5 Steps to Start Saving for Retirement

retirement

The best time to start saving for retirement is 20 years ago. The second best time is now. The same is true of planting a tree, according to according to a popular Chinese proverb.

If you’ve just recently become excited and motivated to take control of your finances or investments, or are just coming out of training, enjoy!

#1 Decide Whether or Not to Be Your Own Investment Manager

If you choose to be your own investment manager, realize that you will need to spend a fair amount of time, especially in the beginning, reading some high-quality books to learn how to invest properly.

I recommend most physicians save 20% of their gross income for retirement. If you can’t do that, do the best you can and increase it each year until you get into that neighborhood. Fifteen percent might be enough if you start early, invest wisely, and work long enough, but 5% certainly is not.

#2 Carve Out a Significant Portion of Your Income to Invest

#3 Figure Out Which Retirement Accounts You Will Use

Most physicians, whether employed or self-employed, should also be using a personal and spousal backdoor Roth IRA and if insured under a high-deductible health plan, a health savings account, which can be used as an extra retirement account.

#4 Choose a Reasonable Asset Allocation in Your Retirement Accounts

As you do more reading and self-educating, you may wish to move into a more complex portfolio.

Your plan may change slightly from time to time, which is fine, especially in the first year or two while you are still doing the lion’s share of your self-education. But within a few years, plan changes should be minor and infrequent.

#5 Develop a Written Investing Policy Statement and Stay the Course

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