We’re all aware of the importance of saving for retirement. If you don’t want to work for the rest of your life, you save money so that you can comfortably live in retirement and don’t need to work in old age. The problem is that, for doctors, retirement planning takes a different shape and comes along with some unique pitfalls to avoid.
For one thing, doctors typically tend to have less time to plan and save for retirement. You’re usually starting your high-earning years later than most other career paths, limiting the amount of time you have to actually save. If a “standard” timeframe for retirement savings is between 35-40 years, a doctor may only have 25 or 30 years. Those five or ten years can make a huge difference in amount of money you can put away.
Doctors may also have substantial student loans to pay back, putting retirement savings on the backburner.
And, believe it or not, social pressures can negatively affect doctors. Our advisors have encountered situations where clients had plans in place to save during their early working years, only to give in to social pressures and begin making purchasing decisions that put their savings at risk.
You could be viewed as very wealthy and “set for life” by society, which can lead to the feeling that you need that new high-dollar car or house. Don’t give in to the pressure of keeping up with the Joneses! Living outside your means is a surefire way to end up in trouble when it comes time for retirement.
So what can physicians and dentists do? How can you avoid the pitfalls and keep your retirement goals on track?
Keeping a budget is a great start. There are many different apps and solutions available to help you create a budget, or you can go the “old-fashioned” way and create an Excel spreadsheet to track your spending. Whether you’re starting your career, or you’ve established your practice, sticking to a budget is a good fundamental to master.
We also recommend having a plan for money before it comes in. If you’re about to graduate and enter your career, or you’re about to get a promotion or a bonus, have an idea of how to distribute that money before it comes in. It can be much easier to save if you plan to do it before the money is in your hand.
Typically, we recommend paying down higher-interest debt and then contributing to basic savings. Once your most pressing expenses are taken care of and you put some toward savings, you can spend guilt-free because you know your obligations are taken care of.
Lastly, we always recommend coming in to chat with us. We can help you with your plan, budget and goals to keep you on track.
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