A Financial Planning Checklist for Dentists Gearing Up for Retirement
After decades of tireless work and diligent saving, your retirement date is finally on the horizon: in the next 3 to 5 years, you’ll be embarking on a new, exciting stage of your life!
However, there are some key investment and insurance planning issues you’ll need to carefully consider well in advance of your retirement date. Fortunately, the licensed certified financial planners and professional insurance advisors at CDSPI Advisory Services Inc. (in conjunction with your other professional advisors) can help guide you in creating a customized exit strategy. Here is a partial checklist of some issues we can explore.
Investment Planning Considerations
□ Properly Structure the Sale of Your Practice—and Manage the Proceeds
Consult your tax professional about the prospect of restructuring the ownership of your practice to minimize taxes ahead of its sale (which may involve incorporating or adding shareholders). You’ll also need to consider how to strategically invest the proceeds from the sale.
□ Revisit the Asset Allocation of Your Retirement Investments
As you approach retirement, it may be advisable to take on less investment risk in your portfolio. One option to consider when mitigating that risk is through discretionary portfolio management.
□ Formulate a Retirement Income Distribution Plan
You will need to plan the method and timing for taking distributions from your retirement assets (e.g., your RRSP, non-registered investments, and dividends from your corporation).
□ Assess Financial Risks
It’s important to understand how to manage financial risks that can impact your retirement, such as a outliving your savings, withdrawing too much income, inflation, investing too conservatively and health care expenses (for more on health benefits, see the box “Introducing CDSPI Retiree Benefits”)
Insurance Planning Considerations
□ Consider Insurance Plans You May No Longer Need
If you plan to completely retire, you’ll want to discontinue certain insurance plans upon retirement. These may include, but are not limited to, your disability, office (unless you will continue to own the practice), malpractice (if surrendering your license to practise) and office overhead insurance plans.
□ Review Coverages You May Need to Maintain
Some dentists decide to retire gradually by working reduced hours in advance of completely retiring. Dentists in this circumstance may need to fully maintain certain coverages, like malpractice insurance, but may potentially need to consider reducing others, such as disability insurance.
If you’ll be working as an associate in advance of retiring, consider obtaining the TripleGuard™ Insurance Associate Package, in lieu of cancelling your office coverage. The Associate Package provides economically priced coverage for office contents losses, commercial liability lawsuits (e.g., a patient slip and fall) and income loss resulting from an office disaster.
Don’t forget to maintain your travel coverage if your retirement plans will involve vacationing outside your home province.
□ Re-examine Your Need for Life Insurance
Term life insurance is generally designed to protect your family’s lifestyle. However, as you approach retirement, you may want to convert a portion or all of your term coverage to a permanent life insurance plan, which can be used for estate planning purposes, such as covering estate taxes and/or creating a bequest for your heirs.
□ Review Your Estate Planning Documents
Are your will, power of attorney and insurance beneficiary designations up to date? Does a trusted person know where to locate these documents?
Of course, financial planning is just one component of the many issues you’ll need to think about when preparing for retirement. To gain insights on others, consider speaking with your retired dentist colleagues. They will undoubtedly be able to offer valuable advice, including potential issues to avoid.
For a personalized assessment of your specific financial planning needs in advance of retirement─or at any other stage of your career─contact CDSPI Advisory Services Inc. at 1-877-293-9455. The non-commissioned certified financial planners and professional insurance advisors at CDSPI work exclusively for dental professionals and have extensive experience in providing solutions* for the profession’s unique financial planning needs.
*Restrictions may apply to advisory services in certain jurisdictions.
TripleGuard™ Insurance is underwritten by Aviva Insurance Company of Canada.