How much money should the average veterinarian have in retirement savings when they finally stop working? Twenty-five times their annual expenses? $12 million? $5 million? The answer to such a crucial question varies tremendously in magnitude and context. Let’s unpack everything by answering this question: How can a veterinarian close this chapter in their career and move into retirement with confidence, excitement and peace of mind?

The numbers above are good starting points. They are understandable and logical. None are inherently wrong. But on the other hand, none are correct, either.

Rules of thumb are a double-edged sword. Once you state what worked for you, people want to debate you because what you did wouldn’t work for them, and everyone misses the point.

Financial success in retirement is relative. In the context of planning for retirement, the only genuine answer (whether we like it or not) is “It depends.” What worked for your parents, best friend or colleague is irrelevant. Why? Because you are different. You live differently. You spend differently. You saved and invested differently. You have different goals, values, financial circumstances, family dynamics and health expectations. Because of that massive variability, you cannot rely on a rule of thumb to plan for your retirement.

John and Mary

Here is an example showing the stark differences in how retirement could look for two practice owners who want to retire:

1. John is 60 and has owned his clinic for 25 years. He will retire next year and sell his practice to his two on-site veterinarian children through a five-year installment schedule. He and his retired wife have no debt, live modestly on $7,000 a month and want to start focusing on their local family and giving money to Veterinarians Without Borders. They do not wish to travel heavily, and they live in a state with warm weather and easy retirement living. Since their children are financially independent and will receive the business soon, John and his wife will not provide additional support. When they die, the kids will inherit the remaining assets. John and his wife will also provide considerable financial support to their aging parents.
2. Mary is 45 and has owned her clinic for 15 years. A corporate consolidator will acquire her business in the third quarter of this year, upon which she will receive a lump-sum payment and help transition the practice over the next 36 months. She and her husband have two children about to enter college. Mary wants to pay for their four-year education. She and her husband live on $10,000 a month but want to increase it to $20,000 a month in retirement because they want to travel domestically and internationally for as long as they’re physically able. They also want to purchase a mountain home and a beach home in 10 years to enjoy time with friends and family. Mary and her husband also want to pay for their children’s weddings and provide a 50% down payment for each kid’s first home.

Mission Accomplished

Here is the best part about financial life planning: John and Mary’s retirement scenarios are awesome because they accomplish goals based on the two veterinarians’ values and vision of the future.

The two scenarios could not be more different. Therefore, planning for them must be done differently.

While John probably doesn’t need $12 million by retirement, Mary likely does. John’s retirement would ideally last 30 years, and Mary’s for 45. John’s moderate lifestyle can be easily forecasted, while Mary expects several significant expenses varying drastically in cost over the short, mid, and long term. John wants to donate money, which comes with tax advantages that need to be leveraged, and Mary isn’t focused on that type of spending. John is getting a five-year payout, and Mary will receive a large, one-time disbursement.

John and Mary should ask themselves, “What will I do over the next 30 to 45 years?” Each projected retirement is longer than the years they owned their practices. Think about that for a minute. You can travel, golf or dig your toes into the sand for only so long.

5 Key Takeaways

How can a practice owner move into retirement with confidence, excitement and peace of mind?

1. Recognize that one’s net worth does not drive a retirement plan. Cash flow and spending do. Calculate how much money you would need monthly to enjoy your ideal retirement life. The feasibility drastically changes if you spend $10,000 a month compared with $20,000. Also, identify anticipated major expenses, such as new homes, boats, RVs, international travel, a child’s education and wedding, charitable giving, and care for aging parents.
2. Know what you’ll do in retirement. Write down what your ideal day, week, month and year look like in retirement. The task might sound trivial, but our clients assure us the exercise is enjoyable. Where do you see yourself in 15 years? Who are you with? What are you doing consistently or occasionally? How are you stimulating your mind?
3. The best retirees are relational and find harmony between pleasure and significance. Just because you retire doesn’t mean you can no longer impact the people and causes you care about. Think about how to allocate your time in retirement in ways that bring you joy and fulfillment.
4. Align your finances with your lifestyle. If you followed the first three steps, you identified your ideal retirement life. Now is the time to find out if such a life is feasible financially over the long term. Review your cash assets, your investment accounts, your real estate and additional future income streams. This is a great time to consider working with an independent financial professional to get unbiased feedback and run your retirement plan through financial planning software to test your plan’s durability.
5. Review your plan consistently. Things will change throughout your retirement, including your vision of the future, your needs and possibly your values. The stock market will fluctuate. So will the real estate market. Keep discussing what you want and how you can adjust your financial life to achieve your goals.

Working people highly desire retirement, but it’s one of the least planned life events. A Charles Schwab study showed that people, on average, spend more time planning vacations throughout their working years than planning for retirement. Make sure to honestly plan for your retirement so you can walk into and through that next chapter with confidence, excitement and peace of mind.

HAPPY BIRTHDAY

According to the nonprofit Alliance for Lifetime Income, “In 2025, an average of 11,400 Americans will turn 65 every day, setting a historic milestone with 4.18 million people reaching the traditional retirement age in a single year — the highest on record.”