Career-Oriented Solutions for Saving
04 December 2020
It’s common for financial professionals to coach individuals to consistently save for retirement — instructing them to keep their heads down, saving and investing wisely until they reach their required nest egg.
Knowing where this end zone lies is important. But certain individuals also need to ensure they are not moving their retirement goalposts further by focusing only on what’s in the distance. By regularly increasing our living standards, we may also be increasing the amount of money required to fund our golden years. Here’s where experienced financial professionals often make an important distinction. Smart saving relies on a well-rounded approach: maintaining confidence for the future by making room for the bigger picture.
While creating our Personal Finance for Physicians class, we discovered that a 35-year-old doctor making about $200,000 and contributing to their 401(k) every year may require an early retirement savings of under $5 million to maintain their lifestyle throughout retirement. This may be a perfectly plausible goal for many doctors.
However, if this physician were to have their lifestyle creep up with each raise until age 55, now living off of $250,000 a year, they would then need more than $6 million dollars for retirement — or face having to dramatically reduce their living standards. Moving retirement goalposts by one million dollars can certainly be avoided. Yet it requires awareness and planning; particularly, mindfulness of one’s income and the raises they receive.
It may be easier to prevent living standards from growing too quickly than to cut costs later on. Facing unexpected changes to a person’s quality of life can be difficult, but by taking lifestyle shifts and income into account over time, it’s possible to catch onto these trends before they begin — and course correct as you go. In order to help facilitate a mindful approach toward long-term saving, we devised a strategy for young doctors called RAISE Management: a protocol to ensure you are being mindful each year of how much your living standards increase with each annual raise.
When someone gets a raise, they often subconsciously spend more, since the natural inclination can be to spend what is made after paycheck deductions for taxes, insurance and retirement accounts.
The income trajectory of physicians is unique. Long years of education followed by high earnings can become a recipe for lifestyle creep. Having to delay gratification of earnings longer than your peers is one of the many special things about aspiring to become a physician. That’s why at In Good Company, we recognize the importance of adapting financial literacy workshops to certain professionals and their unique needs.
Spending and saving habits may be rooted in the experience of overcoming enormous obstacles to achieve exceptional income. Whether you work in a medical profession yourself or lead a niche group of employees who can benefit from guidance relevant to their field, our course offerings are diverse enough to meet a variety of lifestyles and career paths.
We recognize that each vocation comes with its own manual — and financial education isn’t one-size-fits-all. There are certain careers and personal situations that may require a bit of insight beyond the basics, so we can adapt to provide an experience that suits these particular needs. If your employees are looking for more generalized topics, we’ve got something for them, too. From our Evergreen Series to individual investment or estate planning workshops, our selection of pre-existing content provides support for professionals across the board.
Take a deeper look into our RAISE Management protocol or explore opportunities to bring In Good Company to your workplace. Discover how financial education can expand awareness in categories that are most applicable to your employees. This type of self-reflection and engaged learning can make all the difference in shaping the confidence of a hardworking professional or the success of an entire team.