When a doctor contemplates retiring from the workforce, their first thought generally is, ‘Am I able to retire?’ As a financial planner, it is one of the most common questions we receive.
While it may be easy to answer the question simply based on numbers and finances, that does not encompass the magnitude of that question. Too often, people are caught up in if they have the financial ability to move into that next stage of life, but they do not take into consideration what it really means to retire.
Our own, Shane Tenny, CFP® of Spaugh Dameron Tenny, reminds us that the definition of retirement is ‘to remove something useful from service’. If you think about retirement in that framework it can be a daunting milestone in your life. Some people prepare for retirement without missing a beat and others retire and immediately regret the decision. After going through many retirements with clients over the years, we believe that if you are thoughtful about that decision you will be in a much better position to actually enjoy your retirement and not regret it. Our suggestion is to think about what you want your life to be like in retirement before you actually do it. By doing that you will be in a better position, a better situation to make informed and educated decisions along the way.
That’s what financial planning is all about—making these thoughtful decisions ahead of time to ensure you are prepared.
Physicians and dentists, in particular, may struggle with the decision of retiring because so much of their life is predicated on being Dr. [insert your name]. When you consider it, your chosen profession has affected the salutation of your name throughout much, if not most of your life, in a way most careers do not.
The challenge is changing the focus from the thought of being financially ready to retire to being emotionally ready and ready to embrace a change in your own identity. There are four things when someone is ready to retire that are essential to consider before we start the conversation around the financial aspect
After you've considered these things, you should think through whether it's truly your time to retire or not. Here is the difference between retiring and taking a step back.
It is important to make sure that your decision to retire is not just a response to burn out. When you are tired or stressed, it can feel like the right move, but it is helpful to give yourself time to understand where those feelings are coming from so you can make the right decision.
If you still love your work but want to spend less time doing it, there may be an opportunity to adjust your schedule to be part-time or limited time. Tapering down your involvement can take some of the stress off the role, but allow you to keep doing what you love at a lower capacity. Another option to think about is volunteering your time in the work that you do as there are many charitable organizations that depend on the work of part-time volunteers, like America’s Toothfairy.
As you are looking to retire from your original profession, you may have a passion project or hobby that you want to turn into a second career. If this sounds interesting and enjoyable to you, think about what this looks like and identify any goals you may have, perhaps even putting together a rough business plan. Be ready to explain why this is a good idea to use your time, resources, and retirement on this particular idea.
Generally, doctors who have something to retire to have an easier time transitioning to retired life. Whether it is a hobby like gardening, exercise, or traveling to new places, learning a new skill or language, or volunteering with a nonprofit or your house of worship, these activities can give you purpose and keep you busy. Instead of “quitting cold turkey,” having something you enjoy to fill your time can make the transition easier and maybe even fun!
When someone has an immediate reaction to this question, there is a good chance that their identity is not only tied to their profession. Whereas if an individual draws a blank and cannot identify anything in that they enjoy doing outside of their work, it is more than likely that a significant portion of their self-worth is drawn from their profession. Discontinuing their work too quickly and not allowing for a transition time can take them out of the social elements of the profession permanently that are important to their emotional and mental well-being.
You see examples of this not just with clinicians but with coaches and small business owners whose lives are tied closely to their work. Those that coach and work well into their later years may retire and lose their identity. Without somewhere to put their time and energy, they are more likely to pass away soon after retirement.
Developing new or continuing to nurture already established hobbies and activities before you retire can help to ease the transition away from your profession.
Understanding what you are passionate about outside of practicing medicine or dentistry is important because once you retire, you will have more time to focus on your hobbies or using your expertise to help others.
Who are your most important relationships with and have you nurtured them?
Of all these probing questions, this may be the most important. Taking stock and inventory of the relationships around you and asking yourself the difficult question: 'Have I been an active participant in those relationships and nurtured them the way I should?'
It is no accident that more and more Americans are getting divorced right after retirement. Instead of spending more time together, traveling, and visiting family and friends, couples are splitting up. People are realizing that after raising a family together, they don’t recognize their partner anymore. Cullen & Murphy Law explains this phenomenon further, “Couples who base their lives and relationships around their children or occupations may have difficulties relating to one another after the children have left the home and they retire.”
Marriage is not the only relationship that we’ve seen neglected by doctors throughout their careers. Have you stayed in touch with your kids, siblings, friends, etc.? Without your full-time job of serving patients and/or running a practice, will you feel lonely once you retire and find that you haven’t nurtured your relationships as much as you should have?
Whether you answered yes or no to these tough questions, they are common struggles we all face. If you can address the questions before retirement, instead of ignoring the cold hard truth, you can have more time to heal those friendships or connections if you feel it’s necessary. There is an opportunity to be able to confront this issue directly by acknowledging and addressing the role that your prioritization of work may have played.
As you can see, retirement is not only a financial decision, it also involves emotional and relational planning as well. Retirement is not something to enter lightly. It takes both fore-thought and planning to ensure that you are not only ready for it financially but also emotionally as well.
To better understand what you need to retire, a Spaugh Dameron Tenny financial professional can help guide you through these thoughts and decisions. Book a meeting with one of our Retirement specialists to get started today.
Entrepreneurship runs in Andrew's blood. In November of 2021, he launched - Practice Executive, LLC. It is a boutique firm specializing in Practice Transaction Consulting, Growth Forecasting, Key Performance Indicators, Tax Optimization, Real Estate and Associate Analysis, and Entity Structure & Transition Planning for practices. A tax attorney by training, Andrew is also a CPA and a CFP®, and has a passion for sharing his knowledge with doctors all over the country.
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For over 65 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists across the U.S. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
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