Our local Beacon Pointe advisory team can help you evaluate whether additional time in practice may meaningfully strengthen your financial plan—or whether the wealth you have already built gives you the freedom to choose what comes next. A confidential second opinion can help bring greater clarity to that decision.
Why This Decision Deserves More Attention Than It Receives
Delaying retirement can seem reasonable to many physicians, especially when you’re in your peak earning years and your career is going well. Working for a few more years may feel like the financially responsible thing to do.
But before another year becomes the default, you deserve to know what each additional year actually gives you.
- Does it improve your pension?
- Does it change deferred-comp treatment?
- Does it materially increase sustainable retirement income?
- Does it materially change your ability to help your family?
- Or, given what you’ve already accumulated, does it simply make an already large number larger?
Knowing when work may become a choice can help you set a target retirement date—and start working backward from it.
Having a date gives you time to explore teaching, consulting or part-time practice or, when the time comes, to work another year simply because you enjoy it.
But retirement also happens to your family. A target date gives you, and potentially your spouse, time to explore decisions that may have been put on hold: moving, traveling, helping a child buy a first home, caring for an aging parent or creating a family approach to charitable giving.
What many physicians may not realize is that some financial opportunities require action while they’re still working, while others may be better coordinated several years before retirement.
- Your final high-income years may be among your last opportunities to maximize contributions to employer retirement plans, including catch-up contributions when eligible and subject to applicable limits and plan terms, and to coordinate charitable giving during potentially higher-tax years. They’re also the time to understand how deferred compensation, bonuses, and other employer benefits will be treated when you leave—and whether decisions made before retirement may affect the timing or tax treatment of future income.
- The initial years after retirement may present a tax-planning opportunity, particularly if taxable income declines before Social Security benefits or required minimum distributions begin. Roth conversions may allow you to move money from tax-deferred accounts into Roth accounts at potentially lower tax rates, but conversions generally increase taxable income and may affect Medicare premiums and other tax items. Decisions made before you leave your employer plan, including how after-tax contributions are handled, can also affect the flexibility available to execute that strategy later.
- A portfolio designed to accumulate wealth may not be structured to fund retirement. Before your employment income stops, you may want to determine how much liquidity to hold, where the first several years of spending will come from and how much investment risk is appropriate for your circumstances. Doing this in advance may reduce the risk of having to sell some investments during a market downturn early in retirement.
- Depending on the plan’s terms, deferred compensation distribution elections may become less flexible as you get closer to retirement.
- Malpractice tail coverage may need to be addressed before your employment ends.
- Healthcare coverage, HSA contribution eligibility, and Medicare enrollment generally should be considered together rather than handled independently.
None of these considerations necessarily determines when you retire. But a target date can give you time to prepare for decisions you may not realize are coming—and may help preserve options that could become unavailable later.
If you plan to retire in the next several years, do you know what decisions should already be underway?
If you’re not completely sure, consider getting a confidential second opinion. Schedule a time to connect with our team using the form below. To learn more about our wealth planning solutions for medical professionals, click here.
Important Disclosure: Beacon Pointe Advisors, LLC (“Beacon Pointe”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a particular level of skill or training. Beacon Pointe does not provide legal or tax advice. This material is provided for general informational and educational purposes only and is not intended as individualized investment, tax, legal, accounting, insurance, healthcare, or employment advice. The considerations discussed may not apply to every individual and depend on personal circumstances, applicable law, and the terms of relevant employment, ownership, compensation, benefit, insurance, and estate-planning documents. You should consult the appropriate legal, tax, insurance, healthcare, and other professional advisers before taking action. Investing involves risk, including the possible loss of principal. Beacon Pointe is not responsible for errors or omissions in materials accessed through links to third-party websites and does not necessarily approve or endorse the information provided in those materials.