Thank you to James Jolley for his amazing information tailored just for us hygienists!
We have similar problems. Getting people to do what is necessary today so they can enjoy their tomorrows. For you as a hygienist it is getting your patients to keep up on their oral hygiene so that they will have a beautiful smile for years to come. For me it is helping my clients to set enough aside so they can enjoy their retirement years without having to worry about finances.
On that note, planning for retirement is similar to flossing. People put it off until it’s too late. Unless you win the lotto saving up enough money for retirement takes time and effort. Retirement planning shouldn’t be stressful and should definitely never lead to bruxism. Consider the following as you prepare for retirement.
Contribute to your 401k
Most offices don’t offer a 401(k) plan and if you are lucky enough to be in one of those offices be sure that you are contributing money to it even if it’s only a minimal amount. Some offices/companies will even match their hygienist’s contributions. If that’s the case for you then it may be in your best interest to max out the employer match as long as you can afford it. That matched money may also grow by compounding throughout your career. Overall a good rule of thumb is to contribute 10-12% of your income to your retirement account annually depending on your financial circumstances.
Don’t have a 401(k) at your office?
If you are self-employed you may want to consider setting up a SEP IRA. A SEP IRA is similar to a 401(k) for the self-employed but without the administration costs however other account fees may apply. Employers can contribute up to the lesser of 25% of your compensation or $54,000.
Determine how much you will need
According to USNews hygienists on average make just over $70,000 annually. Let’s say you want to continue that lifestyle and would like $70,000 annually in retirement. According to Investopedia, if you were ready to retire at 65 you would need roughly $1 million to last you until you were 95 assuming a 4% withdrawal rate, favorable portfolio performance and the current payout for Social Security income. Why 95? As you have seen in your profession, technology around health care is prolonging people’s lives. I know you love your patients but who wants to go back to work when they hit 80? The last thing you want to do is outlive your money. Plan now so you can enjoy your golden years.
For most American workers (hygienists included) saving $1 million is no easy feat. Determine your retirement goals and then with a financial advisor or use an online retirement calculator to see how much you will need to meet your retirement goals. If you are below where you should be, then budget a way to add more to your retirement account. If you have saved too much, you may want to consider pulling back your contributions and take that extra trip you have wanted to go on.
When to start saving
If you are one of the 33% of American workers who have no savings set aside for retirement it’s not too late. Start out by opening an IRA with a few hundred dollars. Set up an automatic withdrawal from your bank account to make sure you are putting money aside. You may even want to step-up the amount every few months until you max out the contribution amounts. The max contributions for a traditional IRA and Roth IRA are $5,500 or $6,500 for those over the age of 50. This amount is in addition to any amount you are adding to a 401(k). Don’t put it off any longer than you have to, because you will miss out on the compounding effect of having your retirement account invested.
Take advantage of tax breaks through an IRA
Planning for retirement also helps you keep a little bit more of your hard earned cash. If you are looking for a tax break consider adding to a traditional IRA. Roth IRA’s are also an option but don’t provide a tax break, however the money that comes out at retirement can potentially come out tax free assuming certain provisions are met. Speak with your tax/financial advisor to see which type of IRA would work best for your situation.
Just as your patients are encouraged to get routine checkups so should your retirement plan. Retirement plans aren’t a set it and forget it process. Your goals will change throughout your life. To avoid a malocclusion of sorts, make sure that you are updating your retirement plan with those changes. You should be reviewing your retirement plan at least once a year to make sure you are still on track and make adjustments as necessary.
James Jolley is a Financial Advisor for Wells Fargo Advisors in Salt Lake City, Utah providing retirement planning for medical professionals. He can be reached at 800.662.3733 or by email at email@example.com.
Wells Fargo Advisors is not a tax or legal advisor.
Traditional IRA distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59 ½ or meet other requirements. Both may be subject to a 10% Federal tax penalty if distributions are taken prior to age 59½.
The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.