The Pre-Retiring Doctor (and what happens afterwards)
?Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy?.Groucho Marx
The anecdotal evidence is that there are many more doctors than other professionals still practicing medicine in their 70s. How many are still seeing patients (full or part-time) because they want to, and how many because they have to in order to create an adequate retirement fund? We don't know. But we do know that adequate financial planning is the key to being able to retire when you want to, rather than when you have to, and to having more options in life when you do stop practising.
How much is enough to retire on?
In September 2008, the New York Times interviewed ?poor millionaires? in Silicon valley for a feature. These were wealthy individuals in the information technology business who were still working stressful 50 hour weeks in spite of the fact that they were worth millions. When asked why he had still not given up his day job. in spite of the fact that at age 51 he owned a $1.3 million house, had another $2 million in the bank and was in the top 2% of American incomes, one of them replied: ?I know people looking in from the outside will ask why someone like me keeps working so hard, but a few million doesn't go as far as it used to?.
Another factor that makes the ?how much is enough? equation invalid is that your life and your need to grow your assets is not going to end or change on the day you retire. Thanks to modern medical research you could easily have at least 25 to 30 years ahead of you at age 50, hopefully in good physical and mental health. In fact, you may not actually stop working until your 70s, though not at the same job you were doing at 60. This means that you will need to nurture and grow your assets just as diligently when you are 70 as you do at age 50. The need for active investment management lasts as long as you do, so we should correctly regard financial planning as one long continuum stretching from around age 25 or 30 when you have your first serious job until your 70s or 8os.
High income doctors who are low investment achievers
It is very tempting to spend a lot of money when you earn a lot for money. You can afford to indulge. You don't want your children to do without things you could not have as a child. Your hard work and your status deserve tangible rewards. But - and it is a big but - you are very likely at the peak of your earning power right now, and if you cannot divert some of that money into growth investments that will keep on working for you when you want to take it easy or do something more interesting and less demanding, your life could hit a wall in your sixties or seventies, instead of opening up into a new horizon.
In fact, if you are earning a couple of hundred thousand a year or more, and have not yet managed to accumulate any significant assets beyond your family home and your superannuation plan, you are cheating yourself of future security and the chance to choose a new challenge at an age when a change could help keep you young, active and interested in life.
There are only two ways to accumulate enough wealth to achieve your personal freedom. One is to inherit it. The other is to have a goal in mind, draw up a plan to reach it, and have the discipline to stick with it.
How many lifetimes will you actually have?
Many doctors who have devoted decades to study and building up professional practices feel emotionally unable walk away from their life's work, yet would like to have more time for themselves, the people who are important to them and the experiences they missed out on.
A carefully planned transition to retirement can result in a financially painless strategy that will enable you to ease yourself out of your practice over a period of time.
Make time for a financial health check
It is never too late to create wealth, but by the time you hit your 50s, every year is critical in terms of the ultimate financial outcome. You may already have a superannuation plan in place, own a practice, or have invested in property and other assets - but there is always the nagging concern that you may not have quite enough to live as you would like to after retirement or could not have done a lot better.
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