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Insights for all ages on the financial habits of established physicians
Having enough money to retire is the top concern for physicians of all ages, but it holds a special meaning for many physicians over age 60. Many have built a successful career, have some savings, and are looking forward to winding down and savoring the next phase of their lives - retirement.
In a recent presentation to physicians at the AMA annual meeting, I discussed the findings of our 2013 Report on U.S. Physicians' Financial Preparedness©, and many of them related directly to how older physicians approach their path to retirement and financial planning. I'd like to share a few observations that I believe can be helpful to physicians of all ages.
1. Develop good financial habits
First, most older physicians have developed good financial habits. AMAI's survey found that physicians over 60 tend to work on personal and financial planning more often than younger physicians.
Sixty percent check or work on their finances (retirement, investments, insurance, etc.) monthly or quarterly while 25 percent of physicians under age 40 review their finances every few years or as the need arises.
How often do you work on personal finances?
An estimated two-thirds of older physicians also think that the time they spend on personal finances is adequate. That is not the case with younger physicians. In fact, the graphs below show an almost complete inverse perspective of older and younger physicians.
Do you feel the time you spend on your personal finances is adequate?
Overall, the older group got started on their personal finances early in their careers, paid off debt, protected their income and saved for their family's future.
2. Update estate planning and insurance
Second, older physicians are much more likely than their younger counterparts to have multiple elements of an estate plan in place and up to date. Seventy-six percent have an updated will and some 70 percent have both end-of-life and medical directives in place. Conversely, 68 percent of physicians under age 40 do not have an estate plan at all.
Which elements are in your estate plan?
Also, they are more likely to review and update their insurance coverage to meet their changing financial situation. While their need for disability income protection decreases as they move towards retirement, this group is naturally more likely to have whole life/universal life or a combination of universal life and term insurance in place than other age groups. In our survey, forty-six percent had purchased the whole life/universal life primarily for the death benefit; nearly 30 percent purchased it for retirement planning and funding.
3. Seek support from a trusted advisor
Third, older physicians tend to seek professional financial support. In fact, our survey indicated that 65 percent work with a professional financial advisor to help them achieve their goals, in contrast to 55 percent across all other age groups and less than 50 percent from physicians under age 40. They consider themselves knowledgeable about personal financial decisions, and they have more confidence than other age groups that they are making the right decisions.
How knowledgeable do you feel about personal financial planning?
Being 'on track' for retirement planning
Taking all of this into consideration, it comes as no surprise that more than half of physicians in over 60 age group consider themselves 'ahead of schedule' or 'on track' for retirement planning.
In fact, survey findings showed that 70 percent have over $1,000,000 in retirement savings including 26 percent with more than $3,000.000. Only 4% have less than $100.000 saved.
How much do you have in your retirement savings?
Getting 'on track' for personal financial success
There are certainly many factors that play into achieving this level of success in planning for the future. However, physicians of all ages can apply these financial habits to help build a solid foundation for reaching their own personal financial goals, including retirement.
For more information on the state of financial preparedness of physicians of all ages, I invite you to review the findings in the 2013 Report on U.S. Physicians' Financial Preparedness©. I also invite you to pass on this blog to associates if you find it helpful. As always, I welcome your comments and questions.
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