Planning… everyone keeps bugging you about planning for your future, and you’ve barely enough time to take care of the present. Who has time to plan for the future? Retirement…that’s light years from now. After all, you’re young, why worry about the future when there are so many things to take care of now. Besides that, who is going to retire? You probably plan on working as long as your health holds out. You don’t need to plan on retirement because you’ll just keep on working right up until the time you die.
Why worry? You are as healthy as a horse. You don’t have time to talk about the future, there are too many other pressing things that need immediate attention.
Disability? Well, you’ve got that pretty well covered with disability insurance. Sure, you’d have to make some adjustments in your lifestyle if you became disabled, but who wouldn’t? (Maybe you’d better find those old disability policies and read them over again.)
Hey, you’re only in your forties; lots of mileage left on you, that’s for sure. It will be, let’s see, fifteen or twenty years until you’re sixty. Or is it only twelve years? I’ll be darned, it sure sneaks up on you doesn’t it. Maybe you should start making plans for retirement. But, you don’t have any extra money to set aside for retirement, do you? You can barely make ends meet supporting your current lifestyle, so how can you set aside money to retire?
Let’s see, you’ve got about $80,000 saved in your retirement plan. Why, in twelve years that should be worth $200,000 or so. At least that’s something, although I don’t think you could live on it for very long. You’ll just have to plan on working until you are 65 or 70 or longer. I guess you’ll just have to hope you don’t get sick or disabled before you die. (Maybe you’d better take a closer look at those insurance policies and see how much you get if you get sick instead of disabled.) I’d sure hate to see you run out of money before you die. That would be a heck of a note after working for so many years. What would the kids think?
Sound familiar? Unless you are an exception to the rule, this could be a very real scenario. Most doctors rationalize not planning for the future. The future is always next year or ten years away. But all of a sudden, it’s here, and the average doctor is woefully unprepared to enjoy those “Golden Years.”
Yes, if you fail to plan… then you plan to fail. And fail you will, unless you get lucky and die first. That is kind of a strange
commentary, but it holds true for most doctors. There are a lot of seventy and eighty-year-old doctors who never thought they would live as long as they have after retirement, and they are running out of money. They are hoping they will die before their money runs out!
There are also a lot of doctors who were unable to practice as long as they thought they could. They got sick and had to quit practicing years before they had planned. Many of them let their practice decline over the years, and so they lost the value of that asset for retirement. Worse yet, there are a lot of doc- tor’s widows who are in dire financial straits today because their spouses failed to plan in advance for those retirement years.
O.K., so if you don’t have extra money to set aside for retire- ment, then what can you do? Think about the value you have in your practice. Legacy Practice Transitions has developed a pro- gram whereby we sell and merge your practice into another practice. You continue to treat your patients as you do now until the time you choose to retire. Economy of scale allows the purchaser to make money with a practice merger even after paying you your earnings.
The real benefit to you, of course, is how the “miracle of com- pound interest” affects the money you receive for your practice. Let’s say your practice is worth $300,000. If we sold the prac- tice and you put that money into your pension plan (you are now the only beneficiary of that plan since you no longer have any employees) and your money grows at a rate of 10% per annum, then that $300,000 will increase to $600,000 in 7.2 years, and in 15 years it will grow to $1,200,000. Over those same years, you continue to practice and earn a comparable income, but now you’ve funded your pension plan with the value of your prac- tice.
I once sold a practice owned by a 37 year old doctor who want- ed to continue to practice until he was 59, at which time he would begin drawing on his pension plan. The practice sold for $250,000. By the time this doctor reaches his retirement age, that pension plan will be worth $2,000,000!
It is never too early to plan for retirement. Legacy Practice Transitions’ presale-merger pro-gram is a convenient, cost ef- fective method for funding your pension plan without sacrificing your current lifestyle.
LegacyPracticeTransitions.com © 2012 Legacy Practice Transitions, Inc. This article was written by a former colleague. 317-745-2901