In Part 1, Dr. Paul McHale got honest about burnout, the mathematical problem with relying on a 401(k) alone, and what changed everything about how he thinks about money and retirement.

Part 2 goes deeper.

This conversation covers the exact retirement structure Dr. McHale and Ro are personally using right now, how cash balance plans create creditor protection that most physicians desperately need but rarely have, why a pension may be the most powerful tax tool available to a 1099 physician, and what it actually looks like to build a financial system that works for the rest of your life.

If you missed Part 1, start there. Then come back here.

VIDEO TRANSCRIPT

Mark: So Ro, which physicians does this actually work for? What questions do they need to be asking themselves to know if this makes sense for them?

Ro: Great question. Let me frame it around the three steps we laid out in Part 1. Step one is protection. Step two is income replacement. Step three is optionality. What we are saying to physicians is that you can actually buy the optionality Dr. McHale described via a tax deduction. And that is called a pension or a cash balance plan.

Paul: From a peer standpoint, within emergency medicine our group pays via a 1099 process. You can either be an employed W2 physician or you can get a 1099 paid ER gig almost anywhere in the US right now. For physicians who have their own outpatient surgical practices, GI colleagues, cardiology colleagues, surgeons with private practices, there are typically distributions within the ownership of those groups. And those are all high income physicians with annual tax problems. Towards tax season I keep hearing them say oh God I am writing a massive check again. It is nice to be able to say instead of writing that check to the government, write it to your own pension.

Ro: So the fourth step I want to add to the framework is building a team. Your lead advisor's job is to go out, curate the world, and marshal the right resources for your unique challenges. A T&E attorney is not going to give you leadership on finances. Your financial advisor is not going to give you leadership on estate planning. You need to find the quarterback who brings the right people to the table and then gives you dominion and leadership over your future.

Mark: Paul, you mentioned that you have a tax strategist, a real estate strategist, and our team for the cash balance plan. Talk about what that team has meant for you personally.

Paul: You have to have a good team nowadays. Not only that but lawyers, asset protection, estate planning. I am trying to develop a large tent community where a physician can come in and say I do not even know where to begin and have access to people who realize the amount of tools out there are truly accessible and should be used. A lot of physicians should be using many of them. It is not just retirement accounts and 529 plans. Use all these other tools to set up not only protection and optionality but improve your spending while you are alive.

People think of life insurance as something that is only useful when you are dead. There are so many living benefits. I know in a cash balance plan you do have to go through the motions of eventually removing assets from the plan. But I plan on using real estate strategies to limit the tax hit on that. And then you have more cash accessible to you to use during your life.

Ro: Even if you are not insurable you can still build a pension. That should not stop anyone. Life insurance is one of the silver bullets but it is not the only path. And on the team point, if your advisor is high ego and thinks they know everything, move on. Find a low ego advisor. We partner with advisors all over the country to implement these strategies and then follow the advisor's lead.

Mark: Paul, tell us about the moment that changed how you personally thought about protection.

Paul: We had some great financial success around 2015. My oldest daughter has some disabilities and we were building our forever home. I was leaving a local grocery store and as I was pulling into the turn lane a car started honking and flashing lights and I stopped. An F-350 came barreling by doing about 55 miles an hour. I was in a small car. I would have been crushed.

When I got home I had about two million dollars of life insurance at the time. I did the numbers and realized my family would have been okay for probably five or six years but there would have been a ticking clock on the house because of the expenses involved. That was the moment I realized I was good at this and my family was still not well enough protected. That sent me down the path of understanding maximum insurability and everything that followed.

Ro: And that is the point of pensions. You can buy that protection via a tax deduction. There are really only one or two ways in the entire tax code to do this and physicians occupy a uniquely powerful spot.

Paul: When I was first learning about cash balance plans last year I kept thinking this is like an HSA on mega steroids. Goes in pre-tax. Grows tax free. Comes out with significant tax advantages. That is the analogy that clicked for me.

Ro: Other than some of the friction of getting money out of the qualified system, that analogy is pretty accurate. Mark and I started this business to solve the retirement crisis for physicians and small business owners. The closest thing we have seen to a broad spectrum solution for that is a cash balance plan. It is an ability to deduct your way to financial freedom.

Let me walk through what that looks like for a physician in a state like California where creditor protection for life insurance is limited. When the money comes out of the qualified plan the growth is still tax free. And in 46 of the 50 states it is completely creditor protected. If you are in one of the four states with limited protection you can use trust law to create that protection. A revocable trust in your name is not creditor protected but you can move the insurance out of your estate and now it is a fortress.

What does that do? Your heirs and your legacy are intact because you have life insurance. You know it is creditor protected. And here is the philosophy Mark and I come back to. Your last check should bounce. If you have a big pool of money sitting there getting ready to spring into action when you pass, you should be spending it. That is what optionality actually means. That is the life you built this for.

Paul: And get a good team. Talk with a lot of people. If someone comes to these products and says they do not work, ask them what their proof is. If it is the opinion of an article written by someone who does not live in them day to day, consider the source. Spend a little time reading or talking to people who actually use these strategies and then make your own decision.

Ro: Two final points. First, even if you are not insurable you can still build a pension so do not let that stop you. Second, on building a team, find a low ego advisor whose job is to curate the world and marshal the right resources for your specific situation. That is the litmus test. Use it.

Mark: As we look back at why we cut this video, we did it because we at The Owner's Asset understand that if you are a business owner or a physician you are unlocking an incredible world that can help you with tax strategy and retirement planning. Deductions today, assets tomorrow. If you are a clinician with 1099 income, let us unlock that world for you. That overwhelmed feeling does not need to be there anymore.

If this conversation resonates with where you are right now, a 30 minute deduction call with Mark and Ro is a good place to start. Book at https://ownersasset.com/contact.

This content is for educational purposes only and does not constitute tax, legal, or financial advice.