If you’re a practising physician with young children at home, chances are good you feel overwhelmed, desperately trying to juggle career and family life. For some physicians, the only way to achieve balance is to go part-time.
Research shows that among physicians, it is mostly females in early to mid-career who work part-time.1 And as more women become physicians, going part-time may become a growing a trend. Women began outnumbering men in medical school starting in 1996–97. In Canada today, females represent 55% of medical students (after reaching a peak of 59% in 2004–2005).2
If you’re a physician who is considering going part-time, you will probably need to make adjustments to your financial plan. Here are some things, financial and otherwise, to think about.
Can you afford to go part-time?
Obviously, the number of hours you work will have a direct impact on your income. You will need to do the math to see where that leaves you.
- Determine how many hours a month you think you will work.
- Based on this, examine your monthly cash flow—i.e., your expected income working part-time minus your expenses—to see if you can still meet your day-to-day needs and your savings goals.
- Look at the discretionary expenses in your budget and see what can be cut back (e.g., new car, vacation, dining out, entertainment).
Your financial consultant can help you figure out what’s reasonable in order to achieve a balance between going part-time and having the financial resources you need.
After you’ve determined how many hours you will work, decide whether you will make a slow transition or a full change.
How will working part-time affect your retirement plans?
When creating any financial plan, one of the major components is retirement planning. This involves determining how much savings you need at retirement, and how to go about reaching this goal. Of course, cutting back on the hours you work is going to change things.
- Reassess your existing retirement goals. When you were planning on a full-time career, let’s say you set a goal to generate a monthly income of $10,000 in retirement. Do you still expect to do so working part-time? Or will you aim for a more modest retirement lifestyle?
- Create new projections. Your financial consultant can create new projections for your retirement income based on factors like the following:
- how much you can save working part-time
- the expected rates of return on your investments
- future government pensions
- the inflation rate
- your life expectancy
- the withdrawal rate (the rate money is drawn from the portfolio in order to make it last)
This exercise will help you see whether your retirement plan is on track—or whether you need to make changes to the things you can control: the rate at which you save; and the age at which you retire.
- Revisit your risk profile. Going part-time may change your risk profile, which looks at the following:
- Your risk capacity, or the amount of risk you can afford to take. This depends on your age, time horizon and financial assets.
- Your risk tolerance, or the amount of risk you prefer to take. This is your attitude toward losses—what is your comfort level and your willingness to accept them?
Once you have an idea of your part-time income and amount you can save and invest, you can go over your risk profile with your financial consultant to see if changes should be made to your portfolio.
How could going part-time affect your practice?
Your plan for part-time hours will depend on what’s feasible within your practice. Before going part-time, do your homework and work out various issues regarding your practice:
- Think about how your current patients will be affected. You will need to find ways to manage the increase in patient handovers, as well as the timely handling of referrals and test results.
- Arrange for after-hours coverage for your practice, if necessary.
- Find out how your part-time status may affect your licensing and whether your disability insurance benefits will be compromised with the reduced income.
Once you’ve made a realistic assessment of the trade-offs of going part-time, work with your financial consultant to make it happen. Continue to check in and revise your financial plan as needed to ensure you’re still on track to reach your long-term goals.