Young physicians and old physicians have at least one thing in common: they'll all become retired doctors some day by choice or by force. No matter how much you love what you do, that day might come when you will be unable to stand at the operating table long enough to finish a procedure or you might find that you just can't stand the paperwork that follows the procedure (not to mention the nagging thought of getting sued for saving somebody's life).
Certain doctors will be better prepared and have a better chance of making this once-in-a-lifetime transition. Here are three steps you can take toward the day when you hang up your practice.
1. Set a goal... really
If you're new to practice, the concept of retirement is probably foreign to you since you've been working your butt off just to get this gig. But those grey-haired ladies and gentlemen you see in the doctor's lounge were once like you, and many of them have discovered that medicine is a tough business. It's hard on the body, the soul, and the family. And even those who love medicine have come to hate the admininistrivia of their day-to-day existence.
In a few years, you may come to feel this way too. So set a date for your exit, and pick a number for how much you'd like to "earn" once you're done. It's not uncommon for more advanced physician families to pick a retirement date that's close to age 55, with a planned after-tax income of about $10,000 per month. If you spend less or retire later, you'll err on the right side of the equation.
2. Make a (basic) plan
You may be thinking, "Uh-oh. He said the P word. I don't have time for planning."
Easy there. I doesn't have to be a big deal. You can spend days putting together a plan, or just a few minutes punching numbers into an online calculator like MoneyChimp's Risky Retirement Calculator.
What you're shooting for here is a numberone numberthat tells you how much you need to be saving for retirement each and every month.
3. Make adjustments to be certain you're on track
This may sound unbelievable but certain physician families are actually saving way more money than they need for retirement. This presents three opportunities:
- You can save less now and spend more money on everyday living, or work less and spend more time with your family.
- You can target an earlier retirement date.
- You can invest more conservatively.
This last point deserves a bit of attention. The standard advice you hear every day in the media is to "Invest for growth." But what you don't hear is that growth equals risk. I believe risk islike many four letter wordsone to be avoided. If you get the chance to reduce the risk you're taking as you move toward your goals, take it.
If you should find that you're not on track for retirement, you might want to ask yourself why you're not saving enough.
- Do you feel out of control? You might be spending so much on your standard of living that there's not much left to save.
- Is it that you just don't know where to begin? Paying off debt, funding your 401k and saving for college all sound good but you don't know which one goes first.
- Do you feel overwhelmed? Maybe "this financial stuff" makes you crazy"¦ or sleepy.
Or are you thinking, "Hey, I'm maxing out my 401k, I've got this covered." That may be the scariest thought of all. With a limit of as much as $49,000 per year, there's practically no way you'll be able to save all you need in your 401k. The math just doesn't support it (unless of course you make some risky assumptions that may or may not pan out).
All physicians have one more thing in common"¦
The clock is ticking.
The sooner you get on track with your retirement, the better. Doing the right thing for your family to make sure you'll have enough money when you can't earn an income any more is precious, and knowing you don't have to worry about money makes it all worth while.