With a significant percentage of the CRNA workforce moving into the final decade of their working career, there’s never been more of a need for financial guidance. So many CRNAs have spent decades building a sizeable nest egg which we want to help you protect.
By taking an approach that relies on luck, rather than preparation, you are risking your decades of diligent saving and hard work. Jeremy Stanley, EA, CFP®, AIF®, and the team at CRNA Financial Planning® have been providing comprehensive retirement planning and investment strategies to CRNAs all across the country and know the key areas where many CRNAs end up stumbling.
Financial planning isn’t rocket science, and it’s something that many CRNAs could probably handle on their own, but it requires commitment and a significant time investment to stay up to date. Most CRNAs don’t have that extra time or the interest to handle money on their own, and that’s why an advisor can be such a great partner. They can help you navigate key planning areas and give you the confidence to enjoy life after the operating room.
Let’s take a look at some common areas where guessing often takes over and help explain why this can lead to problems down the road.
- Retirement Income
How much income are you going to need in retirement? It’s one of the first questions we ask when we do retirement planning for a client. Many times the room goes silent prompting a conversation about the family budget.
The truth is, the more money you make, the less you budget. Most CRNAs don’t track every dollar that comes in and goes out each month. This mindset has to change as you stop working. Once you're in retirement, you have finite resources in terms of how much money you’ve saved and what you might get from Social Security, and CRNAs have to be able to balance income with spending.
The typical CRNA will underestimate how much money is needed in retirement, which is why we try to get a good understanding of the lifestyle you want to enjoy. Once we do that, then we can determine how much money you will need to cover those expenses. And most of the time we recommend our clients test their budget for a few months pre-retirement to see if it needs to be adjusted.
Either way, an income plan can help you avoid a big mistake.
- Planning for Major Expenses
The next area that often gets overlooked is planning for major expenses. That’s why we run simulations on your plan which tell us how much ‘fluff’ money you have, meaning what extra funds are available for expenses above and beyond your monthly needs. It is important to have enough cushion to cover any emergencies and/or major purchases that we all know will pop up (but don’t have any idea when). If you’re running a tight budget in retirement, these unexpected expenses could put you in a bad position when they become reality.
With inflation climbing higher than we've seen in four decades, this has become a huge buzzword recently. Depending on where you live, monthly inflation related costs now exceed $300 per household, and we’re all feeling the effects.**
The key factor to remember is that inflation erodes your purchasing power over time. If you had $100,000 sitting in a bank over the past twelve months, without generating any interest, you would have lost about $7,500 in buying power as a result of inflation. It’s important that your financial plan accounts for inflation. Your money needs to generate a return that outpaces inflation, so you don’t go broke slowly over the course of retirement.
- Healthcare Costs
There are two expenses in our country which are growing so rapidly that they are even outpacing inflation: education and healthcare. While you might not have to worry about tuition expenses in retirement, but we can almost guarantee that you'll incur medical expenses, right? On top of that, there’s no telling what a doctor’s visit, nursing home care, or assisted living might cost in 10-20 years.
We always worry about the first person who is going to need care. They can deplete a huge chunk of the financial resources which won’t leave a lot for the remaining person. When designing your financial plan, it is vital that you build in healthcare, medical and long term care expenses.
If you want to learn more about building your financial plan, connect with us at CRNA Financial Planning.
To listen to this week’s podcast and learn more, click here.
With decades of experience working exclusively with CRNAs, CRNA Financial Planning® has the knowledge to help you save more of your hard-earned money and determine appropriate decumulation strategies. Schedule a free introductory phone call to discuss your current situation and needs. You can also call our office at 855.304.3748 or email us at email@example.com.
* Occupational Employment and Wages, May 2020; 29-1151 Nurse Anesthetists. https://www.bls.gov/oes/current/oes291151.htm
**How Much is Inflation Costing You? It Depends on Where You Live https://www.jec.senate.gov/public/index.cfm/republicans/analysis?ID=C79AE4C4-2B14-4F1A-9AF3-61E2E91F3D6F
The opinions voiced in this material are for general information only and are not intended to provide specific financial or tax advice or recommendations for any individual. Investment Advice offered through Private Advisor Group LLC, a Registered Investment Advisor