Start thinking about retirement
Looking back on my career (which is far from over) I realize I did a lot of things right, and the things I did wrong I did wrong like a rock star. Which reminds me of what a line from my favorite rock star, Trey Anastasio of the rock group Phish said:
“So why not be like me? be proud of all your crimes
‘Cause when I screw up once, I do it two more times”
So with my biggest mistakes behind me (hopefully) I’d like to take this opportunity to help you younger ODs and students avoid what I see as my single biggest mistake; not planning for retirement earlier than I did.
Planning is an important part of a successful retirement
Now, before you think I’m headed towards destitution let me assure you I’ll be fine, but saving for retirement is not just about being “fine”, it’s about planning and making moves that are likely to result in you maintaining the standard of life you become accustomed to during your professional career.
This involves calculating and planning for a period of your life where most of us will have little to no income other than what we saved or the interest it generates. This is extremely hard to do considering (a) we are living longer, and (b) there are economic uncertainties out of our control.
If you don’t have an asset to sell at retirement, like a practice or a building, it is even more urgent you start saving earlier.
Learn from those before you
Let me provide a concrete example of how waiting to save impacted me so you don’t make the same mistake.
I started saving for retirement at the relatively late age of 37 years old. I am now 51. Here’s what I left on the table.
If I could have saved just $1500 a month for the first 10 years of my career, with compounding interest averaging a very solid 6.5% rate of return (maybe even overly optimistic) I would have an additional $255,473.01 on top of what I’ve saved since then.
That’s a quarter of a million dollars for those of you who think in those terms. If I could have saved $3000 per month I would’ve left $500,000 on the table.
Because I started saving later, I was forced to put the maximum amount away I could to make up some of the difference, but for a period of time having to do this left me relatively cash-poor.
Add retirement to your budget
Many of you are very young, some just having started your career this month! You have tons of debt and soon will have rents, mortgages, car payments etc.
Regardless, I hope to impress upon you the impact of adding retirement savings to your budget. It seems way far away, but think about it this way; unlike a rent or car payment retirement savings isn’t “money going out the door”. It’s still your money, so why not max it out?
Be wise – listen to the rantings of a not-so-wise older optometrist with the benefit of hindsight. Make a budget, include savings for retirement and while you enjoy the present you will be securing your future.
Hope you are enjoying odsonfb.com!
Alan N. Glazier, OD, FAAO, Dipl., ABO