Retirement planning for radiologists has taken on new meaning as the specialty has faced pressures from flattening image volumes and a weak economy.
The situation isn’t one faced solely by the greying radiologists nearing 65 years old. Instead, retirement planning has become a process that involves everyone in a radiology group, including the newest to join and those contemplating a mid-life switch to a new career.
It is also a subject that has proven contentious within radiology practices across the country, said John Cronan, MD, chairman of diagnostic imaging at Rhode Island Hospital and professor at Brown University School of Medicine.
“There is a generational impasse,” said Cronan, who was part of an American College of Radiology (ACR) task force that recently looked at ways for practices to more effectively handle retirement. “How do you make it a graceful exit on one side and make younger people feel like they are not giving away the farm on the way out.”
The crux of the problem rests with more newly-minted radiologists entering the workforce each year than are retiring, while the need for radiologists nationwide has stagnated, Cronan said. About 1,000 new radiologists are licensed each year while only about 600 retire.
The situation has created an environment where individuals and group practices must ensure they are effectively planning for retirement throughout a physician’s career to ensure the best outcome for all, experts say.
While retirement advisors have long urged workers of all ages to save for retirement, they say planning and saving is even more important for today’s radiologist.
“For physicians, and particularly for radiologists, they get a very late start compared to other people [in the workforce] because the training is so long,” said Jeffrey Brown, MD, a principal with the Saint Louis, Mo.-based investment advisory firm Shearwater Capital which caters to physicians. “Most people are out of college at 22 years old. That would give you 40-to-45 years before retiring. It’s a very long period of time to save. But a lot of our clients are in their early-to-mid-30s. They don’t have as long; that’s a shorter time period. They really have to get started saving immediately because there is less time to make up for mistakes if there is a big pitfall.”
Cronan and his task force recently published a two-part report in the Journal of American Radiology urging practices to have constructive conversations on how to structure retirement and suggesting that implementing a phased-incentive retirement, which includes a reduced work schedule over several years, may be the best option for both individuals and groups.
“It is better to discuss options and make decisions for the group rather than for individuals,” the authors wrote. “The development of a formal retirement policy would satisfy senior radiologists and open jobs for newly-trained radiologists, who would be highly desirable and beneficial to the well-being of all groups.”
Experts from both the financial industry and ACR task force suggested radiologists consider the following:
Cronan said taking call is the single biggest debate among practices when it comes to reducing a physician’s hours as he or she nears retirement and is one that must be openly discussed.
Younger physicians tend to be adamant that call continue to be shared equally among all radiologists, Cronan said. But radiologists nearing retirement believe they could continue to contribute to the practice, if they could reduce their after-hours call shifts on weekends and nights.
“Their whole attitude is they don’t believe anything is going to be there when they get there,” Cronan said of younger radiologists. “So, in groups it’s causing conflicts, and it’s most apparent in discussing call. The younger people are not willing to support the older radiologists, and the older guys don’t want to work fulltime but still want to stay involved.”
2. Part-time or per diem hours
While part-time hours can work well for both individuals and practices, per diem hours tend to be of a larger benefit for practices, the ACR report found. Both allow senior radiologists to utilize long-standing relationships during reduced work hours, the authors wrote. But with per diem hours, the retiring radiologist could have long periods of time when they were not needed and there is less structure to his or her schedule, Cronan said.
3. Phased incentive retirement
An option with many ways to structure it, a retirement phased ideally over four years provides both the practice and the senior radiologist a nice transition to leaving the field. The retiring physician gradually reduces his or her roles and time on a pre-determined and set schedule and allows the practice to recruit and plan for filling that role.
Brown said he has seen this option recently grow in popularity among his clients, adding that the way it is structured can vary widely.
“I see some work one day a week, some do a few half-days a week. You’ll see a lot of different arrangements,” he said.
4. Teleradiology and locum tenens
Another option that appeals to radiologists looking to retire from their regular practice, Brown said, is finding part-time work through a new employer in teleradiology or locum tenens, temporarily filling in for another radiologist.
“Sometimes they can make enough that they don’t have to take any money out of savings,” Brown said. “So they are making enough to cover their living expenses. That can have a very beneficial effect on retirement planning.”
5. Employer-sponsored saving plans
Whether it’s a 401K, a 403B, or some other employer-sponsored plan, radiologists, like all workers, should take advantage of these options from the moment they get out of medical school, Brown said. “It is much easier out of residency or fellowship get a good savings built and harness compound interest,” he said.
Additionally, Bob Tucker, MD, a vice president with the investment advisor firm Plancorp, said that radiologists in private group practices can take advantage of some unique financial planning structures that allow them to save above the maximum limits allowed in stand-alone 401K programs. This consideration primarily works for groups where everyone is earning around the same compensation level, he said. Since radiology groups often rely on support staff supplied by hospitals they are more likely to be able to take advantage of the additional savings, he said.
“If you have a group of five radiologists who own the corporation and are the only employees, this is an option,” Tucker said. “If one [of the physicians] hasn’t been too good about putting away money but would like to retire in 10 years, this would allow him to put the standard $51,000 a year in a profit sharing/401K plan, but also fund another plan on the side and that can literally double or triple the amount of money he can put away toward retirement. And all five physicians can do something a little different.”
6. Roth plans
Both Brown and Tucker said Roth 401K and Roth IRA accounts — which are funded with after-tax dollars but can grow indefinitely without paying additional taxes — are important to a diversified retirement savings plan.
“It is particularly a great option for those early in their careers,” Tucker said.
Even once a physician reaches the income limit that prevents a direct contribution to a Roth account, they can take advantage of Roth conversions, Brown said.