Goal-based retirement planning is different from longevity planning.
It was Socrates who said, “An unexamined life is not worth living.” Might it also be true that an unexamined retirement is not worth living as well?
Please don’t take this to mean retirement isn’t worth living.
What we are looking at is the need for this major event to be objectively examined. We have all been disappointed at one time or another with an experience only to realize it didn’t live up to our concept of what we expected. The unfulfilled expectations were caused by an unrealistic concept.
Perhaps the immensity of what retirement signifies is so monumental, that it is too overwhelming for our brains to logically contemplate. Consider, after you have studied to qualify for your specialty for one-third of your life and, were successful at your profession for another third of your life, suddenly everything will stop as you have always known it.
The question arises: “What will I do with the last third of my life?”
The very identity of who you are, in large part, is an ophthalmologist—an active, meaningful, medical professional. You are an experienced and respected doctor taking care of others and living on a schedule that is jammed from morning to night. People all around you depend on you. You are needed and important and up to big things. In fact, you are continually studying and learning about new procedures. If you aren’t a practicing physician any longer, then who will you be? Will how you relate to others and how they relate to you be altered?
Retirement reminds us of a roller-coaster ride that pulls across the finish line and suddenly stops and you climb out. This is some contrast.
In our industry we love numbers so, let’s look at some. There are 10,080 minutes in a week. If you are blessed, you get to sleep for 3,360 of these minutes, hopefully uninterrupted. This will leave us in retirement, 6,720 minutes, or more manageable, 112 hours a week to fill. Conceptually, you think that you may be playing golf (3 x/week for 15 hours), boating (5 hours), walking every day (14 hours), playing bridge (3 hours), seeing the grandkids (10 hours), and traveling (max 2 months). Not counting the vacations, this still leaves 65 hours a week. Remember, the office and surgery keep you busy about 60 hours a week, but this is 65 hours a week you have to fill with no practice to go to.
In other words, how will you fill all day next Monday? Then Tuesday…
Our point is that rushing into and living just for retirement may not be what a healthy individual would want to rush into if they thought about it carefully. Although we have seen ophthalmologists do it on rare occasions, it isn’t an easy endeavor to retire and then a year later, decide it was a mistake and go back to work again.
We are now hearing that today’s 70 year old is the new 50 year old. If this is so, the concept of retiring at 65 may be out the window.
Goal-based retirement planning is different from longevity planning. Holistic retirement planning takes care of the obvious needs first, that is aiming for financial independence, without which you can do nothing. However, this is incomplete as there exists a gap between the financial side and the emotional side of retiring. True retirement planning includes the physical and emotional, as well as the financial needs of retirement.
From our 25 years of observation, it appears it would be prudent for pre-retirees to think and re-think how they will fill their days.
“I’m bored,” are words we often hear from retired doctors. They actually say things like, “How many times can I play golf?”, “How many luncheons can I go to?”, “How many walks can I take up and down the beach?”, or “I don’t feel like I matter anymore.”
In fact, Joseph F. Coughlin, PhD, founder and director, MIT, AgeLab, interviewed retired CEOs in Florida. Interestingly, most retired corporate CEOs live in Naples, Florida. In these interviews, he said 60 of them reported they were unhappy in retirement.
One of Coughlin’s suggestions is to try two exercises before actually retiring:
First, ask yourself what you now do when you are not working. If you have things to do around the house, as he says we all found out during COVID-19, there are just so many times you can paint the rooms. In six months’ time, most of or all the items on your to-do list will be completed.
Second, he suggests that you go to an Airbnb and stay there for 3 weeks. See how this feels to you. We agree with him when he says it is a mistake to think of retirement as a vacation. It is not. It is life happening with lots of time on your hands.
We had one world-renowned, eye-surgeon client who privately confided to us, “retirement is getting better, I now dream of operating only 1 or 2 nights a week rather than every night.”
We aren’t trying to paint a dismal picture of retirement because we do have many retired ophthalmologists who are having the time of their lives.
We hear comments from them like, “I love having no schedule” or “It’s so great not to have those responsibilities anymore.” Many doctors are out skiing, boating, exercising, driving their RVs, and finally doing many of the things they hadn’t the time for before retirement. Some are making furniture, playing music, or creating art. Some make their investments a hobby for them, others work part-time or teach. Many have second and even third homes that they enjoy. Some have become more physically fit than they have been in 20 years. So, there are these doctors as well.
Our point is to “examine” retirement as realistically as you can. Yes, there is golf, skiing, travel, socializing, exercising, biking, boating, flying, etc. But this still leaves a life to be lived in between.
It would be remiss of us not to spend a paragraph on the financial side of retirement. Guessing is no way to plan for retirement, as hoping or guessing is the very antithesis of planning. After all, even if you choose not to retire early, it would still be reassuring to know that you could.
Our strongest recommendation is to become as solidly grounded as you can in the financial realities regarding your future retirement. You will have enough to deal with in retirement without creating the additional problem of worrying about money. Through comprehensive planning, you can get perfectly clear when you can retire without financial worry and with a high enough probability of never running out of money, while still living the lifestyle you have become accustomed to. It is critical that you discover if you are over- or under-allocated to equities or other risk investments as dictated by your specific circumstances and plan.
Our philosophy that has proven true over the decades is never take on any more risk than is absolutely required to meet your goals. If you achieve your stated objectives with a 50/50 allocation between equities and fixed-income, then why take the risk of a 70/30 allocation. Mathematically, find out if you are saving enough or too much toward retirement. Use a budget sheet to realistically calculate your retirement expenses, both essential and discretionary.
And, our advice: don’t use the antiquated rule-of-thumb that you will only need 60% of your current expenses in retirement. In our observation, this just doesn’t work. Our clients spend the same, if not more in retirement at least for the first 5 to 10 years, than before they retired.
Carefully and meticulously construct a viable plan for retirement. This plan, once developed, is your blueprint for the future. Jointly with a financial professional, monitor it throughout the years, making any adjustments that are necessary to account for changing inflation, politics, economy, health issues, and of course according to Murphy’s Law, the “Black Swan” event that you can almost depend on right at retirement. Imagine retirement in 2000, 2008, or March 2020?
Build a moat around your investments to help insulate and protect against the unforeseen. Put in place a lifetime, guaranteed recurring income stream so that you will continue to receive a monthly paycheck in your new lifelong profession. This cash flow will take pressure off of your portfolios by reducing the percentage of withdrawal. Plan for long-term care using some of the newer approaches and policies.
Our friendship with so many retired ophthalmologists has taught us that one should be more reflective about the realities of retirement before retiring.
As you can see in this article, there are many facets to retirement and these issues deserve your attention sooner than later. You can even candidly talk with other retirees about their experience, but beware, they may not be totally honest with you. After all, if they are living the conceptual retirement “dream,” how could they possibly complain? And, talk to your spouse or partner if you have one, and see what their optimal retirement looks like.
Retirement, like anything worthwhile in life, takes planning. Being prepared for both the financial and emotional challenges that can await you in retirement will help assure that this last one-third of your life will be spent as the most rewarding. If you spent one-third of your life preparing for your profession, doesn’t it make sense to spend some reflective time and financial planning effort to plan for what should be the best years of your life?
Begin now to think about what the perfect retirement would look like to you. How will you fill your days? Be prepared!