How Doctors Can Retire Early

When it comes to a doctors retirement, our perspective is pretty straightforward: "Start early, and never fully stop." It’s a simple idea that most dentists get on board with once we explain it, so let’s break it down.

As most of us reach around 55 (or maybe a bit later), life starts to shift gears. The kids are out of the house, the big expenses are behind you, and suddenly you’ve got some breathing room to focus on yourself.

This is the time when many doctors start thinking about their next phase—less work, more personal time. They realize they can finally start spending their money on things that matter to them, like travel or hobbies, after possibly decades of prioritizing family and career.

By the time a doctor hits 55, they’ve usually built up a solid financial foundation, even if it’s tied up in the house or superannuation or maybe the practice's goodwill. This age typically marks a high point in their career: years of experience, professional development, and a depth of knowledge mean they can handle patient needs quickly and efficiently. As a result, most doctors at 55 have a wide range of job opportunities. As long as their health holds up, there’s no reason they can’t keep working for another 10 years, maybe even more.

So, with some wealth built up, a steady income, and a practice that could keep going forever, it’s no surprise that many doctors at this stage opt to reduce their hours and make room for other passions—whether that's traveling, exercising, reading, or just taking time to relax.

Of course, the more wealth a doctor has, the earlier they can cut back, but even if their savings aren’t huge, they can still work fewer hours without worrying about struggling in retirement. With some thoughtful planning around their health and finances, they can ease into retirement gradually, enjoying a mix of work and leisure.

A popular strategy is for doctors to reduce their work to four days a week, taking about two months off every year. By the time they hit 70, they might be working just a few days a week for part of the year. The rest of the time is spent at the beach, traveling, or even escaping to warmer parts of the country during winter.

This approach to retirement has several benefits:

1. You get to enjoy more free time while you're still healthy and active. After all, travel can be harder once you’re past 70, so why not take advantage of that extra energy while you can?
2. Tax strategies, especially those involving service trusts and income splitting with a spouse, can make working part-time much more financially rewarding.
3. Spreading your career over a longer period means you won’t need to dip into your retirement savings as quickly. You might even work well into your seventies, reducing the total amount of money you’ll need to live comfortably.
4. The work you do is meaningful, and working for longer can be both satisfying and rewarding. Plus, being a doctor is often tied to your sense of identity, and many doctors find that staying in the game keeps them mentally sharp and happy.

It’s a bit of an economic paradox, but doctors who scale back their work early may actually end up earning more in the long run than those who work non-stop. It’s like the tortoise winning over the hare—taking it slow might actually be the smartest choice for longevity.

But what if something unexpected happens? If you suffer a health scare or need to stop working entirely in your sixties, having those years of part-time work will likely be a blessing rather than a regret.

How to Retire Early and Keep Going

So, now that we’ve established that retiring early and never fully stopping is a smart choice, how do youmake it happen?

The key is to invest early and wisely. By the time you hit 55 (or whenever your kids are financially independent), your investments should ideally be bringing in more money than your practice. This is the sweet spot—your investments can provide a solid income, allowing you to work fewer hours without feeling the financial pinch.

Interestingly, many doctors keep working even once their investments outpace their earnings from the practice. The big difference is they’re working more on their terms. They get to enjoy more holidays, take longer weekends, and avoid the "I have to work" mentality. It’s a game-changer.

Of course, there are still costs associated with running a practice, even if you cut back on your hours. Rent, equipment depreciation, and some staff wages are fixed costs—things that won’t go away just because you're working less. So, you can’t assume that cutting back to half your normal hours means your income will be halved too. In fact, your profit might take a bigger hit because of those fixed costs.

The solution is to adjust your practice model. Instead of running your own practice, consider joining an existing practice where the overhead costs are more variable. In this setup, if you cut back on the number of days you work, your income will likely drop proportionally, which makes it easier to manage financially.

By shifting to a practice model that better aligns with your new lifestyle, you can continue enjoying general practice on your terms while also carving out more time for yourself. It’s all about finding the balance between work, health, and personal life—and knowing when to step back and enjoy the fruits of your hard work.

 Nick Tolevsky is a Specialist Medical Accountant. He provides expert guidance on tax strategies, building and protecting wealth . If you’re interested in discussing how we can help you,  please book a complimentary consultation by clicking here.

Disclaimer: This article contains general information only . It is not designed to be a substitute for professional advice and does not take into account your individual circumstances, so please check with us before implementing this strategy to make sure it is suitable.