A New Model for Planing Physician Retirement Needs

Understanding Age Banding

By Ann Miller RN, MHA

[Executive Director]

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  • Age Banding [author]
  • Somnath Basu PhD, MBA  [www.clunet.edu/cif]
  • [Director California Institute of Finance]

Link: AgeBander




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5 Responses

  1. Age Bander

    The Age Bander method described by Dr. Basu illustrates an important concept that many retiring physicians do not understand. It is a common mistake to assume that once you enter retirement, you are currently spending your portfolio, so it all needs to be “safe” from a volatility standpoint.

    I point out to my clients that at the time of retirement, they still have a long-term time horizon for a portion of their portfolio – the portion that they will be spending ten years, twenty years, or more in the future. That is why they still need a healthy allocation to the growth portion of their portfolio.

    Brian J. Knabe MD CMP™


  2. About Dr. Basu

    Dr. Basu is a Professor of Finance at California Lutheran University and the Director of its California Institute of Finance. Dr. Basu is also a Professor of the Helsinki School of Economics Executive MBA Program. He earned his B.A. in Economics, University of Delhi, MBA (Finance), Marquette University and a Ph.D. (Finance), University of Arizona.

    Dr. Basu is extensively published in the field of investments and financial planning and is an award winning teacher. He has significant consulting experience with US Fortune 100 companies, advising institutional money managers and in developing proprietary personal investment software. Dr. Basu is actively involved with financial planning organizations including the National Endowment for Financial Education (NEFE), the CFP Board of Standards, International CFP Board and the FPA.

    He coauthored the book (with Block and Hirt), “Investment Planning for Financial Professionals” McGraw Hill, May 2006 which is widely used by financial planning programs nationwide.

    Ann Miller RN MHA


  3. Physicians Delaying Retirement Because of Recent Recession

    Many physicians who had planned to retire and see more of their grandkids are still seeing patients, according to a survey released last week by the healthcare recruiting firm Jackson & Coker. The number one reason why physicians are delaying retirement is the recession of 2008-2009, which wreaked havoc on their investment portfolios and net worth, the survey states.

    Of 522 physicians who completed the online survey, 52% said their retirement plans had changed since the onset of the recession. Of this group, which included physicians of all ages, 70% said they planned to work longer so they could make up for the downturn’s pernicious effects on their investments.

    Source: Robert Lowes, Medscape Family Medicine [8/8/11]


  4. Age-Bander

    Dr. Basu has done a lot for the financial planning industry in helping people think differently about spending patterns in retirement. Rather than doing a simple ratio of expected future expenses as compared to current living expenses and lumping 30 to 40 years of retirement into one big event, Dr. Basu breaks down retirement into age bands that make more sense. It is common sense that the more active years of retirement will be the early years and that more funds allocated to spending and enjoying retirement should be made.

    The current investment environment of low interest rates does not favor the traditional advice of moving more funds to bonds when in retirement because that is “safe” money. Coupled with Dr. Basu’s age banding approach, physicians should consider more dividend paying equities in their portfolio as an alternative.

    David K. Luke MIM
    Certified Medical Planner™ candidate


  5. Age Bander

    I really like the Age Bander retirement model which is easy to understand in terms of biases. I would love to see it implemented into an smart-phone App. Then, anyone might simply plug in their actual expenses, for which they control, to extrapolate a more accurate prediction for their future needs.

    Ken Yeung MBA CMP™ candidate


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