Locum Tenens Physician, Sole Proprietor
Background: James is a 40 year old locum tenens physician who earns $350,000 per year. He has a 2 young children and his wife works part time.
Goal: He would like to invest as much as they can afford to set himself and his wife up well for retirement. He would like to retire at age 62. He can afford to put away more than the 401(k) maximum of $60,000 per year, so he is looking for another retirement savings tool.
Solution: James decides they will put $120,000 in a DB plan and another $25,000 in a 401(k), saving over $50,000 in taxes and creating a substantial retirement nest egg. Here are his tax and retirement savings:
Married Locum Tenens Physicians, No Employees
Background: Jane and David are married locum tenens physicians with no employees. Jane is 51 and David is 55.
Goal: Jane and David love what they do, but they would like to retire in 10 years and have a substantial retirement fund to enjoy traveling and doing volunteer work.
Solution: They decide that after their expenses, they can put $290,000 per year in a DB plan. This plan saves them over $100,000 in taxes and sets them up to build a retirement nest egg of over $3.0M:
Locum Tenens Physician with Variable Income
Background: Tom is just starting as a locums physician and has generally earned about $225,000 per year, but he realizes his income may fluctuate year to year. He is 45 and would like to retire at 62.
Goal: Tom wants to cut his taxes significantly and start saving more for retirement, but because of his variable income, he doesn't want to commit to the highest possible Defined Benefit contribution.
Solution:Tom decides to contribute $90,000 to a Defined Benefit plan and start a 401(k) to which he will contribute $30,000 during years when his income is high. With this solution, he could save over $40,000 in taxes when he contributes to both the DB plan and 401(k) and his DB plan could grow to $4.2M by the time he would like to retire.
University Professor with Locums Side Income
Background: Anne, 57, is a university professor who also works locum tenens at a local hospital to keep up her skills. She typically earns $175,000 as a locum. She is married and her husband is also a university professor.
Goal: Anne and her husband make enough from their university positions to fund their lifestyle so Anne would like to put away as much of her locums income as possible to cut her taxes and save for retirement. She would like to retire at 65.
Solution: Anne decides to $125,000 per year of her side income in a DB plan. This plan saves her over $40,000 in taxes each year and allows her to build a retirement account of potentially $1.0M:
