Key Takeaways:
- Start with the spending number. Your portfolio target should be tied to what you want your life to look like 10 years from now, not a vague account balance.
- Use your strongest earning years intentionally. The final working decade is your last big window to improve savings, flexibility, and tax positioning before paychecks change.
- Prepare the plan for withdrawals, not just growth. Portfolio structure, tax timing, healthcare, insurance, and practice obligations all help decide what you can safely withdraw once the paychecks stop.
https://www.youtube.com/watch?v=toRAyvlp0tU
For many physicians, the last 10 years of practice bring peak earnings — but also the highest-stakes decisions about how that income translates into lasting freedom.
The final decade of your career often feels different. Peak compensation from call pay, partnership distributions, and practice income collides with big questions: Will my savings actually support the life I want? How do I protect against sequence of returns risk, rising healthcare costs, and taxes once the paycheck stops?
This 10-year window is your last major opportunity to shift from pure wealth-building to a coordinated retirement strategy — one that aligns your portfolio, taxes, insurance, practice obligations, and lifestyle goals. There is still time to adjust savings rates, contribution strategies, asset allocation, and work transition plans before full retirement.
Start With the Retirement Income Your Portfolio Needs to Support
In the years before retirement, the first question to answer is how much annual income your plan may need to produce. The account balance matters, but it only becomes useful once it is connected to real spending.
Start with the life you actually want. Include housing, travel, hobbies, family support, home projects, charitable giving, and larger one-time purchases, plus any lifestyle inflation that crept in during peak earning years.
Many physicians in their 50s and early 60s target $150K–$300K+ in annual retirement spending (after taxes), depending on location, travel goals, and family obligations. A common benchmark is the 25x–30x spending multiple — meaning a physician planning for $200,000 in annual portfolio-supported spending might aim for a $5M–$6M nest egg as a starting checkpoint.
Next, subtract the income sources that may not depend on portfolio withdrawals. That may include Social Security (often $40K–$50K+ annually at maximum benefit for high earners), pensions, deferred compensation, practice sale payments, consulting income, rental income from real estate investments, or part-time clinical work.
The remaining gap is the job your investment portfolios may need to handle. A real physician retirement planning process should go deeper by testing that number against taxes, inflation, account mix, withdrawal timing, and how long you want to work. High earners frequently discover they need to bridge a larger gap than they initially expected once lifestyle and healthcare costs are fully modeled.
| Annual Spending Target | Suggested Portfolio Multiple | Approx. Nest Egg Goal |
| $150K | 25–30x | $3.75M – $4.5M |
| $200K | 25–30x | $5M – $6M |
| $300K | 25–30x | $7.5M – $9M |
Use the Final Working Decade to Strengthen the Balance Sheet
Many physicians experience strong earning years as they reach the end of their career. That can make this a great opportunity to further solidify your future financial stability before your earned income changes.
The goal is not simply to save more wherever possible. The goal is to strengthen the pieces that will matter most when paychecks, bonuses, call pay, partnership distributions, or practice income slow down.
Review the Savings Tools Still Available to You
Before shifting into withdrawal mode, make sure the accounts and contribution options available today still fit your plan. The final working decade is often the last stretch where your income can give you meaningful room to build, diversify, and improve your retirement balance sheet:
Workplace Retirement Plans: Employer retirement plans can remain one of the most useful tools for turning peak earning years into long-term retirement capital. Review how much you are contributing, whether employer contributions or profit-sharing features apply, how your investment choices are allocated, and whether your plan gives you pre-tax, Roth, or after-tax options that may support a more flexible retirement income strategy.
Age-Based Catch-Up Contributions: Catch-up contributions generally begin at age 50 and can help you use the final working decade more aggressively when cash flow allows. Physicians in their early 60s should also review whether their plan permits the higher catch-up window available from ages 60 through 63.1
Health Savings Account (HSA) Funding: An eligible HSA can become more than a current-year medical account. When paired with the ability to cover today’s healthcare costs from cash flow, it can grow into a dedicated pool for future medical expenses, Medicare-related costs, and other qualified healthcare needs later in retirement.
Backdoor Roth Contributions: Many physicians earn too much to contribute directly to a Roth IRA, but a backdoor Roth strategy may still create a way to build tax-free retirement assets. Existing pre-tax IRA balances and the pro-rata rule should be reviewed first, since the tax reporting can quickly become more complicated.
Build Flexible Assets for the Transition Years
If you retire or scale down your work before your long-term income source begins, flexibility matters. The goal is to avoid becoming overly dependent on any one account, income source, or market environment.
Here are ways you can use flexible assets during your wind-down or transition years:
- Taxable accounts can bridge full-time income and retirement income. They may help fund spending before other long-term income sources begin.
- Cash reserves may need to shift from a basic emergency fund into a transition reserve. The goal is to cover early retirement spending without forced selling.
- Reducing high-interest debt, practice debt, or large fixed costs can make the income target easier to support and give the portfolio more breathing room.
- Taxable assets can provide planning flexibility because gains, losses, and withdrawals may be managed year by year as income needs change.
- Business or practice proceeds should be connected to specific retirement years and goals instead of treated as one large unassigned bucket.
Position the Portfolio for Retirement Withdrawals, Not Just Growth
A physician closer to retirement may still want to focus on growth, but the portfolio should start preparing for withdrawals. The job of investing now includes access, timing, and downside management. Stronger retirement portfolios should be built around how withdrawals may actually happen, especially during the first years after the paycheck stops:
The Bucket Approach: A Practical Framework for Physicians
Many physicians like the simplicity and flexibility of a three-bucket strategy that balances their typically higher risk tolerance with the need for downside protection during the transition:
- Bucket 1 – Near-Term (0–3 Years): Cash, money market funds, short-term Treasuries, and ultra-short bond ladders. This bucket covers 2–3 years of the spending gap (often $150K–$250K+ annually for many physicians after other income sources). It prevents forced selling during market dips and provides peace of mind when leaving full-time practice.
- Bucket 2 – Intermediate (3–10 Years): High-quality bonds, bond ladders, and conservative balanced funds. This layer replenishes Bucket 1 while offering moderate growth and income. It acts as a buffer against prolonged downturns and helps manage sequence of returns risk.
- Bucket 3 – Long-Term Growth (10+ Years): Equities, diversified stock funds, and growth-oriented investments. Physicians in their final working decade often keep 50–70%+ in this bucket (depending on overall risk tolerance and health), allowing the portfolio to continue compounding while the first two buckets handle near-term withdrawals.
This bucket structure directly addresses the core challenges in the final decade:
Sequence of Returns Risk
A sharp market decline right as withdrawals begin can be particularly damaging. The bucket approach mitigates this by funding early retirement years from stable near-term assets instead of selling stocks at a loss.
Asset Allocation & Liquidity
The investment mix still supports long-term growth but now reflects withdrawal timing. Cash and lower-volatility holdings in Buckets 1 and 2 reduce the need to disrupt growth assets during downturns.
Withdrawal Coordination & Rebalancing
Decide which accounts to tap across the timeline (e.g., taxable → tax-deferred → Roth/HSA) for tax efficiency and Medicare premium control. A repeatable annual or threshold-based rebalancing process keeps everything aligned without market timing guesses.
Map the Tax Decisions That May Matter Most Before Retirement
Many physicians enter the last chapter of their career with pre-tax accounts, Roth assets, taxable investments, HSAs, 457(b) balances, or deferred compensation. That mix can be useful, but it needs coordination.
The right tax planning is about more than lowering taxes this year. It is about creating more control once work income changes, withdrawals begin, and required distributions eventually enter the picture.
Coordinate the Main Tax Buckets Before Retirement Income Begins
A better tax plan starts by knowing which dollars will be taxable later, which may be tax-free, and which give you the most control:
Pre-Tax Accounts: Pre-tax retirement balances can be valuable during peak earning years, but they usually create taxable income when money comes out. The size of these accounts can affect future required distributions, Medicare premium exposure, and how much room you have for Roth conversions later.
Roth Assets: Roth assets can provide tax-free retirement income when the rules are met, which may be especially useful in years when other income sources are already pushing you into a higher bracket. They can also create flexibility for surviving spouses, estate planning, and years when taxable income needs to be carefully managed.
Taxable Accounts: Taxable accounts can give you more control over when income is recognized. They may allow you to manage capital gains, harvest losses, use qualified dividend treatment, and raise cash in a way that complements your retirement account withdrawals.
HSA Assets: HSA balances can be especially useful when they are preserved for future healthcare costs. Qualified medical distributions can be tax-free, which can make the account a valuable part of the plan as healthcare, Medicare premiums, and long-term care-related expenses become more important.
Pro-Tip: After age 65, HSA distributions used for non-qualified expenses are generally no longer subject to the 20% additional tax. However, those non-medical distributions are still taxed as ordinary income, which can make the HSA function more like a traditional IRA if the money is not used for qualified medical expenses.2
Tax Window Considerations Around the Retirement Date
Tax flexibility may improve if you reduce work, retire before claiming Social Security, or have a gap before required distributions begin. However, that window can disappear fast if the timing is not reviewed early. The most useful strategies often depend on when income rises, falls, or stacks together:
Roth Conversions: Roth conversions may fit lower-income years before Social Security, pensions, or required distributions begin. The strategy is to intentionally move some pre-tax money into Roth accounts while the tax cost may be more manageable.
Capital Gains and Tax-Loss Harvesting: Taxable accounts can be reviewed for gains, losses, and cash needs before multiple income sources overlap. That may include realizing gains, resetting cost basis, or selling investments at a loss to offset gains while also raising cash or rebalancing.
Charitable Planning: Charitable giving can be timed around higher-income years or future required distributions. Donor-advised funds may help bunch several years of giving into one tax year, while qualified charitable distributions can later satisfy required distribution needs without increasing taxable income.
Deferred Compensation and Practice Income: Deferred compensation, partnership income, or practice sale proceeds should be modeled before the year they hit. The strategy is to avoid stacking large income events on top of each other when timing, payout elections, or sale structure can still be reviewed.
Medicare Premium Brackets: Medicare premium brackets should be considered before large income moves. Income-related monthly adjustment amount surcharges for Medicare Parts B and D are generally based on modified adjusted gross income from two years prior, so a high-income year can affect future healthcare costs.
State Tax Timing: State tax exposure may matter if relocation is part of the retirement plan. Depending on the states involved, it may be worth timing income, capital gains, Roth conversions, or a practice sale before or after a move.
Review 457(b) and Deferred Compensation Rules Before Separation
457(b) and deferred compensation plans for physicians can be valuable, but payout rules may be less flexible than expected. A plan that looks like another retirement bucket during working years may behave very differently when you separate from service.
Governmental and non-governmental 457(b) plans can have different rollover, distribution, and creditor rules. Non-governmental plans are generally unfunded and tied to the employer, which means the money may remain subject to the employer’s creditors until it is paid out.
Payout elections can also create tax problems if they force income into a narrow window. A lump sum or short payout schedule may stack on top of consulting income, practice sale money, Social Security, or portfolio withdrawals.
Pro-Tip: If you have a non-governmental 457(b), ask for the plan document well before you set a separation date. Distribution elections are often locked in early, and changing them later may not be an option.
How This Looks in Practice – Real Physician Transitions
The final decade plays out differently depending on your practice setting. Here are three anonymized examples drawn from physicians we’ve guided:
Dr. A – Academic Physician (University-Affiliated)
At age 55, Dr. A had a solid $4.2M portfolio but relied heavily on her institutional pension and 403(b). Her projected spending gap was ~$180K annually after Social Security. In her final 10 years she:
- Maximized employer 403(b) + catch-up contributions (including the higher 60–63 limits).
- Funded an HSA aggressively and used taxable brokerage accounts to bridge early retirement before Medicare.
- Shifted to a three-bucket strategy (2–3 years cash, intermediate bonds, and 55% equities in the long-term bucket).
- Result: She retired at 64 into a comfortable lifestyle with part-time teaching, protected against sequence risk, and minimal tax drag thanks to Roth conversions in lower-income years.
Dr. B – Private Practice Partnership
Dr. B, a 57-year-old specialist in a multi-physician group, faced a potential practice buyout. With $6.8M in assets and peak earnings from partnership distributions, his team modeled a $280K annual spending target. Over the decade he:
- Reviewed and renegotiated buy-sell terms to spread proceeds over 5 years (avoiding a large tax spike).
- Used backdoor Roth contributions and strategic Roth conversions during a planned 2-year part-time phase.
- Built a transition reserve in taxable accounts while keeping Bucket 3 growth-oriented (65% equities).
- Result: Smooth transition to semi-retirement at 63, with practice sale proceeds funding travel and family gifting goals while maintaining tax efficiency.
Dr. C – Hospital-Employed High Earner
Dr. C (age 58, employed by a large health system) had strong 401(k) and 457(b) balances but limited control over deferred compensation timing. Facing a $220K gap after pensions, he focused on:
- Coordinating 457(b) payout elections well before separation to avoid stacking with Social Security.
- Implementing tax-loss harvesting in taxable accounts and charitable QCD planning.
- Adopting the bucket approach with extra emphasis on healthcare reserves in his HSA.
- Result: He scaled back to locums at 62, preserved more after-tax income, and reduced Medicare IRMAA surcharges through proactive planning.
These examples show how small, intentional adjustments in your final working decade can turn a “good enough” plan into a highly personalized one.
Review the Risks That Can Disrupt the Final 10 Years
This final stretch of your career is also the time to pressure-test the risks that could affect your career exit, family plan, or retirement timeline. None of them need to be alarming, but each one deserves consideration:
Healthcare Before Medicare: If you plan to retire before age 65, the years before Medicare can create a costly coverage gap. Premiums, deductibles, and out-of-pocket exposure should be reviewed before leaving practice.
Disability and Life Insurance: A disability or premature death late in your career can still disrupt savings, retirement timing, and household security. Review whether coverage still fits your remaining work years, debt, dependents, spouse support, estate goals, and financial independence.
Long-Term Care Exposure: Long-term care can become a major retirement risk if the household has not decided how care would be funded. The plan should clarify whether you intend to self-fund, transfer some risk, or review hybrid coverage.
Estate Documents and Beneficiaries: Outdated estate documents can create problems even when the retirement plan is strong. Wills, trusts, powers of attorney, healthcare directives, account titling, and beneficiary forms should match your current goals.
Practice or Partnership Obligations: Practice ownership, partnership agreements, buy-sell terms, and payout rules can all affect the timing and cash flow of retirement. These obligations should be reviewed before they become the reason your exit timeline changes.
Work Transition Risk: A vague work transition can make the retirement plan harder to test. Clarify whether you want full retirement, part-time patient care, consulting, teaching, locums, or a phased exit from medicine.
Financial Planning for Physicians 10 Years Before Retirement FAQs
1. How much should a physician have saved 10 years before retirement?
A physician should have enough saved that the remaining gap still looks realistic for the final working decade. That means comparing current assets, annual savings, expected spending, and future income sources. A rough spending multiple can help, but the better test is whether the portfolio can support the income gap after reliable income sources are counted.
2. Is 10 years enough time for physicians to improve retirement readiness?
Ten years can still be a meaningful planning window, especially for high-income physicians. You may be able to increase savings, reduce fixed costs, improve the account mix, review tax timing, and decide whether part-time work belongs in the transition. The key is using the decade deliberately instead of waiting until the final year or two.
3. Should physicians prioritize pre-tax savings or Roth savings before retirement?
The better choice depends on today’s tax bracket, future expected income, account mix, and how much flexibility you want in retirement. Pre-tax contributions may be attractive during peak earning years, while Roth dollars can help create tax-free income later. Many physicians benefit from having more than one tax bucket available.
4. When should physicians start planning for Roth conversions?
Roth conversion planning should usually start before retirement, even if the conversions happen later. The best opportunities often appear after work income falls but before Social Security, pensions, required distributions, or deferred compensation begin. Reviewing the window early helps you avoid missing it.
5. How should physicians think about 457(b) plans before retirement?
Physicians should treat 457(b) plans as plan-document-specific assets, not generic retirement accounts. Governmental and non-governmental plans can have very different rollover, creditor, and payout rules. Reviewing the details before separation can help avoid unwanted taxable income or access problems.
6. What should physicians review before retiring from full-time practice?
Before retiring from full-time practice, physicians should review whether the income plan, portfolio structure, tax timing, healthcare coverage, insurance, estate documents, and practice obligations all work together. The work transition also deserves attention, since part-time clinical work, consulting, teaching, or a phased exit can materially change the numbers.
7. How does practice ownership or a potential buyout impact my 10-year retirement plan?
Practice sale proceeds, partnership buy-sell agreements, and deferred compensation can represent a large portion of your final-decade assets. Model different timing and payout scenarios early to avoid stacking large taxable events with Social Security or portfolio withdrawals. Many physicians benefit from spreading proceeds over several years, coordinating with Roth conversions, or using them to fund specific goals like travel or legacy gifting. Reviewing the legal documents with your team ensures the sale supports — rather than complicates — your income gap and tax strategy.
8. How do family and lifestyle goals fit into the final 10-year plan?
Physicians often want retirement to include more family time, travel, support for grandchildren, or charitable impact. Build these into your spending projection from day one (e.g., annual family snow trips or 529 superfunding). Update estate documents, beneficiary designations, and spendthrift trust considerations to protect assets. The bucket approach and tax coordination give you flexibility to fund these without derailing portfolio longevity or creating Medicare IRMAA surprises.
Make the Last Decade of Your Career Count
The final decade of retirement planning is all about turning your strong physician income and accumulated assets into one coordinated plan. This is where you connect income, taxes, investments, the coverage decisions healthcare professionals often face, and risk management into a single working system.
Our team can help you test whether your assets can support the lifestyle you want, identify gaps, and compare trade-offs while there is still time to adjust. Sometimes that means specific financial advice on withdrawals, and sometimes it is broader financial guidance from a financial planner who knows how physician careers wind down.
You do not need all the answers before starting the conversation. If you would like help turning a strong career into a smart retirement, our wealth management team would be glad to talk through where things stand and what may need attention next. Please feel free to schedule a free Icebreaker Call with our team.
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