Retire by 50: How to Manage Your Finances to Retire Early

Dennis G. Murray, MA


August 16, 2017

In This Article

Age 55: Hopping Off a Speeding Train

By age 55, your medical practice or position within a hospital or organization will likely be well-established, your kids may be grown and out of the house, and your mortgage may be either fully paid or close to it. These are all positive factors to help make your dream of retiring early a reality. As financial planners are quick to point out, things like high levels of debt, or the costs of caring for children or elderly parents, can quickly throw even the best-laid retirement plans off the rails.

The same advice for physicians who want to retire at age 50 applies here as well: Think about how you plan to live in retirement, and crunch some numbers with your financial adviser. If you're considering tapping your retirement plan or plans to meet your budget, the good news is that under certain conditions, you can begin to take equal periodic distributions without a 10% penalty. Some restrictions do apply, however, so you'll need to discuss this with your financial adviser and tax preparer.

"Young doctors should be working with a trusted adviser to estimate how much they'll need to fund the kind of retirement they want, and then put a realistic plan in place to get there," says Hearn, author of The Bell Lap: The 8 Biggest Mistakes to Avoid as You Approach Retirement (Provisio Publishing, 2013). "If someone asks them when they want to retire, their answer should be a dollar amount, not a year."

How to Make the Money Last Past Age 55

As an early retiree, age 55 or otherwise, you should always have a cash cushion that will cover a few years of living expenses in case the stock market is trending downward on the day you retire, so that you won't be forced to sell when prices are low. Investors who see their portfolio shrink in the first few years of retirement may have to make some adjustments, such as spending less in subsequent years, to make their nest egg last.

"For your financial plan to work, it may be better for you to continue to work a bit, even if your income drops and you're not saving as much," suggests Dr Greenwald. "This may allow you to delay tapping your nest egg to live on."

In addition to a mix of stocks, bonds, and fixed-income investments, physicians who hope to live decades in retirement may want to think about further diversifying into shares of free-standing imaging or surgery centers, for-profit hospitals, or commercial real estate. With the right amount of research and due diligence, these "passive" investments can be very lucrative for many older physicians, says Kathy Stepp, CPA, CFP, a founder of Stepp & Rothwell, a financial planning and investment advisory firm in the Kansas City area. The only downside is that you'll likely be a silent partner and can't get out of these sorts of deals quickly, should you need to raise cash in an emergency.

"Nearly all of our surgeon clients have been approached about investing in a surgery center," Stepp says. "And they've been cash cows for these doctors."


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