After working hard to graduate from medical school, your next steps could include a lot of effort towards establishing a medical practice. You have a fullfilling path ahead of you, but have you given any thought to how you will spend your retirement?

Planning is necessary for your retirement if you’re a doctor in Canada. Canadians typically have three sources of income available to them when they retire: pensions from their places of employment, personal savings, and government-funded benefits. Since doctors have often only been able to handle the first two, getting good financial counsel is crucial to safeguarding your retirement goals. Talk to our team of experts here about how you can ensure you can retire happily in the future.

Government-Funded Benefits

There are several government supported advantages accessible to Canadians. A monthly, taxable payment known as the Canada Pension Plan (CPP) is intended to supplement lost income after retirement. You must have worked and contributed to the plan during your lifetime in order to be eligible. This covers independent medical professionals who are eligible for a pension upon retirement. The average monthly CPP payout is less than $1,000.

Another government-run benefit is called Old Age Security (OAS), however unlike CPP, it is available to everyone, regardless of whether they have ever worked. OAS normally equals about the same amount per month as CPP.

There are other government benefits that could be available, including the Guaranteed Income Supplement, Allowance, and Allowance for the Survivor. Throughout their careers, the majority of doctors enjoy a comparatively good quality of living. You should seek professional financial counsel to make sure you are saving and investing enough to cover their ultimate retirement because these government benefits often won’t offer a similar standard.

Personal Savings

In order to protect your income over the course of your career, you can use tax-deferred investments such as Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts. Physicians won’t be compelled to pay taxes on the money they invest in their RRSPs in the year they generate that income since RRSPs are tax-advantaged. This is favourable since, upon retirement, when income normally declines, the income is probably subject to reduced tax rates.

Canadians may amass savings in a specific, tax-free account thanks to TFSAs. Gains and contributions are often tax-free, even upon withdrawal. There are yearly maximum donation caps, nevertheless. The TFSA contribution ceiling for 2022 is $6000. Even while these methods may help all Canadians save for retirement, they often are not practical for maintaining the style of life that the majority of doctors want to achieve in retirement without extra financial support.

Employer Pensions

Physicians have generally been unable to access this third source of retirement income, but this is beginning to change. Multi-employer pension schemes for independently employed and corporately incorporated physicians have been in the news recently.

Beneficiaries of workplace pensions can benefit from a number of advantages. A group is able to benefit from guaranteed lifetime income upon retirement by making contributions to one pooled pension plan, which is often managed by a board of trustees. Your investment, should you have one, will expand more quickly with an unlimited time horizon, which can result in larger returns, and will profit from economies of scale with cheaper fees and costs. Shared risk makes growth-oriented investments more feasible.

Blue Pier was introduced in 2020 as a pension option for doctors in Ontario, Alberta, and British Columbia. It was developed to address the gap in employment pension options for independent doctors and makes the claim that it is adaptable to evolving medical demands. Similarly, Medicus, which is scheduled to debut in 2023, would be of interest to doctors. The goal of this concept is to create a single fund that will offer a steady lifelong income upon retirement from medical practice for physicians and physician employers who are corporations.

A greater quality of life in retirement is provided by both of these schemes for retiring medical professionals. Talk to your financial adviser or a CPA about your retirement planning needs, or learn more about how these pension options can benefit you.

It’s Never Too Soon

We all have a tendency to put things off, especially when our daily lives are demanding and busy. Doctors are no different, but it’s crucial to start saving for retirement and making plans for the future during these busiest years. While you concentrate on expanding your medical business, you may keep your retirement goals on track by seeking independent financial counsel and knowledge.

Don’t wait if you want to retire from your medical job while maintaining your current standard of living. Get the financial guidance you require to ensure the protection of your retirement aspirations. Contact us today to chat about your retirement.