More and more family physicians are planning ahead so they can either afford an early retirement or—as in most cases—switch to another career.
This tendency is credited mainly to feelings of burn out, lower morale and overwhelming paperwork, as shown in The Physicians Foundation 2016 Survey of America’s Physicians Practice Patterns and Perspectives. The study also found that 40% of doctors planned to drop out of patient care in as early as 1-3 years. Some were looking to quit for good while others sought a non-clinical job.
If you just want to relax
On average, physicians leave the workforce at the age of 65, and will usually have enough in the bank to live comfortably for the rest of their lives. Now, if you wish to retire early and enjoy the benefits of your career before you turn 50, it’ll take something really special. Remember, that’s less time saving and more time spending!
Let’s say you wish to retire before your 50th birthday and have a good 30 years ahead of you. Consider that the average retirement household spends roughly $40,000 per year—U.S. Bureau of Labor Statistics. This means you’ll need to amass roughly $1,200,000 in savings in a short career—from age 29, post-resident to age 49, retiree. Keep in mind, this is if you’re ok with a moderate retirement void of major spending.
If you’re thinking about leaving the workforce early you must be ready to save at least $60,000 every year. Take into account Medscape’s Physician Debt and Net Worth Report 2016, which features $207,000 as the median annual salary for family physicians.
In other words, it’s always best to have a financial game plan, which leads us to the secret to retirement: a recipe mixing different ingredients together…
- Get a financial planner: Whether you are developing a long-term financial plan or a strategy for early retirement, there is one element that simply cannot be overlooked: a good financial advisor. While there are plenty of professionals with experience working with physicians, it is recommended that you look for a fee-only advisor. Those offering fee-only services do not accept commissions or third-party incentives of any kind related to their recommendations. As a result, you’ll receive unbiased, objective advice with only your best interest in mind. A financial planner will work to help you: live within your means, avoid using debt, be diversified, build an emergency reserve and most importantly, have a long-term plan. In the meantime, you can get started with 5 Ways Family Physicians Can Improve Their Financial Security.
- Be frugal: Consider this your smartest investment. After you start earning post-residency dollars it’s recommended to keep a more modest lifestyle than your income may suggest. It’s a trade-off. Living debt free and saving a bigger percentage of your income means shaving off more years of your career, plus more resources to dedicate to alternative investments.
- Get a side job: Remember, you’ll need to offset your living expenses and student debt as much as possible during your short career as a family physician. It’s hard to predict your passion or talent outside of medicine, but remaining involved in health care is always a great option. For example, you can contemplate paths like teaching or becoming a medical collaborator for a newspaper or portal, which is quite sought-after these days. Another viable route is to invest in real estate, just as long as you have good instincts. It’s more than just location, location, location.
- Involve your spouse: Needless to say, any help helps, especially if you want to hit that $2 million mark. Most of these principles apply to any profession, so if both of you keep your eye on the ball and stick to the plan, you’ll have better odds to reap the benefits early on in life.
- Sell your practice: If you own a Family Practice and were successful in building it up, you’ll probably get a nice farewell check. Find an expert who is insightful enough to consider all possible variables that can drive up the business valuation. Your books don’t always tell the whole story.
If you want to switch careers
Only 54% of physicians in the United States would choose medicine as a career all over again. At least that’s what 24,000 doctors in 25 medical specialties nationwide said in a Medscape survey. This startling fact should be an eye opener, however, that’s a subject for another time.
Now, if you agree with the remaining 46% of doctors who would’ve rather dedicated their life to something else, you’ll have to decide whether you prefer to leave the medical field altogether to pursue other dreams, or harness your knowledge in a non-clinical but still health-related career. Medscape assembled a list of options that you can consider. Here are a few:
- Move into Hospital Administration
- Become a Physician Advisor at your Hospital
- Start a Practice Management Consultancy
- Become a Career Coach
- Review Insurance Claims
- Work in the Pharma Sector
- Become a Physician Recruiter
- Become a Freelance Medical Writer
- Become a Teacher
Word of advice
Whatever path you choose, it’s always advisable to get started while you are still practicing family medicine. If it’s really something that you love and put enough effort towards, that business or activity may evolve into being your primary source of income.
Of course, the most comfortable way to bid adieu is if you can at least wait until you’re deep in your 50s. Some employers offer great retirement plans that can serve as a safety net while you ramp up your new career. If you’re an independent, then you’ve given yourself a few more years to save and increase the value of your practice.
Proper financial management from an early age may eventually make your passive income greater than your earned income, and thus, help you transition into your new career.
So tell us, how soon do you plan to retire? What measures are you taking?