From Residency to Retirement

Jan 12, 2023 | Core Bank, Healthcare

From Residency to Retirement

The road from residency to retirement can be long and complicated, but it doesn’t have to be. When planning for the future, it’s important to build a team of industry experts early on to help navigate those financial woes. From the stress of being a resident to the daily challenges of patient care, the last thing you – as a physician – need to worry about is your financial health, both now and in the future.


As if residency wasn’t taxing enough, student loans and financial planning can make it seem even more complicated. With the rising costs of education, it’s not unusual for young physicians to begin their careers with six-figure debt. In 2020, the average resident salary was $64,000 while student loan debt well exceeded $250,000; add in the compounding interest from student loans, and it can seem almost impossible to pay off. Luckily there are many ways to pay off student loans and industry experts who work with you to fit your needs.

Another big financial decision to consider is the purchase of your first home. It’s beneficial to seek out a financial institution with a physician program as there are often many benefits including lower interest rates on loans, mortgages that require little to no money down, and high-interest accounts. As a resident beginning their professional journey, a high-interest checking, or savings account can provide some financial protection by quickly earning interest. Some financial institutions are more flexible in their consideration of student loans in the debt-to-income ratio, making it easier to qualify for loans, especially for a mortgage.

Practicing Physician: 

Post-residency, it’s most common for new physicians to seek employment within a health care system to establish themselves with physicians and patients instead of taking the leap directly into private practice. It can take several years to build a patient portfolio and without established patients, the work can be made more difficult and stressful than necessary. However, beginning your career as a new physician comes with great potential, a long runway, and the need to start thinking about investing and saving if you haven’t done so already.

With physicians retiring in droves post-COVID, there is a high need for primary care physicians and healthcare organizations are willing to pay. In 2019 the average starting salary for a first-year, full time primary care physician was $180,000 and in 2021, this number jumped significantly to $225,000. Established primary care physicians can expect to make upwards of $278,000 in base compensation but also receive additional benefits such as PTO and retirement. Specialty groups have also seen large jumps in compensation with COVID. A first-year orthopedic surgeon could expect to make an average of $370,000 in 2019, however, the first-year salary now sits at around $400,000.

Financial planning early on is especially important because physicians, when compared to other professions, take years longer to reach their full income potential. Private practice physicians also face additional challenges as they take on extra debt to front the initial capital investment it takes to become a practice owner. Despite the costs, however, there are many benefits to private practice ownership that can pay out in the long run, especially near retirement. 


As physicians think forward, it’s imperative to understand the options available to monetize their initial investment into their practice and ensure continued financial stability upon retirement. When planning for retirement, the two most common options to consider are practice acquisition and partner buy-in.

Partner buy-in is essentially a buy-sell agreement that details the ownership equity after a partner retires or leaves the practice. With this option, other partners can buy out the equity of the retiring physician, and those physicians who are not currently partners have the option to become a partner by buying in. Most private practices generally employ physicians for several years prior to offering partnership opportunities.

Practice acquisition is another option and generally occurs when a physician retires, and an existing practice or health system purchases the practice. This is one of the most challenging business deals to execute and if not done properly, can have lasting legal ramifications including patient abandonment. During a practice acquisition, it’s important to work with the right financial partners such as a healthcare attorney or accountant who can advise on legal and financial decisions.

Retirement doesn’t happen overnight and generally buy-ins and practice acquisitions take years to properly execute. Having your team of experts to help prepare for the future and to be ready when the time comes is imperative to being financially successful starting in residency and following through to retirement.


Provider Placement 2017-2021. (2022). MGMA DataDive.

Physician Compensation 2017-2021. (2022). MGMA DataDive.

​Markie Lowry, CMPE
Assistant Vice President, Core Bank Healthcare Relationship Manager