Exit strategy

BY Aubrey Palestrant, MD, FSIR, and Curtis W. Bakal, MD, MPH, FSIR

As with most any career path, interventional radiology provides more than its share of challenges and joys—and many years of hard but rewarding work. And as with any career path, the closer you get to the end of your career, the more natural it is to start wondering, “What comes next?” Surely retirement will bring its own challenges and joys, but how do you know when you’re ready to retire? Will you be financially comfortable in retirement? Will you be bored? This article explores what those questions mean for an interventional radiologist.

Saving from the start

IRs may be vulnerable by not having saved sufficient funds for retirement. Most IRs complete their training at age 32 and plan to retire by age 65. This 33-year time span is relatively short when compared to other professions. Within this period, the IR and his or her partner need to pay off the mortgage, repay student loans, support the family, pay for children’s education and save enough to live comfortably for the last 25–30 years of life.

Young doctors often perceive impediments to begin saving for retirement. After many years of being overtired and underpaid, some young physicians make the mistake of putting money into a high-end lifestyle by purchasing luxury cars and large houses, while shortchanging their retirement savings.

However, it is critical for young IRs to begin financial planning for retirement as early as possible in their careers. That is, the key to successful investment growth is starting early; it is long-term investing that compounds wealth. Appropriate, consistent asset allocation over time will maximize returns (see tables 1 and 2).

A likely first step is to participate in the employer’s managed retirement fund. Large institutions will often match an employee’s contribution to the fund. Physicians should plan to contribute the maximum amount allowed by these plans as soon as they are eligible.

A diversified portfolio is also important. For most investors, however, attempting to predict market direction, selling high and buying low, can often lead to the converse, with a lower-valued portfolio at retirement. It is therefore important that the young IR enlist the services of a registered financial planner to help develop a comprehensive financial and budgeting plan for retirement.

Money management

A financial adviser’s role can be divided into two main categories: 1) the IR and his or her family and 2) the IR’s financial assets.

The first role pertains to guiding the IR to balance his or her family’s needs (and avoid questionable investments) and to being available to the IR’s family to help them with their finances, should the IR be incapacitated or deceased.

In terms of managing the IR’s financial assets, the financial adviser can offer valuable advice such as the following:

• Avoid investing in a portfolio that is too conservative, as doing so will decrease returns over the long term. Managing and adjusting investment risk is a lifelong activity.
• Consider and implement strategies to reduce taxes or create nontaxable income throughout your working career and after retirement.
• Maximize contributions to IRAs, 403B and 401K tax-deferred accounts, especially if your institution matches your contributions. However, individual contributions to these tax-deferred accounts are limited and may not ensure sufficient funds for retirement. Defined pension plans have become exceedingly rare.
• Explore other funds for retirement such as after-tax investments, cash savings and social security benefits. Some physicians may also choose to purchase annuities.
• Ensure that you carry sufficient life, disability and long-term-care insurance.

With so much at stake, young physicians should seek a certified financial adviser as soon as possible. While many institutions and groups provide limited services through their corporate financial adviser, many IRs choose an independent adviser who is dedicated to their needs and can therefore offer a more expansive view of available investment options.

Most independent financial advisers will charge an annual service fee or a percentage of the portfolio value they manage. To avoid the potential for a conflict of interest, we recommend finding one who does not sell products such as annuities or insurance policies.

The adviser should be a certified financial planner, act as a fiduciary and adhere to criteria such as Global Investment Performance Standards (GIPS). GIPS is a set of standardized, industry-wide ethical principles that guide investment firms on how to calculate and present their investment results to prospective clients. Firms who participate in GIPS have their investment results verified by an outside independent auditor. When investment firms follow these standards for presenting investment performance, it gives investors the transparency they need to compare and evaluate investment managers.

Many young physicians lack proper knowledge about retirement planning. However, in order to successfully retire, it is essential to retain a trusted financial adviser and educate oneself early and well.

When should I retire?

Midlife workers typically think a great deal about retirement, with extensive decision-making that takes years.¹ Retirement plans and intentions may shift over time. Mid-career and senior radiologists typically start thinking about retirement by framing some important questions:

• When do I want to retire, or when can I retire?
• When will my spouse retire?
• Will I continue to work on a limited basis? If so, what sort of work should I do?
• Where do I want to live—one home or two?
• How much will I want to travel, and what hobbies or interests will I pursue?

In the years before planned retirement, it is important to develop a realistic budget for living after full-time clinical practice ends, addressing your expectations of retirement. Many physicians do not appreciate how their monthly household expenses can be adjusted for retirement, so it is important to tabulate, categorize and analyze current household expenses.

What items are essential, what are discretionary and what is the projected need after retirement? Make sure to consider less obvious expenses (clothing, pet food) and quantify potentially significant expenses like travel, dining out and housing. A financial adviser will provide invaluable guidance. Personal money managers such as Quicken^© or Mint^© and various online sites can help you develop and evaluate current expenses and generate a retirement budget.

One important factor that influences retirement age is the affordability of health care for you and your partner. Private health care insurance costs can be considerable in the 55–65 age range. After 65, we become eligible for Medicare and premiums are reasonable. However, one should not forget that the cost of the part B premium, part B supplemental insurance and part D premium can exceed $15,000/year for a couple.

For 30–60 percent of Americans, retirement comes earlier than planned. Reasons for early retirement include disability or loss of a job due to institutional politics or reorganization. In these situations, developing a bridge strategy will require a careful review of essential and discretionary expenses and formulating a smart withdrawal strategy from assets such as savings, taxable investment accounts, IRAs, Roth IRAs and workplace retirement plans. The timing of claiming Social Security benefits must be carefully considered. A financial adviser can help with these calculations and provide a strategy for drawing funds from various accounts including Social Security.

How much money will I need after retirement?

Conventional and widely quoted advice states that retirees should draw down their retirement account balances by 4–5 percent yearly. Traditionally, $1 million invested money produces about $40,000–$50,000 annually, though some analysts believe that yields will be lower in the future. Many publications suggest that about 70–80 percent of yearly income needs to be replaced after retirement for the general public. Retired physicians tend to replace about 56 percent of their pre-retirement yearly income, an estimate that varies widely. Expenses tend to be lower in retirement, but activities such as extensive travel can increase them considerably.

Retirement budgets face challenges in the long term, which include increased longevity, inflation, market volatility and increased spending and withdrawals. For example, A 65-year-old man has a 20 percent chance of living to 90 and a 65-year-old woman has a 32 percent chance of living to age 90. There is an 18 percent chance that one member of a married couple will live to age 95.²

Are finances the only factor I need to consider for retirement? Having enough money is necessary but not sufficient. Nonmonetary factors, of course, influence this decision. Several authors have commented that workers in general decide to retire when they believe that their job takes more than it gives or when they want to explore different career paths or new horizons. Many IRs desire an active retirement while they are capable of functioning physically and mentally at a reasonable level and therefore prefer to retire when they are relatively young.

Pre-retirement checklist

It is essential that IRs nearing retirement understand when to enroll in Medicare and what types of Medicare plans are available. Most importantly, there are mandatory deadlines for enrollment that relate to age and employment status. For example, enrollment in Medicare part A is required by age 65, regardless of employment, and costs nothing. About 6 months before leaving employment or turning 65 years of age, whichever comes last, IRs become eligible for Medicare part B and part D. They should read the current U.S. government publication ”Medicare and you”. Medicare eligible-IRs must register for these Medicare insurance programs at this time, otherwise there will be a lifelong financial penalty.

Like other medical specialists, an IR must take important administrative steps related to clinical practice before retiring. You should review the policies of your institution and jurisdiction regarding continuity of patient care and notifying patients of your retirement. Most group practices specify that physicians adhere to a minimum notification period prior to leaving, to allow the group to adjust patient and department scheduling. Clinical records must be retained and managed for the period specified by your hospital bylaws or state medical regulations. This period varies considerably, depending on the legal jurisdiction, type of record and age of the patient. The retiring solo IR should provide copies of patient medical records or instruct patients on how to obtain them.

Guidelines, sample notices, forms and letters are available online from professional organizations, liability insurers and state medical boards.³ Other practice-related issues might involve destruction of controlled substances, notification of employees and storage of clinical records.

Before retiring, you should review your malpractice policy and retain a copy. Clarify with the insurance company if tail coverage is needed, for how long, and whether your current employer or group will pay for it. If your group intends to pay for the tail coverage, make sure you receive a copy of the paid policy or a written acknowledgment that the premium was paid. If you plan to work part-time, you should begin to arrange for liability insurance to cover activities such as locums and teleradiology. You should also contact your state licensing board and professional societies, many of which offer reduced membership dues for retirees.

Life after IR

Once the beepers are turned in and the call schedule is only a memory, the world opens up quickly. You are no longer beholden to an employer or outside organization. Excluding family commitments, your time becomes your own, giving you far more time for travel, sports, hobbies and recreation.

If you plan to seek consulting contracts after retiring from clinical practice, you should affirm your connections with industry before retirement. You might also consider acquiring new skills that can be helpful to a company. Developing a new focus of expertise such as economics or practice management can be desirable. Some physicians prefer to do part-time diagnostic work or serve as consultant to an insurance, device or medical equipment company. Retired SIR members have surveyed for the Joint Commission.

Another popular option is to volunteer for local organizations. Academic studies have shown that volunteering improves the physical and mental health of participants by enhancing social integration.⁴ Some choose to provide volunteer medical services locally or abroad. You might consider providing services to your medical school by serving on various committees.

Most professional societies encourage retired members to contribute their time and expertise. For example, reviewing for the Journal of Vascular and Interventional Radiology (JVIR) is an excellent intellectual exercise in retirement. SIR bylaws allow continued service on committees, so you can continue to volunteer in areas where you have expertise, or you might develop new areas of expertise that the society or the foundation needs.

These activities can allow you to remain engaged on a professional level, expanding your ability to continue to contribute to your specialty and to patient care. For example, one recently retired SIR member has been active on several economics, governance and development committees. She has also contributed to webinars for members and for residents, fellows and students and has helped develop tools to prepare members for MACRA and the IR Registry. Two other retirees have written this article for IR Quarterly.

Many web sites focus on volunteer opportunities for seniors and retirees (e.g., retiredbrains.com/volunteering.html and naorp.org/about_us.html). These provide advice and list nonprofit organizations that are seeking physician or professional volunteers.

As you pursue and engage in new activities, remember to review your financial portfolio and adjust it for evolving goals. Inheritance planning for children and grandchildren becomes an important part of late-career financial strategy. This is also the time to review your family and professional legacy as well as your financial legacy to the institutions that provided you with the tools to succeed.

In summary, planning for retirement is a continuing educational activity that must begin early in the career of every IR. If well planned, however, you can enjoy a retirement as fruitful and rewarding as the career that led up to it.

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Acknowledgement: This article is based on a categorical course given at the SIR 2017 Annual Scientific Meeting in Washington, D.C. The authors thank co-faculty Katharine L. Krol, MD, FSIR, and Thomas J. Curran for the use of their materials.

Disclaimer: We are not certified financial planners. Opinions expressed are our own and are based on our experience and research.

References

1. Ekerdt, D. J., DeViney, S., Kosloski, K. 1996. Profiling plans for retirement. Journal of Gerontology: Social Sciences, 51B(3):S140-S149. Cited in DB Smith: Volunteering in retirement: perceptions of midlife workers. Nonprofit and Voluntary Sector Quarterly, vol. 33, no. 1, March 2004: 55–73.
2. Plan for a long retirement. personal.vanguard.com/us/insights/retirement/plan-for-a-longretirement-tool. Accessed July 25, 2017.
3. NC Medical Board 2012. The Doctor is out: A physicians’ guide to closing a practice (ncmedboard.org/images/uploads/article_images/Physicians_Guide_to_Closing_a_Practice_05_12_2014.pdf), and Mass Medical Society: Issues for the Retiring Physician, 2012 (massmed.org/retiring/#.WXd6iq2ZNdA). Both accessed July 25, 2017.
4. See JE Mutchler JA Burr, FG Caro Social Forces, June 2003, 81(4): 1267–1293; Schwigel A, Niti M. Continued work employment and volunteerism and mental well-being of older adults: Singapore longitudinal ageing studies. Tang C, Ng TP: Age and Aging. 2009; 38: 531–537.