Essentials To Planning For A Successful Retirement
The fantasy of retirement is one which many people occasionally turn to in order to get through the difficult stretches of a workday. The warm, sandy beaches of the mind are crowded with reclining metal chairs and the residue of tropical drinks that have no name, fishing poles bent in the direction of luckless mahi-mahi, and thousands of flip-flopped feet, attached to dozing, lotioned bodies. The reality of retirement, however, can knock the taste of salty air right out of your mouth. There are no true statistics that can tell how many of us are financially underprepared for our winter years, but rest assured there are likely more than any Gallup Poll could possibly reach. Medical practitioners also must be aware of the challenges their chosen profession poses for successful retirement planning. No one wants to work forever, but how can you tell if you have the financial wherewithal to stop working? “Traditionally, a well-conceived retirement plan consisted of tax reduction planning, various insurance matters, investing and portfolio management, practice succession and estate planning,” explains David Marcinko, DPM, MBA, a healthcare economist. “For modern physicians, these disciplines and many more must be incorporated into the mix, and in a managerially and psychologically sound manner that is not counterproductive to individual components of the retirement plan. As a sobering caveat, the integration of these protean disciplines is no longer an academic luxury, but a pragmatic survival imperative.” Should You Sell Your Practice? The first retirement investment most DPMs consider is their practice. However, there are pros and cons involved in the selling of a practice and a number of nuances to consider. “One of the largest assets that any podiatrist will have will be the equity built up in his or her practice,” says Steven Peltz, president of the New York-based Peltz Practice Management and Consulting Services. “For podiatrists just opening their own practice, they must see the practice as an investment, similar to an IRA or a pension plan and take care of it as such. They must reinvest in it. Ten or 20 years later, when they have a new partner buy in, they’re going to start to get some of the equity that they’ve built up come back to them.” The same holds true, Peltz notes, if they’re joining an established practice. “The payments a new doctor makes to the senior practitioner is the investment he or she is making in establishing the practice,” he says. Peltz says you should think about how to improve the practice. You also must consider how to build the practice so it’s big enough for you to bring on another DPM five or 10 years later when you are ready to bring in a partner. However, Dr. Marcinko urges caution when contemplating the sale of a practice. “Practices are quickly diminishing in value today and the future is uncertain,” he explains. “Some 40 percent of all allopathic physicians are currently employees. This trend is increasing as reimbursement is decreasing. It is a bit different for most podiatry practices that are smaller, more collegial and informally modeled. You also may or may not be able to sell your practice upon retirement, or you may not receive full value for it.” To make your investment as valuable as possible, Dr. Marcinko recommends branding your practice with a group identity long before you retire or sell. “We are now in an environment where cachet value matters, not individual practitioner accomplishments,” notes Dr. Marcinko. “Hot medical groups, not individual doctors, will flourish going forward and transferable operations are the key to premium practice value. Mom and pop offices are ‘out.’” Dr. Marcinko says it’s important to identify the right buyer, seller or merging partner. You should ensure each party has the necessary capital and that you do not assume all the financial risks in the transaction. He says you should look for a good philosophical match in a buyer “since your lifeblood went into building the practice and you should want it to flourish going forward.” Peltz says the act of selling or transferring a business is not indigenous solely to medical practices. “This happens every day in every business,” he explains. “Do you think a successful car dealer closes his dealership when he decides to retire? Of course not, he has partners who are going to buy him out. This is the cycle in any normal, successful business operation.