Retirement is a huge life event for a number of reasons, especially for physicians who have had a fulfilling career and are wary about taking the leap into their next phase of life. On top of the general change that comes with retirement, there is often quite a bit of uncertainty surrounding how much you should save and what types of expenses you will need to plan for to ensure you can do everything you desire after leaving the workforce.
Fortunately, preparing for retirement as a doctor is not any more complicated than preparing for exiting any other career—just as with all financial planning, it just requires a highly customized approach. Below, we will look at some general retirement guidelines so you can be certain you are setting yourself up for an enjoyable lifestyle for many years to come.
How Do Doctors Determine How Much They Need to Retire?
Unfortunately, there is no magic number that doctors can aspire for to ensure they have a long and comfortable retirement free from financial worries—but there are ways to make an educated decision regarding what your own personal targets are.
Determine How Your Current Expenses Will Change
The first step to determine how much you need to have for retirement is to examine your current spending, but it’s also important to consider how your expenditures will change as you age. Right now, a mortgage, student loan payments, and childcare expenses might make up a large portion of your budget, but by the time you’re ready to retire, these will be gone and replaced by travel, medical care, and other late-life expenses. Your current expenses can provide you with at least a ballpark of what to expect your expenses to look like in the future, but working with a financial advisor may help you hone these numbers in.
Consider the Length of Your Retirement
In general, you want to plan for your money to outlive you in retirement—not the other way around. Therefore, it’s important to consider the length of time you will be retired so you can build up your savings accordingly. General estimates put the average lifespan between 85 and 100, so considering your target retirement age can help you determine exactly how long of a period you need to save for.
Look at How Close You Are to Retirement
While “the earlier the better” is always the advice for people deciding when they should start saving for retirement, for physicians, this couldn’t be more true. Most doctors do not become independent physicians until they’re in their 30s, and with many having to prioritize paying off student loan debt for the first few years, it’s easy to feel behind on retirement savings from the moment your career begins. Fortunately, even starting with small retirement savings increments can significantly add up over time so you can make progress no matter where you’re at—but it’s important to remember that because of inflation, if you’re starting early on, you will likely need a higher target for your savings number than if retirement is just a few years down the road.
Decide What Your Sustained Income Will Be
While in the past many retirees could rely on a regular pension, these are becoming less and less common as companies phase them out. However, many retirees are finding income through other means, such as Social Security payments, real estate, or dividends on other investments. While these numbers can vary, having an idea of what expenses your income will cover can help you decide how much you will need to save to supplement that for a comfortable lifestyle.
Are you a doctor who is planning for retirement? We’d be happy to help! You can contact us today to set up a consultation and get started on the road to a successful retirement period.
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.
Michael Huskey is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 4201 Congress St., Ste. 295, Charlotte, NC 28209; 704.552.8507. Securities products offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Huskey Financial Group LLC is not an affiliate or subsidiary of PAS or Guardian. 2020-111545 Exp 09/22