed as I near retirement?

• Can I afford to weather the market fluctuations?

• Do I have a distribution plan, and is it optimal?

Action step: Review your contributions, allocations, investment performance, risk tolerance, and capacity. Consider rebalancing your portfolio.

4. Review Debt Management (Especially Student Loans)

For many medical professionals, student loans are the elephant in the room. Even if payments feel manageable, that doesn’t mean you’re on the best path.

• Are you eligible for student loan forgiveness (PSLF or IDR)?

• Should you refinance?

• Are you missing student loan interest deductions?

And if you're nearing retirement and still carrying debt:

• Should you accelerate payments to be debt-free before you retire?

• How does debt in retirement affect your lifestyle?

• Is this debt affecting your retirement timeline?

Action step: Run a projection with and without refinancing or early payoff. Choose the strategy that aligns with your long-term goals, not just short-term relief.

5. Run a Retirement Reality Check

Whether retirement is 5 years away or 25, now is a great time for a check-in.

• Are you on track to retire when and how you want?

• Do you know how much monthly income you’ll realistically have?

• Are you factoring in healthcare, long-term care, and inflation?

If you’re already retired:

• Is your withdrawal rate sustainable?

• Is your investment mix still appropriate?

• Are you using tax-efficient strategies to minimize your tax liability?

Action step: Meet with your advisor to model your retirement plan under different market, inflation, and spending conditions. Don't wait until you're "close enough."

6. Audit Your Insurance Coverage

Life changes fast, especially in healthcare. Are your policies still relevant?

• Life insurance: Still needed? Still the right amount?

• Disability insurance: Does it reflect your current income?

• Health insurance: Do you maximize your FSA and HSA? What will it be in retirement?

Action step: Gather your policies and check for outdated beneficiaries, coverage gaps, or missed savings opportunities.

7. Revisit Your Goals (Yes, You Get to Have Some Too)

Medical professionals are often so focused on others that their own life plans get blurry.

• Do you want to start a private practice?

• Reduce clinical hours?

• Take a sabbatical? Travel more?

• Retire early?

Action step: Use this mid-year moment to reflect. Real financial planning isn’t about spreadsheets. It’s about building a life you actually want.

Final Word: Progress, Not Perfection

You don’t need to solve everything this week. But by taking just one or two of these steps now, you set a tone for the rest of the year. You stop being reacting and start being proactive.

At Outside The Box Financial Planning, LLC, we specialize in helping medical professionals and retirees create financial plans that actually work for their lives—not someone else’s idea of a checklist.

Need help reviewing your plan? Let’s talk. This isn’t just about money. It’s about building the life you’ve worked so hard for.