If you're one of the 20,000 or so Canadian physicians within 10 years of your 65th birthday, you may be considering retiring soon. These five tips can help prepare you to be more retirement ready.
Sure, you may opt to work later in life, giving you more time to prepare. Most physicians in our MD Physician Retirement Readiness Study said they felt generally well prepared for retirement.1 We found that physicians who made specific plans tend to have more wealth, and a clearer picture of what they need for a financially stable life, post-practice.
Here's what you can do now to keep retirement plans on track:
1. Assess your financial priorities
While most are doing well, the study showed that one in five physicians worry about making ends meet month to month. Two-thirds worry about unexpected expenses. Those who had taken concrete steps to plan for retirement were less worried about it.
There's no simple formula or spreadsheet to put retirement plans on track. Being aware of your current situation is a good place to start. What's competing for your income? Should you save or repay debt? A conversation with a financial planner can help balance spending for now, versus saving for retirement — so you feel comfortable with any trade-offs.
2. Picture what your retirement years might look like
The study found physicians who have concrete retirement plans are far more likely to also report having a long-term financial plan they're working toward (96%), and confidence in their ability to retire comfortably (88%).
Successful retirement calls for more than just itemizing a bucket list. How will you spend your time after you wind down your practice? Where do you plan to live, or will you downsize? How might you redefine your relationships with people you look forward to spending more — or less — time with?
3. Set a retirement date — as a placeholder
Less than half of physicians we surveyed had a specific age for retiring in mind. Those who did have a target stated an average age of 65.3, but there is wide variation. And 4% said they never expect to retire.
When do you think you might want to retire? A lot of physicians retire later than they'd imagined. Worldwide, most doctors say they expect to call it a day at age 60, yet most don't actually stop working until closer to age 69. Targeting a specific date doesn't mean you'll actually want or need to retire, but it does set a meaningful benchmark for financial planning that can be adjusted over time.
4. Pay attention to your plan (at least, a little)
A bit of attention goes a long way: our MD Physician Retirement Readiness Study found those who follow their investments from time to time are more likely to feel well prepared in all dimensions of planning for retirement compared to those who don't.
Well-crafted financial plans don't need your full-time attention. Retirement planning is a process: it takes work, up front, to get rolling along the right track. But once you establish a plan you are comfortable with, it's easier to stick to it. If anything changes in your personal or professional life in the meantime, we just regroup and readjust.
5. Build a security net
Eight in 10 of the pre-retirement physicians surveyed have both life insurance and disability insurance, but only about half carry critical illness insurance. Only three in 10 have a trust for tax and estate planning.
Good health is the best asset to have in retirement. In its benchmark National Physician Health Survey,2 the Canadian Medical Association found that physicians in practice for 31 years or more reported the highest emotional, social and psychological well-being – that's great news as you get close to retirement. But how financially prepared are you for unexpected changes in health or mobility? Would you or your family be protected in the event of a sudden loss of income?
Plan for the best years in front of you
Your mid-50s can mark the start of your most rewarding years in practice — and a great time to get on track to achieve all that you want in the decades ahead. Planning for retirement is more than managing investments; it's a flexible process that prepares you and your family for what comes next.
Talk to an MD Advisor* for more personal guidance on any of these tips, or find other pre-retirement planning ideas on our Invested MD website.
1 Environics Research (2018), MD Physician Retirement Readiness Study.
2 Canadian Medical Association (2018), CMA National Health Survey.
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies. For a detailed list of these companies, visit md.ca.