Speaker 1 (00:00.098)
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Welcome physician, moms and doctor dads. This is Nate Renneke, certified financial planner and primary advisor here at Physician Family Financial Advisors. Today we have a special guest. I'm excited for our listeners to get to know her. She is one of our very own certified financial planner and advisor here at Physician Family Financial Advisors, Chelsea Jones. Say hi, Chelsea.
Hello, everybody.
Chelsea, tell our listeners a little bit about your role here at the firm and maybe just a little bit about yourself.
Yeah, so I'm our retirement planning specialist. And what I do is I meet with all of our clients to help them identify their goals for retirement and basically just help make them a plan to help them get there, which sounds a lot simpler than it actually is.
Speaker 1 (01:21.612)
Right. That's kind of what we're here to discuss. So we brought you on because we have this question that is how early do doctors actually retire? And I think this question, it's important to know kind of what people in the same field or profession as you, what they actually do, because it's probably a pretty good indicator of what you're capable of. But what you just said, Chelsea, about setting goals.
That's kind of the angle that I'm thinking about this because really what I'm after is I do want the awareness of when other people retire, but I'd love for people to start considering that question of when will I actually retire versus how early I'm planning to retire. So that's what we're going to discuss today.
There's a lot to dig into there.
Yeah, that's right. Let's do this. You said it's a lot more complicated than it sounds, picking a number when you want to retire, especially if you're a young physician. It's generally many years away, decades away. What are some of the challenges that come up when you're trying to set that number, like when physicians plan to retire?
Yeah, yeah. So the biggest challenge that most people struggle with is the fact that it can be kind of abstract because we work with a lot of young physicians who are, you know, just finishing up their residency and just started their attending job. And so it's, hard to think about the end of your career whenever you're just starting it. So getting into the mind of, of being able to look into the future and picture yourself in the future and try to read the tea leaves and see what you would want at that point.
Speaker 2 (03:06.2)
can be difficult for people understandably.
But I think the two main things that can be kind of obstacles, especially for newer physicians, really comes down to optimism and overconfidence, which those might sound like unrelated words, but what I mean by optimism is a lot of young physicians think that they can keep up with the same pace for a long time.
And so they're optimistic with their ability to, you know, work at the same pace until they full on retire. And then overconfidence really ties into savings ability. You know, some people, especially if they're just getting into their attending job, cashflow is not super clear, but they have this huge boost in income. And so they're really confident that they can save a lot to maybe retire a little bit earlier than what the average retirement age is.
That makes a lot of sense because what I generally see is that it really comes from that mindset of like what they've been living off of then with this new income you think well I should be able to save most of this but they also with a new income comes new taxes probably new house new family members in the form of babies and that all piles up I mean I fell victim to this too early in my career thinking I could just you
be extremely frugal for the rest of my life. while I think that's good, it also, you know, it'll basically in a different time of your life, as you start to earn money, you cannot achieve this balance that everyone talks about. So that's kind of what you see.
Speaker 2 (04:56.458)
Yeah, yeah, there's definitely a lot of give and take whenever you are coming up with these goals.
Okay. So for these more optimistic physicians, and by the way, I see this even with physicians who, you know, are in their late thirties or early forties, but in a little bit different, they are frustrated that they haven't been able to keep up with their kind of, their, these big goals that they set out in the beginning. So when do you see these
Physicians that we're talking about here though that they they have big goals. When do they say they want to retire?
Yeah, so I really, whenever I go into this, there's kind of two groups of people that, you know, make themselves known in this process. The first type is the, about half of people that I work with want to retire in their fifties. And then the other half really want to retire somewhere in their, you know, early to mid sixties. And then there's that 2 % the outliers that basically never want to retire because they just really love what they do and can't see themselves.
see themselves stopping. but most people do, whenever we initially go to talk about when they would want to retire, they, they usually say somewhere in the mid fifties.
Speaker 1 (06:19.946)
Mm-hmm. Okay, so mid 50s and then people who want to retire later You know Saving is a lot easier. You have more years to do it and you can be more aggressive with your investing and all that So but at the same time, what's the challenge for them? Like what's challenging about people who say they want to work forever?
The challenge really comes whenever there's a major change in their life. It's like maybe a new attending says that they want to work forever because they love their job, but then they have a kid that comes along. you know, whenever they're in their, maybe their 60s, they think about having grandchildren and they don't really want to be working as much. that way they can be grandparents. That's one that I hear about a lot.
And then there are other changes, like it's pretty prevalent burnout in physicians, and a lot of people hit that point with burnout and frustration with, you know, not necessarily medicine, but maybe the administrative aspects of medicine in their practice or in their hospital. And so there are just a lot of things that creep up that make people stop and think, do I want to keep doing this until I'm 70?
or should I start thinking about an exit?
Yeah. Yeah. And then by that time, you know, when you're 62, if you haven't saved enough, it's kind of too late. Yeah. know, if you want to retire when you're 65. OK, that makes sense. So. Sounds like there's some that the main struggle here is planning, because if you don't have a good plan, you're not executing your plan. And if you have an, you know, a lofty goal, you might either can't execute it or it's not what you thought of it. Right. Because.
Speaker 2 (07:50.254)
Mm-hmm.
Speaker 1 (08:12.398)
if you're having to save so much money that you can't live life until you're 55, that's not really a good life. But so how do we tackle this? Like what's the best way to start thinking about retirement timeline?
Yeah, so the first thing that I would say here is it's really important to understand that your retirement timeline or your retirement goal, your age, it's a moving target because, you know, if you're planning early on, that's great, but life happens. Things are not gonna go perfectly according to the first plan that we made with you. And so, it has to be, you have to be able to roll with the punches and understand that
you know, the first draft of your plan or the first version is not going to be the last because you're going to probably switch jobs at some point, maybe move, you know, your spouse may switch jobs. There are a lot of things that can happen that can throw off the first version and we have to just roll with those punches and update the plan, which is totally normal, but being comfortable with that kind of dynamic nature of life.
because we want the plan to reflect your life, is I think the really first, the first most important thing to understand whenever we go to make these goals.
Yeah, that's a really wise thing to consider, which is that, you know, life changes. And really, the reason I think that this can bring some peace to this sometimes very stressful topic, which is preparing for your retirement or preparing for your future with money, is that it is okay. In fact, it is best practice to not
Speaker 1 (10:01.498)
not know for sure exactly what you're going to do from day one. Like you do your best and you need to start aiming at something. Otherwise, you'll definitely never get there. But as life adjusts, you adjust your plan. So that's kind what I'm hearing from you.
Exactly, that's exactly right.
Yeah. And I also know from a statistical standpoint, if you're willing to do that, make adjustments, you're a lot more likely to be successful. And I don't just mean like lowering expectations toward the end. mean, if you want to give yourself a sure shot chance of hitting your first retirement goal ever, you're going have to save so much money that it makes it impossible to have balance. But if you're willing to adjust as time goes on, save a little bit more, save a little bit less when you need balance.
The statistics of whether or not you'll be able to have a reasonable retirement just shoot way up. So that's that's great. That also brings me to a kind of a question that a lot of people ask, which is surrounded around why not just save as much as possible or plan to retire as early as possible to give yourself options later on. So what do you think about that? Like what kind of results come from that?
approach to retirement.
Speaker 2 (11:22.336)
Yeah. Yeah. So this is something that comes up a lot, retiring early, you know, why not? So that way you have options, but this is where the give and take comes in. This is where that optimism and overconfidence comes in because what most people don't understand is that retiring early is expensive. You know, it takes a lot of money and time is money. So if you, if you're trying to save for this,
aggressive goal or what we would call an aggressive goal, retiring early, maybe early to mid fifties. If you're starting off like at age 30, that's 15 years of savings to fund, you know, the rest of your life. That's, that's a lot of savings. That's a big lift. And so what happens is, you know, we run your plan and we tell you, have to save all this money every month. And some people look at that and they're like, I can do that. That's doable.
But what they don't understand or maybe not think about until it is presented in front of them is that to have enough money to save, you have to work a lot. And if you're working a lot, you may not be at home as much as you want to. And when you're not home as much as you want to, that can start to take a toll because you're missing out on, you know, potentially missing out on, you know, really important time with your kids, time with your spouse, or just experiencing
life outside of work, you know?
Yeah. And the other big one would be that what I see all the time is physicians have this goal. And basically what happens is they have this goal, but they don't really act like that's their real goal. So I want to shoot for the stars, I'm not real. But if I'm a little short, that's okay. And I want to invest more aggressively than is required to actually retire at 50.
Speaker 1 (13:21.74)
So they're really not aiming at that goal, which means they're really not aiming at anything. They're just piling money in for no reason, which what I see is that brings no peace to their life. They don't know what they're on track for, you know, and they don't know really what they're shooting for because they're behind. No one can see me, but I'm my fingers up in air quotes behind on retirement, which is behind retiring at age 50. And it just doesn't seem to work out.
So.
There's no context around why they're saving.
Exactly.
So when do you see physicians kind of come back around and reshoot their goal? Like how long before they sort of break and decide they don't want to retire at 49 and they just come up with a realistic goal that allows them to live more sort of more life outside of work?
Speaker 2 (14:16.076)
Yeah, yeah, it's usually within the first year of writing that first plan with the early retirement goal or the mid-50s or the aggressive goal. Because once they turn on those contributions, once they're saving all of the money that their plan calls for, they realize that it doesn't leave a lot of wiggle room sometimes. And so they can't enjoy the things that they're used to enjoying. And that's hard to keep up.
for 15 years until you retire. And so usually, not the first six months, definitely within the first year of saving aggressively, they start to question it.
You know and that that actually makes me feel pretty good because Sometimes this is something that as humans we need to experience for ourselves Maybe I am the person that could save this much and if you are which by the way, there are people that could do this Positions of anybody could do this if they really wanted to and sometimes we find out They're right in front of us and they're that there are those people really frugal people by a reasonable house and You know
saving for public school instead of private school for the children's college, all those things. And then you find out they actually have what it takes to retire real early. So it's a kind of an experience that they have to go through. If I could say anything to everybody, it is, if you just find out that that's not what makes you happiest, that's just okay. That's okay for it to take your foot off the gas a little bit. You're conditioned as physicians to just go, go, go, go, go. And at some point that just is
reducing your quality of life to such an extent that I believe the trade-off between working an extra five, 10 years is worth it. Would you, is that kind of how you would describe this?
Speaker 2 (16:10.154)
Yeah, yeah, for sure. Cause another thing that comes up a lot is, you know, even as people are approaching their planned retirement date, sometimes they're still not ready to retire or sometimes they don't want to stop cold turkey. so a slowdown makes a lot of sense.
slow down. Okay. So is that something you see when you revisit people's goals? They think of this slow down. Maybe tell us about that a little bit.
Yeah, yeah. So the slowdown comes in whenever people realize or decide that they don't want to work full-time or at their current pace until, you know, 60 or 65 or whenever their retirement date comes out to be. And so they're like, well, I could probably keep up this pace until 55, but I've learned that it's not really realistic or it doesn't.
give me joy to save that much to stop working altogether at 55. So maybe I can work part-time or, know, 0.8 FTE to, you know, earn enough to live off of and maybe dial back my retirement savings or turn them off completely and then full on retire at, you know, 60 or 65. And that makes the transition a lot more manageable in both your work life and your savings.
And it's also important to note that if you do shoot for kind of a lofty retirement goal, you could, you know, at the end of the day, if you miss it by a little bit, you could also slow down. So there's nothing wrong with it unless there's something wrong with it, unless there's something wrong without impacting your life. Right. Because if you're fine and you're saving a ton, that brings more security to your life and it may be worth it.
Speaker 1 (18:05.678)
I want to get away from this sort of stigma that you must retire early. Otherwise, you're a failure as a physician and you are letting this opportunity of a big income go because the opportunity of a big income can come like there's many opportunities. You can retire early, like really early, or you can enjoy more life with less work. You know, and I don't I think that is something that is very, I don't know, looked down upon in our culture.
And I don't know why we all want to be happier. And sometimes that's what brings people happiness.
Yeah, balance is so important.
Yeah. Okay. So we asked the question at the top of the podcast. That's how early do doctors actually retire? So when do we actually see physicians retire? Like they talk this about retiring early all the time. We said, sometimes you will hear people talk until that we'll want to retire late, like in their seventies. We have some clients right now who are still working and they're, think.
couple people in the 70, 71, 72, when do you actually see most physicians retire?
Speaker 2 (19:20.43)
Yeah, it's usually somewhere between 60 and 65. And, you know, almost all of the people that I see that have actually retired have built in some sort of slowdown, some sort of transition into retirement. That's not just one day I'm no longer working. So yeah, 60 to 65 with some version of a slowdown is pretty much encompasses 98 % of all of the clients that I've seen.
Okay, so why would somebody, like let's say they're retiring, they wanted to retire at 55 their whole life, like why did they end up retiring at 60 instead?
I think it's because, or at least from what I've seen and what I've heard from clients is, know, medicine is their passion and their purpose and they found that in themselves, in their job. And it's hard to just stop. Once you're a doctor, it's hard to stop being a doctor. And so, you know, once you're not a doctor, what are you gonna do with your time? I think a lot of people don't necessarily know the answer to that at 55. Some people do, but...
you have to re rediscover your purpose once you stop working that early, which can be difficult to do.
Okay. And then alternatively, where for people who say, I want to work until the day I die, why do they end up retiring closer to 65?
Speaker 2 (20:53.44)
Yeah, there's a handful of reasons for that. You know, it could be their health. They just physically can't work until 70. They need to dial it back earlier. It could also be family. You know, the kids and the grandkids, they want more time to move to wherever they are and enjoy being a grandparent or a parent. It could also be, you know, that they've saved enough to retire earlier than 70. And so they're at that point.
happy to walk away because they've put in their time, they're ready to dial it back a little bit and live their life outside of work.
Mm hmm. Okay. So most of the time, people end in this sort of range of 60 to 65, because it sounds like because either they're not ready to give up what's taken up most of their life like their their life's work, or they health or family, you know, family, enter the picture, so they decide to retire a little bit early.
And it just happens to be that 60 to 65 is a lot less expensive to retire. So it sort of all works out. But what I'm hearing you say is while you should be prepared to retire when you think you want to be, right? Because if you do end up needing wanting to retire at 50 and you don't have the money, you don't have the choice and you can try to be prepared. But at the end of the day, life dictates when you're going to retire. And usually.
life puts you right in that 60 to 65 year old range. Is that what I'm hearing you say?
Speaker 2 (22:34.083)
Yep.
Speaker 1 (22:38.774)
Okay, well, that's kind of anti climactic, but I think that's important for people to have a real look at what we actually see people do versus their goals early on in their career. Do you have any last thoughts? Anything else you want to add, Chelsea?
Yeah, I think I just want to reiterate the big takeaway. What I really want people to understand with this, especially if you are one of the people who want to retire early, maybe your 40s and 50s, that's okay to do and you can do it as long as you understand what it takes. You know, it's easy to say that you want to retire early, but it's an entirely different thing to actually do it.
So the retirement date that you plan for is really critical because it impacts your work-life balance. know, retiring early requires resources, the time and the money that we were talking about earlier. And so if you use your resources to retire early, that's taking away those resources from another part of your life. And if you're okay with that, then, you know, go for it. But as long as you understand the impact of retiring early.
I think it's important to understand that before you move forward with actually planning for a goal like that. So just going in informed, so that way you're not hit with some surprises, some maybe not so good surprises.
Yeah, some tough realities. Yeah. Okay, great Chelsea. Thank you for joining us today and spreading your wisdom to our listeners. That's it for this episode
Speaker 2 (24:21.929)
Thank you. was my pleasure.
Speaker 1 (24:26.126)
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