Financial Tips for Doctors Nearing Retirement

John Stephens, MD, MBA, CFA, CFP®

Feb 16, 2022

It takes an enormous amount of time, effort and resources to become a physician–and there’s often a big celebration to commemorate the occasion. Yet, when it’s time to stop being a physician and embrace the next chapter, retirement, there is a fair bit of dread. So much dread in fact that doctors often retire later than some of their peers in other professions. Just like a treatment plan is important for patients so too is a financial plan for retiring physicians. Although a good financial plan is always beneficial, it almost becomes critical as physicians near retirement. As a former physician and having accumulated over two decades of experience as a financial advisor I have helped many fellow physicians navigate a successful retirement.

How Life Changes for Doctors Nearing Retirement

Our occupations become a large part of us, so much so that for some physicians it truly becomes their identity. When people retire all of this goes away rather quickly. One of the most important things you can do as you approach retirement is figure out who you are outside of medicine. After that, then you’ll have to figure out what you will do in your retirement. Your Money or Your Life by Joe Dominguez is a good quick read to help you think about was it about your career in medicine that you really loved.

I hear countless stories of doctor clients who struggle with this loss of identity and have an inability to find themselves in retirement. They have plenty of money to but have a difficult time embracing the non-financial part of retirement. When you don’t have a roadmap as to what you’re doing, the days can become quite long. Some of the activities I’ve seen people engage in are: book clubs, golf, grand kids, volunteering, self-care, friends, experience art. The options are nearly limitless because for the first time in likely ±40 years you’re able to determine your days. You get a chance to decide what you want to do – not what you are supposed to do, have to do or others want you to do. If you need help defining what this next chapter will look like, don’t hesitate to seek advice from an advisor or a life coach.

5 Financial Planning Tips for Doctors Nearing Retirement

1. Prepare to Transition Your Patients and Practice

There is so much thought that go into a decision to like this, so, first and foremost, go at whatever pace feels comfortable to you. Transitioning away from your practice via sale or retirement will likely be one of the biggest decisions you’ll ever make. The one factor that I see time after time that can help with the transition is being organized. Consult with peers, professionals and local regulations to make sure you are doing everything by the book. Additionally, be sure to communicate to your patients. They’ve been with you along your journey, so make sure you keep them apprised about your plans at the appropriate time, of course. This is the first step towards retirement and defining your financial freedom for the rest of your life, try to make this transition easy on yourself. The transition away from working is hard enough for many people without dealing with leaving or selling a practice.

2. Understand Your Retirement Income

When you were working, there are few things as predictable as your bi-monthly paycheck. However, in retirement that will likely not be the case as income can come in monthly, quarterly and/or annually. This, along with everything else in your new post-working life, can take some getting used to. So, figuring your new income stream can be challenging. Is there income coming in from real estate? Social Security? Withdrawals from savings? Sitting down with an advisor will help you get a sense of your complete income picture and can offer strategies on drawing your income in a tax efficient manner and understanding your new spending habits.

3. Update Your Estate Plan and Legal Documents

This is one of the little things that can often be overlooked during such a big transition. Yet, taking the time to update your will and estate plan during these moments can make life simpler in the times when these documents are needed most. As a rule of thumb, everyone should revisit these documents and update them every five years (or so), so they are current with your wishes and desires. Chances are that the team who is helping you transition to retirement has the names of trusted associates to handle any updates.

4. Find Peace of Mind in Your Plan

One of my first physician clients from more than 20 years ago shared with me that one my main objectives as his wealth advisor is to help him have a “Quiet Mind” in retirement. Over the years he shared with me what he is worrying about, and I help keep him on track. Take it from me, clients feel different about market volatility when no more money is being earned. Yet, that’s why you have a plan.  By no means is it set in stone (although, I caution against frequent changes based on external factors), and I am here with you along the ride. The plan is simply a road map to help ensure your next chapter is adequately funded so you can accomplish whatever you need to lead a purpose-filled life.

“Waste lies not in the number of possessions but in the failure to enjoy them.”

Joe Dominguez

5. Have A Family Meeting

At TCI we’re always trying to communicate with honesty and kindness. As you near your retirement transition, now is the perfect time to share with your family the current state of your finances and what’s in store for your next chapter. This can be an incredibly impactful meeting in order to get everyone on the same page.

There’s no two ways about it, transitions are hard. After all, you’ve grown accustomed to your working life for decades. Even though you’re likely ready for the next chapter, this transition represents much more than simply not going to work anymore. We’re here to help with the emotional side and financial side of the guiding you to and through retirement. At TCI it isn’t solely about the portfolio, it’s about what the money enables you to do. Once you’re able to focus on that, the next chapters of your life write themselves.

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