How Much Money Do You Need to Retire?

 “So, how much money do I need to actually retire?”

The question of retirement came up when we were at the American Academy of Ophthalmology conference in Chicago speaking with a group of eye surgeons. The moment it was asked, I was thinking to myself how am I going to give him a simple answer for this because are so many variables that come into play. He was looking for an exact number. For any fee only financial planner out there, we all can share the same sentiment…it’s like where do we begin, which layer do we start with.

Is there a specific dollar amount that has to be achieved in order to be able to make it? You may have heard $3M or $5M or some other number. Well there are two different numbers to consider. There’s the amount you must have saved by retirement and there is the total amount of spending over the course of retirement with the latter being much more significant.Surgeon Details

In this surgeon’s case, he had been working for about four years, had been maxing out his retirement plan, had profit-sharing from the practice and was saving on the side. He already had purchased a nice home and was contributing toward his kids’ college funds.

In order to get into all of the variables that are required, let’s discuss the questions that need to be answered first.
It starts with when a doctor plans to retire. How many years do they have left to save? How much have they already saved and at what rate are those savings growing? What is their income goal for retirement and how many years of income are they anticipating? For someone who is in good health and comes from a family that did not have many health issues, we typically start by looking at needing enough income to make it to 90. With the advances in health care we have to be careful because one of the biggest risks nowadays is outliving your assets.

Read this: What Your Kids Can Learn About Financial Commitment & Health from You

Other Factors

What else do we have to take into account? What’s reasonable to assume for inflation, income taxes, healthcare costs, education rates, political or economic changes? What about social security? Should we assume it will payout at current levels or none at all? As you can tell there are so many ways to set the variables that every person is going to be in a unique position. There are no two doctors who are alike.

It’s for this reason that we suggest you connect with a fee only financial planner and investment advisor who can walk you through each of these items and give you an idea of whether or not you are on track. Keep in mind the fiduciary standard as you talk with a potential advisor. You may have heard of it before. This is an advisor who is working for their client’s best interests not theirs, nor their employers or any outside influence. This puts you in the best position to get independent and objective advice.
They can give you an idea of the probability of success you’ll be able to reach your goals based on what your current plan looks like and provide recommendations for ways to either get back on track or be able to do it in a more efficient manner.


Planning for retirement is one key area of several others in the development of your financial plan. The others that come into play are income and cash flow, debt repayment, tax reduction, investments, risk management and estate planning. All of them are significant and impact the momentum at which you can achieve your retirement goals so keep them in mind as you analyze the question of how much do I need to save to retire.
As you read any of the financial preparedness surveys designed specifically for doctors what you’ll find is the concern of having enough money to retire is usually in the top 3 among all age groups. There’s no better time than now to start planning your future since the more years you have to do it, the easier it can be.

Related: What Physicians Need to Know About Cash Balance Plans

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