Financial Planning Through the Stages of a Veterinary Career – Part 6 - Transitioning to Retirement

May 15, 2023

Introduction: About the thirtieth year of practice marks a significant milestone for veterinarians, as it often brings about a career transition period. During this time, veterinarians may consider shifting from full-time to part-time work or even making a break from the workplace altogether. They may also explore alternative work structures such as consulting, relief veterinary work, teaching, or mentorship. This stage of their career also requires careful financial planning, not only for retirement but also for achieving their desired lifestyle and goals in the years to come. In this blog post, we will discuss key financial considerations for veterinarians as they navigate the transition to retirement.

Transitioning to Retirement: At this stage, veterinarians should start envisioning their retirement and how they want to spend their time. Will they engage in seasonal living based on climates? Will they travel? What activities will fill their time? It is important to consider how they will keep their minds and bodies active and if they have any goals they wanted to accomplish during their working years but now have the time to pursue.

Succession Planning and Business Transition: For practice owners, transitioning their business becomes a critical consideration. Succession planning should ideally begin at least three to five years before they intend to exit the practice. This timeline allows for the formulation of a solid plan and sufficient time to find a suitable successor. Practice sales can take considerable time, with listings taking years to sell. Considerations such as selling to an individual or a larger corporate entity, the terms of the sale (outright, phased, or asset sale), and the possibility of leasing the building back to the new owner should also be addressed.

Retirement Income Planning: Determining income needs in retirement is crucial to support the desired lifestyle. Social security planning plays a vital role, and there is no one-size-fits-all approach. Deciding when to start receiving social security benefits should be based on individual circumstances. Other income sources, such as revenue from the practice sale or lease income, should also be considered. Assessing spousal retirement income and social security benefits is important as well. Working part-time during the early stages of retirement may provide additional income.

Asset Allocation and Drawdown Strategies: Once a baseline of guaranteed income is established, veterinarians can evaluate their retirement savings assets. Based on income streams and lifestyle goals, they can determine if their current assets will adequately support their needs. Implementing a suitable asset allocation and drawdown strategy will ensure the sustainability of their retirement savings.

Health Insurance and Medicare: Understanding health insurance needs in retirement is vital. Exploring Medicare options and considering additional coverage through Medicare supplement plans can help veterinarians meet their healthcare needs effectively.

Legacy and Estate Planning: Veterinarians should consider their legacy plans, including what they want to leave for future generations and any charitable aspirations. Depending on the size of their total assets, they should also evaluate estate tax implications and identify efficient strategies to pass on assets while minimizing potential future taxation.

Conclusion: Transitioning from a veterinary career to retirement requires careful financial planning. Veterinarians should consider their desired retirement lifestyle, alternative work structures, succession planning for practice owners, retirement income sources, asset allocation, health insurance needs, and legacy plans. Seeking the guidance of a financial professional specializing in retirement planning can greatly assist veterinarians in navigating these considerations and creating a solid financial roadmap for a fulfilling retirement.