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Retirement planning for doctors: It's complicated

A person wearing glasses, sitting on a couch while writing in a notebook.

As the baby-boom generation enters retirement and millennials approach the mid-point of their careers, retirement planning is becoming an increasingly urgent topic for many Canadians, including physicians.

Talking about money can be tough for doctors: nearly half of physicians between 40 and 59 surveyed in the MD Physician Retirement Readiness Study, a study of 401 physicians across Canada, said they found it hard to save for retirement due to other expenses. Meanwhile, a quarter of those surveyed said that they did not know or were not sure what level of assets they would need to retire comfortably.

Just as you wouldn’t want a physical ailment to go undiagnosed, physicians should be ensuring their finances have regular check-ups too. It’s healthy to voice any concerns or questions you might have about your long-term wealth plan.

“Medical culture has a very strong altruistic slant to it, which can mean people don’t want to talk about money,” said the Canadian physician behind The Loonie Doctor . “But the reality is, it’s like your body — you may not want to talk about all your health issues, but you have to make sure you look after your body.”

When it comes to saving, doctors have to play catch-up

Physicians have a particular need to make a financial plan pretty quickly after they begin working — because long years of medical school and residency cost them not only money, but saving and investment time.

“We get a bit of a late start,” the Loonie Doctor said in an interview. “So because we spend a lot of years in training, and then we accrue debt during that training, which we then have to pay off, we have a more condensed period of time that we’ve got to start saving for retirement with — and that comes usually at the busy part of our lives.”

It’s not easy to make up a lost decade of savings potential, but it is possible; the key is to start saving early in your career. That isn’t always easy either — even though physicians’ income typically jumps significantly after residency.

“You have a long period of delayed gratification where you’re working really hard but you’re still making kind of an average income, and then you suddenly go to making a higher income and there are all sorts of expectations that come with that,” the Loonie Doctor said.

This all tends to coincide with a period in physicians’ lives when they may have both childcare and eldercare responsibilities. Add to that the desire to save and invest for a better standard of living during your working years and for your children’s education, and the need to insure yourself against unexpected illness or other events, and saving for retirement can easily become something you’ll get around to nearer the time.

Don’t overlook the symptoms of financial ill-health

Another reason financial planning is sometimes difficult for doctors is, counter-intuitively, that the pay is relatively good.

“We do make a good income, which can mask a lot of financial indiscretions until further down the road,” the Loonie Doctor said. But just as ignoring or covering up the symptoms of a medical problem makes the patient sicker and the required treatment more radical, the later you begin to address your financial planning needs, the more stressful and difficult it becomes.

Worries cited by physicians in 2021 included concerns about health and aging (63%), getting by on a reduced income (38%) and running out of money (36%).

If you don’t take proper care, the Loonie Doctor said, “then the first time you notice you have a problem with your financial health is when you have a heart attack — a financial heart attack — years down the road, at which point the damage is done.”

Retirement is not straightforward for doctors

Expected retirement age varies widely among physicians, which can also make it tough to prepare for. Almost half of physicians surveyed in the MD study (the average age of participants was 57) did not have a specific age for retiring in mind or felt it would be dependent on several factors. The top factors they felt would influence the timing of their retirement were the state of their own health and energy and the size of their retirement investment portfolios.

Ultimately, retirement is highly personal. Not every physician has the same goals or expectations for it, so there is no one-size-fits-all strategy to follow. That makes it difficult to judge how prepared you are — and to talk about it with peers.

Think about finances in terms of time

One way to help doctors overcome any embarrassment or guilt they feel when thinking or talking about money is to view it as what they exchange for their time, and to take a lifelong view.

“Early on in our lives, we exchange time to get money, and if we have some of that money and save it and grow it, then we can then draw on that money to buy time later on,” the Loonie Doctor said. “It’s about, how much of that time do you balance now and how much do you balance for the future?”

When you think about wealth planning in terms of time, and of the time you spend on work now as an investment that pays off in time for yourself later, it makes sense to set financial goals early on in your career.

At the end of the day, it’s not just about money

Remember the non-financial aspects of retirement, such as your personal health and your relationships with your family and friends, are just as important as the financial elements and deserve consideration as part of your overall retirement plan.

You should be investing in the non-professional aspects of your life so that you have a well-rounded and stimulating personal life waiting for you when it comes time to retire.

“Physicians tend to be busy, engaged, intellectual, social people and our career provides a lot of that,” the Loonie Doctor said. But, “if you’re not careful, medicine can consume all of that and you may not develop a sense of purpose outside of medicine.”

Doctors need to develop those other parts of themselves before they retire — by actively investing in family, relationships and personal interests outside the office.

Understanding what you want to do with the time you spend retired, and knowing who you want to do it with, can help to make retirement planning overall a more concrete, less daunting task.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals.