How to retireBMJ 2009; 338 doi: https://doi.org/10.1136/bmj.b786 (Published 04 March 2009) Cite this as: BMJ 2009;338:b786
Planing for retirement should start on graduation. Kathy Oxtoby looks at what you need to consider
Retirement can’t come soon enough for some doctors. Others are more reluctant to hang up their stethoscopes, while some are devastated that they must leave the career to which they have devoted most of their lives.
Dread it or dream of it, when the time comes to take retirement, then what? Unfortunately, many retirees haven’t saved enough—or planned carefully enough—to finance their usual lifestyle after they retire from a career in medicine, says Andrew Dearden, chairman of the BMA’s pension committee.
“Most of us will work for around 35 to 40 years and are going to live for an average of 20 years after retirement. So we need to start planning and saving for retirement as soon as possible.”
The key to a comfortable retirement is to put plans in place early on in your career, he says. “If you don’t start planning for retirement as soon as you can—and that could mean as early as your first house job—you may be disappointed when you come to retirement age, by which time there’s little you can do about it.”
One of the first steps is to work out how much you will need to live on during your retirement. Dr Dearden says most independent financial advisers would say that most retired doctors will need between one half and two thirds of their usual annual income to live comfortably. “Much less and they will struggle a bit, and need to change their lifestyle,” he says.
According to Dr Dearden, many doctors wrongly assume that just because they have an NHS pension they will have enough money to live on when they retire. “Often, they have no idea what their pension will actually be and whether it will be enough to fund a comfortable retirement.”
He recommends that all doctors should write to the NHS Pensions Agency in the next few months, (if they haven’t already done so in the past one to two years) to ask for a pension estimate of how much they will be entitled to when they retire. In that same letter they should request a service contribution record to make sure it is accurate. Your contributions to the NHS pension scheme are based on a percentage of your salary (on a sliding scale), and the employer adds a further 14% of earnings as employer contributions on top of what you put into the scheme.
There are now two NHS pension arrangements. The current system applies to healthcare staff who have already joined the scheme and who have worked for the NHS since before 1 April 2008. It has a normal pension age of 60, though you can consider retiring at any time between the ages of 50 to 70.
The new scheme, which began on 1 April 2008, applies to all those who joined the NHS on or after that date. Anyone who has been away from the NHS for more than five years before returning to work will also have to join this new scheme. Their previous contributions, however, made under the current scheme, will remain there. The new system has a normal pension age of 65.
Starting later this year, but over a period of one to two years, every NHS employee will be sent a letter to explain the current pension system and to ask whether they would like to transfer to the new one. Since 1 April 2008, you can remain in the current scheme until the age of 75.
On whether to transfer, Dr Dearden advises: “Think carefully and seek advice from an independent financial adviser so that you can decide what’s best for you.”
You can find a full explanation of the two schemes at http://careers.bmj.com/careers/advice/view-article.html?id=3060.
An independent financial adviser can help doctors reach their retirement goals. If you are not sure where to start, you can try BMA Services or ask colleagues and friends to recommend someone they might be using.
Doctors who have a separate income from non-NHS work should consider pensioning that income via a private pension scheme, Dr Dearden advises, as private income cannot be superannuated in the NHS system. Private pensions can be a tax-efficient way of saving, but can be subject to the vagaries of the economy and the stockmarket.
When planning for retirement, doctors should contact the Department of Work and Pensions (DWP) to request a state pension estimate. Not all doctors will qualify for a full state pension as some, for example, may have taken time out from employment during their career.
Another way doctors can plan for their retirement is saving “cash.” Some form of tax-efficient saving vehicle, such as an ISA may be advisable.
Dr Dearden says a common mistake people make when considering retirement is that they don’t differentiate between the vehicles they have to generate cash “with which to buy bread” and the assets they own (box). This can give a false sense of how much money you actually have available on retirement.
“A retirement vehicle, such as a pension, gives you cash to live on when retired, whereas often the only way to free up money from property or an expensive car is to sell them,” Dr Dearden explains.
“So I tend to look at assets as valuables you’re likely to pass on to your kids, (if you’re not likely to sell or rent them) rather than as a source of income to live on when retired.”
Things to consider
Prepare for your retirement early
Talk to an independent financial adviser
Don’t view your assets, such as property, as income to live on when you retire
Don’t wait to pursue medically related activities or hobbies before you retire—take the initiative now
Whether you’re 20 or 50, if you haven’t looked at your financial situation in the last year, do it in the next six months
Dr Dearden believes that the right time to leave medicine “is when you want to.” That said, he stresses, “The timing is mainly about whether you have prepared your finances well enough in advance during your career, so that you can retire when you want to and live your retirement years in the way you want to.”
Preparing for retirement is not just about organising finances—it’s also about making plans for the future. If doctors don’t prepare themselves for life after medicine, boredom can set in, and they can feel a lack of purpose in their lives.
Early retirement can be particularly difficult when medicine has been the doctor’s main source of satisfaction. In such cases, the end of a career may bring an acute sense of psychological, intellectual, and emotional loss.
Leaving medicine can be “quite a shock to the system,” says Frank Wells, chair of the BMA’s Retired Members Forum, which looks after the interests of nearly 12 000 retired doctors. “It can be devastating to find you’re no longer in a position of esteem, working to benefit society. And many are ill prepared for the amount of free time they have on their hands,” he says.
Unfortunately, information about coping with retirement is “sadly lacking,” he adds, but the forum is looking into how to help doctors prepare for a life after medicine.
If you’ve been involved with your family, hobbies, community activities, voluntary work, and other interests over the years, retirement won’t necessarily be traumatic. Working part time towards the end your career or after retirement is also an option. General practitioners who wish to do this should seek advice from the primary care trust and the secretary of their local medical committee, and consultants should talk to the medical director of their trust.
Doctors who wish to continue their involvement with the medical profession after retirement could also consider medicolegal work, medical journalism, or voluntary lecturing, Dr Wells suggests.
He stresses, however, that doctors should not wait to take up these options when their career ends. “Take the initiative. Look at what you want to do as you’re approaching retirement, rather than waiting for opportunities to arrive once you’ve retired, when they may not present themselves,” he advises.
Although retired clinicians should enjoy the release from professional pressures, it is just as important not to “stagnate,” he believes. “Doctors are intelligent, well educated people, so they need to keep their well-trained minds active.”
The ideal age to retire is 60, he suggests. “After around 35 years of an active life in medicine, this is a good time to follow your own passions and interests,” he says.
“Every doctor should have something they enjoy doing and an ambition to fulfil, and they should pursue them before it’s too late.”
BMA Retired Members Forum: www.bma.org.uk/representation/other_committees_groups/retired_members_forum/index.jsp
Case study 1
Trevor Turner is a consultant psychiatrist working for the East London Foundation Trust, who at 60 is keen to continue practising medicine beyond retirement. He says: “I’ve no firm plans to retire. I will go on until I’m about 65, and since I’m allowed to work up until 75 I’ll probably work at least part time into my early 70s, health willing. If you’re good at being a doctor, then why not keep going?
“I want to keep working because I’m still fascinated by my specialty. I enjoy working with patients, carers, families, and my colleagues. Every time I see a new patient I look forward to being able to help them.
“I work in the heart of inner city London, which is a tough place to practise—with high crime rates and high numbers of drug and alcohol related behaviours—but this means you really get to see the difference you can make to patients’ lives.
“If I was talking to an embittered 45 year old consultant I would tell them to use their appraisal and job plan to do more of the things they enjoy doing, and not to obsess about what they can’t change.”
Case study 2
Dr Christopher Nevill is a general practitioner in Powys, Wales who at 54 is looking to take early retirement. He says: “My main problem is that despite the new contract, the pressure on general practice is rising inexorably. The contract keeps being broken, and it hasn’t addressed GPs concerns.
“I enjoy being a GP, but I hate not having the time to do my job effectively. There’s just too much pressure. We’re understaffed, we’re working to full capacity, and there’s no flexibility in the system.
“I’m fed up with not being in charge of my own destiny. I’m thinking about changing my situation as soon as I can. I have to prevent myself from burning out, and I want to see more of my family. It will mean going part time, retiring, or even emigrating.
“We all want a reasonable balance between our work and home lives, but that’s not happening any more. I love doing this job, I don’t want to give it up, and I want to continue being a doctor in some way—but I can’t go on like this.”