Retire early by planning for it now

An early work-exit strategy requires both financial and personal management.

By Amir Arbisser, MD and Lisa Brothers Arbisser, MD

Planning for an early retirement ought to begin the first day you open the doors to your medical practice — if not earlier. It warrants a business plan, professional advice and regular interval checkups. You would do the same for any endeavor targeted to accrue millions of dollars in its final valuation.

MANAGE YOUR MONEY

Quantify your finish line

For discussion purposes, imagine you’re targeting $5 million in personal unencumbered assets as your finish line. Remember, that number is independent of your practice’s or home’s value or the cost of your children’s educations, weddings or other expenses.

Quantifying a specific financial end figure is like the first tipped dominoe: it sets in motion your smaller annual savings targets. In our $5 million example, $50,000 in annual savings compounded by 7% would exceed the goal in about 30 years. Typical ophthalmologists could theoretically cross the finish line by the time they are about 60 years of age. If you’re a better saver, a better investor, or live a simpler lifestyle, you could finish your financial circuit even sooner.

Saving money gives you peace of mind

Routinely saving income from the moment of your practice’s inception helps in several ways. Initially, your lower income, and the resulting tax bracket, might facilitate your aggregating that annual deposit during the time that you will likely live a more modest lifestyle.

In addition, growth and long-term benefits might accrue if you use a tax-protected Roth IRA-like vehicle at the outset. Of course, your saving discipline’s corollary also results in less to spend. Prepare for a bonus benefit here — happiness. According to a study conducted by consultant John Pinto and psychologist Craig Piso, the single identifiable factor that is most predictive of an ophthalmologists’ career happiness is spending less than one earns (The research appeared in Mr. Pinto’s Little Green Book of Ophthalmology).

Regular periodic oversight

You should expect clarity and transparency from your financial gurus and their documents and savings vehicles. No one likes burning midnight oil repeatedly tallying assets and progress or calculating everything to the third decimal point. However, we must maintain comfortable, regular periodic oversight. We know no financial adviser of any stripe — lawyer, accountant, insurance agent, broker or any other wealth adviser—who operates with perfection. If they err, it is usually to our detriment. After seeking corrective understanding or actions, we’ve switched institutions and advisers more than once.

The most entertaining financial misadventure (in our favor, for once) was discovering a spare $10 million in each of our four children’s college trusts. That $40 million appeared monthly and undetected by neither our nattily attired friendly broker nor his prominent brokerage house. Although the error would have jump-started an even earlier retirement, we preferred a good night’s rest to, say, extradition proceedings. We promptly pointed out the error to the broker and his investment firm before parting ways with both. Incidentally, that firm famously failed a few years later.

The point? The individuals and firms nurturing your nest egg — or better, a part of it — may be your congregant, your patient, your running, biking, drinking or poker buddy, but he still must be held to the highest standards. If he commits egregious errors, it’s time to part ways.

KEEP YOUR EYES ON THE FUTURE

Turning a profit

If you hope to transition (for example, sell and harvest some economic benefit from) your practice, organize it at the outset for future sale. Make the practice attractive to newly minted colleagues; their options are growing due to our aging society and (the relative) declining availability of graduating residents.

Use a generic name

Despite good personal and professional reputations, we chose a generic name for our practice. We could not imagine forever saddling future unknown professional successors with our name. Nor did we embrace the idea of an unknown ophthalmologist with few or no credentials possibly sullying our names in the future.

Selling shares

We sold full and equal equity shares to colleagues after appropriate non-equity courtship periods. We established a unique anticompetitive compensation methodology that fostered cooperation among the group’s colleagues. The group was stable and strategically focused instead of wasting its resources, emotions and legal fees on each other. We directed adequate resources to assemble strong nonclinical professional administrators, a huge attraction for recruits/future partners or owners.

MAKING THE TRANSITION

Practice structure

Strong administrators greatly facilitated the transition when we considered retirement. We passed the group baton to a leader-ready colleague after our administration demonstrated skilled leadership and stability for several years. During that period, our CEO Dan Craig launched a more business-like proposal for equity transition. Instead of tallying used equipment, accounts receivable, and nearly nonexistent goodwill as assets, he helped us redefine equity as a simple multiple of annual profits. This business-like calculation saved all parties on both sides of transactions tens of thousands of dollars in legal and accounting fees in addition to the months, and emotions, invested in negotiations. By the time we packed our bags we had concluded most of the practice’s equity transactions years earlier. The practice had only to write us checks for two (of 12 equal partner) shares.

Personal interests

With our financial plan in place, money in the till and a practice structured for transition, we need to discuss one more vital aspect of retirement; satisfying personal interests outside of clinical practice. Few of us can comfortably and abruptly switch gears from always doctoring to always idling.

To get a taste of life outside of the practice, we job-shared with another ophthalmology couple for four years; each couple worked alternating months all year long. In other words, we were off six months a year and could test-drive our satisfaction level while not working.

You must explore alternate interests and pursuits that satisfy you — not only in anticipation of elective early retirement, but also in case of forced premature retirement, due to health, natural disaster or other contingencies.

ENJOY THE RIDE

The perception of control

This ain’t rocket science. Early retirement is attainable. It requires that you have financial discipline and that you structure your practice with future transition in mind. Identify and embrace non-practice interests to let go when it feels right.

Psychologist Dr. Joyce Brothers (Dr. Lisa Brothers Arbisser’s mom), used to share the following anecdote with her lecture audiences.

Two racecar drivers hurtle toward and around the track’s curve. They experience identical physiologic responses: they’re sweating bullets, are tachycardic, and are experiencing breathing changes. One driver hugging the inside of the curve is thrilled with the ride of his life. The second begins sliding out of control; he’s distressed. Interestingly, despite identical physical responses, the reason for euphoria or dysphoria results simply from the drivers’ perception of control.

We espouse planning for early retirement and recommend finding a way to enjoy the ride. OM

About the Authors
	Amir Arbisser MD is a now-retired pediatric ophthalmologist and the founder of Eye Surgeons Associates, a multi-location practice based in Bettendorf, Iowa. His e-mail is aarbisser@usa.net.
	Lisa Brothers Arbisser, MD is a now-retired ophthalmologist at Eye Surgeons Associates in Bettendorf, Iowa.