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The Cost of Retirement for Physicians: A State-by-State Breakdown

Jan 17, 2025

For most retirees, planning for retirement involves calculating their future needs based on a mix of savings, Social Security, and pensions. However, you face unique challenges when transitioning from a high-income, high-spending career to retirement. You often have a "revved-up" lifestyle, characterized by spending habits far above the average retiree. This article will explore why you tend to spend more in retirement, what you allocate your wealth toward, and provide a state-by-state breakdown of how much you may need to retire comfortably.

Why Physicians Spend More in Retirement

Your retirement planning as a physician is likely more complex and demanding than that of most other professionals. Several factors contribute to the higher expenses you may face during retirement, making it essential to understand how your financial needs differ from the average retiree. Let’s break down the reasons why you might spend more in retirement:

Delayed Retirement Savings Unlike many other professionals, you probably began saving for retirement much later. After years spent in medical school, residency, and possibly fellowship training, you didn’t start earning a significant income until your early 30s—or even later. This means you had to play catch-up, saving more aggressively over a shorter period. However, with the financial pressures of paying off medical school debt and maintaining a higher standard of living, it can be challenging to put away enough for retirement early on.
High Standard of Living Throughout your career, you’ve likely grown accustomed to a more affluent lifestyle—larger homes, luxury vehicles, private schooling for your children, and other significant expenses. Retirement doesn't always mean scaling back on these habits. You might want to continue enjoying the same standard of living, which means keeping up with expensive hobbies like golfing, attending cultural events, or traveling internationally. Cutting back may feel like a loss of status or enjoyment, leading you to spend more even after you've stopped working.
Healthcare Costs As a physician, you’re more aware of the best healthcare options available, and that knowledge often leads to higher spending. While Medicare will cover some of your medical needs in retirement, you might choose to supplement it with premium insurance plans to access cutting-edge treatments, concierge services, or private care. You could also live longer than the general population, meaning your healthcare needs—especially for long-term care—might extend over a longer period, significantly increasing your costs.
Estate and Tax Planning You might also prioritize preserving your wealth for future generations or charitable causes. This means estate planning becomes a considerable expense as you work with attorneys, financial planners, and tax specialists to manage the transfer of assets to your heirs. Creating trusts, making charitable donations, and minimizing taxes are areas where you may spend more than the average retiree. The specialized strategies required to reduce estate taxes or manage philanthropic giving often come with hefty legal fees and administrative costs.
Professional and Social Commitments Even after you retire, you may stay connected to your professional identity. Whether you serve on boards, volunteer your medical expertise, or mentor younger physicians, these commitments often involve travel, accommodations, and conference-related costs. You might even choose to maintain your medical license or memberships to professional societies, which come with ongoing fees that add up over time.
Leisure and Recreation Retirement is finally your time to enjoy the leisure activities you didn’t have time for during your demanding career. Whether it’s buying a vacation home, taking extended international trips, or indulging in luxury travel experiences like cruises or guided tours, these expenses can be significant. If you have more adventurous tastes, you might even spend on things like yachts, private planes, or specialized sports equipment, adding considerably to your post-retirement expenses.

Where Your Retirement Money Might Go

Your retirement spending likely includes the usual categories like housing, healthcare, and food, but your expenditure patterns will reflect the professional history and lifestyle you’ve built. Below are the key categories where you’re likely to allocate your wealth:

Luxury Travel Having spent years in a demanding career, you might want to enjoy long vacations during retirement. Whether it’s luxury accommodations, first-class flights, cruises, or extended stays in your second home, travel is often one of the most significant expenses for you. You may also spend on international health insurance or concierge travel services to ensure you have access to medical care wherever you go.
Healthcare and Long-term Care Even with Medicare, you may choose more expensive supplemental healthcare plans that give you access to the specialized treatments you want. As you age, long-term care becomes a major expense, especially if you opt for premium retirement homes, assisted living facilities, or in-home healthcare services. Private nursing care and luxury long-term care options can add significantly to your retirement costs.
Philanthropy and Estate Planning In retirement, you might want to give back—whether through charitable donations or setting up trusts or foundations. These activities require help from legal, tax, and financial advisors, all of which come with costs. Your estate planning might also be more complex as you work to minimize tax liabilities and ensure your wealth is passed down effectively to your heirs or beneficiaries.
Ongoing Professional Costs For some, retirement doesn’t mean completely cutting ties with the medical community. You might continue consulting, researching, or mentoring, which may require you to maintain your medical licenses or professional memberships. Additionally, attending conferences or subscribing to medical journals might still be part of your ongoing professional expenses.

The Cost of Physician Retirement by State

I came across this article in ASC Review about comfortable retirement for non-physicians. Even the article is labeled “how much physicians will need”, this article was really about the general public, and we all know you don’t always fit that mold!

Using average data on retirement expenses for the general population in their article (which came from CNBC), we can estimate that your retirement needs are at least 20-30% higher, depending on lifestyle choices, estate plans, and other variables. Below is a breakdown of expected retirement costs for you in each state, which includes a "comfort buffer" and are adjusted to reflect the unique factors affecting doctors:

Conclusion: Plan Ahead for Physician-Specific Costs

While the general public may comfortably retire on $65,000-$75,000 annually in many states, physicians will likely need anywhere from $90,000 to $170,000 depending on the state they choose. The gap between physician and non-physician retirement spending is most evident in high-cost states like California and Hawaii, but it exists nationwide.

Physicians who plan to maintain their current lifestyle must be mindful of this financial disparity when setting their retirement savings goals.

While the average American may have a relatively modest retirement lifestyle, physicians face unique challenges in transitioning to retirement, often requiring significantly more savings to maintain their standard of living. Planning ahead and understanding these added expenses can help physicians prepare for a retirement that reflects the lifestyle they've worked hard to achieve.