by Vicki Rackner MD
As I caught up with an old friend, she shared that she’s in the midst of adding an in-law apartment to her home. She plans to have her parents move in with her.
I said, “That’s wonderful! I know how close you are. Now your kids can grow up with their grandparents.” She replied, “Yes, that’s true, but that’s not why we did it. My parents ran out of money!”
My friend’s father was a top-earning surgeon, and the Deacon in his church. How could this happen?
Today about half of physicians are behind in retirement planning. Here are some steps that you can take today to prevent outliving your money in retirement.
Create a vision of your retirement years. You may have been told that your expenses will go down in retirement. However, if your ideal retirement looks more like a long vacation, budget accordingly.
Plan for a long life. As you know from your own clinical experience, people are living longer. In fact, the number of Americans age 100 and older is up by 44 percent since 2000. How long will you and your life partner live? Best to prepare for a long life.
Factor in taxes. During your earning years, tax deductions for contributions to your 401K’s and IRA’s look very attractive; it’s not as attractive as you pay taxes on the money you withdraw in retirement. Work with an expert who can help you minimize your lifetime tax burdens—both during your working years and in retirement years.
Sequence your retirement revenue. You have a portfolio of investments. The order in which you tap into these “pools of money” can have a huge impact on your total lifetime investment income.
Invest in your health. This is a great way to decrease health-related expenses in retirement.
Explore non-clinical sources of earned income. You can serve as an expert in medical malpractice lawsuits, consult or speak. This income can accelerate retirement savings and augment retirement income.
Consider moving. You can make your money go further in retirement by moving to a place where the cost of living is lower.
My guess is that you would prefer not to be forced to live with your children in your golden years. The best time to plan your retirement is today.
© Vicki Rackner MD 2018