What Physicians Need to Know About Pension and Social Security

What Physicians Need to Know About Pension and Social Security

August 12, 2021

Physicians are typically held in high esteem by our society—and for good reason! As a doctor, you’ve spent years dedicated to honing your craft, working hard to save lives, and making the world a better place. However, accolades aside, long workdays and a complex financial situation means retirement planning is often put on the back burner as you tackle more pressing matters. 

As you now near the end of your career, you have some important financial decisions to make. And, unfortunately, many of these decisions, especially pension elections and Social Security options, can be confusing and overwhelming. If you’re in this boat, read on to learn what you need to know about pensions and Social Security—and how we help doctors just like you prepare for a fulfilling retirement.

The Truth About Pensions

Pensions are far less common than they once were. Back in the 1950s, over 50% of private-sector workers had access to traditional pensions. (1) Fast-forward to today, and only 7% of employers offer pensions and 14% offer hybrid plans. (2)

But if you’re a high-earning doctor with your own practice, you have the option to establish a defined benefit plan for you and your workers, which is essentially a modernized pension. These plans often have “hybrid” options known as cash balance plans, which allow you to save even more money per year than you ever could with a 401(k). For 2021, you can contribute up to the lesser of these two amounts: (3)

  • $230,000; or
  • 100% of your average compensation for the highest three consecutive years

As you move forward in your career and earn a higher income, your contribution limits increase drastically. That’s why these hybrid options are an attractive choice for older physicians who are trying to make up for lost time when saving for retirement. Plus, contributions are usually tax-deductible as a business expense. 

The Truth About Social Security

It’s important to understand that Social Security was only designed to cover 40% of income for the average worker. (4) For high-income earners such as doctors, this percentage is even less. For 2021, the maximum amount anyone can receive in Social Security benefits is: (5)

  • $3,895 for someone who files at age 70
  • $3,113 for someone who files at full retirement age
  • $2,324 for someone who files at 62

Your Social Security payout increases by 8% each year you wait to claim benefits—until it maxes out at age 70. As you can see from the example above, postponing benefits could add an additional $1,500 in your pocket each month. But deciding when to take Social Security is a highly personal decision. From a mathematical standpoint, it makes sense for everyone to wait until age 70. Ultimately, factors like your health, age, and financial obligations will influence your decision. 

How We Help

The truth is, Social Security will only cover a portion of your expenses in retirement and choosing pension plan elections is a tough thing to do. We at Haydel, Biel & Associates have years of experience helping doctors navigate these tough decisions. Together, we help physicians just like you gain financial clarity with these three easy steps:  

  • We start by creating a clear picture of your current financial situation (including talking through your current level of wealth, risk tolerance, health, current mix of assets, and family obligations).
  • From there, we analyze your current mix of fixed and additional sources of income and discuss the advantages and disadvantages of each (e.g., pensions, Social Security, annuities, taxable brokerage accounts, rental income, and more).
  • Lastly, we develop a Social Security election strategy that helps you maximize your benefits. 

Start Today! 

Just like you want your patients to come to you for informed medical advice, it’s best to consult a financial advisor when it comes to retirement planning. Our HBA Wealth team is dedicated to helping you maximize your Social Security benefits and make pension elections you won’t outlive in retirement. Consider partnering with us so we can review and assess your current financial situation and offer suggestions to help you gain financial clarity. To get started, contact us at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

About Haydel, Biel & Associates

Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

The commentary on this blog/website reflects the personal opinions, viewpoints and analyses of the Haydel Biel & Associates employees providing such comments, and should not be regarded as a description of advisory services provided by Haydel Biel & Associates or performance returns of any Haydel Biel & Associates Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Haydel Biel & Associates manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.


(1) https://www.ssa.gov/policy/docs/ssb/v39n6/v39n6p3.pdf

(2) https://www.washingtonpost.com/news/get-there/wp/2014/09/05/nearly-a-quarter-of-fortune-500-companies-still-offer-pensions-to-new-hires/?utm_term=.dcf2ba464e67

(3) https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-defined-benefit-plan-benefit-limits

(4) https://www.ssa.gov/planners/retire/r&m6.html

(5) https://www.investopedia.com/ask/answers/102814/what-maximum-i-can-receive-my-social-security-retirement-benefit.asp