As a CRNA, you’ve worked hard in your education and career to get where you are. Regardless of whether you are currently employed or have already retired, it’s important to preserve the assets for which you have so diligently worked.
Many CRNAs come to us not because they need help building their wealth, but rather preserving it. Reaching millionaire status is a major accomplishment and maintaining that wealth requires a proactive strategy. Let’s look at a few strategies we recommend CRNAs consider to preserve wealth.
Stop Relying on Return Rates
No matter how savvy investment platforms or financial planning software become, we’ll never be able to predict or control what the markets do. It’s dangerous to bet on a specific rate of return when it comes to your retirement. We saw this happen in the 1990s when people could simply keep their (then) present retirement portfolios fully invested in the booming stock market to generate adequate money to retire. However, the crash that followed this 90’s boom caused a roller coaster ride down the path of “legalized gambling,” leading to financial disaster for many Americans.
Today, the average savings for baby boomers is only $50,000. Most will depend on Social Security as a primary source of income – which is scary considering the uncertain future of Social Security.
Ultimately, the traditional financial planning model of "high risk equals high rate of returns" has failed Americans. We believe that “high risk equals high risk," and the idea of chasing rates of return has promoted low rates of savings.
Capitalize on the Power of a High Rate of Saving
During your accumulation years, the amount of money you contribute to your retirement fund is far more important than the investment vehicle in which the money is parked, as you can control the former but not the latter.
Often, we’ve found that wealthy families, such as CRNAs, assume that earning a high income is the key to retiring early. While it’s true that a high income is helpful, the real secret comes down to two S’s: saving and spending.
It’s easier to retire on your schedule based on how much you save as opposed to how much you earn. This is for a couple of reasons. For one, if you’re spending at your income level, you’re more susceptible to what’s known as “lifestyle inflation”. As you earn more, you start spending more and upgrading your lifestyle. Additionally, if you’re used to living a certain lifestyle that requires a high level of spending, you’ll need an increased income in order to maintain a similar lifestyle in retirement.
While there’s no set number for how much income you’ll need in retirement, many experts agree that the average retiree will need to replace about 80% of their income in retirement. If you can pay off your mortgage and other debt before retirement, this percentage may be even lower.
However, if you intend on traveling and spending more on entertainment and leisure in retirement, your retirement income may actually need to be higher than your working years. This can be risky if you only save the bare minimum for retirement.
Stay Focused on Your Long-Term Strategy
Have you ever taken the time to create an investment philosophy based on your goals, personality, and risk level? If you have, do you stay true to your strategy or do you let your emotions take over when the markets go wild? The reality is that markets fluctuate every day. If you try to beat the market and get swayed by the headlines, not only will you cause yourself unnecessary stress, but acting on emotions could cause damage to your savings.
A 2015 Dalbar study shows how playing the market leads to underperformance. (1) Buying high and selling low due to panic lowers your overall return and may jeopardize your retirement. What should you focus on instead? Maintaining a long-term perspective and a disciplined approach and refusing to ride the market roller coaster.
Seek Guidance from Knowledgeable Sources
When you don’t partner with a trusted financial professional, you put your money in a dangerous spot. At this point in your life, you need to work with an advisor who will help you maintain and preserve your wealth.
An advisor can provide you with guidance and advice that you can’t put a price on. At CRNA Financial Planning®, we are intimately familiar with the CRNA industry. We believe that making informed decisions can only be accomplished through education. By offering insights, we hope to help clients have a better understanding of their financial plan. If you have questions about preserving your wealth, schedule a free 15-minute introductory phone call now to discuss how we can help. You can also call our office at 855.304.3748 or email [email protected].
About Jeremy Stanley
Jeremy Stanley is the founder of CRNA Financial Planning® as well as CRNA Tax Associates®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNAs) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP® Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.
Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.