by Vicki Rackner MD
I listened to the story of a physician’s financial challenges. He described how unanticipated taxes were eroding his financial health, and along with it his retirement dreams.
This story had an oddly familiar ring.
Not only have I heard other physicians and dentists tell this story. I was reminded of the challenge of treating patients with late-stage malignancy.
How Unmanaged Taxes are Like a Malignancy
Malignant cells demonstrate characteristic behaviors: unregulated growth, a propensity for invasion and the ability to divert resources from healthy cells.
The same is true of taxes. Have you ever considered how much of the money in your 401K is REALLY yours, or what percentage of the sale of your practice you will pay in capital gains, or how much of your estate your heirs will inherit?
Further, the damage from ovarian or pancreatic cancer share something else with unmanaged taxes. They tend to be diagnosed late, mostly because of the absence of screening tests or public awareness campaigns.
Tools to Treat Unmanaged Taxes
You treat patients with ever-evolving therapeutic tools; a treatment plan that incorporates surgical interventions, chemotherapy and radiation therapy.
So, too, financial tools evolve.
Further, the tools for high-earning, high-net-worth doctors are different from the tools for the average American.
Consider this: in 2016 Warren Buffet reported an income in excess of $10 million. He paid a 16.3% tax rate. How? He worked with experts who knew how to use the financial tools and align his investing strategies with the tax code. Remember, the tax code rewards behaviors that benefit society, like philanthropy, job creation and building homes. Warren Buffet knows how to work with the tax laws to let his wealth serve in a bigger way.
Early Interventions Lead to the Best Results
The best time to proactively manage taxes is today.
With whom do you address your tax burdens in each stage of your financial life?
Whether you are in the accumulation phase or distribution phase of wealth-building, seek out experts who can help you minimize your lifetime tax burdens.
Remain open to all of the financial tools that will allow to you manage your tax burdens.
© Vicki Rackner MD 2017. You are welcome to reproduce this post with this by-line:
Vicki Rackner MD, President of ThrivingDoctors.com helps physicians achieve the personal, professional and financial rewards that attracted them to a career in medicine. She calls on her experience as a practicing surgeon, clinical faculty at the University of Washington School of Medicine and entrepreneur to help her physician clients thrive. Her most recent book is The Myth of the Rich Doctor. You can reach her at (425) 451-3777.