I want to thank Dr. Blair for inviting me on the blog to talk about a subject that should get everyone pumped up...how to become a millionaire!
"I have little doubt that any pharmacist who is doing adequate planning over his/her career shouldn't be able to retire as a millionaire."
What basis do I have for making this statement?
According to the Bureau of Labor Statistics, the median pay for a pharmacist in the US is $120,950. If a pharmacist making this income saves 10% of their income per year ($1,008 per month) over 30 years earning 6% growth on the investments, he/she will have just over $1,000,000 saved. If planning early, one could and should do much better than this since I would argue 10% for 30 years is not good enough. To be conservative, I recommend saving 15%-20% of your income over 40 years depending on your other financial goals.
In order to be successful with your investment plan and strategy, you have to first know what goal you are trying to achieve. Therefore, trying to project the amount of money you need to have saved at retirement is an important step to determine what you will do on a monthly basis to make this goal a reality. Without that goal, you may lose sight of the importance of making saving a priority in your monthly budget.
Build Your Launch Pad
While it is much more exciting to talk about investing, there is a very first important step to protecting your financial plan. If we think of investing as a rocket launch, then think of this step as building your launch pad. The launch pad consists of three major parts.
First, build an emergency fund of 3-6 months of expenses (not income). If your monthly income and expenses are the same, it is time to get serious about a budget!
Second, evaluate all of your debts and set a plan to pay off your debts. Notice I didn’t say you had to get rid of all your debts before investing. That decision should be based on your feelings and philosophy towards debt and the interest rate on those loans. You can read about my personal journey and budget that allowed my wife and I to pay off $200,000 in non-mortgage debt. One of the keys to winning with long-term savings is to get out of debt as soon as possible; especially high interest rate debt. This will free up your income for saving early and often.
Third, make sure you have the appropriate baseline protection in place. For the sake of the brevity of this article, this should include at least some term life insurance (e.g., 20 or 30 years) and long-term disability insurance if your family depends upon your income. There are all types of insurance policies and you should be cautious in choosing those that are necessary and play a valuable role in protecting the rest of your financial plan.
Utilize Tax-Advantaged Retirement Savings Vehicles
So, where should you start with retirement savings? Some employer-sponsored options (such as a 401k/403b) offer tax advantages on contributions whereas others (e.g., Roth IRA) offer tax advantages on the growth of your investment. You should take any tax-advantage savings before looking elsewhere.
I would recommend the following order of savings for retirement:
If you don’t have access to an employer sponsored retirement plan, I would recommend establishing services with one of the well-known robo-adviser companies such as Betterment (ed: Blair's referral link that gets you 6 months of free investing) that provides you with good investment options with low fees. If you already work with a financial advisor and feel comfortable with that individual in terms of the advice they are giving and the fees they are charging, he/she should be able to help get you started.
Personally, I like to have a balance of retirement savings that are tax-advantaged on the contributions (e.g., 401k whether through an employer or self-funded) and others in a vehicle that are growing tax-free (e.g., Roth IRA).
Why is that the case?
The big question to answer (if you could) to help determine whether you should save more in an account where you pay taxes on your contributions but the money grows tax free (e.g., Roth IRA) versus an account where you don’t pay taxes on your contributions but will on the distributions (e.g., 401k or 403b) depends upon your income tax rate today versus your projected income tax rate at retirement.
There are lots of opinions out there as to whether income tax rates may go up or down in the future but the reality is we do not know and I think there is wisdom in having a balance between the two.
It is important to remember that the vehicles noted above (401k, 403b, Roth IRA, etc.) are just that, vehicles. They are not your actual investments. Within those vehicles, you will have to select your investments. There is a common mistake I see that everyone should be aware of. Often someone will get so excited that they are saving 15-20% of their income in the right vehicles but they then forget to carefully select the individual investments (e.g., mutual funds) within those vehicles.
If your hard-earned money is going to be put away for retirement, it is worth this extra step to make sure that you are selecting the best options that match your long-term goals.
This is where you can truly win long term by making sure you have a diversified portfolio of investments that have a strong track record of performance with as low as fees as possible. If you aren’t comfortable selecting individual investments, you should consult a licensed financial advisor.
To get access to Timothy's e-guide The Path to Debt Free, enter your email address and start your journey to debt freedom today!
ABOUT THE AUTHOR:
Timothy Ulbrich, Pharm.D. is an associate professor of pharmacy practice and associate dean at Northeast Ohio Medical University College of Pharmacy. He lives in Rootstown, OH with his wife Jess and three boys Samuel, Everett and Levi. After paying off over $200,000 in non-mortgage debt, he is motivated to empower pharmacists and pharmacy students to take control of their financial future. He is the author of the blog Your Financial Pharmacist and The Path to Debt Free: An E-Guide for Pharmacists. You can send me questions and/or share your progress on achieving financial freedom on Twitter (@FinancialRPh) or via Facebook at www.facebook.com/yourfinancialpharmacist
In the previous posts of this LinkedIn Series, we have discussed Keeping Your Knowledge Current, Networking and Publishing on LinkedIn be sure to check them out if you haven't yet!
Now in the final post of this series, we are going to discuss how to use LinkedIn Groups for growing your connections and growing your business.
One of my favorite, most active group on LinkedIn is APhA’s American Pharmacists Association group. Another one that has had many productive and wonderful discussions in my niche is the MTMS group, which stands for Medication Therapy Management Services.
There are also a few press and job finding groups such as Pharmacy Professionals Network, Pharmacy Times, PharmacyWeek and The PharmaMoms Club that I enjoy. They are all great for networking as well as putting out a lot of great content. Just take a look around and see which groups you feel most comfortable in.
Groups are the best way for me to connect individually with people. It seems that not as many people will comment on a personal status, but feel more comfortable if you post your discussion topic or question in a group.
If you start a discussion in any of these groups either asking for help or sharing some valuable information, people tend to like, comment and generally interact more with you. This is a great place to share a Published Post and ask others for feedback on your ideas.
Another thing that is great about groups is that they give you the ability to send a connection request or InMail message to other group members.
This is important when you are still focused on building your network. It doesn't require the Premium version of LinkedIn to send connection request to people outside of your 1st or 2nd degree connections.
Now that you know the basics of LinkedIn set a goal for yourself:
Will you rework your Profile page?
Start Publishing Posts?
Facilitating discussions in Groups?
I would love to hear from you if you feel this series has improved your knowledge, networking or publishing on LinkedIn, just shoot me an email at email@example.com
If you found this information useful, and would like to get all blog posts and MTM-related updates sent directly to your inbox join the Pharmapreneur Community NEWSLETTER.
ABOUT THE AUTHOR:
Blair Green Thielemier, PharmD is an independent consultant pharmacist living in Arkansas with her husband and daughter. She is the founder of Pharmapreneur Academy, an online teaching platform where she guides pharmacist-entrepreneurs through the process and barriers of building a pharmacy consulting business. She is the author of How to Build a Pharmacy Consulting Business: Your Rx for Finding Freedom and Loving Your Career, a contributing author for Pharmacy Times and guest host on the Pharmacy Podcast. More information about Dr. Thielemier can be found on her website BTPharmacyConsulting.com
Part 3 of our Making LinkedIn Work for You series will focus on how to publish articles on LinkedIn in order to build credibility and connections. In Part 1 of this series, we talked about using LinkedIn for Keeping Your Knowledge Current and Part 2 focused on using LinkedIn for Networking.
Why is it important use Published Posts to build your connections?
We are now entrenched in the "idea economy" a term made popular by Taylor Pearson's The End of Jobs. In the idea economy it is more important than ever to build Career Capital regardless of your employment status.
Writing is a great way to share your ideas and expertise in order to build this Capital. Even if your post is merely a brief update about an experience and what you learned or some successful idea you've had, consider how you can tell the story to make it into great “how-to tips” post that could help others.
For example, if you are excited about a new study you just read about, share information about it in an Published Post.
Especially if you are a good writer, but even if you are not (you will get better with practice) think about the posts you find most interesting and think about how you would re-tell the story in your own words.
Publishing helps build your Career Capital and shows your expertise.
When you do publish a post, connect it to your Facebook and Twitter feeds so it will automatically be shared on all your social media sites.
Don't forget to connect with me on LinkedIn, so I can see what you come up with!
If you found this information useful, and would like to get all blog posts and MTM-related updates sent directly to your inbox you can join the Pharmapreneur Community NEWSLETTER.
ABOUT THE AUTHOR:
Blair Green Thielemier, PharmD is an independent consultant pharmacist living in Arkansas with her husband and daughter. She is the founder of Pharmapreneur Academy, an online teaching platform where she guides pharmacist-entrepreneurs through the process and barriers of building a pharmacy consulting business. She is the author of How to Build a Pharmacy Consulting Business: Your Rx for Finding Freedom and Loving Your Career, a contributing author for Pharmacy Times and guest host on the Pharmacy Podcast. More information about Dr. Thielemier can be found on her website http://BTPharmacyConsulting.com