When Will I Be Able to Retire?

Physician's Money Digest, July15 2003, Volume 10, Issue 13

Battered by the poor investment market ofthe past 3 years, I hear an increasingnumber of my physician-colleagues voicingconcerns about their retirement plans. Themost recent complaint I've heard: "I'm going tohave to work another 5 years now."

The concept of retirement is really a glimpseof one's aspirations for life in the future. The"traditional retirement" in a sunny climate filledwith days of golf and the beach is not somethingmany physicians really idealize. Oftentimes, theactual way in which a retirement day will be filledhasn't been well thought out, and retirement islooked at as just an end to work.


In a life-planning approach, financial advisorsseek to discover what "retirement" really meansto the individual physician (and their spouse). Asa generalization, physicians are intelligent"knowledge workers" who do not relish thethought of endless future days lacking in intellectualand/or emotional rewards. The life plannerworks with these professionals, helping themtransition toward a fulfilling, productive retirementthat cannot really be called a "retirement"in the traditional sense.

The New Retirementality

($16.95; Dearborn TradePublishing; 2001) by MitchAnthony is an excellentreview of this new way ofthinking about work in thelater stages of life. This timeperiod (after a physicianleaves a first career) can last30-plus years. And it can beas exciting and refreshing asone's early career.

The possibilities are numerous. It might involvea medically related experience, such as participatingin an academic setting or serving the needy inclinics or overseas. It might mean a totally newcareer, either for remuneration or for altruistic reasons.Or it might be a combination of activities:recreation, family time, and a part-time career.

On a personal note, now that we're in our late40s, my physician-wife and I are experiencingour own transitions. My wife is devoting almostall of her time to her art career, and I am makinga transition toward becoming a full-time financiallife planner. We're not alone, either. I knowof a surgeon who longs to return to the researchbench and another internist taking an interest inthe business world.


After a physician chooses a new career, thenuts and bolts of financial decision-making canbegin. Some general rules of thumb apply here,although each case is subject to careful individualscrutiny. First, the doctor must determine anestimate of the yearly income needed to live intheir desired manner. This amount is generally70% to 130% of current yearly expenditures andvaries by what activities are expected.

The next factor to consider is how muchincome (if any) is expected from the new professionor activity. The difference between theincome stream needed and income earned in thenew career will have to come from retirementsavings. The need for a stream of income fromsavings may last for several decades. Many academicfinancial studies have been published in anattempt to give some guidance on just how muchof the income and principal from a pool of savingscan be used—and not used up.

From these studies, a reasonable assumptionis that such savings can produce roughly a 4%stream of income (adjusted for inflation) thatwill not run out before its time. For example,combined retirement assets of $3 million (prudentlyinvested) should produce a long-termincome stream of $120,000 per year (increasingwith the rate of inflation) almost indefinitely. Asthis time ensues, adjustments would be made toreflect changes in investment performance,health issues, and variations in lifestyles.

So, before you ask the question, "When will Ibe able to retire?" sit down and think about whatyou'd like to do after you retire. That way you'llbe prepared to answer the real question: "Whatdo I want to do with the next part of my life?"After you come up with an answer to this question,figuring out "when" will be much easier.

Steven Podnosis a practicing internist in

Florida. Realizing that his enthusiasm for

finance had become stronger than that for medicine,

he earned his MBA degree and recently

passed the Certified Financial Planner™ practitioner

boards. He has begun a transition to a

full-time financial planning career and welcomes questions or

comments at stevenp302@aol.com.