PHYSICIAN RETIREMENT
The Financial Basics of Preparing for Retirement By Michael Clark
How we spend our retirement is an extremely personal and emotional matter. We’ve seen the television commercials of the gray-haired couple retiring to their vineyard or sailing in their yacht on the beautiful Mediterranean Sea. While appealing, those are really not the goals of most hard-working Americans. However, regardless of your unique goals, there are very specific steps that almost everyone should take in the years leading up to the transition to retirement. We are going to lay out these steps in bullet format below but want to provide you with a warning first. Many people will feel inadequately prepared or overwhelmed by how much there is to consider when reviewing these bullets. Instead, maybe you can be encouraged by the steps you have already taken and be glad to learn about other important steps that will help you further prepare for retirement now rather than once you’ve already hung up your spurs. So, here goes… Save enough money – this seems abundantly obvious but the process for determining the appropriate amount can often be ambiguous. There are certain analytical tools available that incorporate historical market performance, inflation, varying income streams such as pensions and inheritances, different account types such as IRAs and Trusts, to help determine the mathematical prob-
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SAN ANTONIO MEDICINE • April 2021
ability of achieving your goals. Adjustments can then be made in how much you save or how you are investing to increase your probability of success. Adjust your portfolio to the right risk level – finding the comfortable balance between risk and reward can be challenging. We all want lots of upside without the risk of big losses. Some investors think they shouldn’t own stocks once they retire but they forget their time horizon doesn’t end on the day of retirement but goes for the rest of their life. There are now many strategies and investments designed to provide access to meaningful returns while protecting your irreplaceable capital from catastrophic losses. Consider tax diversification – generally, we all agree that diversification of investments in a portfolio is wise but not many people consider tax diversification. If future tax rates are unknown, then it may make sense to have some taxable investments (taxable now), some taxdeferred investments (taxable later) and some tax-free investments (taxable never). Understand your insurance – a thorough audit of your insurance coverage may help you eliminate unneeded policies, reduce your costs
