Veterinarians are unique in so many ways when compared to the rest of the working world.
Most veterinarians spend their lives working long hours and sacrificing their personal lives and
often family relationships to help make the lives of animals better. Most of us didn’t
get into veterinary medicine for the money. The old saying that “the only rich veterinarians
are the ones who either are born into it or marry wealth” seems to hold. Most
veterinarians are content with hopefully making enough of a living to enjoy a comfortable
middle-class lifestyle, educate their children if they have them, and save enough for retirement.
Selling your practice or just retiring as a veterinarian, if you are an associate, is a really hard
concept for most of us. Most veterinarians keep working long past the normal time to retire for
other professions, and after a long period, discover all at once that they just can’t take it
anymore and try to sell their practice or quit as quickly as possible.
How Can Veterinarians Plan for Retirement?
Let’s say Dr. Jones is on the phone for an initial consultation on the future of her veterinary
practice and planning for her eventual retirement via the sale of the practice. The first thing I
usually ask her is, “What’s your number?” She’ll usually respond, “What number? The age I
want to retire?” I’ll respond, “No, the number you need to know is the amount of savings you
will need to go along with Social Security retirement so that you can retire and maintain your
desired lifestyle for about 20 – 30 years of retirement.” Your financial planner, preferably with a
CFP designation, and your CPA are both great resources to help you determine your “number.”
One rule of thumb that I’ve tended to follow and use as I’ve planned my retirement is that
you will need to have accumulated 20-25 times your desired annual income by age 65 to have
enough income from savings, along with Social Security retirement distributions, to maintain
your desired annual income and lifestyle.
For example: For Dr. Jones to retire at age 65 and be able to maintain an estimated annual
income of at least $100,000/year, she would need:
$100,000 x 20 years of retirement = $2,000,000 plus her Social Security payments.
-Or-
$100,000 x 25 years of retirement = $2,500,000 plus Social Security retirement benefits.
Dr. Jones’ family history indicates that she would, in all likelihood, live longer than most other
people born the same year, so the higher number of $2.5 million might be a better goal. Dr.
Jones should ideally have a larger nest egg to support the likelihood of a longer-than-average
lifetime. The same holds true if Dr. Jones started a family later in life and wants to be able to
send her kids to college or has expensive hobbies that might require greater retirement savings, such as the lifelong dream of becoming a licensed airplane pilot or a large boat owner.
Planning for retirement?
Simmons & Associates can help you find and achieve your “number”! Get in contact with our team for a free consultation!
Your “number” is critical to your retirement planning. Many practice owners tend to
stay active in the profession for too long because many have the notion that they need to
continue practicing in a veterinary hospital as an owner or associate until their life is completely
spent. Some later learn that once their practices have been sold and the proceeds are added to
their savings, they could have retired or reduced work hours many years earlier. This is why
knowing your “number” is so important.
The key, as with almost everything in life, is to have a written plan and a goal for the “number”
you need to accumulate so that you will have the freedom to retire on your schedule
instead of feeling that you must keep working. This information holds true in determining your
retirement “number” whether you are an associate veterinarian or a practice owner. If you are
a practice owner, we recommend that you do wellness testing annually on your practice’s
finances to determine your practice’s health, just as you do on your patients to keep them
healthy. A regular valuation of your practice throughout your career is critically important since
the sale of your practice assets is often a large portion of your retirement “number.”
As with anything worth having in life, it takes hard work, planning, and some luck to achieve
your goal. Begin working today to determine your “number” and plan for your optimal
retirement.
