Money Meets Medicine Podcast

MMM 77: Should Physicians Save for Retirement or Help Their Family?

Do you have parents who expect you to take care of them financially? Or have you ever  thought about paying for your kids’ college? Maybe you have a brother or sister who has asked you to help them out.

Larry Keller

This all begs the same question, should physicians save for retirement or help their family? 


Life Is Complicated

Sometimes it might seem like people think you don’t invest because you are living in the now, but we know that is not usually the case. 

Instead, you are trying to make real-life, tough decisions like should you save for your kids’ college or your own retirement? What if you need to help out your aging parents? How do you still make the best financial decisions for now and your future?

Let’s talk through a few different scenarios that can come up and put you in the tough position of choosing between helping your family or saving for your future retirement.


Kids’ College vs. Saving For Retirement

The first question I want you to ask yourself is should I be saving for my kids’ college or my retirement? This is a very interesting conversation because some feel strongly that parents should pay and some feel strongly that children should learn how to make it work. 

First, you can’t finance your retirement, but you can finance your kids’ college. That’s one key thought to strongly consider when looking at this trade off. 

Second, if you asked your children the question, “Would you rather me pay for your college or would you rather pay for my healthcare and lodging in my elderly years?” They will undoubtedly say college. 

Now, this is not to say that you can’t help your kids understand how they can pay for college and pay off any debt quickly. But really think about this trade off. 

Side note, it is also important to think about if a 529 Plan is really the best way to save if you do choose to save for your kids’ college education. 


Helping Parents Out Financially

This is a tricky discussion here because it is a very sensitive one. For some people there is a cultural expectation that children take care of their parents financially when they are older. And therefore the parents have generally not planned for retirement because the norm is they will be taken care of. 

For example, I have talked to people before whose parents were making really good money, but saved absolutely nothing for retirement. Why? Because he knew that it was his child’s responsibility to take care of him in his older age. So, if this is a cultural decision in your family, we are not going to question that. 

However, for others this cultural expectation does not exist or they do not plan to keep it. In this case it really comes down to how involved your parents want you to be in their finances. This is a discussion you need to have early so you both can have common goals and an understanding of what responsibility each person (parent and child) have. Will you have a shared bank account or not? Who is expected to cover what? These are questions that you want to answer early on. 


Providing Financial Aid To Other Family Members

So what if there are other members of the family who need financial aid? Maybe your sister, brother, a close cousin or aunt and uncle. What then?

First I want to caveat this one, it has been my experience with my family that money can ruin really good relationships. I am not saying don’t help them out, but I do have some recommendations if it is at all possible for you to help someone out.

Here are my top two things:

(1) Give the money as a gift with no expectation of getting it back 

(2) If you can not give it as a gift, then be VERY clear on how and when you expect the money back. Review what happens if they don’t pay (I’d write it down and make sure both people really understand it). This isn’t because of lack of trust, it is for clarity so that people’s feelings don’t get hurt when it doesn’t go the way that you plan. Because it rarely goes as planned. 


Communication Is Key

These financial decisions are never cut and dry. However, it is really important to be thinking about and planning for these different scenarios that may come up in life. Communication and planning is key. If you haven’t talked to your parents or children about what retirement and paying for college will look like, have those conversations now. The earlier the better.  

And be sure to include your spouse in every conversation and decision too. If your spouse doesn’t care about money then we have some tips in a previous podcast episode for you on that here, but still have the conversations. 

Learning how to balance your responsibilities to your family financially, making decisions on what that looks like, and finding opportunities to help your family financially while meeting your goals all starts with talking about it. It is so important to have clarity on the situation with everyone involved when making decisions to support your family or not.

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