Retirement planning for healthcare professionals has become easier with the new Secure Act 2.0, which allows them to save more towards their retirement. This new law is a game-changer for physicians, who have struggled to save enough for their retirement due to their long training periods and high student loan debts.
In this blog, we will dive into the details of the Secure Act 2.0, how it benefits healthcare professionals, and why it's crucial to work with a financial advisor for physicians.
What is the Secure Act 2.0?
The Secure Act 2.0 is an updated version of the Setting Every Community Up for Retirement Enhancement (Secure) Act, which was signed into law in 2019. The Secure Act 2.0 aims to improve retirement security for Americans by providing additional opportunities for retirement savings.
One of the significant changes introduced by the Secure Act 2.0 is the increase in the age for required minimum distributions (RMDs) from 72 to 75. This change allows retirees to keep their money invested for a more extended period, potentially earning more money in the process.
How does the Secure Act 2.0 benefit healthcare professionals?
The Secure Act 2.0 provides healthcare professionals with several benefits that can help them save more towards their retirement. Here are a few ways healthcare professionals can benefit from the new law:
Increased contribution limits for 401(k) plans
The Secure Act 2.0 increases the contribution limits for 401(k) plans from $19,500 to $20,500 in 2022 and to $22,500 in 2023. This increase in contribution limits allows healthcare professionals to save more towards their retirement and take advantage of the tax benefits offered by 401(k) plans.
Introduction of catch-up contributions for 403(b) and 457(b) plans
The Secure Act 2.0 introduces catch-up contributions for 403(b) and 457(b) plans. Catch-up contributions allow employees aged 50 and above to contribute an additional $6,500 to their retirement accounts, over and above the regular contribution limits. This provision can be highly beneficial for healthcare professionals, who often have shorter retirement timelines due to their late start in the workforce and high student loan debts.
Increased tax credits for small employers
The Secure Act 2.0 also provides increased tax credits for small employers who offer retirement plans to their employees. This provision can help healthcare professionals who work for small medical practices or hospitals to benefit from retirement plans and save more towards their retirement.
Why is it crucial to work with a financial advisor for physicians?
Retirement planning for healthcare professionals can be complex, and it's crucial to work with a financial advisor who specializes in working with physicians. Here’s why :
1. Specialized knowledge
A financial advisor for physicians has specialized knowledge of the unique financial challenges that healthcare professionals face. They understand the intricacies of medical practice finances, student loan debts, and retirement planning for doctors. This knowledge can help healthcare professionals develop a personalized retirement plan that aligns with their financial goals.
2. Investment management
A financial advisor for physicians can also help healthcare professionals manage their investments. They can help select suitable investment options that align with the healthcare professional's risk tolerance and financial goals.
3. Risk management
A financial advisor for physicians can also help healthcare professionals manage their risks. They can guide insurance coverage, including disability insurance and life insurance, which can help protect healthcare professionals and their families from financial hardships in the event of any catastrophic event.
Retirement planning can be challenging, especially for healthcare professionals who face unique financial challenges. The Secure Act 2.0 provides healthcare professionals with several benefits that can help them save more towards their retirement.
With the new Secure Act 2.0 and the guidance of a financial advisor, healthcare professionals can spend more time doing what they love and less time worrying about their retirement savings. At PRIME Financial Services, our team of experienced financial advisors can help you plan for a comfortable retirement, enabling you to Spend More and Save Less in 2023.
Disclosure : For Educational Purposes Only – Not to be relied upon as financial, tax, or legal advice.