Depending on where you are in the lifecycle of your practice, retirement may be a hazy, far-off vision of ease and travel.
Or, it may be beckoning over the horizon—a call you either welcome or dread.
As a chiropractor, the ability to control when and how you retire is crucial. That’s because the healing profession carries some inherent risks that can affect when and how you leave the workforce. As chiropractic is a physically demanding occupation, your physical fortitude may in part dictate how long you can practice.
Additionally, most chiropractors are small business owners; the ability to step away from the daily grind directly relates to how savvy you have been at managing your practice. The power to retire well requires preparation—years of thoughtful planning that result in the ability to enjoy, even relish, your post-working years.
People are living and working longer. A recent survey found that about 45 percent of Americans are planning on retiring after age 65, while only 30 percent expect to retire before it.1
In a parallel finding, according to a National Board of Chiropractic Examiners report, chiropractors’ longevity in the practice is increasing: nearly 40 percent of practitioners worked more than 25 years in 2014, up from 25 percent in 2009.2
The good news is that working longer gives practitioners more time and flexibility to save for retirement.
Saving for retirement means different things at different points in your career. It can be tempting to overlook this task when you’re young, but the earlier you start saving, the more powerful and flexible your money will be.
Chiropractors just out of school are commonly more concerned about setting up or joining an established practice than putting aside money for the far-off future. This is understandable, but saving early leverages the power of compound interest to transform even a modest amount of money into a solid nest egg.
Even so, many professionals still neglect to save money for the future. For ambitious chiropractors especially, it can take discipline to set aside funds that could also be used to expand a business, buy that cutting-edge imaging system, or take a much-deserved vacation.
That said, the initial discipline it takes to start saving right out of school (a rule of thumb is to save 10 percent of your income) is key because it transforms resistance into habit. This ability to prioritize saving pays off later.
Why the rubber doesn’t meet the road
Clearly, saving for a secure retirement is a good idea. So why do people neglect to save for their futures? According to The Strategic Chiropractor consultant group, only 5 percent of chiropractors can afford to retire by age 65.3
This dismal statistic points to some hard truths of practicing chiropractic: Despite their skill at healing patients, chiropractors rarely focus on ensuring their own futures. After all, chiropractors are trained to work with he human body—a much different skill set than running a business or investing wisely. When faced with the practicalities of payroll, hiring and firing, bookkeeping, and insurance, many chiropractors feel overwhelmed and out of their depth.
Here, two scenarios emerge. In the first, many chiropractors grossly underestimate how much money they will need to retire. They assume that, given what they’ve saved in Social Security along with some modest investments or savings, they’ll be fine. It’s easy to think, “Oh, I’ve saved $1 million so I have plenty of money to live on for the rest of my life.”
This may or may not be the case, but you won’t know for sure until you’ve run the numbers and taken into consideration things like health- care, inflation, periodic car purchases, vacations, and much more. And these concerns are all on top of general living expenses.
Not preparing for the realities of your expenses in retirement is scary enough. But worse for many chiropractors is a second scenario: They haven’t considered retirement saving at all.
Distracted by the daily tasks of running a business, seeing clients, and trying to live well in the present moment, they typically don’t prioritize saving until they are getting close to retirement age. But at that point their options are limited, such as working longer or trying to live on less than they would like.
If you assume your practice is going to leave you with a large lump sum of cash when you sell it at retirement, think again. When selling a practice, too often the expectations do not align with the realities. Most chiropractors who rely on the sale of their business to fund their retirement are forced to either retire with meager funds or work longer than they had anticipated.
One reason has to do with the realities of the post–Great Recession lending market. A young ambitious chiropractor, likely saddled with a large school debt, is simply not going to be able to borrow what he or she needs to purchase an established dollar practice.
According to James Fedich, DC, author of Secrets of a Million Dollar Practice, a single-doctor practice would be lucky to sell for 80 percent of its annual gross collections. And that’s the best-case scenario, as many go for much less. There is much involved in selling a practice: location, condition of equipment, staff and client retention, negotiating a buy-in or co-ownership, and more. A professional practice broker can appraise your practice to assess its true market value so you can approach selling with your eyes wide open.
Help is on the way
So you’ve committed to setting aside money for retirement? Bravo! This can involve a variety of strategies, depending on your comfort with risk (or vice versa). Like the body, everyone’s financial life is unique and requires a steady maintenance regimen. Your money and your priorities change over time and, to continue the metaphor, need more than a one-time adjustment.
As a chiropractor, you understand the danger of self-diagnosis. In financial matters, and especially a crucial concern like a happy and secure retirement, it’s no different.
Few chiropractors (regardless of their level of education and intelligence) should be their own investment managers. Strategizing for your optimal retirement in conjunction with a well-thought-out and written investment plan is constant and demanding work. And it often can require nerves of steel during diffi- cult market conditions. How many chiropractors at the end of a hard day of work will have enough energy, focus, and cool perspective to manage the investments that are key to their financial futures?
For many chiropractors, hiring a trusted wealth manager who can be a true partner in planning for the future is at first intimidating; however, it eventually garners feelings of massive relief and fewer sleepless nights. When your money is in the hands of an expert who is coordinating with your accountant, lawyer, and insurance professional, nothing falls through the cracks. And you can focus on what you are truly passionate about.
Todd Calamita, CFP, is a fee-only certified financial planner and author. He focuses on providing wealth management solutions to chiropractors and their families by helping them preserve their wealth, mitigate taxes, take care of their heirs, and protect their assets. He can be contacted at 704-276-7325, firstname.lastname@example.org, or through chirowealthmanagement.com.
1 Brandon E. “The Most Popular Ages to Retire.” US News & World Report http://money.usnews.com/money/blogs/ planning-to-retire/articles/2016-06-10/ the-most-popular-ages-to-retire. Published June 2016. Accessed May 2017.
2 National Board of Chiropractic Examiners. “Practice Analysis of Chiropractic 2015.” http://www.nbce.org/practiceanalysis. Published January 2015. Accessed May 2017.
3 The Strategic Chiropractor. “Chiropractic Exit Strategy.” https://www.strategicdc.com/prod– ucts/manual-cd-sets/chiropractic-exit-strategy. Accessed May 2017.