With the average age of the board-certified allergist in their 50s, many of us are thinking about retirement. But even allergy Fellows-in-Training need to make sure they have a secure retirement plan in place. It is never too early to start saving for your golden years. Before you know it, you have been practicing allergy for 25 or 30 years, and it is time to retire. All of us know allergists – in fact, you may be one of them – who will practice until the day they drag your cold body out of your office. But for most, retirement is the next step in a full life.
Recently, AMA Insurance published a report on U.S. physicians’ financial preparedness, and part of it looked at considerations for retirement. These insights were developed with input from practicing physicians 60 years and older, with about one third planning to retire in the next two years. I think we all can learn some valuable lessons from this group in thinking about our retirement, no matter what stage of our allergy career we are in.
One of the main topics addressed was concerns about personal/family financial issues. Not surprisingly, this is the key matter for most of us facing retirement. You can guess the main concern here – having enough money to retire. You can talk to a million retirement financial planning gurus and get a different answer from each, because every person facing retirement has different needs. In the physician group preparing to retire in the next two years, about 33% had retirement savings of more than $3 million. About 20% of those not retiring soon had that level of retirement funds. Almost 50% of the physicians nearing retirement had between $1 to $3 million. Do you need that much for a great retirement; do you need less? One of the rules of thumb for retirement money needs is the “4% rule.” Can you live on a 4% withdrawal per year from your retirement monies indexed for inflation? If so, you should be in good shape. Only you know all your circumstances, but these numbers can give you an idea what physicians in their 60s have accumulated.
The other two personal/financial issues that concern physicians, in the order of importance, were ability to fund long term expenses (e.g., illness or disability) and having the right estate plan. As physicians, we know that costs for chronic illness and long-term care can be devasting to one’s nest egg. All physicians (in fact, everyone) needs a will or living trust, which are kept up to date, and end of life and medical directives.
Saving is important, but debt can have a major adverse effect on retirement plans. Forty six percent of those who are about to retire had no personal debt, compared to 33% of physicians who plan to continue practicing. Similarly, 86% of soon-to-retire physicians had no professional debt, versus 77% of their peers who are not yet retiring. It is clear that debt plays a significant role in determining whether you are ready for retirement. When successfully retired physicians were interviewed, they all pointed out the need to eliminate, or at least minimize, debt.
Another key issue on retirement was whether the physician had completed their obligations for financially supporting others. Physicians who are about to retire are less likely to be financially supporting others, including elderly parents and older children. Similarly, physicians who are divorced are less likely to be among those who are getting ready to retire (divorcees make up 3% of soon-to-retire physicians but 8% of those waiting longer). It’s difficult to retire if you are still supporting others.
We are all “retirees in training” until we finally retire. We worked hard in medical school, residency, fellowship, and in practice, whether academic or community based. It’s important that we plan for our retirement now so we can finally relax when that day arrives.
Michael Blaiss, MD, FACAAI, Executive Medical Director