Financial wellness is central to retirement planning for everyone, especially doctors. Balancing financial priorities is like eating a well-balanced meal. When preparing for retirement, it is important to make a commitment to your financial health as you would to your personal or your patient’s health. By looking at one’s finances and establishing healthy habits early on, the more prepared you will be for life after retirement.
Sixty-one percent of the general population plan to rely more on personal savings than on Social Security income in retirement, according to a recent study conducted by Massachusetts Mutual Life Insurance Company (MassMutual). While Social Security plays a role in retirement planning today, there are many other funding options to consider. Taking the right steps at an early stage is critical to achieving financial wellness after retirement.
Here are three tips to help secure a healthy financial future:
Determine how much you will need
In order to create a solid retirement plan, it’s important to understand your current financial situation and determine how much you will need for retirement. Know your income and expenses, and the value of your savings and investments. Then define your goals for both the present and retirement. Do you want to financially live as you are today? Maybe you wish to save for traveling abroad or for your children’s college education, while others may prefer to stay involved with the practice they built. Make sure you conservatively estimate what you need with all these factors considered. Just like with healthy eating, planning for retirement is about finding the right balance for you.
As a physician, you have a late start in the retirement game. Because you typically do not start earning relatively higher levels of income until your early thirties, your retirement goals call for a higher contribution rate. It is not rare for a physician to contribute more than 20 percent to 30 percent of his or her pre-tax income toward retirement. Attempt to build a portfolio that equates to 20 times your annual income pre-retirement. Most people are not aware of the considerations that must be accounted for when making retirement projections. Even more so, not aware of the correct information as to where and how much is to contribute.
Stay Healthy and Plan ahead for Health care
A recent study conducted found that 73 percent of retirees in better health say they feel financially secure compared to 51 percent of retirees in poorer health, and planning for the unexpected can help maintain peace of mind. One of the biggest curve balls in retirement can be related to the cost of health care for you and your family. Be sure to carefully think through your options for health care in your retirement, which may include various forms of insurance.
Find the Right Wealth Management Advisor for Your Needs
Maintaining financial wellness after retirement is all about keeping a good balance and knowing the different options that are available for investments, insurance, savings and income. As a physician, you’re expected to be confident and knowledgeable about your medical specialty, the same confidence doesn’t always extend to your financial matters. Depending on the complexity of your financial strategy, can depend on the level of wealth management advisory you may need. Very similar to how a patient should be treated. Depending on the severity of the medical issue, determines the treatment and who should perform it. If a patient acquires a minor scratch, most likely they can treat themselves. On the other hand, if someone is in need of heart surgery, it is safe to say, leave it to the professionals. When looking for the right advisor, it is best to go with a certified financial planner (CFP), which is an instant signal of credibility- but not a guarantee of same. To start, ask your colleagues who they recommend. If possible, you want to find a planner with successful experience advising clients in the same stage of life as you. However, choosing the right advisor will take more than finding someone certified or highly recommended. Do your own due diligence and meet with several. Your interviewing process should be as if you are conducting an interview for an applicant whose job will be taking care of you and your family for the remainder of your life.