Physicians’ salaries average significantly higher than the average American salary. While this certainly adds to the draw of becoming a physician, it also comes with the stipulation of belonging to a higher tax bracket.

According to healthcare writer Joe Hannan, physicians should begin considering tax savings when opening a retirement account. Hannan suggests that physicians doubly benefit from investing in appropriately selected retirement accounts by both netting the initial investment upon retirement and lowering current taxable income. 401(k) or 403(b) plans are typically available to most physicians and provide an excellent opportunity to make a tax-deferred investment.

Forgoing investment in either a 401(k) or 403(b) plan means missing out on the chance to lower taxable income. It also means not being able to reap the benefits of an employer fund-matching plan, in which employers match funds for a specific dollar amount or percentage of an employee’s income. In other words, when physicians pass of the opportunity to fully fund their retirement accounts, they may be leaving money on the table.

Save for Children’s College Funds As Soon As Possible

Hannan suggests that physicians who begin saving for the children’s college fund as soon as possible also place themselves in the best position to recoup some tax savings. He recommends doing so through a qualified tuition program (QTP), also known as a 529 plan, which are managed by either states or state agencies. Not doing so means many missed opportunities, like decreasing taxable income, tax-free investment growth, and avoiding the effect of rising tuition costs.

According to California-based financial planners Otium Advisory Group, LLC, the cost of a post-secondary education goes up 6% every year. The price tag of a 4-year degree at a private college in 2035 could be around $230,000.

Section 199A Deduction Might Be the Best Option

Healthcare savings accounts (HSAs), according to Hannan, also offer tax savings, doing so by lowering taxable income and via HSA-subsidized medical expenses. They offer an opportunity for physicians with high-deductible health plans to cover the cost of expenses like coinsurance, copayments, and deductibles. HSAs also offer tax-deferred growth without any expiration date (unlike flexible spending accounts).

For self-employed physicians, the Hannan suggests that the Section 199A deduction might be the best option. Eligible entities, like S corporations, sole proprietorships, and partnerships, receive a sizable deduction. Up to 20% of a physician’s qualified business income, 20% of qualified real estate investment trust dividends, and income from publicly traded partnerships all provide deduction opportunities. Hannan suggests speaking with a CPA before jumping into a Section 199A deduction.