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Retirement planning for doctors: It's complicated

Talking finance is often seen as taboo for physicians — but that’s starting to change

A stethoscope placed on a heart monitor machine.

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

Talking about money can be tough for doctors, however. Only about a third of those surveyed in the MD Physician Retirement Readiness Study, a study of 402 physicians across Canada, said they have well-articulated plans and goals for retirement, while half said they have a general notion of where they’re going in retirement but no specific plans.

But just as doctors would not want a medical ailment to go undiagnosed, they should be checking up on their finances 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 blog. “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

One reason doctors need to make a financial plan pretty quickly after they begin working is that the long years of medical school and residency likely set them back financially.

“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 is not easy to make up a lost decade’s worth of savings potential, but the key is to start saving earlier on in your career. That, however, is not always easy either. Doctors’ pay typically jumps significantly after residency, once they become attending physicians.

“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 childcare and eldercare responsibilities. Add to that desires to contribute to an investment portfolio and insure yourself against unexpected illness or other events, and saving for retirement can easily become an afterthought.

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 you would not want to cover up the symptoms of a medical problem, you should not do that with your finances either.

Two-thirds of the physicians surveyed by MD worried about unexpected expenses. Despite the relatively high income they earn, some even said they worry about making ends meet each month.

If you do not 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. Less than half of the physicians surveyed in the MD study had a specific age in mind (the average age of survey participants was 55.2 years old). That might be because they are uncertain about their finances, or because of the impact their retirement would have on their communities. Many physicians also gradually transition towards retirement over time.

Ultimately, retirement is highly personal. Not every physician will have 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 the guilt they might feel when thinking or talking about money is simply to view it as what we exchange for our time.

“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 the time you are buying for yourself down the road, it makes sense to set financial goals early on in your career.

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

As MD has written before, “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 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.

Incorporating those elements into your strategy might help to make retirement planning overall a slightly 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.