How to Retire After 25 Years of Pharmacy Practice: Part 2

Here’s the second part of a 2-part series on how to retire after 25 years of working as a pharmacist:

1. Consider purchasing insurance for long-term planning

Fundamental things to consider include disability and life insurance. I purchased insurance through my company and it was very useful when I had surgery and had to take time off from work. The earlier you purchase whole or term life insurance, the cheaper it is, especially after graduating.

You can purchase a life insurance plan when you’re 24 years old for $20/month for $500,000 instead of $50/month, which is the premium for 40- to 45-year-olds. If you don’t have a spouse and/or children, you may not need life insurance, but it’s cheaper the earlier you get it.

You may also want to consider purchasing insurance for your parents, spouse, and children. I didn’t purchase insurance for my parents and it became a hardship for me because of the funeral expenses I had to cover out-of-pocket. We don’t want to think of death in our family, but being in the medical field, we have firsthand knowledge of how patients can become ill and pass away, so we can be proactive in purchasing coverage for love ones.

2. Evaluate your wants and needs

Do you want or need that $50,000 car? Getting that new Lexus shows status, but it comes with a huge price tag. You should consider a modest car after you graduate, and then consider upgrading it as you establish your career.

Shopping sprees, vacations, and dining out should all be done in moderation. Planning ahead for those events can make them easier to finance, while spontaneous trips can cost more in the form of higher fees and greater consumption.

If you have a spouse, he or she has to be in agreeance with your spending habits. One partner can be frugal, but if the other overspends, there will be constant turmoil. Many retirement plans have been foiled by a spendthrift spouse, so if you don’t see eye-to-eye, opt for financial counseling to compromise and get back on track.

3. Hold off on buying a home

It may be tough to resist buying or building your dream home when you land a job out of pharmacy school or residency, but if you’re unsure how long you’re going to be in the same area, consider renting instead. You may not be satisfied with your job, and you don’t want your home to stop you from finding a better fit.

When you’ve been in the same place for some time, buy yourself a nice home with a low-interest, 15-year mortgage, as this will help you eliminate your mortgage payment before retirement. You can also implement the 13^th payment rule by either paying a 13^th payment before December 31^st of every year or divide the 13^th payment over 12 months and add that as a principal payment. This can cut down 2 years of payments, or 7 years for a 30-year mortgage.

4. Learn about investing

If you’re offered a 401k or any other employee benefit plan, take advantage of it. Some companies offer a matching program, such as $1 match by the employer for every $1 the employee contributes. Go ahead and participate in those programs because they offer free money.

Participating in employee stock programs takes investment control away from the employee and allows the company to invest money on your behalf. If the market falls, your investment is lost, but if your company invests well, your money will grow.

It’s unfortunate that you can’t count on your retirement account in 25 years if you contribute every check, because the investment isn’t guaranteed to be there when you’re ready to retire. For that reason, I recommend diversifying and investing some money on your own and some with the company.

5. Follow your money

Look at your credit cards, mortgage, and even your grocery receipts for discrepancies. I’m not a fan of a budget because it’s so easy to bust, but I’m a fan of saving money every paycheck.

By creating a healthy savings account, you can feel comfortable if your financial status changes suddenly. Keep in mind that most pharmacists’ salaries don’t increase over time. Many times, new graduates and pharmacists who have been working for 20 years can be within 20 cents of each other. Therefore, save, invest, and be conscious of your finances early on.

6. Make more, spend less

I’ve seen pharmacists working multiple jobs to make ends meet and overnight pharmacists working 2 overnight jobs on their opposite weeks just to pay their bills. This can be a dangerous position, especially when you’re depriving yourself of sleep to earn money.

There are ways to increase your income without wearing yourself out. For instance, I’ve seen pharmacists create their own business outside of the pharmacy environment. One couple started a T-shirt business and they make $20,000 in extra income annually.

The great thing about having your own business is you can control your client base around your work schedule. If you want more customers, you can increase your marketing, and if you have too many customers to handle, you can adjust accordingly. Think of a hobby you enjoy or an innovation that can help patients, and create a business model around it. Extra income can always help your bottom line.

7. Start one thing at a time

If you’ve been practicing pharmacy for a while, you may not have done any of these things yet. However, it’s never too late to get control over your finances.

Start small by saving $50 each pay period. That may be a major sacrifice now, but if you set up this payment automatically when you get your direct deposit, you won’t miss it.

Also, look at your school loans and try to pay them more frequently. If your payment is $100 a month, pay $50 biweekly, which would cost you the same amount a month but attack the interest.

Track your spending to understand what you purchase on a monthly basis. If you know what you need to spend in order to live, first make sure you have those expenses covered, and then start a small savings. Soon enough, you’ll start to get back on track.