Most of us are preparing for our retirement in one way or another, whether through consistent 401K contributions or by developing some passive income streams. However, if we’re honest with ourselves, most would agree to feeling at least a little unprepared, while some even see retirement as a huge source of stress. So what does it take to truly feel confident in the idea of living out our retirement years in comfort?
Well, the 2016 Report of U.S. Physicians’ Financial Preparedness, a report published by the AMA insurance company, discovered that the physicians who actually feel they are well prepared (or are even “ahead of schedule”) for retirement share some key characteristics. The interesting part is that not a single one had to do with age or stage of life.
According to that report, here are the five most important characteristics of well-prepared physicians:
1. They have a good knowledge-base about personal finance. As doctors, we know how to increase our knowledge on a particular subject (we made it through med school, after all). It requires dedication and effort. Do we put in even a small fraction of that same effort into learning about personal finance? The good thing is, there are ample resources if you want to learn more. Books, blogs, podcasts–they’re all out there waiting for you.
Related: 10 Podcasts Doctors Should Really Be Listening To
2. They carry less debt, particularly consumer debt (credit cards, mortgages, car loans, home equity loans). This one may seem obvious, but it is a hugely important point. Student loan debt is unavoidable for most. However, being conscious of the other debt in your life and keeping your spending under control can make all the difference.
Related: Good Debt, Bad Debt
3. They max out tax-advantaged retirement accounts annually (401k, 403b, Roth). By contributing to the max limits of these accounts, you can benefit in a multitude of ways. You not only force yourself to save for the future, but you’re also able to take full advantage of what tax benefits the government allows.
4. They have estate plans in place (living trust / will, medical and end-of-life directives, power of attorney). Thinking about the future will inevitably make you realize that if something happens to you, you want your family to be taken care of. This is absolutely vital. The last thing you want is a court deciding your future and also how to split up your assets.
Related: What Doctors Need to Know About Estate Planning
5. They plan to retire sooner. Having a game plan dramatically increases your chance of success in most every aspect of life. This concept is seen in the world of sports, finance, education, and more. Obviously, you have to be flexible enough to weather unexpected changes, but you should never take your eyes off the prize.
Related: Why I’m Beginning My Retirement Today in My Thirties
Are you ahead of the game? Do you fit these criteria? If not, there’s no time like the present to begin making preparations for your future. If you already feel confident in your long-term plan, I’d love to hear about it!
Fascinating read! I’m not suprised at all actually. That makes sense. This probably applies to the general population of FIRE fighters. It’s nice to know money savvy tops the list instead.
Yeah, nothing too crazy, but just shows you need to know the basics.
I am realizing that it is also very important to know what you want to do with all that free time…
So true… wish I had more free time!
Living will and the POA stuff are topics that many of us put off taking care of. I still have to get my stuff in line too. You never know when/if you need it.
It’s hard because there seem to be an endless number of things to prepare for. However, I try to cover the basics and estate planning is definitely one of them.