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Plan for the End at the Beginning

Katz, Barbara

doi: 10.1097/01.EEM.0000302954.05410.fd
Career Source

Ms. Katz is the president of the Katz Company, an emergency medicine consulting firm dedicated to providing expert physician recruitment services and training emergency medicine residents in effective job searching.



Several times over the past few months, I've been asked about exit strategies by relatively young emergency physicians who are seeking a way out of full-time clinical practice. While it paints a poor picture of the specialty that so many of its practitioners are looking to leave before they reach retirement age, it also shines a glaring light on the fact that most emergency physicians don't plan adequately for retirement.

Emergency physicians are like the sports stars of medicine; the average career span is around 25 years. That puts them at retirement age 10 years before they can collect Social Security. Other specialists work well into their 60s and even their 70s but not emergency physicians. Call it burnout or whatever, the fact remains that around age 55, a great many of these doctors are ready to get out of the ED. So when an EP wants to stop being an EP, but can't stop working … Houston, we have a problem.

A large number of these physicians, even those who are closer to retirement age, are not financially capable of retiring fully, so they must continue earning a wage. The problem is there isn't much out there for an emergency physician who no longer wants to practice emergency medicine full-time. Part-time, locum tenens, urgent care, rural medicine, or even dwelling in the bowels of a cruise ship 12 hours a day for weeks at a time pretty much complete the list of opportunities. As for executive options with HMOs, health care organizations, insurance companies, etc., forget about it! You can have two MBAs and a long list of administrative accomplishments, and it won't matter. Those companies are primarily looking for money-counters and paper-pushers, not good doctors with a clinical conscience.

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Plan Now, Retire Later

The time to make plans for the end of your career is at the beginning of your career. The average graduating resident puts the majority of his focus on the immediate financial gain a position offers, and tends to ignore retirement and pension opportunities. While it is understood that most of these physicians are coming out of residency with large loan debt and often have young families, the future is not going to take care of itself. Planning for retirement must be proactive, and it needs to start with the first job.



One of the issues contributing to this troubling trend is a tendency to live a lifestyle one would like before one can afford it. With some young doctors, purchasing expensive homes, cars, boats, and other toys seems to take precedence over saving for a rainy day. But that's the American way of life these days, isn't it? For a young physician starting out in a specialty with an early burnout rate, this is especially dangerous.

Right about now a large number of 2008 graduating residents and other emergency physician job seekers are either actively interviewing or approaching the decision-making portion of their job searches. I encourage all to pay particular attention to the retirement and pension benefits being offered by the employers they are considering.

Among the small democratic groups, many have made the commitment to provide for the future of the partners by including group-made contributions into a defined retirement plan for each physician on an annual basis, some as high as $45,000 a year. The physicians in these groups are still earning good incomes, often with performance-based incentive formulas, while they enjoy peace of mind from knowing the future is being attended to. The amounts vary and are dependent on the vote of the partners. Ask for details about when these contributions start (usually when you make partner), how the funds are managed, and what happens to funds that have been accrued when a physician leaves the partnership.

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Deferred Salary

The average hospital/health care corporation can't afford to pay high retirement contributions for hospital-based physicians. Most of these employers contribute something to a defined retirement plan, but the amounts differ widely and the formulas can be complex based on annual earnings and time on the job. These employers usually provide the opportunity to defer a percentage of one's annual salary into a variety of physician-directed pension plans including 401(k)s, 403(b)s, and others, often including a matching contribution. Match percentages are not always set in stone, and are sometimes dependent on the employer's fiscal year financial results.

Most retirement plans have an age requirement for distribution. When interviewing with this kind of employer, find out what happens to the retirement money that was invested for you if you leave that job before you reach retirement age. Also keep in mind that pension plans that have a match or include employer contributions of any kind usually require a five-year vesting period, which will affect how much you walk away with if you leave before becoming fully vested in the pension. Ask questions, and get details. The hospital human resources department will have a benefits coordinator who specializes in these matters.

Still other employers, particularly large, national contract groups, employ their physicians on an independent contractor status, which means that no formal retirement or pension plans may exist at all. It can be entirely up to the individual physician to set up a self-employed pension or other retirement account. Unfortunately, not many of the younger physicians in these positions are doing so, despite the higher cash earnings and tax perks they enjoy. It's not because these employers don't encourage them to invest for retirement. A lot of the independent contractor-based employers even provide professional financial counseling and assistance for their physicians at no cost. If you are considering a position as an independent contractor, ask how they help their physicians create retirement plans and what kind of professional advisors they make available.

Every employer is different, and a job seeker deciding between three opportunities will most likely be faced with three different retirement/pension plans. The important thing is to give the same focus to that part of the income package as you give to the base salary and incentives. And when you make a choice, make the most of it; max out your opportunities to invest in the future. By starting to take fiscal responsibility for the future early on, you prepare the way for a comfortable retirement on your own terms later on.

© 2007 Lippincott Williams & Wilkins, Inc.