Most of the words written about retirement focus on building a nest egg, but those who hope to retire someday must also plan for non-monetary considerations.
As we plan for retirement, many of us are understandably focused on income needs and sources. How much money you’ll have—and how much you’ll need—is obviously critical to a successful retirement. But focusing only on income and expenses can blind you to other essential considerations, including some that may end up having a truly significant impact on when you can retire and what your quality of life will be when you head for the sailboat, the Winnebago, or the beach, or the golf course.
With that in mind, let’s take a look at an oversimplified list of major decision categories you’ll want to consider as you near the big day, in two parts.
Our first item up for consideration is a bit of a cheat, because the eventual sale of your practice may be the single biggest factor in what your retirement income will ultimately be for some dentists, despite the risks to relying on the sale of the practice as your sole source of retirement income. For others, however, who may be leaving the practice to a family member or a group of partners, what happens with the practice may not necessarily be your biggest consideration. Make it one. No matter your situation, you’ll want to ensure that you answer the big questions about your practice long before the siren call of retirement lures you in.
Health Coverage and Costs
This should be obvious to all, much less someone who works in the healthcare industry. But you’d be surprised how often even dentists fail to consider future health considerations and the impact they may have on your retirement income and quality of life. Before you retire, thoroughly and honestly assess the health of yourself and your immediate family members, consider items such as long-term care insurance, and don’t take it for granted that good health now will continue to eternity. Father Time is remarkably consistent in his ability to mess with people’s health as they age.
Lifestyle Needs and Changes
Estimating how much income you’ll need involves projecting out the kind of life you envision for yourself and your family when you retire. That lifestyle may involve traveling Europe, the going on safari, and wiggling your toes in the black sand beaches of the Caribbean. But it could also involve a lot of lower-cost activities like gardening, cooking, and reading. They key in anticipating your lifestyle in retirement is including flexibility. You may find that extra free time didn’t motivate you to become the homebody you expected to be. In that case, you’ll want to have the flexibility to increase your monthly spending without the very real and disturbing threat of running out of retirement money before that sudden desire to travel has been satiated.
Unless you plan to go back to work post-retirement, you’ll have much more leeway in your expenses than you will in your income. While you have a higher income now, consider whether building in that additional flexibility, even if it comes in the form of sacrifice now, might be wise.
In part 2, we’ll look at estate planning decisions, life insurance needs, and an unexpected factor that retirees often fail to consider.