Why It Pays To Have A Retirement Plan Early In Your Career

I have been retired from podiatry for three years but I still enjoy attending the American Podiatric Medical Association National seminar. It is a chance to see old friends and keep my finger on the pulse of my profession of 34 years. Last summer, the meeting was in Boston, which is an interesting city with lots of good restaurants and walking neighborhoods.

   Visiting my old friends was interesting. The constant mantra from doctors in my generation is, “I wish I could retire but this economy has wiped out my portfolio.”

   A variation of that is, “I thought I could save like mad during my last five years, then sell the practice and my house, and move to Florida.”

   Another variation is, “I had it made but then the marriage broke up and my second wife, who is a bit younger, spent me into poverty. I will be working until I am 90. You should meet my new fiancée. She is on Medicare and has a teacher’s retirement.”

   All of these comments were followed with, “McCord, how did you retire at 62? You never seemed that smart.”

   I was always in the middle of my class and enjoyed tormenting my overachiever classmates. Too many were focused on the goal of being addressed as “Doctor” and lost sight of the reality that we were becoming podiatrists and our class standing would not mean a thing to our patients. They just wanted good, pain-free, cost-effective foot care. I have observed over the years that many of the doctors who were average or even slightly below average podiatric medical students enjoyed successful careers. I also observed that many of the top students struggled in practice.

   In the end, I am glad to have been average. My podiatry practice was rewarding and enjoyable. I never had any illusions about a financial crescendo at the end of my career. I listened to older doctors and realized that those who had not developed a financial plan early in their careers were forced to work longer.

   I also noticed that the doctors who chose their retirement age were happier than those who were forced into retirement by illness or the economy.

   I chose age 62 for my departure from the profession when I opened my first office at the age of 28. I chose December 31, 2008, which was also my 62nd birthday. I planned an unceremonious exit in which I walked out the back door of my office, threw the keys in behind me and locked the door. What a feeling of relief and freedom. I had completed 34 years of a profession I loved and without a malpractice claim or causing the death of any patients.

   I started preparing for retirement six months after starting my practice. I bought an old building in a deteriorating commercial section of my small town. The building was worth the value of the land minus the demolition cost of the structure. I paid $17,000. The payments were $100 per month, which was a struggle in 1975.

   I remodeled the building and used it as an office for 20 years. There was ample space to rent to other doctors. This paid for the building.

   Over the next 10 years, I acquired another building and a house and a vacant lot behind the house for parking. I later moved to a medical center and the rental income from the buildings put my children through college, bought me an airplane and a cabin on an island near Victoria, BC. The rent from the buildings is now a significant portion of my retirement income. The value of the first building is now 12 times what I paid, according to the county assessor.

   No one retirement investment can be trusted. I started a tax deferred plan in which I saved 15 percent of my net income. I also contributed the same percentage for my employees, which kept them loyal and committed to our practice.

   I did accelerate my savings in my last five years to build a source of non-retirement funds that I could tap without the tax consequence of taking money out of a qualified tax deferred retirement fund.

   I walked out the back door at about the time that the economy went to the toilet. The diversity of my financial plan made that possible. I concluded that I was inept at managing stock funds so I hired a fee for service manager who has kept me from doing dumb stuff with my money.

   Probably the most important part of my life financial plan was keeping the same wife for 43 years. She has a teacher’s retirement and will soon be on Medicare.
I am still just average and very happy.

   Dr. McCord retired in December 2008 from practice at the Centralia Medical Center in Centralia, Wash.