Ensure A Bright Retirement: Why It Pays To Be Proactive
As a fourth-year podiatry student in 1974, I decided to start my practice debt-free. As a student, I heard horror stories about young DPMs going $60,000 into debt to open their first office. In 1974, $60,000 would give you a posh office with state-of-the-art equipment and plenty extra to live on before the revenue started pouring in. I heard stories about young podiatrists who ended up falling behind and losing everything before they completed the first year. Our current graduates are now toughened by the overwhelming burden of six-figure student loans and would probably get a good laugh at the sums of debt that scared me 30 years ago. I decided to start debt-free by purchasing used equipment from retiring podiatrists. I got a lot more than some good deals on old manual exam chairs. I heard stories of what worked and what did not work in financial planning. Some were liquidating their practices to move to Florida or Arizona to live out their retirement years in comfort. Others had to stay in Cleveland and cover a few nursing homes to make ends meet. I decided it would be important to me to at least have a choice so I began formulating a financial plan before I even had a diploma. The most successful doctors were those who developed a simple plan early in their careers and stuck with it. The least successful were those who anticipated a few good years at the end when they could sock away a small fortune. They believed that this money in addition to the sale of their practice and homes would set them up for retirement. The soft housing market and glut of new DPMs made 1974 a bad year for selling homes and practices. I read a couple of good books on stocks, bonds and mutual fund investing. I decided to start debt free, invest in real estate for 10 years, stocks and bonds for the next 10 years and be ready to choose work or retirement by age 55. I decided to set aside 15 percent of my income for investments. It seems to have worked. I am 58 years old now and am still practicing podiatry full time because I love my job. A portfolio of stocks, bonds, mutual funds and annuities is ready to cover my financial needs when I decide to leave podiatry. There are several commercial buildings ready to help with the retirement revenue production. In the meantime, these investments continue to compound and grow. I learned early that the most important concept in building wealth was to live beneath my means. That is easy once you get past the idea that you are a rich doctor and must live like one. It is also important to have the right spouse who shares your values. A compulsive spender with a deck of charge cards can derail any financial plan. The other thing I have learned is to manage my portfolio myself. I only invest in no-load, commission-free mutual funds. I don’t have a paid financial planner. I occasionally interview one of these guys to see if I might benefit from their expertise. Mostly, I feel the need to keep my back to the wall and my hand on my wallet. Most of them tend to be kids just out of college who have taken a brief marketing seminar from a brokerage firm and are now ready to start investing your money until it is all gone. There are exceptions. I have met very skilled financial planners who are needed to manage complex portfolios. They mostly work with foundations with millions of dollars to manage. My portfolio is simple so I don’t have an adviser to churn everything just to keep the commissions rolling. I want to get the message to young DPMs who are just getting started. Thirty years go by very fast. The investments you make at the start of your career will sustain you at the end. There are no guarantees or certainties about your financial future so it is important to take control early. There is nothing more dangerous than a debt propelled, 60-year-old doctor who is trying to make up for a lifetime of conspicuous consumption and squirrel away a few bucks for retirement. There is nothing more pathetic than a 65-year-old doctor who has worked hard all his life and complains that he will have to work until he drops because he has not planned for retirement. Open a savings account tomorrow. Dr. McCord is a Diplomate with the American Board of Podiatric Surgery. He practices at the Centralia Medical Center in Centralia, Wash.