Today's Chiropractic Lifestyle

Discussion Board

Survey

Passions & Pursuits

Retirement Refresher Course
By Behlor Santi

For the last 15 years, John W. Eckel, CFA, CFP, of Simsbury, Conn., has been president of Pinnacle Investment Management. Pinnacle is a financial planning firm that serves many health professionals, including chiropractors. For Eckel, financial planning has held a lifelong appeal.

“I’ve been interested in finance,” he says, “since my grandfather took me to a Merrill Lynch office. All the retirees were sitting there smoking their big old stogies.”

>From that beginning, Eckel earned a Bachelor of Science from Cornell, and earned a Master of Business Administration from the University of Virginia. He then went to work for corporate America, where he felt that the traditional commission-based brokers and financial planners weren’t serving their clients successfully. Eventually, he started his own no-fee based financial planning firm.

Eckel states what his firm does. “We work with professionals and we help them plan for retirement. We help them develop a well-diversified portfolio that supports them for the rest of their life.”

What makes a health professional’s retirement planning different? “Small practices have more flexibility in their type of retirement plans. Corporate professionals, on the other hand, don’t have as much control over their type of retirement plans.” While many health professionals choose to work after the age of 65, corporate professionals may have stringent retirement age requirements. The amount of years a professional has to earn income influences their portfolio greatly.

When it comes to your financial planning, Eckel can offer some sage advice. Sure you’ve heard it all before, but are you putting it into practice? Here’s his refresher course on retirement planning for chiropractors.

1 Reexamine your life expectancy. “Life expectancy here in the United States is only in the 70s,” says Eckel. Yet for people of higher educational and economic backgrounds, the average life expectancy goes up into the 80s. With a long life expectancy, it’s vital to plan your retirement portfolio accordingly.

2 Start early. Jeffrey Langmaid, D.C., of Warwick, R.I., received his Doctor of Chiropractic from the Palmer College of Chiropractic. His great-grandfather was one of Rhode Island’s first graduates of Palmer. With this family history of chiropractic, Langmaid is confident about his future in this field. With Tim Warren, D.C., Langmaid practices general chiropractic with some emphasis in pediatrics.

Despite his relative youth, Langmaid has created a personal plan for retirement. “Everybody has different wants,” he says. “I’m still in my first year of practice, so my plan can still change over time. You always have to have a clear-cut goal.”

Stephanie Canada, D.C., of Denver, Colo., was an accountant at a Metro Foods warehouse in Ohio when she decided to do work that she actually enjoyed. “I wanted to be a business owner,” she says, “I wanted to serve people. I wanted to challenge all of me—the brain, the physical self, the emotional self.” In 1987, she graduated from the Cleveland College of Chiropractic, and received a diploma in orthopedics from Los Angeles College of Chiropractic.

Canada regrets not starting to invest in her 20s. “My 25-year-old daughter already has an IRA,” she says with some bemusement.

According to Eckel, starting in your 20s pays big. “If, at the age of 25, you invested $2,000 for 10 years—at the age of 65, you’ll have $291,000. If you waited until the age of 35 and invested $2,000 for 30 years, you’ll have only $226,000.”

3Pay yourself first. Langmaid saves between 5 and 10 percent of his income for investment. “It’s nice to start saving,” he says, “even with your first job at 16. Saving 5 dollars per week is a good start.”

4 Diversify your portfolios. Many unbalanced portfolios come from the game of playing catch-up with your retirement. Langmaid warns against being too dependent on investments that offer high interest yet are risky. “You don’t want to end up in a bad spot.”

Canada invests in SIMPLE, an Individual Retirement Account for business owners. In addition, she owns her own house. “I also belong to a woman’s investment club and have a minimum amount of investments.” Canada wants to diversify her portfolio by paying more attention to stocks.

5 Recognize the effects of inflation. “Inflation’s like high-blood pressure,” says Eckel. “You don’t feel it over the short term, yet it kills you long term financially.”

6 Make tradeoffs. “Clients often make trade-offs for what they want in retirement,” says Eckel. When it comes to retirement, it’s all up to the chiropractor to decide whether to save more money, live on less, or work longer.

7 Recognize your reasons for not investing for retirement. “All human beings concentrate on the now rather than the far future,” says Eckel. It’s hard to convince some people that a penny saved today becomes a dollar tomorrow if invested.

8 Decide whether a deferred benefit plan is right for your practice. Deferred benefit plans are pensions and 401(k)s, plans that help employees plan for retirement. “While corporations are moving away from deferred benefit plans,” says Eckel, “it may be the best option for health practices.” Eckel suggests that chiropractors calculate the age of their employees, the salaries, and whether they are employing mostly professionals or nonprofessionals. Deferred benefit plans seem to be more effective with practices that employ young non-professionals with low salaries.

9 Think beyond the portfolio. Canada owns the building she practices in. “After I retire, I plan to sell the building or rent it.” In leveraging real estate property, Canada has another source of income for her retirement, rather than just depending on her IRA, stocks and bonds.

10 Keep up with your investments. Langmaid suggests that chiropractors consult with professionals to keep their portfolios in order. Eckel, a professional, concurs with Langmaid. He also emphasizes, again, the importance of saving early.

“Be determined to save. Realize the importance of small contributions early in your career. It’s critical.”