Wealth Strategies for Physicians: What You Should Be Doing Now
If you’re a physician, chances are you’ve been so focused on patient care, charts, and call schedules that your wealth strategy is more of an afterthought—if it exists at all.
That’s understandable. But it’s also risky.
As a U.S. tax advisor who works with high-earning professionals every day, I’ve seen too many physicians make the same mistake: assuming high income = automatic financial security.
It doesn’t.
Without a clear plan—one that takes taxes, timing, and protection into account—your hard work could translate into unnecessary losses, missed opportunities, and long-term regret.
So let’s fix that.
Here’s what you should be doing now to grow, protect, and keep more of your wealth.
1. Know the Difference Between Income and Wealth
Just because your paycheck looks impressive doesn’t mean you’re building wealth.
Wealth comes from what you keep—not just what you earn.
And yet, physicians often:
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Let taxes chip away at every dollar earned
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Rely too heavily on W-2 or 1099 income
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Fail to convert earnings into scalable, passive, or protected assets
High income can lull you into a false sense of security. But if you’re not actively directing those earnings into smart vehicles—like retirement plans, tax shelters, and appreciating investments—you’re simply earning to spend.
Instead, think in terms of long-term net worth, asset protection, and after-tax cash flow.
2. Use Retirement Plans Strategically
You already know retirement accounts exist—but how you use them matters more.
If you’re still contributing only to your employer’s 401(k), you’re missing options like:
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Mega Backdoor Roths
→ These allow you to contribute well beyond traditional limits using after-tax contributions. Learn how to do it right. -
Defined Benefit Plans
→ Especially helpful if you’re older and earning more—these plans let you defer significant income for retirement while cutting today’s tax bill. -
Cash Balance Plans
→ A hybrid between pension and 401(k), ideal for high-income solo and group practices.
Are you a 1099 physician? You have even more flexibility with self-employed retirement options—check out our 1099 contractor tax guide.
3. Reduce Your Taxable Income Proactively
Too often, tax planning happens after the year ends—when options are limited.
Instead, plan in advance using strategies like:
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Health insurance reimbursements through your business
→ Triple-tax advantage -
S or C corporation election
→ Can reduce self-employment tax and allow tax-free travel reimbursements -
Shifting income to family
→ Legitimately employ your children or spouse in the practice -
Using market losses
→ Offset capital gains when you hit a rough patch in the market. Here’s how.
4. Choose the Right Business Structure (Yes, Even If You’re Employed)
Even if you’re primarily W-2, you may still be earning income from consulting, expert panels, or locum tenens work.
That income should be structured under a legal entity—like an LLC taxed as an S Corp.
Why?
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It creates separation between you and the income
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It can drastically reduce self-employment tax
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It unlocks deductions you’d miss as an individual
Not sure which setup makes sense? Start with this guide.
5. Don’t Dismiss Insurance as a Wealth Tool
Most physicians are underinsured—or worse, overpaying for the wrong kind of insurance.
Done correctly, insurance can be part of your long-term wealth strategy:
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Private Insurance Models
→ Explore the benefits -
Captive Insurance
→ Ideal for practices with risk exposure. Here’s what to know. -
Self-Insurance
→ Especially relevant in high-premium environments. This guide explains the pros and cons.
6. Turn Side Income into Scalable Wealth
Many physicians are generating income through consulting, expert witness work, or speaking.
If that money is simply hitting your checking account, it’s not working hard enough.
You should be:
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Structuring it under a business entity
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Deducting expenses tied to that work
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Reinvesting into retirement, insurance, or real estate
Curious how others are doing it? Here’s how physicians are increasing income with non-clinical side businesses.
7. Coordinate With a Tax Advisor, Not Just a CPA
There’s a difference between filing your taxes and planning around them.
A tax advisor works before the numbers are final—helping you:
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Estimate quarterly taxes
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Time large purchases
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Restructure your income
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Reinvest with tax consequences in mind
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Plan your exit strategy early
If your current CPA isn’t guiding you through tax planning, you may be overpaying every year.
Don’t wait to find out during tax season.
8. Start Thinking About Legacy—Even If You’re Not “There Yet”
You don’t need to be 70 to start thinking about what you’ll leave behind.
Legacy isn’t just about inheritance—it’s about control, impact, and peace of mind.
9. Avoid the Trap of “Someday” Planning
One of the biggest mistakes I see physicians make?
Saying “I’ll start planning when things calm down.”
The truth is: they rarely do.
You don’t have to overhaul everything today. But you do need to take the first step now—whether that’s setting up an entity, scheduling a meeting with your advisor, or simply reviewing where your money is going.
Even a 1% change today could grow into something massive 10 years from now.
FAQ: Physician Wealth Strategies
Do physicians really need business entities?
Yes, especially if they have any 1099 or side income. It opens the door to deductions and better tax structuring.
What retirement options are best for high-income earners?
Solo 401(k)s, defined benefit plans, and mega backdoor Roths offer significant advantages. The right mix depends on age, income, and employment setup.
Can insurance be used for wealth building?
Absolutely. When structured correctly, insurance can offer tax-deferred growth, risk protection, and even legacy tools.
Is a tax advisor really necessary if I already have a CPA?
Yes. A tax advisor plans proactively; a CPA typically files reactively. You need both—but especially someone helping you make decisions before the year ends.
What’s the first step I should take today?
Start by evaluating how your income is structured. Are you protected? Are you optimized for taxes? That’s the foundation for everything else.
Ready to talk strategy? Start here.
Visit contact physiciantaxsolutions.com to schedule a consultation and learn how we can help you take control of your tax strategy today.
This post serves solely for informational purposes and should not be construed as legal, business, or tax advice. Individuals should seek guidance from their attorney, business advisor, or tax advisor regarding the matters discussed herein. physiciantaxsolutions.com assumes no responsibility for actions taken based on the information provided in this post.