In this episode, we dive into a topic that’s becoming more and more urgent: how healthcare professionals can financially prepare for the possibility of career burnout. We know from data and personal experience with clients that burnout is hitting this sector hard—over 50% of healthcare professionals report symptoms, and a significant number are considering stepping away from their roles entirely. So, we tackle this issue head-on, not from a medical standpoint, but from a financial planning perspective.
We start by emphasizing that prevention is key. Just like in medicine, the best remedy for burnout is early action, and that begins with building a solid financial foundation. We explore how consistent savings habits—even when it feels unnecessary—can offer crucial flexibility down the line. Setting aside 20% or more of each paycheck, creating an emergency fund with 6–12 months of expenses, and maintaining liquidity outside of retirement accounts are all smart, actionable steps. We also stress the importance of not delaying financial planning because you assume higher income gives you more time to catch up later. That’s a trap we see too often.
Next, we look at how to create income flexibility if burnout leads to reduced hours, a role change, or even early retirement. We talk through the importance of evaluating disability insurance—especially with mental health in mind—and how thinking ahead about possible career pivots like consulting or teaching can reduce stress. We also dive into the importance of building passive income streams and using investment strategy to bridge income gaps without needing active work.
For those considering early retirement, we advise updating retirement plans immediately to identify any needed changes, recalibrating spending, and optimizing the timing of account withdrawals to minimize taxes. We also cover how to smartly use pensions and healthcare benefits, especially when considering stepping away. Timing really matters here, and small adjustments can have outsized financial impacts.
Finally, we go over tactics to manage financial obligations during a career break—reducing debt, refinancing, and communicating with lenders. We talk about using COBRA, marketplace insurance, and HSAs to maintain healthcare coverage. The bottom line is that being proactive with money gives healthcare professionals the power to make the best choices for their well-being—financially and mentally—before burnout forces their hand.
ThimbleberryU 138 -Healthcare- Preparing Financially for Career Burnout
Speakers: Amy Walls & Jon Gay
[Music Playing]
Jon Gay (00:07):
Welcome back to ThimbleberryU, I'm Jon Jag Gay. I'm joined as always by Amy Walls from Thimbleberry Financial. Amy, always good to be with you.
Amy Walls (00:14):
Jag, it's great to be talking to you.
Jon Gay (00:15):
And today we're talking about healthcare professionals, especially physicians and high earning medical employees, those not working in private practice. Talking specifically about financially preparing for something increasingly common and that is career burnout.
I know we've seen that since COVID. Recent studies show over 50% of healthcare professionals experience burnout symptoms and nearly one third seriously consider cutting back or leaving those careers entirely.
Amy Walls (00:41):
Yeah, absolutely. Jag, this is a conversation that we are regularly having with our clients that work in healthcare and I'll just put this out there. Prevention really is the best medicine when we're talking about burnout.
Jon Gay (00:53):
It's true in medicine and it's true in burnout (laughs). Got you, yeah.
Amy Walls (00:57):
Absolutely. And there's obviously prevention, the healthcare ways of avoiding burnout, reducing stress, all those things. But we're really here to talk about some financial preparedness because that financial preparedness gives anybody flexibility, choice and peace of mind. And for healthcare professionals facing burnout, that is so important.
Jon Gay (01:22):
Absolutely.
Amy Walls (01:23):
Because too often the comfort of the higher incomes associated with healthcare leads professionals to overlook the importance of building a financial safety net.
And I've regularly seen individuals in this profession delay savings, convinced they can always catch up later. Meaning their income's big enough that they don't have to worry about what they spend this month because they can just tighten the belt just a little bit next month, then they'll be fine.
Jon Gay (01:53):
Kick that can down the road.
Amy Walls (01:55):
Yep. When burnout hits, they're now trapped because they didn't have a foundation that lets them pivot well.
Jon Gay (02:02):
Exactly.
Amy Walls (02:03):
The goal is to get people unstuck as we have this conversation today.
Jon Gay (02:07):
So, Amy, you've talked about the why. Let's get into the how. How should healthcare professionals financially prepare to avoid that trapped feeling if burnout starts to set in?
Amy Walls (02:16):
Yeah, so first of all, Jag, consistent savings habits are key. I think many of us want to think the trick in the strategy is different for us. “It's not what basic advice says; I'm different, I'm a high earner. I need to do something different. “ (But) it's consistent savings habits.
So, even when it feels unnecessary at first, establishing savings early. So, if you are listening and you're early in your career or you are listening and you're saying, oh my gosh, I'm 20 years into my career, this isn't early. Early is the earliest you're aware and can make a change. Or do something different.
Doing this early provides critical flexibility. And that's the piece. The flexibility adds so much healthiness in terms of financial opportunity and de-stressing. And when we're less stressed, we make better decisions.
So, for instance, setting aside 20% or more of each paycheck can quickly build the safety net. And that doesn't mean just in your 401(k) or your 403(b). We want to have that in a spot that is a smart place to get at money.
What I'm really saying here is create an emergency fund that's covering at least 6 to 12 months of expenses at minimum. At least were the key words there. Imagine, Jag, being a high-earning healthcare professional and all of a sudden having the freedom to take much needed breaks or shift roles without stress or financial obligation.
Jon Gay (03:51):
Having that money set aside of when you burn out, you can just say, “I need to go to Tahiti for a week and just recharge.”
Amy Walls (03:58):
Absolutely. Or “I am not happy in this role I am in. I love being a doctor, a physician. But guess what? I'm no longer happy. I am going to stop and take a break while I figure out my next role and I now have the financial freedom or flexibility to do that.”
Think of it like actively planning for a scenario like a sabbatical we've talked about, or a reduced schedule. This is something that's come up with many of our clients is “What's going to happen to my retirement picture if I reduce my schedule? Maybe I go half-time for the next five years.
I've got kids at home. I've got aging parents. I really want to be able to be there for them. And I'm feeling so burnt out with trying to balance everything for an early retirement.”
Jon Gay (04:49):
The stereotypical sandwich generation.
Amy Walls (04:51):
Absolutely.
Jon Gay (04:52):
So, Amy, if that burnout does lead someone to a career change, I imagine one source of anxiety is income. How do they effectively protect or replace the income if they're making a career change?
Amy Walls (05:03):
So, first of all, this might sound funny, but I'm going to say regularly review your disability insurance to ensure it provides adequate coverage for your income.
Jon Gay (05:13):
Okay.
Amy Walls (05:13):
And I share this because we're talking about burnout, which could be associated, or is, with mental health. To what extent I can't speak to; that's individual with the professionals involved. But disability insurance policies, if it is mental health related, may pay out.
And so, you want to make sure you have enough coverage as you need to, because if you can make a claim because it's mental health, well then, you've got income coming in that way.
Jon Gay (05:44):
That’s a brilliant idea.
Amy Walls (05:45):
And I've seen healthcare workers underestimate their needs. Realizing all of a sudden, it's too late. Plan ahead. I said prevention's the best medicine. Think about alternative roles that you may be more interested in that may give you more of the flexibility.
Maybe it's teaching, maybe it's consulting, maybe it's a different administrative position in healthcare. And mapping out and thinking through those potential pathways now can significantly reduce stress at the point in time you want to make the change.
One option we've talked with clients about, they've brought it up to us, is, “Well my group, I don't have the option for a sabbatical. But if I were over here with this group, I think I'd have more flexibility.”
But if they didn't pop their head up and pay attention to that while they're bogged down and feeling this burnout, they wouldn't recognize that. So, even though you're burnt out, you still need to be aware of opportunities to solve the problem.
And once those opportunities come up, your financial advisor can really help navigate through questions and income streams of what this might look like.
Jon Gay (06:54):
And just to clarify, Amy, when you say group, you mean the employer, the position, the place where that individual is working? Right?
Amy Walls (07:01):
I do. Some places will refer to it as a team or location of their specialty. Some employers it's a group. It just depends on the employer. We're talking about how they might distinguish that.
Another thing is: build passive income sources. For some people, that's rental properties, maybe it's dividend paying investments. Essentially what I'm getting at is: understand, for you, your options for bridging income gaps without active work.
And investments can do the same thing. A lot of times I will hear people say I need real estate because it's how they can imagine having a paycheck come in when they just don't understand yet how to turn their investments basically into a cash flow.
Jon Gay (07:47):
We've talked about if burnout pushes someone to a career change. What about if burnout pushes someone to early retirement? How can you limit the negative financial consequences in that situation?
Amy Walls (07:56):
First of all, immediately updating retirement plans provides clarity on the necessary adjustments. So, I've seen clients pleasantly surprised when fewer resources are needed than what they thought. Which basically creates new opportunities in the form of ideas of what they may be able to do.
Quickly recalibrating spending habits can protect your financial future. Often, especially when we're talking high income earners, reducing just a few discretionary expenses can significantly extend a financial runway- looking strategically at the timing of withdrawals from retirement accounts.
I'm not talking market timing. But how you're going to recreate this paycheck from which account when and the tax ramifications of those choices. And then being smart about that can stretch money further too. And understanding those pensions. Healthcare professionals often have pensions more often than not, from my experience.
And so, use those estimate calculators and get really good accurate information because that's one of the pieces that goes into this puzzle or roadmap to make assets last throughout your life.
Jon Gay (09:14):
The tool is available; you may as well use it.
Amy Walls (09:16):
Yep. And if you work with us, we're going to ask you to, because need to see all that to have to put it together (laughs).
Jon Gay (09:21):
So, Amy, how can healthcare professionals structure their investments to ensure that flexibility during a burnout period?
Amy Walls (09:27):
Yeah. Well first of all, we don't know if burnout's going to happen post 59 1/2. Ding, ding, ding, ding, ding. It does a lot. But it can also happen well before that. So, I'd say burnout can happen. Equally, it's about what's going on in your life.
So, because of that, we need to have flexibility, really diversification of where assets are so that you have a smart place to get out money. Having access to funds in a taxable brokerage account alongside traditional retirement accounts, ensures you can access money without penalties.
It's having a balance of liquidity and growth and investments to cover immediate needs, expected or unexpected, without sacrificing those future goals. So, sometimes, and I've seen this several times with clients in healthcare is “Oh, we're not retiring for a while. Everything can be aggressive.”
We've got an aggressive risk tolerance, we've seen this. And then all of a sudden it may not be burnout. It might be burnout. Or maybe it's a new goal that pops up.
Jon Gay (10:35):
Or just life happens.
Amy Walls (10:37):
Yep. Exactly. And everything's aggressive, but it's not a great time to get out money. That's a good reason to say, okay, outside of cash reserves, here's the next money you'd use. This probably shouldn't be as aggressive as your Roth IRAs.
Jon Gay (10:52):
Got it. As a side note, Amy, have you seen The Pitt on HBO Max?
Amy Walls (10:57):
Yes.
Jon Gay (10:58):
So good.
Amy Walls (10:59):
I binge watched it recently.
Jon Gay (11:00):
This whole podcast is making me think of that. We just binged it too. And it is so intense. We couldn't watch more than two episodes in a night because it was so intense. But you see the burnout on these healthcare professionals in this fictional ER in Pittsburgh and healthcare professionals I've talked to say the show's not too far off real life.
Amy Walls (11:22):
Yeah. That's what I hear also.
Jon Gay (11:24):
It's ER meets 24. That’s the best description I had, for two shows that I really enjoyed back in the day. Alright.
Amy Walls (11:31):
Absolutely. That's why I turned it on. That was the description I had heard also.
(Laughter)
Jon Gay (11:36):
Alright, back to the topic at hand Amy, what's your advice for managing financial obligations if someone does need to step away due to burnout?
Amy Walls (11:43):
It's no fun but proactively reduce those financial obligations. Whether that's credit cards, memberships, whatever you can do helps ease financial pressure during a career pause. Now might not be the best time given interest rates, but that could change.
Consider refinancing mortgages or other longer-term loans to lower monthly payments. That can be a great strategy. Or is it that some things need to be paid off and there's money in the right spot to get them paid off without an extra tax bill?
Communicate early with lenders. This would be especially someone younger, probably student loans about potential income changes. Find some manageable solutions and avoid what I'm going to call the unnecessary financial stress.
Jon Gay (12:31):
Yeah. Alright. What tax implications should healthcare workers consider if they take a career break?
Amy Walls (12:35):
Yeah, so first of all, if you are taking a career break, I'm going to assume that your income's going to be reduced.
Jon Gay (12:42):
Sure.
Amy Walls (12:43):
So, that could potentially put you in a lower tax bracket. So that means there might be opportunity to look at withdrawals from retirement accounts based on your age or maybe some Roth conversions that may not help you in the moment, but it might set you up better in the future.
Or you're in a lower income tax bracket, maybe normally you'd be hitting that 20% capital gains rate. You're in a place where you're going to only have to pay 15%. These are all opportunities that can be considered.
And really, it's something we're regularly doing and any good financial planner or a tax professional can help optimize financial decisions related to that. And even better if you're working in tandem with a financial professional and a tax professional.
Jon Gay (13:31):
For sure. We've talked about income investments, taxes so far. What about employer benefit considerations to keep in mind during a career break?
Amy Walls (13:39):
It's important to really understand retirement and pension investing schedules. Maybe you think, “Oh gosh, I've been contributing,” but you'd switch firms. It might be that you have a five-year cliff vest on employer contributions into your retirement plan. So, that balance that you're looking at isn't really your balance.
Maybe you delay a few months, and all of a sudden, all that money is now yours. I'd say that's probably beneficial, if it's a significant amount.
Consider your healthcare coverage options. Healthcare is not inexpensive. And we don't know when medical emergencies are going to hit. Healthcare professionals know that better than anyone. So, what does COBRA look like through your employer? What are your other options? And that needs to be included in your planning of what your costs are going to be during this break.
Jon Gay (14:31):
Absolutely.
Amy Walls (14:32):
And evaluate the timing carefully. Timing of when things happen, compared to assets, can have a significant financial benefit in a lot of ways, it's sometimes people just aren't even aware of. I've touched on some of that already.
Jon Gay (14:47):
Amy, how can healthcare workers financially plan to maintain that health coverage during a burnout period?
Amy Walls (14:52):
I mentioned COBRA, maybe it's marketplace insurance plans, health savings accounts, all of those are options to cover those costs. Explicitly budgeting for potential healthcare costs.
We've talked about before for our tech clients planning sabbaticals. Some of our healthcare clients also have sabbaticals, but usually they do it because their employer offers that option.
This is a lot like that where you need to think through and budget what would happen if, what would happen if I reduce my hours. My benefits aren't quite the same. So, what are those consequences? And HR teams can be really helpful in this.
Jon Gay (15:32):
For sure. Amy, what is your most crucial takeaway for the healthcare professionals listening today?
Amy Walls (15:37):
Well, I think it's what I started with, Jag, prevention is the best medicine. So, financial what I'll call “proactivity”, saving consistently, limiting lifestyle expansion and preparing for flexibility is the most powerful tool financially and probably psychologically, financially, to combat that burnout.
Because really taking these steps today means you've made the choice, in our conversations about control influence and when you have neither to both influence and control the situation. And I think in my professional experience that goes so far towards comfort level with decision making around your financial life.
Jon Gay (16:25):
For sure. Amy, if one of our medical professionals listening to this podcast wants to talk to you about planning for burnout or anything related to their financial future, how do they find you and your team at Thimbleberry Financial?
Amy Walls (16:36):
They can find us online at thimbleberryfinancial.com or by giving us a call at (503)-610-6510.
Jon Gay (16:45):
Good stuff. Amy, we'll talk again soon.
Amy Walls (16:47):
Great, Jag. Thank you.
Voiceover (16:49):
Securities offered through registered representatives of Cambridge Investment Research, Inc., a broker dealer, member of FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions.
Securities offered through registered representatives of Cambridge Investment Research, Inc., a broker dealer, member of FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.