Just like the rest of the workforce, nephrologists eventually have to hang up their stethoscopes someday and enjoy life after work. However, the recent recession and a rollercoaster stock market have to hurt potential retirees and cause a them to work beyond what they planned. That’s why it is important to have a solid retirement plan in place as soon as possible. This is especially true as more young nephrologists enter the workforce.
The Marketplace & Compensation
Nephrology is a relatively young specialty having really gotten its start in the late 1960s and early 1970s; therefore, the first wave of retiring nephrologists has just started to impact the workforce in the last five years.
According to Martin Osinski, president of NephrologyUSA, the American Medical Association’s Physician Masterfile indicates there are approximately 8,300 nephrologists in the United States and only 4,000 are age 50 or younger. Although there are no concrete statistics on the number of nephrologists retiring, Osinski estimated that probably 200 to 250 nephrologists retire annually.
The American Medical Group Association’s (AMGA) 2009 Physician Compensation Survey estimates the median compensation for the hypertension and nephrology specialty at $246,049, with the average starting compensation at $180,000. Nephrologists earn approximately $235,000 in the East; $284,940 in the West, $256,293 in the South; and $238,750 in the North. “You have a lot of older nephrologists, and at a time when the demand is increasing, the number of nephrologists that are coming out are not going to keep up with those that are retiring,” he said. “In addition to age, many nephrologists are choosing to retire early due to frustrations and difficulties in practicing medicine in the current economic climate, the predominance of Medicare (and its lower payments) reimbursement in nephrology, the increasingly high cost of medical malpractice insurance, and the difficulties in getting a handle on the future of bundling and its impact on physician incomes (at least those joint venturing or receiving medical directorships).”
Whether you are a nephrologist nearing retirement or a resident just starting your career, you still need to keep an eye on earnings and contributions to savings and retirement accounts. The good news is that more U.S. families are beginning to contribute to their savings. According to the Wall Street Journal, household debt decreased for the first time since 1952. This, in turn, resulted in a rise in the savings rate. In the past few years the savings rate actually has been below zero at times. The savings rate had been declining since the 1980s when it was around 10 percent. Many analysts predict the savings rate will be 3 percent to 5 percent this year, with Goldman Sachs predicting 6 percent to 10 percent.
Is Your Retirement Plan On Track?
A physician coming close to retirement hopefully has established a good relationship with a financial planner that includes a solid plan for their retirement that includes a number of investment avenues. For example, as a partner in the practice, a nephrologist probably is benefiting in a number of ways including the opportunity to buy into real estate and/or ancillary services or dialysis units, or fees received for medical directorships.
Osinski said nephrologists also must consider several things that other physicians do not when it comes to retirement planning. In any financial arrangement that physician has with a joint venture organization or healthcare provider where income is going to be coming to the physician, appropriate tax planning needs, be done to ensure a maximum return of the physician’s investments.
“If they are medical directors of the unit, they are not going to earn additional income they otherwise were earning once they retire. Therefore, they need to know if there are going to be opportunities for them to work on a part-time basis (assuming they want to do it) and still maintain that medical directorship,” he said.
Additionally, if they are joint venture owners in any real estate venture or dialysis units, a retiring nephrologist needs to determine how and if they will continue in that role. “If they are going to be selling those interests they need to determine how that money will be paid out,” Osinski said. “An additional consideration is how the money will be paid out if they are selling their share in the practice.”
