Many of us work hard and manage our money in the hopes of a comfortable retirement someday. But it can be difficult to know how long we must work and how much money we need to accumulate to maintain a satisfying lifestyle without the consistency of a salary.
The amount of money you need to retire depends on a variety of factors including what your anticipated expenditures are, the length of your retirement, and how much passive income you expect such as social security benefits or investments. Additionally, certain expenses may increase or decrease. Travel and gift expenses tend to increase during retirement. However people interested in downsizing their home or moving to a warmer climate to retire can lessen housing expenditures.
These retirement factors are applicable to anyone in any profession. But doctors in particular may see significant changes in monthly expenditures after retiring because they no longer need to pay Social Security or Medicare taxes. This raises the question: how much money does a doctor need to retire? Retirement advice for doctors often suggests that 70% of your yearly income is necessary to maintain your current lifestyle during retirement.
Is $10 Million Enough?
$10 million is another common number thrown around when considering the amount of money for a doctor to retire. However, for an average physician the necessary amount may be significantly lower. Furthermore, it is difficult to achieve a retirement fund of $10 million even with a doctor’s salary.
Depending on your expected monthly spending during retirement, which can be estimated using your current spending habits, a mere $2 to $5 million in retirement assets may be sufficient. Though no amount of retirement money will be right for every doctor, with careful financial planning most people can live comfortably on far less than $10 million.
The Heartbeat of Your Wealth Management Plan
Retirement planning for doctors can be more difficult than retirement planning in other professions. Many doctors enter the workforce later than people entering other careers due to medical school and residency requirements. The time it takes to receive an MD can prevent physicians from starting financial planning for retirement as early as other professionals.
However, a financial planning stethoscope can help you pinpoint the heartbeat of your wealth management plan to ensure that your money works for you during retirement.