Greg Smith Senior Vice President & Director of Private Client Services

I am often reminded of a story that a colleague of mine tells about her brother the doctor. He married during his first few years of practice at the age of 35. He had always assumed that he would have the income to educate his children wherever they wanted to attend college and retire early in great comfort.

Now, at the age of 50, with the rising cost of colleges and shrinking margins in his practice, he realizes that the long hours and nights on call will have to continue well into his 60s in order to fulfill his long-term goals.

All too often in the financial world, we see the physician who assumes their relatively high wages will allow them to fulfill all of their dreams for their families and retire early or more comfortably than may be realistic.

Moreover, unexpected life events, such as divorce, illness, a bad investment or a falling our with one’s partners, leading to a breakup of the practice, can derail even the best retirement plan.

Thanks to significant increases in life expectancy, retirement or second careers are now lasting as long as 30 years.  So developing a wise retirement plan early and updating it periodically is critical to having the kind of retirement you want.

Here are some tips for a financially healthy retirement:

1.How compliant are you?  Once in practice, focus on setting up a household, paying off medical school loans and working towards a fixed savings goal each year.  It is important to take the time to set up a retirement plan no matter how new you are to your practice.

2. Heal thyself: As practice keep pace with technology by purchasing the latest equipment, it is easy to focus on investing in the business and put off saving for retirement.  While the practice is important, it is paramount that you keep paying into your retirement – remember, you may be retired for the same number of years you practiced medicine.

3. Discipline and focus: Many physicians will delay starting a retirement fund, instead opting first to pay off their school loans and/or save for their children’s education.  If they didn’t have children until after medical school, that means they are not starting the retirement fund until they are almost 50.  Given the current state of reimbursements and other unexpected events in life, such as illness or disability, not paying yourself first with pretax dollars until middle age is a risk you probably don’t want to take.

4. Consult with a financial adviser you trust and who has had experience with physicians’ needs.  Despite all of the newspaper articles and websites on the ins and outs of retirement, it is important to have a knowledgeable and experienced financial adviser guide you.  Use TV, websites and books to educate yourself, but be sure to talk to an adviser who understands the medical industry before making any decisions.  Look for one with experience in investing, who can help you to establish, diversify and grow a portfolio.

5. Consider yourself a small business.  Three main types of retirement plans exist for small businesses.  They include: Simplified Employee Pension (SEP) plan; SIMPLE plans, which can be set up as either a SIMPLE-IRA or SIMPLE 401(k); and qualified plans, the most popular being a profit sharing plan.  These small-business retirement plans offer the same advantages of tax-deferred growth as 401(k) and other defined-contribution plans.  Your contributions are tax deductible.  Consult with an adviser to see which plan may be right for you.

Physicians spend all of their days helping other to stay healthy or battle disease.  There is probably no more rewarding profession.  But despite your long hours and increasing demands, don’t forget to take care of your future by planning for retirement.