Take it gradually when planning for retirement

Physicians should start their retirement planning when they first start working, first by deciding what retirement should look like and establishing a timeline to accomplish goals.


Successful retirement isn't all about the money. Adequate savings and sound financial planning are certainly key—a 2018 survey of 1,202 retired physicians by the American Medical Association Insurance Agency found that satisfaction was more likely among those who reported being financially knowledgeable and those who began saving for retirement early—but physicians thinking ahead to their golden years should consider other factors as well.

“You should retire to something, not from something,” said Jack Ende, MD, MACP, a past ACP President and moderator of a discussion on the subject at ACP's Internal Medicine Meeting 2019. “It's an individual decision based on your professional life, your health status, your financial status, and family issues. Have a plan, ideally a plan you're looking forward to.”

Every retirement plan is unique for financial, professional, and personal reasons. Physicians can get a leg up by planning for all three phases.

Phase one: Financial

Although most physicians have higher-than-average salaries, they can still face financial hurdles in retirement planning, specifically related to student debt and a later-than-average entry into the workforce.

Physicians can get a leg up on retirement by planning for three phases financial professional and personal Image by erdikocak
Physicians can get a leg up on retirement by planning for three phases: financial, professional, and personal. Image by erdikocak

“Physicians sometimes back into what they need to do,” said Anjali Jariwala, CPA, CFP, founder of FIT Advisors, a financial planning firm catering to physicians. “Physicians are behind on retirement when they start working. They can start their careers in their late 20s or early 30s, so there can be a lot of catch-up to do.”

Available data bear this out. According to a 2015 analysis from Fidelity Investments, physicians on average save about 20% of their income for retirement, including employer contributions. The caveat is that 48% of physicians reported saving only around 9%. Moreover, 45% of physicians in the study reported being financially unable to properly save for retirement.

“I can certainly tell you I've heard the stories of people who said, ‘Oh, I wanted to retire at 70, but I wasn't financially able to,’” said Charlene Dewey, MD, MEd, MACP, a professor in the department of medicine at Vanderbilt University Medical Center in Nashville, Tenn. “People who make money tend to live to the level of the money they make. So, are they necessarily saving more money if they make more money? I don't think that that's 100% true.”

Gradually developing a vision for life post-retirement goes hand in hand with cultivating the means to get there. Start by defining what retirement means to you, Ms. Jariwala recommended. “Do you want to stop working by age 65? Do you want financial independence so you can work less, and not retire at all? Or do you want to continue working but stay healthy and do the things you want to do?”

Dr. Dewey said her institution advises physicians to begin planning for retirement when they're hired. “We have a model that we use and it covers five decades. Start planning in your 20s and ask, what do you do to plan for retirement? What do you do to plan for retirement in your 30s, 40s, 50s, and your 60s? What's your retirement age that you hope you live to see?” she said. These plans may change over time, but sketching them out in broad strokes helps lay the groundwork for an eventual successful transition, she said.

Free online retirement calculators, which are offered by a range of companies and organizations, including the AARP, can generate useful baseline financial numbers, Ms. Jariwala said.

“You can do quick calculations,” she said. “It's a function of how much you're able to save and the type of saving you're doing. How much do you spend on a monthly basis? Can you sustain that cost of living? Put the numbers in and look at them.”

Health care can also throw a wrench into the financial works, Dr. Dewey said. “We know that the most expensive health care for any individual, besides a pregnant woman, occurs in the last five years of their life. Depending on how old you are, and how much you save, and how much you have in your 401K makes a determination of how comfortable you live, but it could just take one hospitalization that throws that whole equation off kilter,” she said.

Insurance is a detail that can fall through the cracks. “I find that people still might not have long-term health and health care insurance,” Dr. Dewey said. “In [a private practice] setting, the physician has to generate all of his or her own revenue. And then they still have to think about … retirement monies, … long-term disability, how much insurance do they have, do they have extended life insurance, those kind of things.”

Ms. Jariwala recommends a comprehensive review of all personal policies, including life and health. Reviewing insurance policies online, on the phone, or in person secures an important part of the safety net. “Asset protection is critical,” she said. “You should have the right policies in the right places for the right amounts.”

When it gets down to the nuts and bolts of financial planning, Dr. Ende said most physicians are best served by working with professionals. “Ask for help unless you're an adroit financial planner yourself,” he said. “It should begin way before it actually happens. You don't necessarily need to commit at age 45, but the earlier the better.”

Phase two: Professional

According to a 2016 systematic review and meta-analysis published in Human Resources for Health, many institutions have as much uncertainty about physician retirement planning as physicians themselves. “Health care organizations often do not have effective succession strategies in place to manage their aging medical staff,” the authors wrote.

Checking to see whether an institutional policy exists or what it includes can help begin a smooth transition out of the workforce. “Whether it's an academic institution or a group practice, you should familiarize yourself with how retirement is handled,” Dr. Ende said.

In academic medicine, the Office of Faculty Affairs would be the best place to start, Dr. Dewey advised. “If you're conducting research, then you have to transfer all your research protocol, your IRB requirements, etc., and give a timeline of what needs to transfer and designate the person who will assume those responsibilities,” she said. Academic physicians will also need to consider how to transition their coursework to junior faculty members.

In both private practice and academic medicine, physicians should give some thought to transitioning their patients to new physicians, Dr. Dewey advised. Options can include hiring another physician to assume responsibility for the entire patient panel or determining which other physicians in the practice might be best for specific patients.

Daniel Kimball, MD, MACP, who celebrated his 81st birthday in April, said his gradual professional transition to retirement served him well. He partially retired in 2004 following 15 years as internal medicine chair with Reading Hospital in Pennsylvania, then served as part-time medical director for a local hospice until his full retirement in 2010.

As he prepared to leave his position at the hospital, Dr. Kimball found that other staff members, with their work facing disruption, also experienced stress. From that, he learned the importance of communicating widely with colleagues during the transition.

“I did not have a private practice or patients to worry about during the transition, but reassuring the faculty and department members that the hospital was committed to recruiting a quality department chair and involving them in the process was vitally important,” Dr. Kimball said.

Phase three: Personal

It's common for physicians to have trouble leaving their work life behind, Dr. Dewey said. “The challenge that physicians have is it becomes a consuming profession, to the point almost that they have no other life outside of medicine,” she said. “They unfortunately lose part of who they are in order to build their professional identity as a physician. And those individuals who get completely wrapped up into that mindset sometimes have a harder time retiring, because they have nothing to go to and they lose their sense of purpose in life.”

Rather than waiting until retirement to rekindle other interests, Dr. Dewey advised making it a point to cultivate them all along the way. “Find those things earlier on. … Find something about what you do for yourself. That becomes valuable,” she said.

Dr. Kimball added that self-care in the transition to retirement is critical. “I think anyone approaching retirement is concerned about financial security, but the importance of self-care may not be recognized,” he said. “In retrospect, I did not give the attention to it that I should have.”

The good news is that it is possible to make up for lost time. Dr. Kimball said he gradually improved his personal life by simply spending more time with family and serving on the boards of local nonprofits that piqued his personal interest. Simply devoting the time, Dr. Kimball said, is the most important tool in improving one's personal life.

He also participates in organized medical activities “as allowed,” which points to a common, potentially unexpected challenge. Medical volunteerism, often held up as a fulfilling postretirement service option, may not be as readily available as public accounts of such activities might suggest.

“The likelihood of easily doing physician volunteer work is overstated,” Dr. Ende said. “There are challenges related to administrative hurdles, credentialing, and the practice itself. Physicians may want to think about how to volunteer their time differently.”

Dr. Dewey recommended using a different mindset when thinking about continuing professional work. “You can still continue professional activities because you can give presentations. You can still sit on boards that can use your medical acumen,” she said.

Don't forget about personal and intellectual interests, and spending time with family, Dr. Ende said. Be creative, he advised. Activities such as writing for a website or local newspaper are examples of activities that can add richness to retirement. Being of service transcends medicine—and a medical career, he said.

Remember, Dr. Ende said, that retirement can complement one's medical career, not necessarily replace it. “One doesn't lose one's identity as a physician,” he said. “You lose your active work, but you're a physician your entire life.”