The Benefits of Owning a Practice When Evaluating Retirement

August 22, 2016

When you plan for retirement, you'll find that owning your practice has a lot more benefits than being employed.

Retirement. One day it will happen to all of us. Maybe you decide to retire based on your physical or mental health. Maybe it's something else.

Whatever the case, hopefully you leave the practice of medicine with enough in your retirement plan so that you do not have to change your lifestyle. If you can work until age 70, you receive the maximum Social Security allowed. Retiring early will get you full Social Security but those extra few years can add a lot of income for the future. 

You have to ask yourself a few questions. Who managed your 401K or employer vested retirement plan? Was the money in stocks, bonds mutual funds, and did it grow over the years? How much money do you need at retirement? I can recall reading articles estimating you need at least $1 million or more in funds. What debit do you still have in mortgage payments, loans etc.?

All these factors need to be considered before you stop practicing. But what if these factors are not in your control. You belong to the hospital 401k plan, which means only 9-12 percent went towards retirement and the plan options were poor and the money grew slowly over the years. Your salary did not go up a lot and the performance bonuses were small, so your plan did not get enough in contributions yearly. The hospital wants you to retire, but if you do you will be short financially.

A local colleague of mine was an employee of one of the nearby hospitals. The hospital decided to create a larger primary-care group combining his practice with two others. Shortly thereafter he was informed that his services were no longer needed and terminated. His contract has a non-compete clause for two yrs so he would have to travel way outside the area to practice or just relocate and sell his home. He did get a part-time job teaching at the local junior college. Another retired physician is now driving a school bus for supplemental income.

Owning your office means you decide with a financial adviser where to invest your retirement income and when is the best time for you to retire and at what age you choose to do so.