Retirement Planning for Medical Professionals

Retirement Planning for Medical Professionals: An overview

Confused about all things ‘retirement planning for doctors’ or ‘dentist retirement planning’?

It’s fair to say that if medical school seemed like a challenge, understanding the pension system as a medical professional takes things to a whole new level!

Just like the work you do in the medical or dental field, retirement planning is a specialism that’s best left to the experts. This is because retirement planning is both complex and important – especially since you will be relying on any funds you put away now for the rest of your life.

Plus, after many years of dedicated service, you want to be safe in the knowledge that you can relax during retirement – whenever you plan on taking it.

How can retirement planning help me as a medical professional?

• Make sense of the NHS pension, state pension and any other pensions you may hold.
• Ensure that as someone with a busy and stressful career your retirement isn’t sidelined, meaning you can strive to achieve your expected standard of living once you come to rely on your retirement fund.
• Provide you with trusted, independent and informed financial advice which may not be available through your employer.
• Help you plan for an early retirement from the medical profession.
• Gain peace of mind on anything else you’re unsure about.

Need help with more than just your retirement? We also offer Financial Advice for Medical Professionals.

How much do you need in retirement?

According to Standard Life, the average person now needs £37,300 a year to enjoy a comfortable level of retirement. This is in terms of their typical day-to-day living expenses.

However, your required amount may differ from this figure, especially for someone who is a higher earner.

Your retirement fund should allow you to maintain your current standard of living as you age. Alongside the essentials, this includes other lifestyle purchases you wish to make.

Ironically, medical treatment is one of the biggest costs when you retire. As a medical professional yourself, you know better than anyone the advanced level of care someone may need as they age.

According to the UK Care Guide, care costs can be as high as £55,000 annually if advanced nursing care is required.

Your retirement fund must also account for inflation and other financial market changes. Plus, any unexpected expenses.

When should I start my retirement plan as a Doctor or Dentist?

As with all types of retirement planning, the earlier you start, the more benefits you are set to potentially gain.

Even if you are newly graduated, it’s never too early to put plans in place for your retirement. After all, the medical field is demanding, and as you advance in your career you may wish to retire early. Not delaying your retirement plan is one of the best ways to plan for your future, whatever you might have already thought of.

If you’re a medical professional with an existing retirement plan, it’s also never too early to consult our retirement experts to review your current strategy either. This will allow us to develop your goals and assess if they are still on track.

Early retirement planning for medical professionals

As we’ve just touched upon above, it’s also important to consider the realities of working in the medical field, and the implications this may have for your retirement plan.

Many medical professionals work long and demanding shifts under ever-increasing amounts of stress. Therefore, retiring early may be something you are considering. Even if this isn’t where you’re at now, there are no guarantees you’ll want to, or even feel able to keep working until the standard age of retirement.

Similar to other occupations, early retirement is always a possibility. Though the difference is the types of strategies which will need to be put in place to be able to stop working early.

Read more: Retirement Planning for an Early Retirement

NHS pension scheme types

Although far from the only way of funding your retirement, the NHS pension is arguably the most complex of all pensions that may be relevant to you.

Not only are there several NHS pension schemes, but the way that NHS pension schemes work is unique, meaning they take time to fully understand.

To summarise, there are three types of NHS pension schemes, including:

• 1995 NHS pension scheme
• 2008 NHS pension scheme
• 2015 NHS pension scheme

Each type of NHS pension scheme has different conditions attached, including when you can access your pension.

You will only be contributing to one NHS pension type. The specific type depends on when you joined the NHS pension scheme.

Furthermore, if you left and rejoined the NHS at any point, you may have been enrolled on a different NHS pension scheme then you were on previously.

NHS Pension 2023 reforms: What you need to know

In March of 2023, reforms were made to NHS pensions due to life expectancy rates increasing.

While NHS staff who are within 10 years of retiring will see no changes to their existing scheme, all other members need to familiarise themselves with the adjustments.

We briefly touched upon this in our post Jeremy Hunt unveils the 2023 Spring Budget. However, here are some key takeaways to keep you up to speed:

• Annual allowance increased to £60,000 from 6th April 2023
• Minimum tapered annual allowance increased to £10,000
• AA taper adjusted income will increase to £260,000
• Changes to combined pension input amounts for 1995, 2008 and 2015 schemes may significantly reduce annual allowance charge
• Lifetime Allowance (LTA) charge abolished from 6th April 2023

For any high-net-worth individuals with an NHS pension who are more than 10 years away from retiring, our retirement experts can help you understand what the reforms mean for you personally.

When can I access my NHS pension?

Technically, you can access your NHS pension from age 55 as drawdown payments without leaving your job.

However, the age at which you can claim your full NHS pension and retire will depend on which NHS pension scheme (1995, 2008 or 2015) you are enrolled in. The age of retirement ranges from 60 up to the state pension age which applies to you.

Accessing your NHS pensions as an expat

It is not possible to transfer an NHS pension overseas, so, therefore, your options are limited as an expat.

The only way an NHS pension is transferable within the UK is if it is switched to another government entity.

We’ve put together a guide on UK pension transfers to explain more, including the types of pension transfers which are possible.

However, it’s also good to know that there are several other ways of funding your retirement as a medical professional who is an expat as we’re about to explain.

Beyond the NHS pension – Retirement Strategies for Healthcare Professionals

The NHS pension or even the state pension are far from the only ways to fund your retirement.

The earlier you approach us about your retirement as a medical professional, the more options that may be available to you.

Some of the ways to fund your retirement may include:

• Investments
• ISAs
• Property
• Savings
• SIPPs and other pension types
• Tax efficiency reviews (including expat tax planning)

When you meet with our retirement planning experts, we can guide you through a full list of options both as a higher earner and as a medical professional.