Behind on Retirement Savings? Here's How to Catch Up

Dennis Murray, MA


July 31, 2014

In This Article

The Future Starts Creeping Up On You

Time flies. Before you know it, you're 50 (or older) and feeling every bit your age. Now is about the time, too, when retirement, once a pipe dream, is fast approaching. Five, 10, maybe 15 years may seem a long way off, but think about how quickly the past years went by.

In the whirlwind that surrounds most doctors' lives -- seeing patients, running a practice, volunteering, making time for family and friends -- focusing on saving for retirement often takes a backseat. Months turn into years, and you wake up one day with the realization that you haven't been socking enough away.

Even if you're young and many years from packing away your lab coat, the sage advice in this article can help you keep pace with where you need to be -- and pave the way for a great retirement.

 How Much Will You Need?

You can't begin to know how much you'll need to live on in retirement unless you do some projections -- either by using one of the many online retirement savings tools (such as those on the Websites of most major mutual fund companies), or having a heart-to-heart with your financial advisor.

Ask yourself what you want to do in retirement. Will you be content to read the newspaper and putter in the garden, or do you see yourself playing endless rounds of golf and doing some serious globe-trotting?

The latter lifestyle is going to cost you quite a bit more than the first -- perhaps twice as much. That's where your financial projections come in.

If you expect to live lavishly in retirement and are behind on your savings, "you have no choice but to be aggressive and increase your contributions," says Robert M. Doran, a principal with Infinity Wealth Management in Wantage, New Jersey. "Anything you put away for retirement needs to go into a tax-sheltered account, and contribute the maximum allowable, if you can. If you get a tax deduction on top of it, such as with contributions to a 401(k) plan or certain IRAs, that's icing on the cake."

And, Doran says, if you're over 50 the tax law allows for annual "catch-up contributions" beyond the usual IRS limits.

A good advisor may ask you about things that a computer program may not, such as whether you have enough insurance to cover you in the event of a crisis.

"If your number is $1 million and you become disabled, and your disability policy is inadequate, then the number doesn't really matter," says Bill Cleveland, a principal with Preston & Cleveland Wealth Management, with offices in Georgia, South Carolina, and Tennessee. Without good insurance in place, he says, you might be forced to eat into your retirement savings, which could throw off your whole plan.

For the purposes of this article, let's assume a traditional retirement age of 65 and examine some strategies for doctors who are behind on their savings goals with 5, 10, and 15 years until retirement, respectively.


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