Are You on Your Way to $5.5 Million?

SEPTEMBER 16, 2008
Gregory J. Kelly, Editor-in-Chief

How much do you need in your retirement kitty to finance your golden years? It's a vexing question and one that most physicians tend to ignore. For those doctors curious about whether they'll be living on Easy Street or Skid Row when they hang up their stethoscope, it helps to do some basic math.

One rule of thumb is to multiply current income by a factor that takes age into account. If you're younger than age 40, multiply by 40; if you're between ages 40 and 50, multiply by 30; and multiply by 25 if you're over age 50.

Big Numbers

The formula shows that the average Physician's Money Digest (PMD) reader (ie, 47 years old and $184,000 in annual income) will need about $5.5 million. That's if they plan to have the same lifestyle after retirement as in the years just prior to retirement. To live on 80% of pre-retirement income, doctors will need about $4.4 million. Although that isn't exactly loose change, the average PMD reader has a head start, with a net worth of $1.1 million. By maxing out on retirement plans, the average reader could be in shouting distance of the goal by age 65.

Although the figures may be daunting, they are a wakeup call to the fact that doctors may need to save more aggressively to be able to finance the retirement they're working toward. To run your own numbers, visit the retirement calculator at

Carving a Plan

The stereotype is that doctors are rich and savvy. In truth, they mirror society—requiring personal financial direction just like others. One person who understands this need is physician David Marcinko. Seeking to arm today's financially troubled doctors with the necessary tools and knowledge to create a successful financial plan, he has compiled a sound resource, Financial Planning Handbook for Physicians and Advisors: An Integrated Approach ($54.95; Jones and Bartlett Publishers; 2005; 800-832-0034).

To grasp a view of their future, Dr. Marcinko recommends that doctors develop a retirement cash flow plan. "It's a year-by-year analysis of how all your likely decisions will impact your finances,"he explains in the book. "The result let's you know if what you are doing will work and how much you should have accumulated at any time."

Dr. Marcinko, an accomplished guy—has an MD, MBA, and CFP® by his name and owns a medical business advisory firm—says that doctors don't plan for the transition from work to retirement. This lapse makes the emotional adjustment to retirement "the most difficult thing"in a doctor's life. That's saying a lot.

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