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What if You Are Behind Your Target Goals?
By: Alexander M. Kimura; MBA, CFP®
By: Robert J. Greenberg; CFP®
By: Richard P. Moran; CFP®
The stock market has been in a terrible place for your money and retirement planning, since October 2007. Perhaps even the last decade or so for some physicians. But, if none of your assumptions have changed and you feel that you can make up the difference in the next year, you probably can use the same retirement cash flow plan. As a rule of thumb, if you’re less than 10 percent off of your goal, you may not need to do anything. This is rare in the investing climate today!
So, if you have fallen so far behind that each year’s target seems unachievable, you will probably need to make some changes. However, before you change your planning and investing, you need to see why you’re behind.
Examine Expenses
If you haven’t saved as much as you expected, take a look at your expenses [personal and office] and see where you can cut down. Remember, you need to pay yourself first before you spend on luxuries. Contribute as much as possible to your qualified retirement plan at work, too.
Examine Returns
Next, you need to look at your investment returns. Since the stock market has been in one of its inevitable “corrections” for several years, this can significantly impact your balances. Remember, your return assumptions are based on averages that should include the bad and good years. If you’re close to retirement and have a large shortfall, then you may need to increase the risk in your investment portfolio in order to meet your goals. If the market falls more, or stays down for some time, increasing risk by buying more stocks forces you to “buy low” which should pay off over time.
Assessment
As a doctor, you can always delay retirement and work a few more years. Fortunately, medicine is one profession where experience earns an economic premium.
Conclusion
And so, your thoughts and comments on this Medical Executive-Post are appreciated. How will you make up any retirement shortfall? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.
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Filed under: Recommended Books, Retirement and Benefits | Tagged: Alexander M. Kimura, David E. Marcinko, retirement benefits, retirement planning, Richard P. Moran, Robert J. Greenberg |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Changes coming to the retirement system,
The financial crisis of 2008-09 dealt a huge blow to all US retirement savers’ 401(k) accounts. Now lawmakers are pushing for new retirement-plan rules and policies. This affects all medical professionals, as well.
http://www.fa-mag.com/fa-news/5094-changes-coming-to-us-retirement-system.html
Charles
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Excellent article on retirement cash flow
http://www.fa-mag.com/online-extras/5096-managing-retirement-income.html
Perhaps too theoretical, however. And, I prefer a draw-down rate of 4% for doctors.
Joe
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Great Advice – NOT
As I understand the article noted above, one should keep about 2 years of cash and 3 years of bonds available for liquidity in the first five years after retirement. Equities are for the longer term; thereafter.
But, what if someone retired in 2000? This person would be running out of cash in 2005, and since we’ve had a decade of essentially flat or negative equity returns, this retiree would be hurting in 2010.
And, what about the next decade; not a great start thus far! Any thoughts from our financial advisor readers?
Just a Happy Doctor
[Who didn’t listen to his financial advisor]
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On Retirement for Physicians
HL Mencken noted back in 1922 that occupation matters:
If he got no reward whatever, the artist would go on working just the same; his actual reward, in fact, is often so little that he almost starves.
But, suppose a garment worker [like a doctor] got nothing for his labor: Would he go on working just the same?
Can one imagine his submitting voluntarily to hardship and sore want that he might express his soul in 200 more pairs of ladies’ pants [patients]?
Think abou it!
Dr. David Edward Marcinko; MBA
[Publisher-in-Chief]
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