The end of any year marks a good time to see where you stand and what you might need to change in terms of achieving your retirement goals.
The end of any year is a busy time for dentists, with the demands of the holiday season, closing out the 2016 fiscal year, and budgeting and planning for 2017. But if you are nearing retirement, you may want to try and squeeze in one more consideration: taking stock of your retirement planning, where you stand, and what you may need to adjust.
The allure of your pending retirement can sometimes seem overshadowed by the uncertainty around these next few years. Will you find the same sense of fulfillment when you’re no longer caring for patients? Will you struggle to keep yourself occupied without the daily purpose of work? And, perhaps most important, will you have enough money saved to make your retirement enjoyable? The first two questions are difficult to answer, and the third is no bargain either. But there are steps you can take as you near that projected date that can help you make sure you’re ready.
Play catch-up. If you got started on your retirement savings late, and now you’re 50 or older, you can contribute as much as $24,000 a year to workplace retirement plans such as a 401(k) or 403(b) in 2016. You may have heard that the maximum contribution is $18,000 per year, and that’s true since 2015. But you can contribute an additional $6,000 if you’re over 50. If you’re in position to max out your contributions, that’s a good chunk of change to add to your nest egg. For those dentists who might want to save even more, you can look into a Roth IRA, although you may be near the maximum income for people who are able to contribute to one. Talk to your advisor about this and other potential strategies.
Aim for a higher return. Yes, your investments should gradually shift from more aggressive to more conservative as you get closer to retirement. But that doesn’t mean you have to become ultra-conservative, especially if you’re interested in building extra income. You may want to think about keeping some of your investments invested for growth.
Consider a part-time job. Though it takes a little bit of the shine off the idea of being unencumbered, a part-time job is a necessity for many retirees, and a way to stay sane for many others. Having a flexible role that you can go in and out of will still allow for travel and time for hobbies, while helping pay for some of those hobbies and helping you keep some of your retirement savings still earning rather than being spent. Certainly, your skills as a dentist will allow you to pursue ongoing work in the field, perhaps filling in for local dentists looking for time off. But you should consider other pursuits as well.
Find the floor. Before you retire, make sure you know the absolute bottom of the range of income you’ll need to cover basic expenses. Then, measure this against your projected income, including all retirement plans, other investments, and Social Security. Does the math work? If it doesn’t, while you’re still earning is the time to talk to a financial advisor about the strategies available to you.
One you’ve made the leap, adjustments won’t be as easy, and your earning window will have closed. Look now so you can act now.