The status of your retirement savings
People, especially my physician clients, put off a retirement savings plan for a number of reasons. For many, retirement appears far enough away to not make it an immediate priority. Others don’t think they are earning enough money to save for retirement. Some would simply rather splurge and enjoy life now than plan for tomorrow.
Other reasons you may fall behind retirement savings include:
You spend too much
An expensive house, a luxury car (or two), and other lifestyle expenses can prevent physicians from putting enough away for retirement. It’s amazing how many people try to “keep up with the Jones.”
You are unemployed for a period
This can cause you to deplete retirement savings to pay basic expenses until you get back to work. In addition, you have no income to put toward retirement. Obviously COVID has had a serious impact here – physicians are not immune.
You become disabled
Even if your disability is temporary, that’s time you aren’t earning your full income. You also may have expenses related to treating your disability. This underscores the importance of physician disability insurance. If you are also in private practice ownership, determine the need to have overhead disability insurance in place.
You give money to your children
Not only does your own student debt affect your retirement savings, but your children’s college aspirations may also. Many parents forgo saving for retirement to fund their children’s education. In addition, you may even be tempted to help pay for your adult children’s living expenses. Sorry but I’m old school – once you exit college or decide to enter the workforce, you are on your own financially. This is how I and my generation was raised.
You care for aging parents
Helping cover a parent’s health care expenses can also put a dent in your retirement savings.
Needless to say, saving requires a great deal of discipline. And physicians face more pressure than most when it comes to splurging on luxuries items (homes and cars) and experiences (travel and entertainment). Like most people, doctors plan to maintain the same lifestyle in retirement that they had while working. This only further complicates their approach to retirement planning.
Two final notes on retirement savings
There are so many physicians out there that “have to work.” Why? Because they didn’t take retirement planning seriously and didn’t prioritize their retirement savings.
Remember, people don’t plan to fail, they just fail to plan. This is especially true when it comes to personal retirement planning.