Wealth-Building Strategies for Optometrists
Grow Your Wealth
Building wealth requires a solid plan, and as an optometrist, you need a tailored strategy that maximizes opportunities, provides specific protections, and leverages your unique investment options. While there’s a lot to consider, breaking it down into key areas can make the process more manageable.
Create a Goal-Based Plan
Optometrists often have more career flexibility and a different trajectory compared to other professions. Start by thinking about your income:
Will you pursue a residency for further specialization?
What practice setting are you interested in (private vs. corporate, owner vs. associate)?
How will you diversify your income streams?
How demanding is your job, and how long do you plan to practice?
Answering these questions early on will help you determine your investment needs, savings goals, cash-flow planning, risk tolerance, and more.
Also, don't forget lifestyle planning. Whether it’s buying a home, traveling, or other personal goals, incorporating these into your plan helps align your financial and life goals. Consider the timing and cost of these ambitions.
Protect Your Most Valuable Asset
Disability income insurance is essential for as long as you practice. Your education, training, and daily knowledge are your primary income sources. Securing the right policy protects your lifestyle and retirement plans.
If you can’t work due to illness or injury, you’ll need to replace your income. Opt for an "own occupation" policy, which pays benefits if you can’t perform your specific job. The broader the definition of "disability," the more comprehensive your protection. For example, policies that cover maternity, psychiatric conditions or addictions provide added security beyond physical illness or accidents.
Life insurance should also be part of your plan, especially if you have debt. Term life insurance is often a cost-effective way to cover your financial obligations during your wealth-building years. It can ensure that your mortgage, debts, and family’s needs are covered if something happens to you. Whole life insurance, while more expensive, offers lifelong coverage and may have investment-like features. If considering whole life insurance, purchasing it when you’re younger can reduce the long-term cost.
As you begin to accumulate wealth, consider an umbrella liability policy. This policy supplements your existing insurance, like car and homeowner’s insurance, and provides additional protection. It's important to assess both your income and lifestyle risks when determining the need for this coverage.
Pro Tip:
Some “financial planners” make some or all of their income by selling insurance products with large commissions. They may be incentivized to sell you more insurance than you really need. Foresight Financial Planning is different. Our only income comes directly from our clients, aligning our interests from day 1.
Make Investing Consistent
Consistent saving and investing is key to reaching your financial goals. Automate transfers to different savings accounts—whether it’s for emergencies, a home purchase, or vacations—so that you save before you spend. As your income grows, gradually increase these automated savings to avoid lifestyle inflation.
Take full advantage of tax-advantaged retirement accounts to reduce taxable income and maximize compounding. Max out employer-sponsored 401(k) or 403(b) plans, as well as health savings accounts (HSAs). You may also have access to a 457 deferred compensation plan, which can further boost your retirement savings.
What About Debt?
When it comes to managing optometry school debt, mortgages, or car loans, the decision to pay debt off quickly or invest instead depends on several factors:
What is the interest rate on your loans?
What return can you realistically expect from your investments?
How comfortable are you with financial risk?
For some, becoming debt-free provides a sense of freedom and flexibility. Others may prioritize investing and building wealth early. This is why having a clear financial plan is essential—it helps guide these decisions based on your personal goals.
Starting Strong
Optometrists have unique strengths when it comes to investing. ODs tend to be well-researched, knowledge-based professionals. These traits tend to make financial planning and investment analysis a straightforward process when working with the right financial planner. This comfort may extend to a wider range of investment options, including real estate, private assets, or alternative investments.
Build Your Plan
Creating a financial plan that includes income protection, savings, and investment strategies will help you build wealth as you progress in your career. Starting early and focusing on the fundamentals will give you more choices and flexibility as you move forward on your financial journey. At Foresight Financial Planning, we specialize in helping optometrists like you create personalized financial plans for long-term success.
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