Your schedule is jam-packed. You’re busy dealing with patients, staff, insurers and maybe even your hospital or network administration. After all that, you may have some time left to spend with your family and friends. Planning for retirement may be pretty far down on your priority list.
However, retirement is approaching, whether you’re ready or not. Being a doctor is a physically and mentally challenging task. Even the best doctors eventually reach a point when they can no longer do the job the way they would like. If you’re not prepared when that time comes, you may face a retirement that doesn’t align with your goals and expectations.
Fortunately, there are simple steps you can take today to prepare yourself. Even by just avoiding some common planning mistakes, you can put yourself in a much stronger financial position. Below are two common mistakes that many doctors make as they build their career and plan for retirement. If these mistakes sound familiar, it may be time to rethink your strategy.
Waiting until student loans are paid off before saving for retirement.
It’s understandable that you want to get your student loans paid off as quickly as possible. As much as you value your education, the payments are a drain on your cash flow. The sooner you get your loans paid off, the sooner you’ll have more cash available to allocate to other goals.
However, in your rush to pay off your student loans, don’t forgo saving for retirement. Time may be your most valuable asset when it comes to retirement planning. You can use time to help you get a jump on your savings and boost your balance.
Time is so important because of something called “compounded returns.” That’s simply the idea that as your money grows, you start earning returns on top of gains from the previous years. As these gains compound over time, your money may grow at a faster rate. The earlier you can start saving and taking advantage of compounding, the stronger your outcome is likely to be.
While it may be tempting to put all of your money toward paying off student loans, make sure you don’t ignore retirement. Find a way to make healthy contributions toward your retirement savings while also paying down student loans.
Not protecting your ability to work.
In addition to time, your other valuable retirement planning asset is your ability to work as a doctor. That ability generates your earnings, pays for your lifestyle and produces your contributions to your retirement savings. If you were unable to work, you would likely face a difficult financial challenge.
Unfortunately, disability is a very real risk. If you’re a surgeon, any injury to your hand could threaten your career. A back injury may make it difficult for you to move quickly and treat patients. Vision or hearing loss could impair your ability to work. There are any number of conditions that could leave you disabled.
A disability insurance policy can be an effective way to minimize this risk. With a disability insurance policy, the insurance company pays you income as a benefit should you ever become disabled. You can use the benefit to replace your income, support your lifestyle and even save for retirement.
Your ability to work is too valuable to leave exposed to disability risk. Even if you’re covered by a group disability plan, it may not offer the level of protection you need. Look into an individual policy that will protect you and your family from financial challenges.
For more information, contact us at Bridgeriver Advisors in Bloomfield Hills, Michigan. We help doctors analyze their risks, evaluate their options and develop a retirement strategy. Let’s connect soon and talk about your retirement goals.
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