Why Doctors Should Start Thinking About Their Retirement Now

Why Doctors Should Start Thinking About Their Retirement Now

Retirement, it is an inevitable part of life. For some, it will come sooner than others. Doctors are especially notorious for working well past the usual retirement age of 65, and this can be due to a number of reasons. However, if you start thinking about your retirement when you are still young, you might be able to enjoy more of your retirement and sooner than the rest of your peers.

Why Are So Many Doctors Working Beyond Retirement Age?

This question is one that is pretty unique to the medical industry. Most people who work in industries outside of the medical field tend to see the retirement age as an end goal. The mentality is often “I just have to get to 65 and then I do not have to work anymore”. However, most Doctors do not share this thought pattern.

Instead, a common concern is that if they retire too soon that they will grow bored in their retirement with the lack of stimulation and daily interactions that they are used to. To be a great Doctor it requires that you are continually learning, to keep up with the latest in medicines and techniques. To go from this environment to one with no stimulation may seem nice at first, however many worry how long before they are cursing from boredom. Especially if you cannot afford activities to keep your mind and body engaged.

Another concern for a lot of Doctors is that their superannuation funds will be unable to support their current lifestyle and instead they choose to continue working past the retirement age to ensure that they can hold off dipping into their superannuation. This is a particularly big concern for most doctors due to their later start in careers and the significant debts accrued during study. This, in turn, leads to a delayed start in their superannuation growth.

Success Stories: SMSFs and Retirement Planning

Why You Should Think About Your Retirement Today Rather Than Tomorrow

When most Doctors finish Medical school, they have a substantial debt for their qualifications. They are also behind the eight ball in terms of their age compared to the career progression of others in the workforce. In any other career someone might have already spent a solid few years working their way up the corporate ladder, but as a doctor you have only just started your working life.

Due to this, a lot of doctors’ early career income goes directly to paying back their student loans (HELP Debt), then to acquiring a home and paying down this debt. This mentality sees many Doctors investing most of their income into catching up on reducing their debts, while not realising they should also be saving for their future too.

The best plan for Doctors at this point is to hire a financial planner to sit down and work out a financial strategy that allows them to pay off their debts while simultaneously also contributing to their future.

Why Keeping Up With The Joneses Will Leave You Behind

For most people, a dream they are working towards is to have a large family home with plenty of space to raise a family. However, if you want to make sure you can retire at an age where you can still actually enjoy your retirement, you may have to compromise on this for a few years.

Young Doctors are usually earning a good salary, but after paying money towards debts and living expenses, they are left with little to put towards retirement, especially if their immediate goal is to buy a home and start a family.

It is hard, but possible to have your cake and eat it too. You can pay your debts and save for retirement all while working toward owning your own home. The key to success is discipline and having a sound financial plan.

Take a look at life hackers article How to save for retirement while getting out of debt for some great ideas.

Make Sure That You Can Enjoy Your Retirement

When putting together your financial plan, don’t leave your retirement contribution to be whatever you have left over after all other expenses are paid for. That is a guaranteed way to end up having to work well into your golden years. Instead, your financial plan should have your primary goal as paying off your student debts with a secondary goal of saving for retirement.

Take the time to work out how much you will need to retire. This is not as simple as it seems, considering we are living longer than ever and the cost of living continually creeps up, so the cost of retirement is not a small one. You need to take into consideration how much you would require to:

  • Pay for medical expenses, remembering that as you get older, your medical expenses increase.
  • Pay for living expenses like food, bills and clothes
  • Pay for travel and other activities to keep you stimulated

You can use this calculator to help you work out how much you would need for your retirement.

Now that you have worked out how much you need, you can work backwards based on the age you would like to retire to work out how much you would need to be contributing to your superannuation to be able to achieve this. Once you know that you can then proceed to work out how much of your income you have left to put toward other goals like buying a home. It may result in you purchasing a smaller house than you would like. However, it will safeguard your future down the line.

As you can see it is hard but not impossible to be able to retire at a decent age as a doctor while not sacrificing your other life goals. The biggest tool you need is a sturdy financial plan and the help of a financial planner that specialises in clients in the Medical industry and Superannuation.

Get in touch with the expert financial planners at Quarles BFS; we can help get you started on achieving your goals today.

SMSF Guide | Self-Managed Super Funds | SMSF Advisers Perth

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