What Is Your Retirement Cash Flow Plan?

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A retirement cash flow plan is a year-by-year analysis of how all your likely decisions will impact your finances. The result of planning is to learn if what you’re doing will work, and how much money you should have accumulated at any time. You will need to know how your income stacks up against your expenses; how your discretionary income is the starting point for saving for your retirement; and how your timeframe, risk tolerance, and amount of annual savings will determine if you will be able to achieve your retirement goal based on the assumptions made
 
Remember, time is your biggest friend or worst retirement planning enemy, according to Michelle Pannor Silver.¹

Demographics of the Podiatric Workforce

The workforce of podiatrists in 2022 was 10,166 people, consisting of 26.8% women, and 73.2% men.² The age ranges that comprised the largest portion of the workforce were ages 35–39, 45–49, and 50–54, accounting for 43.3% of the total workforce of podiatrists. The average age is 47 years old.
 
The yearly wage ranking according to the US Census Bureau in 2022 was $177,186 (#9 in ranking compared to the national average ranking for all occupations across the USA of $64,683).3 By comparison, the highest earning allopathic physicians were in the ROAD medical specialties: radiology, orthopedics, anesthesiology and dermatology.³

What Needs to Be Considered in a Retirement Cash Flow Plan?

1. Income Sources:

• Your current balances in retirement accounts like Roth IRAs, HSAs, traditional IRAs, 401(k) or 403(b) plans and the contributions you’re making to your retirement and non-retirement accounts each year, with inflation increases as appropriate
• Savings and investments outside of your retirement plans, if available for your retirement
• Income during retirement from part time work or consulting with any increases for inflation
• Other sources of retirement income, such as pensions or Social Security
• Installment payments from the sale of your practice, if any
• Rental property income, if you plan on keeping the property. Will there be annual increases?
• Income from a reverse mortgage, if appropriate
• Any deferred compensation payments

Other sources of one-time only retirement income:

• Expected proceeds from the sale of your home, less the cost of your new home and any taxes due. Will you pay cash or finance this home?
• Any inheritances you expect
• After tax cash from the sale of rental property
• After tax cash from the sale of a podiatry practice

2. Expenses:
 
Fixed expenses

• Mortgage expenses until the debt is paid off. If you’ve refinanced every few years in the past, thereby extending your mortgage term, will this continue?
• Car payments, if any, including replacements as appropriate.
• Insurance payments
• Loan payments

Variable expenses

• Expected taxes when withdrawing money from your retirement accounts
• Likely cost of living, based on the retirement lifestyle you want, not some “rule of thumb.” If planning to move to another state, incorporate that as well.
• The cost of supporting a parent[s] or disabled child, or a boomerang child, if likely

Significant One-Time Expenses

• The payment of major debts such as your mortgage
• The costs of educating your children or grandchildren, since this may occur at the same time as you begin retirement
• Other lump sum expenses, such as weddings, bar mitzvahs, or buying a second home
• Major medical expenses like dental work or out of pocket costs for medical expenses such as a hospital stay or service that is not covered by health insurance

Retirement Planning Assumptions

• Retirement time period: With medical advancement and healthy lifestyle, we may have a longer lifespan in retirement than in our working years. So, it is important to take longevity into consideration when designing a retirement portfolio. Consider your life expectancy and that of your spouse (if appropriate). If people in your family have consistently lived to be 100, don’t plan as if you are dying at 78.
• Inflation rate: The overall inflation rate you expect. The longer time you have before and during retirement, the more inflation will impact your buying power.
• Costs of living adjustments (COLA) in retirement income: Your pension and social security may have COLA to keep up with inflation; these are based on where you live.
• Investment returns: The expected long-term return on your retirement portfolio, and the after-tax return of your other accounts. Realistic projections have to be based on long-term history, which shows stock market returns of about 9–10 percent and bonds at approximately 4–5 percent.4 Returns might be modified if academic research indicates lower or higher returns are likely.
• Withdrawal rates: The rate of withdrawal from your portfolio in retirement.
• Medical expenses: Unforeseen medical and dental expenses.
• Health insurance: Private insurance, Social Security, Medicaid, Medicare and Medicare Advantage (Part C) plans?
• Tax rates and changes: No one can predict future tax rates or tax law changes. 

Assessment of Your Retirement Readiness

Knowledge of when a podiatrist plans to retire and how to transition out of practice can aid succession and retirement cash flow planning. Moreover, although easy to mentally conceive such a plan, it is often difficult to execute according to colleague and professor Gene Schmuckler, PhD, MEd, MBA.⁵
 
Perhaps state podiatric medical associations might consider promoting retirement resources, textbooks, education seminars and guidance for doctors throughout their early careers; and not just for mid- to late career practitioners where time may have already eroded even the most fruitful clinical career?

In Conclusion

Hopefully, the above discussion is a good way to start the neverending retirement cash-flow planning process.
 
As a former governor-appointed University Professor and Endowed Department Chair in Economics, Entrepreneurship and Free Market Capitalism, Dr. Marcinko was a New York Stock Exchange broker and investment banker for a decade. Later, Dr. Marcinko was a vital and recruited member of the Board of Directors of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as the first healthcare leader for Deloitte-Touche and other start-up firms in Silicon Valley, CA.
 
References
  
1. Silver MP, Hamilton AD, Biswas A, Warrick NI. A systematic review of physician retirement planning. Hum Resour Health. 2016;14(1):67.
 
2. Data USA. Podiatrists.
 
3. US Bureau of Labor Statistics. Podiatrists.
 
4. Marcinko DE. Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. Productivity Press, New York, 2017
 
5. Schmuckler E. In: Marcinko, DE and Hetico, HR: The Business of Medical Practice [Transformational Health 2.0 Skills for Doctors]. Springer Publishing, New York, 2010.