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Five ways for medical professionals to make 2021 their strongest financial year yet


Regardless of how 2020 may have gone for you, the great news is that you have the choice to make 2021 your best financial year yet.

When you think of the most common New Year’s Resolutions, what immediately comes to mind? Generally, the most popular resolutions include getting in better shape, getting organized, and improving wealth and well-being. The ultimate goal is to grow in ways that enhance and better our lives.

Surprisingly, the goals you set to improve your financial life aren’t much different, metaphorically speaking. If you focus on trimming the fat, organizing your important financial and estate planning documents, and make a point to exercise better financial habits, you can feel confident you’ll end 2021 in a better place than where you started.

1. Trim the Fat

“Trimming the fat” in your financial life means cutting out habits, bills, or debts that are weighing you down and holding you back from reaching bigger picture financial goals.

What would you do with an extra $1,000 or $2,000 a month? Pay down debts, invest more to retire earlier, or perhaps re-invest in your practice?

Removing things from your life that don’t serve any of your personal, professional, or financial goals can free your time and resources to dedicate to those things that can. Here is a checklist to get you started:

  • Check to make sure there aren’t recurring subscriptions or expenses you are being billed for that you no longer use.
  • Review your insurance policies to ensure you aren’t overpaying for coverage that doesn’t fit your needs—especially life and disability policies if you’ve experienced any major life changes.
  • Depending on the interest rate environment, consider refinancing your home to potentially save thousands each year on payments.
  • Check your credit report for outstanding balances and errors that could be negatively affecting your score.x

2. Keep Your Financial House in Order

How would you like to be able to get more done in less time? This is possible when you keep your financial documents organized. They say for every minute spent organizing, an hour is earned.

Rather than finding yourself scrambling at the end of 2021 trying to locate important tax and legal documents, keep them together and sorted properly throughout the year.

  1. Property taxes
  2. Estate planning documents
  3. Proof of charitable contributions
  4. Business expenses
  5. Healthcare initiatives
  6. Payroll logs
  7. Insurance policy documents

Your financial advisor may even have access to online document portals where you can upload, share, and securely store these important items electronically.

3. Update Beneficiary Designations

Beneficiary designations on insurance policies, retirement accounts, bank accounts, and brokerage accounts should be reviewed annually, especially if a major life change such as a marriage, divorce, birth, or death has occurred in the family. These updates should also be shared with your estate planning attorney to ensure everyone has the most up-to-date information.

Updating a beneficiary is neither difficult nor time consuming. The process generally begins by requesting the proper paperwork from your banking or insurance institution, filling out the desired change, and returning notarized copies. However, more and more companies are making the process available electronically, so check with your provider to find the specific details you need to make the change.

4. Contribute the Max to Your Retirement Accounts

Contributions for retirement accounts change over time according to the rate of inflation and cost of living adjustments. Unfortunately, the IRS announced that contribution limits for 401(k) s and IRAs will not increase next year. For 2021, 401(k) contribution limits will remain at $19,500 for individuals, plus an additional $6,500 in catch-up contributions for those 50 or older.

The same limit also applies to 403(b) accounts, most 457 plans and the government Thrift Savings Plan. SIMPLE retirement accounts (savings incentive match plan for employees) will also stay at their current savings limit of $13,500.

Limits on individual retirement accounts will also stay at the 2020 level, maxing out at $6,000. Those over 50 can contribute an extra $1,000 to traditional and Roth IRAs in 2021.

For a complete list of details, you may wish to check out the IRS's bulletin.

5. Rebalance when Necessary

The best way to invest is to do so early, often, and on a consistent basis. Keeping your long-term picture in mind is ideal when it comes to your investment portfolio.

However, sometimes shifts in our current situation or the market conditions themselves make it necessary for us to adjust our portfolio allocations. You want your current mix of assets and asset classes to align with both your personal timeline and risk tolerance level, two factors that are not mutually exclusive.

The closer you are to retirement, for example, the more conservative you might need to be with your portfolio. If the market experiences a downturn just before you retire, you may not have enough time to recover before your anticipated retirement date. Conversely, if you are early in your accumulation phase, you may be able to afford taking on a little more risk with your allocations.

Here’s to a Financially Fit 2021!

It’s hard to believe the New Year is here. Regardless of how 2020 may have gone for you, the great news is that you have the choice to make 2021 your best financial year yet. If tackling this list all at once feels overwhelming, try breaking it into a couple hours each weekend. Complete a little bit at a time and you’ll have the items crossed off in no time.

About the Author
Julianne F. Andrews, MBA, CFP®, AIF® began her career in financial planning in 1988 and co-founded Atlanta Financial Associates in 1992, merging into Mercer Advisors  in 2020. She specializes in working with physicians and executives in the healthcare industry. Her passion for working with physicians comes from being a pediatrician’s spouse for more than three decades. Julie has been featured on Forbes’ list of America’s Top Women Wealth Advisors since 2017 as well as Forbes’ Best-in-State Wealth Advisors since 2018. Julie can be reached at jandrews@merceradvisors.com.
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