The number of citizens without a retirement plan shows a grim picture of the population’s inept financial planning capability. And while there are several reasons that will hinder your retirement planning; it is important to inculcate and devise methods which ensure you take care of your retirement.
Despite the array of retirement plans available for a doctor, without a consistent system in reimbursing your plan – you will end up with less than the average amount you’ll need once you hang your white coat.
Here are the top 5 retirement planning tactics that will ensure you stay afloat as a doctor;
- Diverse Investment Portfolio
- Savings Automation
- Choosing a Plan
- Locum tenens (supplement your income)
1. Diverse Investment Portfolio
There are risks involved with every investment opportunity you explore, which is why it’s important to check out websites like https://www.stocktrades.ca/personal-finances/ to research the different options, and they vary depending on the market product. To cushion your proceeds from market unpredictability, it’s ideal to invest in fixed income and market-linked products.
By exploring different portfolios, your returns also decrease in relation to risk variants, but you’re ensured that permanent loss of your capital or your portfolio volatility is mitigated.
2. Saving Automation
It’s an open secret that there are unforeseen expenses that derail our financial planning process. They can vary from medical emergencies to car emergencies. To ensure you maintain a consistent reimbursement of funds to specific budget allocation, then you will need to automatize that process.
There are a number of mobile apps or bank automation systems available that will ease your retirement process and let you concentrate on the nitty-gritty of your practice.
3. Choosing a Retirement Plan
Cranking up the numbers isn’t an easy feat but as a physician, regardless of whether you understand the holy grail of achieving your financial retirement goal. You will need to emulate a pension fund manager to assess the funds you’ll need after retirement, the amount you’ll put up, and the best plan to aid you in attaining your goals.
And while there are a number of reputable certified financial advisers, it is an added advantage to be privy to the ABCs that go into retirement planning. Given the extensive products available in the market, you’ll be spoilt for choice. Having the traditional 401(k) is ideal for any physician, backdoor Roth IRA, Keogh retirement plans, among others, are promising.
4. Locum tenens
As a physician, you have the advantage of earning an extra buck to bolster your income. This is convenient more so for physicians who are almost retiring. The locum physician jobs will supplement your income and enable you to bridge the gap on your monthly deposits whether you decide to work full time or moonlight.
A budget is a critical aspect of any doctor intending to have a stress-free retirement period. Implementing several budgeting rules, be it the 50:30:20, 70:20:10 rules will enable you to churn out enough finances into your retirement plan.
You can also opt to dedicate a fifth of your income to your retirement. As a general rule, your monthly expenses will reduce by about 20-30% after retirement. Crunk out those figures and you’ll be able to come up with a conclusive amount that you’ll need after retirement.
With the vast majority of the population with less than the required retirement saving amount, you should aim to have at least 11 times your annual income when you retire.
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I am a CFP® (Certified Financial Planner). I have a severe phobia of bridges and dirty balance sheets. Hobbies: blogging, meditation, and loving Bull Market (my dog).