I feel like I wish I had this when I was going through training, so I'm hopeful that some of these tips will be helpful for you. So I work at Kaiser Permanente. For those of you who don't know what Kaiser is, it's a large group encompassing all specialties. It's almost a closed system. We have our own hospitals, our outpatient centers. But Kaiser also owns its own insurance plans. So it's a very closed-loop system. It's a little different than some of the models you've been hearing about, but that's what I wanted to mention. So I have some disclosures. I am not a financial advisor, okay? I'm not a CPA. I'm not a contract attorney in my spare time, okay? I'm just an employed interventional gastroenterologist. I'm married to a very underpaid academic colorectal surgeon. We live in a very high-cost-of-living city and state. My hospital is a few miles down the road from this sign. This is the L.A. skyline. Everybody says, L.A. has no skyline. This is the skyline. There's mountains on one side. There's a beach on the other side. You can do it all in the same day. I live sort of closer to the mountainside. I can't afford the beach, all right? So from the moment you start practice, nobody teaches you really in medical school residency how to think about money. They teach you about how to be a doctor. But you have to start thinking about it not just in context of how much clinical treatments and things like that cost, but also sort of about yourself, you know? We have higher student loans. We have lower reimbursements. It's a whole different ballgame these days, I feel like, compared to, say, even 20, 30 years ago. Everybody unfortunately thinks you're a sucker. This is how financial advisors see doctors. We are targets. We do have earning potential. We generally have job security. Unfortunately, most physicians are very financially illiterate because you spend 12 years in training. You don't learn about money. MBA school is, what, two years, maybe, if you do the full-time situation. Medical training is much longer. But they don't teach you how to think about that. And surveys of graduating residents, 90% of you all feel like you're unable to actually handle your own finances. You want to trust a professional. But some of these professionals, it's not like medical school. You're not officially licensed. And they just sell themselves as financial advisors, so you really have to be careful. But this is easier than all the tests you took. These are the ones you've taken to get here. This is so much easier, personal finance. It's easier than this one, too, I promise, okay? You guys haven't taken this one, but it's easier, okay? So you can do this. And as mentioned earlier in this course, nobody is going to care more about your money than you. And they shouldn't, right? They shouldn't care about the stuff that you earn to fund the lifestyle that you want. So the goals of this today is to really introduce you to this topic, inspire you to learn more, and just take control of your future financial well-being. So this is sort of the traditional teaching, right? To get rich, you make money. You don't spend more than you make. You take the difference between what you make and what you spend and invest it in some way, shape, or form. And you protect yourself from financial catastrophe. A couple of things. This is the mom in me speaking. There's that term, one spouse, one house, one job. The job thing is a little different in today's economy. But really, divorce cuts your assets. It cuts your future income in half, okay? If you do it twice, you're never going to build wealth, okay? So physician divorce rates, thankfully, are lower than the rest of society, but it's higher for female physicians, all right? The cost of a divorce, anywhere between $30,000 to $200,000, not insignificant amount of money. Those lawyers make way more than you do. Female MDs actually lose about a median of $150,000 when they go through this. One house, you can only really be in one place at a time. Try to limit the number of vacation homes you buy, guys, okay? The cost of selling and house buying, it's 15% with every transaction. Home maintenance is a lot of money. So really, what we're looking for here is financial independence. And this is sort of the ability to cover your expenses indefinitely without having to work. This was my retirement plan, but I didn't win this week. I'm not related to these guys. Of course, you could always marry into money. So how to achieve financial independence? This is the order that they teach you, but I would argue that for physicians, the order should be different. You have to start with protecting what you have, and I'll go through some of that. Then you talk about spending. Then you talk about estate planning and kind of making plans for the future, and then how to diversify that income, and et cetera. Protecting what you have, this is sort of the insurance part of it. You want to insure against financial catastrophes. Those are disability, obviously death, but that's the life insurance part of it. There's different types of liability that we have. Professional, that's the malpractice insurance. Personal liability, things like health, auto, home renters insurance, umbrella insurance. And divorce, prenups are sort of like an insurance against future catastrophe in case you decide you don't like your spouse. So disability insurance, this is the big one. You have been in school and training for more than 12 years. How many of you guys already have disability insurance? Okay, about half of you. Okay, very good. So your very most valuable asset right now is your ability to work because you're young. And so I want you guys to think about protecting your current and future income. And because like Dr. Adler said, you guys think you're invincible, you actually need it more than you think, okay? Most employees believe their odds of becoming disabled for at least three months, 1% of you guys think that, but in reality, more than a quarter of today's 20-year-olds will become disabled before they retire. So this is why. Everybody thinks they're going to get in some serious accident and then there's strokes and things like that. But actually, the most common reason for disability is mostly on bone disorders, breaking your Achilles or tearing your Achilles, et cetera, that kind of stuff. There are certain things that will increase your likelihood of disability if you're overweight, if you smoke, if you're mostly physical labor, that's us, actually. Unhealthy lifestyle, probably also us. So those are the things that you really have to think about and these are the modifiable risk factors. So specifically for GI, one in seven overall doctors will require disability insurance during his or her career. And GI doctors are very high risk for disability, higher than actually other procedural IM specialties, including cardiology, pulmonary critical care, et cetera. Our rates are similar to that for surgeons and interventional radiologists. And you heard from Dr. Pawa as well, a lot of you guys suffer muscle skeletal pain and half of you guys have reported it during fellowship. So when should you buy GI? As early as possible after medical school. It is the cheapest when you are younger and I actually will argue that you don't want to rely on your employer, your group for insurance. So buying GI, these are some of the words you want to look for. Own occupation. I'll go into that in a little bit in a minute. Guaranteed renewable means that the company you buy from cannot cancel your policy. They can raise the price, but they can't cancel it if you pay. Non-cancelable, again, it means they can't cancel, they can't raise the price and or decrease the benefits as long as you pay the premiums, okay? If the policy can cancel or raise prices, it may be good initially, but as you get older, your insurance risk for the company becomes higher, right? Cuz you're more likely to become disabled as you get older. So unless you become financially independent, like if you're in neurosurgery and you make a million dollars a year, do you really need this for that long? Not necessarily, but that's kind of what you're looking for. Then there's something called there's level or graded premiums, very similar concept. Level, the premium doesn't change. So these is kind of what you're looking for cuz you carry long term insurance and again, graded, it changes over time. Own occupation and specialty, this is the most important part of buying DI. You are defined as disabled if you cannot do GI, regardless of whether or not you're gainfully employed. Say you end up working in hospital admin, or say you get in an accident and you can't scope anymore, you can only work at Starbucks or whatever. When you have own occupation or specialty, you can withdraw the entire amount of your DI and get your Starbucks salary. Whereas if you are not own occupation specialty, the insurance company will be like, well, you can work at Starbucks. I don't have to pay you, right? There are now, this is six companies, but I think over last year it went down to five. So Principal, MassMutual, Ameritas, Standard Guardian, those are the ones that cover doctors. I don't think Ohio National does anymore. Yeah, okay, that's what it is. Yeah, got bought out or something. Do you need your own DI? Why can't I just rely on my employer to pay for this? You could change jobs. A third of doctors change jobs within their first three years. So this is why you really need it, your own. Group long-term disability plans are not always own occupation. So that is something you have to think about. It does not always cover bonus income. It does not always, they have a very low ceiling. There's a max monthly benefit. It won't be ever as much as something you could buy yourself. And unfortunately, this is what we're finding. A lot of group DI policies exclude work-related injuries, because they were getting a lot of long COVID claims. So you could catch COVID at work from a patient, and your group will not pay for it. It's been a big workman's comp issue, and so this is something you have to be wary about. The other benefit has to do with how our tax structure is set up in this country. Benefits from group work policies are paid by the employer with pre-tax dollars. So you will never, they already take it out as part of your paycheck before you even get it. So you'll be taxed on the benefit when you withdraw it. So if you're disabled and you drew the income, you have to pay taxes on that. If you pay it with your own discretionary post-tax income, you cannot get twice. It's that double jeopardy thing in American law, but basically you cannot pay twice. So the second time when you, if you pay with it with your own money after they already had taxes taken out of that money, they can't tax you on the benefit when it's time to use it. So how much coverage, how much of this do you need? So buy what you can. I think the baseline is like five grand for most of these policies. A lot of people can buy more now because your resident salaries are higher and fellow salaries are higher. Think about how much you have to cover and your family needs to cover for your expenses. There's a maximum because they're not gonna pay you for not working, right? So you can only qualify for about 60% of your gross income. The things that matter in setting rates, age, gender, women pay more, and I'll tell you why in a minute. Specialty, amount of coverage, health status. There are certain discounts you can take. There are certain riders, which are sort of the exceptions. DI costs more for women because we get disabled more often, and a lot of that has to do with pregnancy. So buy before you get pregnant if possible. Buy before a big birthday also is kind of what I recommend because that's when they raise the rates. Language, this again, a lot of times they will exclude pregnancy complications. So this is something you wanna buy when you're younger. The annual cost is two to 6% of annual benefits. Unisex rates, if you can find them, are great. And you wanna shop around. You're looking for an independent insurance broker, not an insurance agent who will only sell you one company's products. The independent brokers get paid only when you sign and pick one, not by the company itself. So they have your better financial interests in heart, okay? And your slides will be available, so we'll go through. These are some of the riders you get. The two of them, if there's no own occupation, you can get it as a rider. The two that you want are the cost of living adjustment and your future purchase option rider, okay? When you start out, you're usually at a lower salary. What you want as a future purchase option rider is that once your salary increases, you can increase the amount of disability insurance you get to match that without having to go through medical underwriting. So if you develop diabetes, if you whatever, like in the interim, you don't have to get that medical underwriting. Your cost will stay very similar. Special circumstances, they check your prescription history. So do not lie on this because once they find out, that's actually one of the ways they can cancel your policy, okay? So don't get your friends to write you your whatever meds you're on, all right? Disclose everything. If you're not insurable, group policies are not a bad idea. David Beckham's leg, I think, is still insured for 15 million even though he doesn't even play soccer anymore. When can you stop paying for this? Usually everybody will say about 65, 67 is when these term out or you hit the lottery. Life insurance really quickly. If you have enough money for your own burial and nobody else is depending on you, you don't really need this so you can tune out. Cheaper again when you're younger. This is where it's cheaper for women because unfortunately men are better at killing themselves. Again, you want to get it before pregnancy. Has to do with gun ownership actually if you look at the things. There's two different types. I recommend not ever tying your insurance to a investment product, which is what permanent, whole, universal index life insurance is. It's tied to an investment product. That guy's an insurance agent. He has his own interests at heart. It's going to be a lot more expensive to get. What you want is term life insurance. They go for 10, 20, or 30 years. They'll pay out if, unfortunately, god forbid, you pass away in this time. How much do you need? This is sort of the basic stuff. 10 times your income if you live in not California, 20 times if you live there, $1 million per kid is another way to do it. If you just want to set it, forget it. It's $3 million, 30-year term life insurance. This is how much you need to cover. These are some of the big expenses out there. Mortgage, college costs, student loans for you guys, especially if you had a cosigner. Those are not discharged on death if you had a cosigner, OK? Sorry about that. Everybody wants your money, OK? Large ticket items. You can ladder policies. So what you can do, this is the cheapest way to do term insurance. Once the kids are out of the house, you may not need $3 million 30-year terms. What you do is you buy two policies. $2 million, you're going to need the $3 million earlier, right? If you die earlier, it can't work. So what you do is you buy two policies. $1 million for 30 years, $2 million for 20 years. So maybe after 20 years, you don't need a whole $3 million. You just need that $1 million. And so the rates will be cheaper. Laddering policies, OK? Most stocks get between 1 and 5. This is the only thing. Do not get genetic testing before you apply for life insurance and disability insurance. If you have a genetic syndrome, you may not qualify. They are actually in talks to get your data from 23andMe and some other places that will disqualify you. So whichever random aunt sent you a 23andMe, don't do that test until you get your insurance, OK? Because otherwise, you may not qualify, OK? So we went through some of this. We're going to go through a little bit on spending and then retirement accounts. Spending, be deliberate. Spending has consequences. I know it's hard, because you'll see that first attending paycheck and be like, whoa, my Porsche 911. No, OK? Live like a trainee for two or five years. Pay off your loans. Save up for your housing down payments. Start your retirement savings. I'll go into that a little bit. Longer hours are easier to work when you're younger. I know you guys think you're invincible, but again. Set up an emergency fund. Three to six months to cover expenses. Put in someplace easy. Nobody has cash anymore, but you could do it at a high-yield savings account. Put in some budget. Minimize your fixed expenses. Say 20% of your gross income is sort of the general rule of thumb. And pay off your debts. I recommend starting off with credit card, because the interest rate is higher. Housing is your biggest purchase. It is OK to rent, especially if your job, you don't know if you'll like it. What if you don't stay there? It's much easier to say bye to a landlord than to sell a house. How many of you guys have student loans? Almost everybody. 75%. The average debt is, and this is pre-COVID, about $200,000. I would like to point out that one year of the most expensive private college, which is unfortunately the one I also went to right now, tuition at University of Southern California is $100,000, including room and board. This is only going to go up. And you guys unfortunately graduate during a time of high interest rate, not during the Clinton years. So there are a couple options. You can refinance, consolidate, do private loans to go through a lender that way. Make a plan to pay it off. They're not the family pet. Don't keep these around. PSLF, we'll go into that a little bit. This is for federal loans only. And you have to work for the right employer, which means that employer sees indigent patients. And the government has an interest in for people to take these patients. So you usually work for a nonprofit government. A lot of academic centers qualify for this. Kaiser, where I work, also qualifies for this because we do see a huge number of Medicaid, Medi-Cal patients. These apply to federal government loans only. And the way this works is it's income-based repayment. You pay as little as possible towards your loans for 10 years and then you get the rest of the federal loan forgiven at the end of those 10 years. It's basically trading time for money. If you both have loans, there is a married filing separately situation. We can go into that offline if you want to at some other point to discuss this. But this is actually a very good program. So finally, sort of the retirement account portion of this, the power of compound interest. This is AKA free money, eighth wonder of the world. OK, Albert Einstein, I thought, was a pretty smart guy. So we're going to do a little bit of math. And this is obviously not going to be your salary. Unfortunately, this is sort of the average pediatrician salary. So please be nice to your future pediatricians. They do take a big hit for caring for our kids. So say you have a salary of $200,000. And you're really good. You're really diligent about putting 20% of your gross income towards retirement savings. That's what, $40,000 or so? And every year for 30 years, you put in $40,000. At the end of that, you're going to be very close to $4 million. There is an inflection point you see there. The yellow is your principal, all that $40,000 that adds up. If you just stuff it under a mattress, it's $1.2. The difference between $4 million and $1.2 million is not small, OK? The green part's all interest. It's money on the table, assuming a 7% return, which is a little higher than what's out there. But that's sort of the math. I hope this makes sense. And the earlier you do this, the better. If you wait 10 years, you have to contribute $90,000 more a year just to hit $4 million. If you just leave it and there's no growth in 10 more years, it's going to be $8 million. This is compound interest. This is extremely powerful. This is why you guys need to start saving for retirement now. And why is that important? All your iBanking friends have been doing this for 10 more years than you, OK? We start saving for retirement later due to our length of training, the really not-so-great salaries we have, and the ability to match and contribute fully. There's a lot of tax advantages to doing this. And I don't care if you're a communist. You don't want to pay taxes, OK? This is how this works, OK? This is tax-advantaged money. And the best part about it, it's protected. So they cannot seize your retirement accounts, usually, by creditors. So that's huge, OK? You can automatically get it withdrawn. You can be self-employed and set up your own. Some employers will match. So say there is a contribution limit of $7,000. Some will match up to 4% or whatever. That's free money on the table. You already work there, you know? Get paid, you know? So how much do you need to retire? The thought is they call it the rule of 4%. It comes from looking at historical growth rates. And what it is is the thought is you can withdraw 4% from your invested assets annually without touching the principal. So for something like, say, at the end of all this, you're retiring with $3 million or something like that. You can just live off the interest alone, $120,000, and you can just keep withdrawing. So that's sort of the thought about how much you need at the end of the day. There's two types of retirement accounts out there. There's tax-deferred and tax-free. Tax-deferred is your 401k, your traditional IRAs. What you do in that situation is you contribute pre-tax money. So it gets taken out by the employer out of your paycheck before you pay taxes on it. And then that compounds in an account. And you pay taxes later when you withdraw it out. But you're not making money at that point. So actually, you pay taxes at a much lower rate than you would have if you take it earlier. Tax-free, these are also known as Roth accounts. There's an income limit to these, which all y'all qualify for as fellows. I think it's less than $160,000 a year for single and then a little bit more for married. What you do is this is where you pay into it after you pay taxes on it. So you pay into this with your discretionary. When you get your paycheck, you put it in a Roth account. What happens is, again, you can't get taxed twice. When you withdraw money from this, you cannot get taxed on it. There's a whole thing called backdoor Roth. It's way too complicated for me to explain today. But if you want to talk about it, we can. So these are the limits for this year, 2024, about $7,000. If you're older, you get to put in more at once because they want you to catch up, as we discussed earlier. These are all the different retirement accounts, including health savings. These are your tax brackets. Most of you guys are here. And remember, federal taxes are different. State taxes, I can't even begin to go into those. But federal taxes are different. So say you make $12,000, the first $11,600 are taxed at 10%. The next dollar after that is taxed higher. So it's not that you guys are paying 22%. It's graded like this. So say you're making $500,000. That's about the median. You make a $56,000 401k contribution. It comes out of your 35% tax bracket. You save about $20,000. And when you withdraw it, you withdraw it at a much lower income tax bracket. This is the benefit. So not only is it compound interest and all that, it's the taxes. You save money on taxes. Health care savings account, they call this a triple tax-free. No tax on contribution, earnings distribution. You can pay for your kids' braces. Those are cash pay. It's very expensive. Other earnings, contacts, all of that stuff. Save the receipts. You can do it that way. So really quickly, because I'm running out of time, but I wanted to mention basic 101 rules for investment. This is where all the business guys make their money. Nothing's stopping you from making money here either. There are things called target date funds. So as we get closer to retirement age, your risk tolerance will decrease. So don't lose your money before retirement. So things like stocks and real estate are considered high risk, high reward. Things like US bonds, unless the country goes down, but you know what I mean. Low risk, lower reward. Target date funds, they'll say something like Vanguard Fidelity 2065, whatever. If you plan on retiring in 2065, these mutual funds will adjust your asset allocation based on your retirement year. So when you start, when you're younger, you can take a lot more risks, right? Because you can build time in the market. The amount that you, you know, so it's going to be a higher stock proportion, lower bonds. And then as you get closer to retirement, it's going to be higher bonds, lower stocks. That's kind of how mutual funds work. It's the easiest, set and forget it type of way to invest for retirement. Mostly these, they will not outperform the market, but the market for the most part is positive. So this is easier. Three fund portfolio, that's basically the same thing. It diversifies your income, not all your eggs in one basket. You can read more about this. I know it's boring, but you know, you could just buy Nvidia stock, right? But is this really a con, you know? So final considerations, I just really quickly, I'm sure some of you guys have kids or are planning on having kids. Parental leave is different. FMLA legally only guarantees your job safety, does not guarantee payment. And states have very different laws about this, so know that. One in seven American women suffer infertility. One in four female physicians suffer infertility. IVF is only covered by insurance in Massachusetts. So each go around is $20,000. So I would like to point that out, things you have to plan for. Invest in, if you have kids, dependent care spending accounts. This is like the health care savings account. Free money, of which you pay probably your biggest expense, which is child care, nannies, et cetera. 529 college plans are a great investment. Again, a lot of tax savings on this. Varies by state, but for the most part, you do save a lot on taxes. You can use it for yourself if your kids don't end up using it. You can transfer it to between kids. Say your kid doesn't end up going to college, you can put the other kid's name on it and move money that way. Or one of my colleagues actually used it to take a cooking class in France. And it's still cheaper to take the penalty. Yes, and if they don't, yes, it's cheaper to take the penalty as well. Your biggest, there's a state planning, wills and trusts. Try to avoid probate, because it ties up your money and assets for like a whole year, so make sure you set those up. Your biggest gift to your kids will be your financial independence. Nobody wants to pay for mom's nursing home, my kids already told me. So just so you know. Anyways, these are the books that you can go through. I listed these. There's a lot of things out there that you can learn, some things to read about if you want to, or podcasts. Actually, Kerry Reynolds is a PSGI in Texas. So finally, conclusions. Protect yourself. Live within your means. Save early, save often. Max out your tax advantage retirement accounts. I know this is really boring. I sound like your mom, but please learn to invest and make a financial plan. Thank you guys again so much.

financial literacy

disability insurance

life insurance

retirement planning

budgeting

student debt