Physicians are highly compensated professionals, and on average save for retirement at a healthy rate, according to a new study from Fidelity Investments.
However, in a closer look at data from 13,330 workplace savings plans, Fidelity found that many practitioners were falling well short of recommended savings rates.
The analysis showed that physicians were saving at an average rate of 19.8%, up from 15.3% in 2012.
Nevertheless, 48% of physicians were saving at an average rate of only 9%, well below Fidelity’s recommended 15% rate.
In addition, 48% were not maxing out their contributions to a qualified workplace plan. Here gender differences were stark: 58% of female physicians fell short of maximum contributions, compared with 45% of their male counterparts.
Furthermore, 71% of physicians were not contributing to a nonqualified retirement plan.
Fidelity’s analysis also showed that 39% of pre-retirees were aggressively allocating to equities, making their savings more susceptible to market fluctuations.
At the same time, some 33% of midcareer physicians were more conservatively allocated, which limited their potential for growth during their long-term savings horizon.
Why are many physicians lagging the average savings rate of their colleagues?
Fidelity said in a statement that a survey it conducted in November 2014 found 45% of physicians unable to afford to max out their workplace retirement plan.
Even though physicians on average earn $300,000 annually, based on Fidelity’s business data, industry research showed that 84% carried medical school debt averaging more than $176,000. Not only that, but many practitioners were strained by heavy practice-related costs.
Sixty-one percent admitted to being at least somewhat confused about how to navigate their financial path for the future.