When Retirement Plans Go "On Hold"
Make those extra years in practice good ones.
BY JOHN B. PINTO

In the wake of the multi-year decline in the stock market, and falling returns for fixed-income options like bonds and CDs, I've received an average of one call a week from ophthalmologists saying something like: "I'm 63 and was planning to retire last year. My practice was already winding down. I was really looking forward to leaving active practice. What am I supposed to do now that I have to work extra years to top off my retirement tank?"

In this article, I'll attempt to explain the key factors that you'll have to consider -- and the important questions you'll need to answer -- so that you can make those few extra years in practice at least palatable, and perhaps actually enjoyable. After all, why should you end what's been a useful and rewarding career feeling a sense of resentment and wishing that you were anywhere else.

Can you accurately gauge just how many more years you need to work to reach your economic finish line?

The closer that retirement looms, the more critical it is to get a second and even third opinion on the variables that go into setting your personal retirement finish line. You need to get answers to the following key questions:

• What will your lifestyle costs be in the years ahead? Can these outlays be trimmed back comfortably if circumstances require it?
• How many expected years do you have in retirement? (A polite way of asking, "How long do you and your spouse expect to live?")
• What's your net worth today and how much of a cushion do you want to have? What's the allocation of qualified and non-qualified savings, and what tax consequences will flow from this, based on your age?
• What are appropriate assumptions about future investment returns and inflation/deflation rates? And what estate-planning issues arise in your individual case?

A savvy fee-only planner or trusted accountant should be able to help you triangulate among these and other critical variables. This isn't a time for guesswork, using off-the-shelf, do-it-yourself financial planning software.

Seek out a professional who's motivated by your best interests, not his commission structure.

Can you put the spurs to an aging practice that may be in modest or moderate decline?

Quite often, when a surgeon starts slowing down, losing let's say just 20% of his marginal revenue (collections), profits will be cut in half or worse. That's because ophthalmology is largely a fixed-cost business.

In client settings such as these, I look first toward re-opening the doctor's appointment template, while at the same time initiating efforts to call back to the practice patients who have been lost to follow-up through poor recall protocols.

I also begin any needed damage control to reverse the perception in the community that the doctor is retiring. If the pre-retirement doctor lacks the energy to practice more hours a week, and we have an abundance of patients, we find part-time O.D.s or M.D.s, or start looking for a partner-track associate to join the practice. Whatever fixes are applied, the end goal is the same: increase marginal revenue and trim costs as feasible to leverage profits upward.

How can you make your unexpected (and potentially undesired) extra years in practice more enjoyable?

This third question is the hardest. Here's the best way to arrive at a workable answer. Make a list of all the individual tasks and elements that make up your practice life today, from the commute among various offices, to direct patient care, surgery, and the myriad details of running your business affairs.

Now, go back and score each item on a 1-10 scale, with "1" representing those gruesome chores you like least, and "10" representing those you enjoy the most, and give yourself an overall score for the whole job you do. Then ask yourself, of those tasks you like least, which could you eliminate or delegate to others? If you did this, what would your resulting overall score be? It might only take giving up call coverage and a few irksome managed care patients to elevate you from an unacceptable "4" to a very livable "6."

Your unique and intelligent answers to these three questions should set you on the course that's not only right for you, but right for your family, your staff and your patients.

John Pinto is president of J. Pinto & Associates, Inc., an ophthalmic practice management consulting firm established in 1979, with offices at 1576 Willow St., San Diego, CA 92016. John is the country's most-published author on ophthalmology business and career management topics. Recent books include the second edition of John Pinto's Little Green Book of Ophthalmology, Turnaround: 21 Weeks to Practice Survival and Permanent Improvement, and CashFlow: The Practical Art of Earning More From Your Ophthalmology Practice. He can be called at (800) 886-1235, e-mailed at pintoinc@aol.com, or found on the web at www.pintoinc.com.