Do you own a medical practice? Physicians and other medical providers face unique challenges when it comes to financial planning. As your own boss, you have many freedoms. But, at the same time, as a business owner, you also face many responsibilities to others. How can you successfully plan for your retirement even with these competing pulls? Here are four steps to take starting now.
1. Work with a Financial Planner. Many doctors underestimate the need to consult with a professional financial planner about their goals. Instead, they often try a haphazard, do-it-yourself approach. But as a medical professional, you know the value of getting regular checkups, asking questions of knowledgeable people, and creating good goals. Apply this to your own financial health.
2. Investigate What You Need. One of the biggest hindrances in retirement planning for many Americans — and even more business owners — is the difficulty in knowing how much money you will need during retirement. Even if this is an imperfect science, make the effort to find a ball park number. This will be vital when you go to sell your practice or take on partners. Whether you use a standard guideline of 85% of your current working income or find your own number by eliminating working-related expenses, just finding a target will help you plan.
3. Decide How You Want to Retire. Practice owners have choices about how to retire that many workers don't. Do you want to sell the practice completely and retire completely? Or would you rather take on (or elevate) partners so you can simply work much less? Would you prefer a lump sum buyout? Or would payments be the best way to go? Do you plan to stay involved in the medical community? In what capacity? You and your financial planner can create a good path to the retirement you want, but only after you decide what that looks like.
4. Set Up the Practice for Success. As retirement years get closer, get the practice ready for new owners. Set up processes that work consistently without your input. Keep equipment updated and well-maintained. Write down procedures for staff to follow independently. And keep a consistent, healthy profit. When you sell, these will all make the business an attractive prospect for others and keep your retirement on track.
This whole pathway may seem a little daunting, but you can easily start today with a small step. Make an appointment with an experienced financial advisor who works with the medical community. Together, you will be able to make actionable plans to move on to the other steps with confidence — making retirement closer than you ever thought possible.