Are you planning on retiring from your career as a medical professional?
Retirement is a transition in life that's almost inevitable.
After many years of hard work and long hours, you can finally rest and enjoy your heyday.
However, the reality of retirement can be daunting and unsettling if you haven't prepared well for it.
Aside from the financial obligations such as mortgage repayment or debt repayment, it's essential to consider having retirement funds that will sustain you for a long time.
Retirement is a major life transition that evokes many emotions.
To enjoy a secure and comfortable retirement as a medical professional, financial planning and investment are essential.
Medical professionals find it difficult to have money-related conversations.
In a study, half the physicians surveyed said saving for retirement is difficult due to expenditures.
On the other hand, a quarter of those said they had no idea or were unsure how much money they'd need to retire comfortably.
It's healthy to express questions or worries you have regarding a long-term financial strategy.
For medical professionals, it's important to develop a financial plan as soon as you start earning an income.
Oftentimes, especially for physicians, medical school takes a lot of years to complete, and residency costs a lot of time and money.
Additionally, some nurses that want to upscale their skills often have to take extra years to learn additional skills.
This gives them a late start in life.
Since many medical professionals spend so much time training, and most of the time have to pay off student loans and other loans, they have a limited time to start saving for retirement.
It's not only hard to make up for the lost time that would have been used to save for retirement, but it's also next to impossible to catch up for most medical professionals.
Even if most practitioners' salaries normally increase with time, things aren't always straightforward.
How Do You Catch Up with Saving for Retirement?
Do Not Touch Your Retirement Funds
Avoid early withdrawals from your retirement funds.
This is the most important advice for retirement savings.
Research shows that nearly half of those with retirement funds took the money out before they were eligible to retire.
Withdrawing early from your retirement fund might not be a big deal at the time, especially if you have bills to pay and other need for money.
However, it can tremendously impact your retirement funds in the long run.
Aside from that, you may incur penalties for early withdrawal.
This will not only diminish what you currently have in your savings but also your overall savings for the future.
Remember that patience pays.
It's much better to wait.
Avoid High-interest Loans
Paying off high-interest loans as soon as possible is an important strategy to catch up on your retirement savings.
Avoid taking any more loans before retirement.
If you need to take a loan, avoid high-interest loans.
You can deposit that money into your retirement savings instead of paying interest charges.
With compound interest, any money you save will generate interest on its own, and additionally, the interest will earn interest.
Examine your current debt, whether from loans or credit cards, and adjust your budget to pay off your debts as quickly as possible.
Start with the loan with the highest interest rate and work your way down to the loan with lesser interest rates.
Reduce Expenses and Save Extra Money
Reducing your expenses means cutting down on non-essential spending.
This means spending less on your "wants" rather than your "needs" by implementing lifestyle modifications.
Consider making a budget.
A budget will assist you in analyzing your costs and expenditure by identifying what things you can do without.
To get you started, apply the 50-20-30 (or 50-30-20) rule.
This rule indicates that you as an individual should spend 50% of your income after tax on must-have needs and commitments.
The other half should be divided into 20% for saving and debt reduction or payment and 30% for whatever else you like.
The 50-20-30 rule is designed to assist people in managing their finances and saving for retirement and other emergencies.
Another thing to consider is putting any additional money into your retirement savings.
Additional money can include tax returns, pay raises, bonuses at work, and inheritance, to name a few.
If you get extra money, place it in your retirement savings immediately.
This money will collect interest over time and can help you avoid the urge to spend the money.
Get a Side Hustle
Increasing your potential to earn more money is helpful when catching up on your retirement savings.
You might consider picking up a side gig to augment your principal income.
You might also look at getting a second non-demanding job or working part-time earlier in your retirement.
Another option is to extend your retirement and continue working for a few extra years while saving wisely.
Consider the following types of investments:
- Annuities: This is an agreement between an insurance company and an individual in which you invest a chunk of money and get regular payments in return.
- Property and Real estate: You may invest directly by buying a home or indirectly using a property/real estate investment trust.
- Non-traded real estate investment trusts (REITs): a type of real estate investment trust that allows you to purchase commercial real estate assets that are not publicly listed, e.g., vacation homes, hotels, retail centers, apartments, healthcare facilities, self-storage, office buildings, warehouses, etc.
- Retirement income funds: RIFs put your money in a diverse portfolio, often big and mid-cap equities and bonds, and rebalance the assets on a regular basis to keep your investment on track.
- Total return investment approach: An investment portfolio generates income in the form of dividends, interest, and capital gains. This portfolio focuses on a well-balanced mix of bonds and stock.