• Feature

    Retirement Planning for PTs and PTAs

    Guidelines for successful retirement planning have changed from previous generations and continue to evolve. Here's what some PTs and PTAs have discovered.


    "I grew up in a household where saving and paying yourself first was key," explains Nancy Paddison, PTA, BA, of MD Anderson Cancer Center in Houston, Texas.

    "Prior to coming to MD Anderson, I saved on my own and was always putting money into retirement and stock accounts," says Paddison, who is certified as a lymphedema specialist by the Lymphology Association of North America. "I saved something from every paycheck and put it away every month. Now I've been able to build up a good amount of retirement money."

    Paddison's experience reflects the "new normal" of retirement planning. Previous generations could expect to retire comfortably on Social Security and pensions, but things are more complicated today. Pension plans are practically nonexistent, and most retirement programs today are "defined contribution" rather than "defined benefit" — with no promise that the retirement program will provide a specific amount of income.

    Also, people are living longer (and more expensively) than ever before, which places even more responsibility for retirement planning on the individual. However, you can act now — and at every future stage of life — to retire successfully.

    In Your 20s

    Your 20s are a time of learning to budget and save while paying bills and paying down accumulated debt from student loans and credit cards. The problem: Retirement seems so far off that it's hard to imagine that it's important to start saving. Yet nothing could be further from the truth.

    Even small contributions to a retirement account now will outgrow larger contributions made in your 30s, 40s, and 50s. A quick example: Saving $200 a month at a 5% interest rate for 40 years (from age 25 to 65) will give you a nest egg of $289,919. If you begin at age 45 and save twice as much for half as long — $400 a month for 20 years — you will have a balance of $158,717. (Try your own numbers with the U.S. Securities and Exchange Commission's Compound Interest Calculator. Go to www.investor.gov and search for "compound interest calculator.")

    Paddison, who has been at MD Anderson for more than 13 years, strongly believes in incremental saving. "Even $25 a month can make a big difference when you're ready to retire," she says, "I found that automatic deductions taken out of my check worked well because I didn't even miss it."

    MD Anderson offers employees several pre-tax and post-tax savings options from which to choose, plus free advisor services. "I periodically sit down with an advisor who helps me figure out how much more I need to be saving and what my allocations should be to keep on track with retirement," she says.

    Paddison always sought out savings advice, beginning in her 20s, when she was looking for an investment firm. She wanted to avoid brokerage fees, preferring to pay a flat fee per planning session. Instead, she ended up finding a group of local women in Madison, Wisconsin, who were helping other women build their nest eggs.

    Paddison cautions others to be wary of fees that brokerages charge, or of paying a percentage of your savings for each financial planning session. She recommends paying a flat fee instead, or taking advantage of an employer's free retirement planning services.

    When evaluating a potential employer, consider what options are offered to save for retirement. If you are fortunate enough to have an employer-sponsored retirement plan that offers a match — making contributions based on the amount you're setting aside — you are receiving free money. Take it!

    In Your 30s

    Now is the time to start increasing how much you're putting away and to learn more about investing and how the money you have set aside is working for you. For Paddison, each time she received a raise she increased her contribution to her retirement account. The closer she has gotten to retirement, the more she has put in.

    In fact, some plans offer to automate the process. For instance, if you are saving 10% of your income this year, you could set up the plan to automatically increase that percentage by a certain amount a year. You might select a 1% automatic annual increase. So, next year the plan would automatically deduct 11%, the year after that, 12%, and so on, until you stop the increases or the contribution reaches its legal limit.

    Speaking of legal limits, the Internal Revenue Service limits your maximum annual contributions. For 2020, contributions to an Individual Retirement Account cannot exceed $6,000 ($7,000 if you're 50 or older). Similarly, your contributions to a 401(k) plan are limited to $19,500 ($26,000 if you're 50 or older). The agency has information at www.irs.gov. Search for "retirement topics - contributions" or check with your financial advisor.

    In Your 40s

    Now you have plenty of work experience from your 20s and 30s and more earnings to put toward your retirement planning. However, this is when families tend to grow up, generating more expenses. You may own a home and be saving for your children's college education. You also may be paying off lingering college loan debt. And you may be part of a "sandwich" generation, helping pay the expenses of not only your children but also your parents. You're probably about halfway along in your career. Now is a good time to reevaluate your retirement plan to be sure you are on track.

    According to an online survey conducted by The Harris Poll on behalf of TD Ameritrade that was released in January, 41% of people in their 40s have less than $50,000 saved for retirement, and 59% have less than $100,000 saved. At the other end of the spectrum, 14% have saved more than $500,000.

    In Your 50s

    Prioritizing retirement is important now. If you have a partner, plan with your spouse or significant other. The "other half" of your retirement plan involves your partner's age, professional goals, and stage in life. It is important to have these conversations earlier rather than later so that you have shared expectations — minimizing the chances of any surprises for either of you.

    Many financial advisers suggest trying to create a balance between maximizing retirement contributions and eliminating debt. Sarah Cleveland, PT, like Paddison, is certified as a lymphedema specialist by the Lymphology Association of North America, and has been at MD Anderson Cancer Center for 15 years. She considers herself "extremely well-prepared" for retirement. One of her strategies has been to contribute to two tax-free retirement funds throughout her employment. When she turned 55, she maxed out her contributions.

    This is a time to start thinking about cutting back on spending, since you will be living on a fixed income when you're retired. It also may be time to downsize your life. For example, you may no longer need (or want) a family-sized home.

    According to the Harris/TD Ameritrade survey, 37% of people in their 50s have less than $50,000 saved for retirement, and 53% have less than $100,000 saved. A financial planner can help you build a retirement plan that takes into account your projected expenses, lifestyle, Social Security timeline, tax implications, and income stream.

    In Your 60s

    If you are hoping to retire, you shouldn't do so until you feel confident about your financial stability.

    A popular approach to managing money in retirement is the "4% rule." If you have your savings invested in a mix of stocks and bonds, the rule says that you should be able to withdraw up to 4% to live on in the first year of retirement, then increase the annual withdrawal each subsequent year just enough to keep up with inflation.

    That rule can reduce the chances that you'll run out of money over the course of a 30-year retirement. One flaw, though, is that the rule assumes a steady growth in retirement savings. If you retire and your savings decline sharply in the first few years of retirement — as occurred for many a decade ago during the "Great Recession" — the rule can fail and you can run out of money.

    You also need to take into account how much of your income is devoted to necessities and how much is discretionary. If needed, you could cut back on discretionary spending. It's more painful to cut back on income you've defined as necessary. So, run the numbers. There are a variety of online calculators, such as AARP's at www.aarp.org; search for "retirement calculator."

    According to the Harris/TD Ameritrade survey, 28% of people in their 60s have less than $50,000 saved for retirement and 38% have less than $100,000 saved. However, the percentage of people with more than $500,000 in retirement savings is 26%.

    Paddison comments that while she doesn't have any real concerns leading up to retirement, she'd like to conduct another annual review soon with her financial planner to see if there's anything she needs to adjust. "I would like to know where I am right now and what my likely income will be," she says.

    When you start taking Social Security is a personal choice. You can begin as early as 62 or as late as 70. Some experts say taking Social Security early can be a mistake because each month you wait to take Social Security, you'll receive a higher monthly income — approximately 8% more annually. For instance, delaying payments from age 66 to 70 can raise your monthly benefit 32%. And once you do begin receiving payments, they are guaranteed by the government, keep pace with inflation, and include a survivor benefit, so the larger to start, the better.

    On the other hand, some experts advise taking it earlier. Your monthly checks will be lower, but you'll receive more of them than if you wait. Many factors play into this decision, not the least of which are your health and life expectancy.

    Not Quite Ready to Retire?

    According to the Bureau of Labor Statistics, the labor force participation rate for older workers — people ages 65 and older — is expected to increase the fastest of all age groups. BLS data also finds that 40% of workers ages 65 and older are employed part-time.

    In its October 2019 Monthly Labor Review, the bureau wrote, "This increase in participation is made possible, in part, by U.S. job growth being in service sector jobs rather than in more physically taxing 'blue collar' jobs such as manufacturing and construction. Lack of sufficient retirement savings and employer-provided health insurance may be further reasons for some older workers to stay in the labor force. Another reason may be an employer's increased willingness to hire and retain older workers who may have institutional knowledge that is not easily replaceable."

    If you are not ready to enter into full-time retirement, consider these options to reduce the physical demands of the profession:

    Work part-time. If you can ease out, you may want to look at practicing part-time. Consider starting by taking one day off to see how things go. Eventually, working part-time can give you control over the hours you want to work and allow you to accomplish the other things you want to do in life.

    Naghma Ahmed, PT, has been practicing for 35 years, 19 of which have been at MD Anderson. When she retires, Ahmed, certified as a lymphedema specialist by the Lymphology Association of North America, would like to continue working at her current employer on a per diem basis. "I don't ever want to stop practicing physical therapy. I have worked so hard to get where I am," she says. "I just want to slow down."

    Ahmed's schedule, like those of many PTs, is demanding. "My work is high-intensity because I work with patients who are very sick," she explains. In addition, her commute is 50 minutes each way, and she works a few more hours each night when she arrives at home.

    Ahmed's husband, who is self-employed as a contractor, will continue working, she says — facilitating her ability to reduce her hours to part-time.

    Become a consultant. Being a consultant to other practices can allow much greater mobility, particularly if you are considering downsizing and moving to a more affordable area. One downside, however, can be spending a lot of time away from home and on the road when visiting practices.

    Set up a specific area of practice. Having your own practice that focuses on patients who do not require extensive lifting or other physical exertion can help your body avoid unnecessary stresses and extend the life of your career.

    Become a travel therapist. A travel therapist provides short-term coverage for outpatient clinics, hospitals, skilled nursing facilities, and home health agencies across the country. Contracts vary in length, with most lasting 13 weeks. You can set your own schedule, take extended time off, and see different parts of the country.

    Transition to a cash-based business. Moving to cash and no longer dealing with insurance companies can be a way to focus on patient engagement and achieve quality outcomes.

    Teach. Teaching residency and fellowship programs, conducting seminars, or serving on the boards of directors of physical therapy-related organizations can help you turn your years of experience into a comfortable retirement.

    Reentering the Workforce

    Let's say you've been retired for a year or two and would like to return to work, either part- or full-time. Skills and knowledge change over time, so it is important to consider how much retraining you may need. For instance, insurance regulations are constantly changing, so you may need to plan to allow a period of time to get up to speed before returning to practice.

    If going back to work is a possibility, consider how you will maintain your licensure and certifications. In addition to the cost of maintaining licensure, there is the time and money required to meet continuing education requirements.

    A less tangible but equally important element of staying current is your professional connections. Studies have shown that most positions are filled through networking, so maintaining your professional connections is important, particularly as you spend more time out of the workforce. In addition, those who are older may find it more difficult to compete with younger, less-expensive practitioners. This makes it all the more important to maintain connections. APTA membership, of course, is one of the easiest ways to do so. (Read more about returning to the workforce in "Upon Reentry" on page 18 of this issue.)

    Special Considerations for PTs and PTAs

    Consider your professional "bucket list." Do you have something you'd like to accomplish professionally before you retire, such as a clinical research project? Create a plan for achieving this goal so you don't have any regrets when you're ready to retire.

    Be aware of your physical capabilities. For most PTs and PTAs, a major consideration regarding the timing of retirement is the physical demands the profession places on the body. Therefore, think realistically about how long you may be able to practice. This is a personal decision, but physical and mental stamina often decrease with age. Pay attention to the signs that you should start cutting back on the number or types of patients you treat. Leave while you're "on top" and still healthy.

    Visualize how you will spend your time in retirement. One thing you may have greatly valued about your physical therapy career is the close relationships you developed with your patients and colleagues. Paddison says that her biggest loss will be missing her colleagues. "They have been like a second family to me. Just think about all those hours…it's a big community to lose."

    Recognize that retiring "to" something that you find satisfying can go a long way toward filling any void you might feel. Think about putting plans in place, including cultivating new hobbies, prior to retirement.

    Cleveland has no problem visualizing what she'll be doing when the time comes. She already loves dancing — Argentine tango, country western, and salsa — so she definitely will be doing more of that. She also plans to become more involved with social groups, traveling, and performing lymphedema treatment as a volunteer. "I love my job, but I feel like between doing my job, trying to get enough sleep, and exercising, I don't have time for anything else. When I retire, I'd like to expand my horizons by taking online courses and catching up on my reading. I don't think I'll have any problem keeping myself entertained. There are so many things still to experience!"

    Paddison, a former health care writer and marketer, agrees. "I would like to do some writing and traveling, and be able to work out more," she said. "If I'm lucky enough to have grandchildren, I'd like to enjoy being a grandmother!"

    Know your financials. As you get closer to retirement, it can be a good idea to confer with your financial planner, lawyer, accountant, and others as a group. You likely can make better decisions as a team when everyone can weigh in at the same meeting.

    Private practitioners: Have an exit plan. APTA member Tannus Quatre, PT, MBA, advises that waiting until shortly before you retire to begin planning your exit from private practice forces you to do much more work later in your career. A full understanding of exit opportunities requires months, if not years, of planning. Quatre urges practice owners to do the homework and know what they want. But, he adds, be flexible. Exit strategies rarely go exactly according to plan.

    Quatre adds that practice owners should think about what they would want in order to exit their practice if presented with an offer. Including that possibility in the planning process will allow the owner to take advantage of such an opportunity if it presents itself. In any event, he adds, the process will give you a greater understanding of your business.

    As you do your long-term planning, be aware that buyers look for practices that are systems-driven and show a history of profitability. Therefore, analyze your market, improve your operations, and determine what your clinic is worth.

    Don't waver from your timeline. Having your plan in place before you take the leap will help prevent hesitation and potential disruption to your workplace and patients when the time comes.

    Health Care Costs

    Paying for health care is one of the biggest challenges many people face in retirement.

    According to the 2018 Retirement Healthcare Costs Data Report by HealthView Services, retirement health care costs are projected to rise annually by 4.22% for the foreseeable future — down from the organization's prediction of 5.47% in its 2017 report. This is due mainly to slowing in the growth rate of prescription drug costs. However, retirees still face a heavy health care cost burden. According to the report, total projected lifetime health care costs for a healthy 65-year-old couple retiring in 2018 were expected to be $363,946 in today's dollars ($537,334 in future value). The report features data on health care claims from 70 million individual cases, plus actuarial and government data.

    A strategy to help manage future costs is to take steps now to improve your health and invest the savings. This can not only help increase your longevity but also help you generate additional retirement income when you need it the most.

    Staying in Shape for the Long Haul

    To help your body take you through the decades, address physical issues as soon as they occur. Feeling pain in your hands, back, or neck can be a wake-up call. Proper training in body mechanics and posture can help you avoid injuries. Taking care of your body now will help you enjoy life down the road.

    Make time for exercise. PTs and PTAs, particularly those who are older, should not let the demands of practicing get in the way of exercise. Lifting weights, using stair-climber machines and other aerobic devices, and maintaining flexibility all contribute to a higher quality of life and greater productivity.

    Be a consumer of clinic facilities. It's easy to see your clinic as a place where you help others, rather than one where you help yourself. Use the exercise equipment at hand, as well as any other amenities such as a weight-loss program or fitness and yoga classes.

    Ahmed keeps up with her exercise, which includes cycling. She says she is committed to exercise as a way to stay healthy throughout her working career. Once she retires, she plans to add yoga to the mix.

    "Lead a healthy lifestyle!" advises Cleveland, who describes herself as an exercise fanatic. "I try to set a good example for my patients by practicing what I preach. I exercise for stress relief, am a vegetarian, and recently cut out all sugars from my diet. As someone who is single, with no dependents, I need to keep myself healthy and stay as independent as possible, for both body and mind."

    Jennifer Rondon recently retired from APTA. She was the association's business development manager.

    What Advice Would You Give to Your Younger Self?

    An online Harris Poll conducted in January for TD Ameritrade asked respondents: "When it comes to finances and retirement planning, what advice would you give to your younger self?" Responses were similar for all four surveyed age groups — ranging from 40 to 79 — but were most pronounced for those 70-79 years old. Their advice:

    Retirement Table


    I’m a 66 year old,“not ready to retire physical therapist”. My retirement plan is to practice until I’m 70 years old. At 60 I transitioned from a permanent full-time 40 hour per week position to part time interim traveling position. I began practicing as an interim traveling Physical Therapist in late 2015. Most of the suggestions related to my age group that this article points out, I have utilized in the past four years. Practicing as an interim traveling physical therapist has been very rewarding and is ideal during my transition to full retirement. I provide fill-in coverage to my colleagues in critical access hospitals in a rural state. The problem that I have encountered in my plan is keeping up with membership and section dues, licensing fees (licensed in 3 state’s) and continuing education costs (with meals, lodging, traveling). E-courses help some but only cover half of my acceptable CEU’s requirements. My annual income from providing services has been $20K or less. I have looked into APTA’s membership benefits, but their payment options do not work for me for assistance. I do not qualify at this time, lacking in years invested. I have been an APTA member since 1993. As I reduce the hours I practice my annual income has changed accordingly. As pointed out in this article, I’m at a point where I must choose or make changes to cut costs to reach my retirement goal. Career, Family and an individual’s Health is a balancing act. Overall, this article has confirmed that I have been on the right path in my pursuit to retirement (Harris Poll). I know I will continue to practice and be there for my rural colleagues until I choose full retirement status. But, as what is now occurring in our world today, I might be asked to hold off from full retirement as our world recovers.
    Posted by Honani Polequaptewa on 4/1/2020 1:21:55 PM
    I agree in that APTA membership for someone nearing retirement & working part-time is costly and should be reduced OR at a minimum the dues should include the educational courses offered on-line.
    Posted by Christine Brussock -> =MT\A on 4/22/2020 10:32:52 PM

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