Is On-time Retirement a Myth?

Dr. Raj, who was trained in India and came to Canada five years ago, has incorporated her business and uses the medical corporation as her way of saving money and as an investment vehicle. She and her husband manage their own finances. As a naturally optimistic person, Dr. Raj said she thinks it will all work out, but she is not certain. “When I retire I hope to be able to borrow through the corporation. I don’t know,” she said. “Am I worried? I am not worried. I wasn’t raised that way,” she laughed. “I may in trouble, I don’t know.”

A pension plan for doctors would be a great idea, said Dr. Raj, and she would happily contribute. “There should be an essential government plan that gives us options. I do feel that way. I work really hard and give a lot to overhead and I do feel it is public work and there should be those assurances for us.”

Pension survey
The Medical Post hit a nerve when we asked physicians about retirement planning. We contacted Dr. Raj and other doctors to find out how they are saving for retirement, and whether they think their government should help by setting up a pension plan. Our interviews supplement findings from our exclusive online survey of physicians recently conducted with mdPassport.

The pension survey was completed by 642 physicians earlier this summer. Respondents were in private practice(58%), academic medicine(19%)or working at a community-based hospital(19%). Respondents were divided evenly between solo practitioners, those who worked in small groups and those who worked in larger group practices. Half(54%)of our respondents were family physicians or GPs, while the other half were specialists.

This is a profession struggling with the issue of retirement. Only 61% of doctors plan to retire at or before age 65. A huge majority(91%)would be willing to contribute financially to a pension plan if their province offered one. In fact, 76% believe a pension plan for doctors is the most critical financial strategy in future negotiations with government.

Comments from physicians who filled out the survey reflect a range of opinions.

“I believe the province ‘owes me’ a pension and that I have contributed in kind for the 40 years of practising medicine, under-compensated over the years; they can count that as my contribution,” wrote one physician respondent. But another holds the concept of independence dear: “I think a pension plan is a step to becoming employees, which I think would be a disaster for the medical profession. A state-participated pension plan for MDs(much like teachers have)partly subsidized by government, is imperative. About time we had this in place.”

‘Too late for me’
Dr. Jan Moe, vice-president of medical services and chief of staff at Kelsey Trail Health Region in Saskatchewan, is one of the lucky ones. At 62, he is “slowing down considerably for personal life” and sees himself being fully retired within a year and a half. He has been practising in Saskatchewan for 30 years, and will receive a lump sum of $40,000 from the province. Over the years, he has managed his own funds, with some help from MD Management(the Canadian Medical Association’s financial planning services arm), and has contributed to his RRSP at the maximum level each year.

Even though he said “it is too late for me,” he added he believes the province should develop a pension plan for physicians. “The government has shirked responsibility for year and years and years. Fee-for-service is miserably short.”

Dr. Moe said this would correct the discrepancies he sees around him. “I am aware of physicians who can’t afford to retire who are older than me.”

Still working
Dr. Geoffrey Purdell-Lewis, age 69, is still working three days a week in pain clinics in Toronto and Burlington, Ont. Having organized his retirement savings through a variety of stocks and mutual funds, financially he doesn’t need to keep working, he said, but rather continues because he enjoys it and likes to keep his mind sharp. But this resident of Dundas, Ont., certainly knows doctors who have been “plain stupid” and still have mortgages on their homes at age 60. Unlike Dr. Moe, he is skeptical of the idea of a government pension plan for doctors.

“My own philosophy is, if you want the state to look after you, go live in Sweden.”

At the moment, there are far more questions than answers. “Who would run it? The medical associations? The government? What amount is it based on? Gross income? Net income? What do doctors want? A huge amount of discussion is needed.”

Doctors have to realize there are trade-offs. “The government isn’t going to give you a high fee schedule and a pension as well.”

Dr. Purdell-Lewis said he worries about young doctors, who start their careers with far more debt than older doctors ever did.

We asked B.C. pediatric resident Dr. Kevin Harris, age 30, if his colleagues generally have financial plans.

“They are more concerned about debt and how to pay for their first home. I would say it is routine to owe $50,000 to $150,000 after medical school.”

Saving for retirement is still a “sink or swim” scenario for doctors. “I think the biggest problem is that financial planning is not a component of medical school or residency curriculum. If the government contributed, people would definitely benefit,” said Dr. Harris, a resident at B.C. Children’s Hospital.

Dr. Peter Petrosoniak is a 57-year-old GP in Lindsay, Ont. He has had a busy family practice there for 26 years. He and his wife, an osteopath, have raised three boys, who are in their early 20s. He estimated that he can retire at 65. “We should be comfortable. We have enough to be OK. We are not the Bronfmans,” he said.

He said it does irk him that some civil servants such as teachers retire with full pensions. He knows an engineer in his 50s who retired from a public utility with a pension, and now plays a lot of golf. With his practice and a huge burden of paperwork, Dr. Petrosoniak said he can hardly squeeze in one golf game a week.

“If I retired right now, I’d probably run short at some point. But it would be nice.”