Establish a Sound Retirement Plan Today

For physicians, investing for retirement is easier said than done. Developing and implementing a successful retirement investment strategy requires knowledge. You need to know all of the facts and options available to make informed investing decisions.

Retirement Checklist

First, you need to inventory all of your assets. Identify the location, amount, and value of cash, cash equivalents (eg, money market funds and treasury bills), security portfolios, homes, and any other assets you own, including retirement plans. Withdrawal options should also be determined, and copies of current beneficiary designations should be obtained. In addition, figure out all of your liabilities.

Determining Income Flow

Once you have completed your asset inventory, evaluate your retirement income flow. List the sources of your future income and the amount of money each source will generate, differentiating between fixed- and variable- income sources. Periodic income, such as Social Security, fixed pensions, annuities, investment portfolios, and retirement accounts should also be listed and taken into consideration.

Keep in mind that the amount of money you'll need to maintain your preretirement lifestyle will almost certainly change after you retire. Most experts predict that retirees need as much as 70% to 80% of their pre-retirement income to live comfortably.

Investment Strategy

Now it's time to develop an investment strategy. Begin by looking at your current situation (ie, family, health, and continuing business obligations). Consider your age and the age of your spouse, and then decide how much risk you're willing to take. Financial advisors typically recommend a balanced portfolio approach (50% stocks and 50% bonds). However, that strategy might not be appropriate for you.

Family first:

Having determined the desired asset allocation, analyze all of your current arrangements to see if any changes need to be made. Be aware that there are usually costs associated with any changes. Since circumstances and investment vehicles change, you need to review your asset allocation on an annual basis. Make sure your spouse is involved in this process and that they fully understand your investment strategy.

Thomas J. Cholis is managing director of trust sales at Chevy Chase Trust Company in Bethesda, Md. He can be reached at 240-497-5042 or tcholis@chevychasetrust.com.