EVERY person maps out the transitions leading to their retirement differently. On one hand, doctors generally earn well and should have multiple options for growing a nest egg. On the other hand, most doctors start earning much later in life which can delay their full earning and investment potential.
There are many reasons why doctors who could retire are hesitant to do so. Some are worried about running out of money in retirement. As many other parents, doctors, too, want to keep supporting their children through some major life transitions, such as putting them through university, marriage, or buying a first car or home.
But perhaps the most common reason why doctors delay their retirement is that they just can’t imagine their lives without work.
Doctors who are considering retirement need to ask themselves two very important questions before deciding to call it a day:
- Do they have the resources to live their ideal lifestyle in retirement?
How much is enough for doctors to live their ideal lifestyle in retirement? There are various rules of thumb offered: somewhere near RM10 million or 80% of their pre-retirement income or 20X of their last annual income.
But oftentimes, these guesstimates fail to predict what a comfortable life is actually going to cost, particularly with the impact of inflation, the rising cost of healthcare and eventually, the cost of aged care.
Even for doctors and other high-income earners who have saved and invested wisely, life could throw them a curve ball and make maintaining their current lifestyle a challenge.
Just how big should their nest egg be, and how long it might last will depend not only on what they save and invest, but also on how they spend it once they do retire. Everybody’s idea of an ideal lifestyle is different. So, they should ask: What is their ideal lifestyle in retirement? Do they know the magic retirement number to live this ideal lifestyle?
- Are they retiring from something or to something?
The qualitative factors surrounding what retirement will look like may just be as important as the quantitative factors.
Repeated studies have shown that people who do not have a rewarding retirement can suffer both physically and psychologically during retirement and lack of mental stimulation is a primary reason. Losing their identity as a practicing doctor can also be difficult for many.
Even if doctors have planned their financials for their retirement, they should also consider what this transition will look like for them. While many think that they are ready, yet they are ill-prepared for the day-to-day realities of a new lifestyle, especially finding worthwhile activities to fill their time.
Furthermore, as they will be spending a lot more time at home in retirement, their relationship with their spouse may also undergo a difficult adjustment when they work less.
Hence, they should ask: What is their vision of their retirement years? How and where do they desire to spend their time? Are they sufficiently prepared for the road ahead? What allocation/s can they make with their time to bring more balance to their life?
My hope is that if doctors are considering retiring, they should have done so ON purpose, and WITH purpose. Appropriate financial life planning – done on their own or with a licensed financial planner – will minimise financial worries in their later years and also ensure that they lead a rich and fulfilling retirement life. – Aug 21, 2022
Dr Selina Dang, CFP is a licensed financial planner with Coreplus Advisory Sdn Bhd and a certified member of the Financial Planning Association of Malaysia (FPAM).
The views expressed are solely of the authors and do not necessarily reflect those of Focus Malaysia.
