Managing Your Finances in the Covid Era: A Guide for CRNAs
The coronavirus pandemic has had a profound impact on the lives and livelihoods of individuals and institutions around the world. The cumulative civic and social costs have been devastating, exacerbated by the economic ramifications of a worldwide recession and tumultuous unemployment landscape.
While the impact of recessionary pressures and new professional and financial circumstances is by no means limited to the healthcare field, medical professionals on the front lines have been placed in the difficult position of simultaneously handling extraordinary workplace challenges and navigating personal difficulties.
For Certified Registered Nurse Anesthetists (CRNAs) across the United States, those challenges can be particularly acute. Many CRNAs work as 1099 independent contractors, essentially making themselves business owners hired on an as-needed basis. While 1099 status can be more lucrative, it traditionally offers less professional security and predictability than full-time employment. But with some of the nation’s largest health systems forced to implement significant COVID-related layoffs, shutdowns, or furloughs, even the traditional “safe” route provides less professional security.
CRNAs play a vital role within the ecosystems of healthcare institutions. And at a time when CRNAs are focused on taking care of both their patients and their own families, the last thing they need is a new set of financial difficulties to manage. What follows is a brief overview of the tips, tactics, priorities, and best practices that CRNAs should be aware of as they navigate their evolving financial situations in a post-COVID-19 environment:
Crack Open the Window of Opportunity
While CRNAs are often phased out of being able to contribute to a Roth IRA due to their income level, pandemic-related income reductions may have a silver lining. Current circumstances may allow some CRNAs to either qualify for a contribution in the current year or even convert old retirement plans to a Roth IRA with smaller income tax ramifications. While it is true a Roth Conversion will create some short-term tax liabilities, the potential long-term benefits of this move are significant—perhaps even dramatic. Additionally, the passage of the CARES Act included provisions designed to give additional access to funds for those who have had their health or finances impacted by the pandemic. The IRS is waiving the 10% early withdrawal penalty for anyone under the age of 59 1/2 that withdraws money from traditional and employer-provided IRA accounts. Individuals still need to pay taxes on those early withdrawals, but the legislation allows payment over three years instead of right away.
Take Stock
The pandemic has wreaked havoc on regular spending and savings habits. While some have struggled, others actually find themselves with more discretionary income available due to less spending on travel and entertainment. One of the most impactful things you can do is to step back and take stock of your spending and your new circumstances. Evaluate your habits (both good and bad) and reassess your long-term financial planning strategies. More cash flow might give you more flexibility and investment options, and lower income levels obviously necessitate behavioral changes. Recognizing that more people lose money from bad habits and behaviors than bad investments is an empowering insight that leads to new opportunities.
Don’t Tax Yourself
Between new legislation and a higher-than-usual degree of income variability, there is more opportunity than ever before to move strategically between different tax brackets to optimize your tax planning. Prioritize proactive planning, as the most valuable opportunities require preparation for next year’s taxes.
Harvest Your Losses
Every market presents an opportunity. Seasoned investors recognize the ups and downs of the market, which dropped an eye-opening 30-40% in the early days of the pandemic before recovering in subsequent weeks, provide opportunities for some to harvest their losses and take advantage of a wide range of alternative strategies designed to not just mitigate losses, but yield meaningful gains.
Leverage Institutional Flexibility
Most CRNAs entered the business to care for people. But times like this can be scary or feel overwhelming and may even prompt some introspection about career plans and timelines. Those who may be reassessing things like life and disability insurance, or retirement timing will be gratified to discover that some financial institutions have recognized frontline workers for their work, introducing new flexibility with regard to underwriting, or terms and conditions around preexisting conditions. Now is not the time to assume that because you could not qualify for these protections in the past, you will not be able to qualify after the onset of the pandemic. Do your research and due diligence.
Above all, recognize that financial planning is fluid: a process, not an event. Economic and regulatory situations are constantly changing and working with a trusted advisor who can keep abreast of those changes is essential. If possible, seek out financial professionals with demonstrated experience working with CRNAs and an intimate understanding of the industry—from education and testing timelines, to the credentialing process and even managing your student loans—and the financial obstacles and opportunities they present. The best professionals understand the value of CRNAs and can help you navigate post-COVID financial complexities and planning pains so that you can focus on what you do best: taking care of your patients, your family, and yourself.