The average retirement age for doctors tends to be fairly late – 30% of physicians in the United States were over 60. This trend is increasing every year, especially in Canada, where doctor retirement age is significantly higher than the general working population.
Physician retirement has also becoming more flexible than ever. With options for working fewer hours, travelling around the country, or taking on a flexible patient load, doctors have plenty of options for continuing their practice later in life. Still, physician retirement is a big decision, and one that you should give plenty of time and thought.
Here are some questions to consider:
1. Are you in a hurry?
Whether you’re working with patients or in a lab setting, chances are the practice you’re operating out of will need some time to adapt to you leaving. While it might be easier if you have a little bit of notice, there are many situations where retirement comes quicker than you planned. For doctors retiring early or are in a hurry to retire, hiring a locum to cover part of your workload so you can go part time; transferring patients to other doctors in your practice; or taking a reduced work week are some of the options to consider.
If you’re not in a rush, it may be worthwhile to do more detailed planning for your physician retirement. You have to consider whether or not you’ll be selling your stake in the practice you own, transferring patients, or simply leaving your role. In the latter case, a goodbye to your patients and colleagues might be all you need. If you have a more complex practice setup though, it’s a good thing to start planning for retirement a few years in advance, especially if you’re planning to sell your share and relying on that income as part of your nest egg.
2. Do you own your practice?
Your ownership stake in your practice can impact your financial readiness to retire. Even if you own your practice outright, it’s a good idea to look into other factors that might impede your ability to sell, like having paper based records vs. an EMR system. If you’re counting on the income from selling your practice to jumpstart your retirement, you might need some help making a careful appraisal of the business’ value and the best time to seek out potential buyers.
If you’re part of a partnership, you will need to think about the impact your retirement will have on the other physicians in your practice. Will you be selling off your interest to one of the other doctors in the clinic, or will you need to look for outside buyers? The answer to these questions will help determine whether or not you’re ready for retirement.
3. What are your lifestyle goals?
What does retirement look like for you? Do you see yourself relaxing on a beach or in a secluded property? Is it feasible for you from your current financial standpoint? It’s important to try to plan for the lifestyle you hope to have prior to retirement, and find any gaps in your financial means ahead of time. If needed, continuing practice through locum work, teaching, or a lowered workload would allow you to keep a steady income and spend your retirement savings more cautiously.
It’s also important to think about not just your financial goals, but also what you enjoy doing and find satisfying. Think about the needs of both you and your spouse, your family, and your community. Will you want to continue your professional growth and development in a different field? Are there hobbies or interests you’ve always wanted to explore? If you have areas you’ve wanted to live or other lifestyle things you might enjoy, the years before retirement are a good time to ‘dip your toes in’ and test the waters.
4. What are your financial goals?
Another factor that impacts when you’ll be able to retire is whether or not you have enough savings or have fulfilled your financial responsibilities. Good saving, planning, and investment in the years prior to retirement will assist you and your family in reaching your financial goals.
You can also think about staging your retirement process (via locum work or a reduced workload) to help you financially on the process to full retirement.
If your financial goals depend on the income from selling your practice, you should start thinking about this sale a few years in advance in order to get your patient book, medical records, and other crucial pieces of the puzzle together. Do you own the building your practice is in? How much of an ownership stake did you take? Will you be taking advantage of the tax credits for the sale of your business? Careful consultation with a professional can help you clear up all of these details and give you a timeframe for your financial readiness.
5. Do you want to continue working?
For many doctors, the satisfaction and identity they gain from their job is difficult to give up. Even more than the financial aspect of retirement, one of the biggest things to think about is whether or not you’re ready to leave that part of your life. Do you have a strong network of relationships and hobbies to keep you busy, or will you be missing the challenge and satisfaction of seeing your patients? There’s no right answer. How you choose to retire will be up to you, but there are always options for those who just want a lighter workload or more flexibility instead of leaving medical practice entirely.
Thinking about retirement is a big decision, but you don’t have to make it overnight – in fact retiring gradually, doing plenty of prep work, and planning carefully can make your path to retirement smooth and enjoyable!
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.