I'm often asked if people in lucrative careers really need to start focussing on retirement income at the beginning of their careers. We are a culture of short-term gain at the moment and in some cases, when the pay is really good, surely retirement is something that's way down the list after paying off student loans, buying a house, getting married, saving up for the kids' college and THEN retirement! Recently, this question came up for doctors. Specifically ~ What are the advantages physicians gain by planning for their retirements early in their careers?
Not to state the obvious, yet the power of compounding will work well by planning early. In fact, the longer you can leave the money, the less you have to put aside for the maximum gain. The scramble begins at age 50 when you realize you have only 15 years left! In order to have income in retirement, you need to put a bit aside from a few good years.
Nowadays, however, physicians of all professionals, face an uncertain future. It's not just billing practices, there's also the potential for increased regulation, and perhaps nationalized health care. This is why putting monies away now, and perhaps utilizing defined benefit pension plans or blended plans may be wisest rather than the usual default into something pedestrian, like a defined contribution plan. Yet that said, I know many physicians who aren’t even maxing out their defined contribution plans.
Aspects like hiring spouses and/or children to perform legitimate office functions, etc. abound which lend tax favors.
If you serve your fellow man by being a doctor, you deserve a decent retirment, no question. But income in retirement takes a little planning. For more about income in retirement planning, please visit my website, Ms Morrison Speaks.
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