PracticeLink Magazine

Spring 2018

The career development quarterly for physicians of all specialties, PracticeLink Magazine provides readers with feature articles, compensation stats, helpful job search tips—as well as recruitment ads from organizations across the U.S.

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Page 23 of 91

T HE J OB S E A r CH ISSUE D E P A R T M E N T S Financial Fitness 24 S PRIN g 2018 ▼ T HE J OB S E A r CH ISSUE D E P A R T M E N T S Financial Fitness J a M e S M c N a UG h T o N What's your retirement plan? When it comes to retirement, you either outlive your assets or they outlive you. The deciding factor is whether you have a formal, comprehensive plan. D e P e NDING o N Y o U r SP ec I a LTY, you just spent the last 12 to 15 years of your life preparing for your "real job." While your friends from undergrad have been in the workforce for 10 years, you have been increasing your debt load during medical school while working for a fraction of your worth during residency. You have given up one of the most important components of investing: time. Fortunately, physicians can earn a higher paycheck than most. Unfortunately, the temptation to purchase items that were unrealistic during residency (luxury cars, large houses) can be overwhelming. The good news is that, by exercising some common sense and creating a formal plan, accumulating the assets needed for your "work optional" lifestyle is not as difficult as it seems. Create a budget beyond student loans Creating a budget is a great idea for two reasons. First, it will give you an idea of how much you spend on necessities, the things you need to live. Secondly, it will determine your discretionary income, or surplus, after you cover the necessities. From this discretionary income, you can determine how much you need to invest to achieve your target retirement age. There will be non-investing factors, such as the cost of setting up a practice or running expenses for a clinic. There will also be investing factors to consider, such as contributing to a taxable account vs. retirement accounts. Start saving early Once you decide on a "work optional" age, you'll need to calculate how much to invest each year to accomplish your goal. You will also want to choose a hypothetical rate of return determined by your risk tolerance. Everyone's risk tolerance is different. If you are able to tolerate volatility and have a long-time horizon, a portfolio weighted more heavily in equities may be suitable for you. If market volatility gives you sleepless nights or you have a shorter timeline, a balanced portfolio consisting of equities and fixed income may be more suitable. Be sure to consult a financial professional if you are unsure of your risk tolerance. Inflation is another factor to consider when creating a financial plan. Inflation is the rate at which the general level of prices for goods and services increases over time. Consequently, inflation can erode purchasing power, something to consider when building your portfolio.

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