Ready for Retirement but Your Portfolio Isn't? Get on Track With a Financial Plan

Joel S. Greenwald, MD


October 27, 2021

You're trying to figure out if you're on track to retire. You're not sure if you've saved enough to retire in 5 years like you wanted. Or perhaps retirement seems decades away. Or, even more stressful, you may not know at all when you might be able to retire.

For some, retiring in comfort seems like the impossible dream…but it doesn't have to be that way. If you're not sure what to do, don't panic. There are steps you can take right now to help you gain financial independence in a reasonable amount of time.

What if Financial Independence Seems Hopeless?

As an example, let's say you're 60 and have been in practice for 30 years. After this exhausting pandemic year, which keeps on going, you'd like to be finished with clinical practice. But the numbers don't work. Now you're even more stressed out.

First off, this is not uncommon, especially with docs who have been divorced or who got a late start in medicine. Others fall behind because they largely ignored retirement savings early in their career. There are many reasons why you may be off track, and you're not the only one.

You Know the Hard Facts -- Or Do You?

Let's back up a bit. How did you determine that you can't retire when you'd like? A big mistake people make is checking an online retirement calculator. Just think of how many patients go online to identify an ailment and become convinced that their condition is worse than it is! Not a great idea, and the same applies here.

There are countless online retirement calculators, with some more reliable than others. Besides, maybe all the assumptions you filled in don't meet reality — and small differences can have a major impact on the results. For example, what did you fill in for your assumed rate of return for the portfolio, inflation rate, and spending per year in retirement? 

If your guesstimates are wrong, it's the perfect example of garbage in, garbage out. Before you conclude that you're in trouble, make sure your projections are accurate. It's best to gauge your financial health with professional advisors, not Google.

What to Do if You're Not on Track

Maybe you're not wrong. You've met with your professional advisors and what you feared is, in fact, true: You're not on track to retire when you wanted. If this is the case, you have options. As you may have guessed, you can spend less or work a bit longer. But it's not necessarily one or the other.

What do I mean? Compromise is often the best solution. I work with clients on decreasing their spending on low-priority items, while at the same time showing how working a bit longer — maybe not even at full capacity — can make all the difference. 

Let's walk through the two main options we've discussed.

Option 1: Spend Less

Here's where you can start. Break your spending into two buckets. The first bucket holds necessary expenses such as housing costs, food, and healthcare. The second holds discretionary expenses that are nice to have but aren't really that important to you. Now let's look at the discretionary bucket by showing some of the changes my clients have made to free up more money for retirement savings.

Driving more modest cars. One of my clients was set on retiring at age 50. One of his pleasures was driving late-model European cars. But when he looked at his priorities, the cars didn't matter as much as not working at a practice he hated. The result? He retired at 50, is content at 60, and he doesn't miss those cars that ate up so much of his income.

Supporting your children. Many of my clients help out their adult children from time to time. But if it's a problem area, you and your spouse should plan for how you can reduce or even eliminate this spending. Communicate your plan clearly with your children so they can adjust their budget or find ways to earn more so they no longer require financial help from mom and dad. 

Traveling. You don't need to totally give up traveling, but economize where you can. Do you travel first class? Do you stay in the highest-class hotels and dine out in the most expensive restaurants? London, Paris, and Rome won't be any less spectacular whether you stay at a three-star or a five-star hotel. 

What I'm saying is that even modest changes in spending, such as a few hundred dollars a month, can have a big impact. 

Option 2: Work Longer

If you've lessened discretionary spending substantially but it's still not enough, you can explore scenarios for working a few more years, at least part-time. Similar to making small adjustments in spending, working a little while longer (even at a lower income) can make a big difference. This can be a big relief if you want to retire sooner rather than later but you're behind in your savings. 

With the additional income you can delay when you start tapping into your retirement portfolio, giving it additional time to grow. My point is that you'll decrease the number of years your savings will be the sole source of income beyond Social Security. 

Option 1? Option 2? It's Best to Be Flexible

What should you do? It depends. I can't tell you how to weigh cutting spending against working longer because it's a very individual choice. Economizing may be easier for you, whereas others are happier extending their careers. In the end, it's your decision how to balance your current needs with what you want in the future. 

So, here's the lesson: Run the numbers in a reliable way. And don't panic if it still doesn't look like you're on track to be financially independent when you had hoped. A little flexibility in your spending and work plans can make all the difference and give you confidence that you can meet your goals within a reasonable length of time.

The above article is intended for informational purposes only. Please consult a legal or tax professional regarding your situation.

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About Dr Joel Greenwald
Joel S. Greenwald, MD, is a graduate of the Albert Einstein College of Medicine in Bronx, New York, Joel completed his internal medicine residency at the University of Minnesota.

He practiced internal medicine in the Twin Cities for 11 years before making the transition to financial planning for physicians, beginning in 1998.

Joel's wife is a radiation oncologist, making him all too familiar with the stress of medical practice.

Knowing firsthand the challenges of practicing medicine, Joel's passion is making the lives of physicians easier by helping relieve them of financial worries.

Connect with him on LinkedIn or on his website.


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