There are several smart moves that physicians and dentists — or anyone preparing for or near retirement — can make to optimize their cash-flow planning. I’d like to share five “hacks” to improve your financial picture that we often recommend at Altfest Personal Wealth Management, where I work as a senior financial advisor.

Budgeting Hack #1: Maximize Tax-Preferred Retirement Savings

First, do the most you can to boost tax-preferred savings. When you’re young, the size of your investment doesn’t necessarily matter as much as the time it’s held. For those closer to retirement, it’s important to take advantage of all the ways you could save, which may be more than you think.

For example, there’s no better time than the present to start investing, due to the wonders of compound returns. At a minimum, you should contribute enough to receive your full employer match through your company retirement plan.

You can also use catch-up contributions when saving for retirement. Individuals ages 50-59 or 64+ in 2025 can contribute an additional $7,500 to 401(k)s or 403(b)s, for a total of $31,000 per year. If you are between ages 60-63, you will be able to contribute $11,250 as your catch-up contribution, for a total of $34,750 in 2025.

You may also have access to a 457(b), which is another retirement account offered to some qualifying positions. One thing to note is that non-governmental 457(b) plans are owned by the employer, not the employee, which means there is a risk that if the employer has financial difficulty, like bankruptcy or legal claims, employees’ funds could be at risk. Contributions to traditional pretax retirement accounts like IRAs also will help reduce your taxable income for the year. Even if you can’t contribute the full amount, you should contribute as much as your cash flow allows.

In years of decreased income, while working or in retirement, you can convert pretax retirement funds to a Roth account, which is post-tax, and your savings will continue to grow tax-free and not be taxable when withdrawn. This will help you diversify your retirement savings, with taxable, pretax and post-tax investments. The key is staying consistent throughout your career and not letting market turmoil deter you from saving for your future goals.

Budgeting Hack #2: Conduct a Spending Audit

Next, do a spending audit. Identify bad spending habits you may have so they can be addressed early. Reviewing your spending now can help pave the way for what spending will be like after you’re no longer working. It’s vital to understand your current inflows and outflows, as well as anticipating what your future income and expenses will look like.

Whether you plan on saving for your children’s education expenses, purchasing a house or vacation home or any other major life goals, it’s important to look ahead and plan for these events. As we all know, not everything will always go according to plan, so you’ll need to make adjustments to meet your goals.

When you’re analyzing your spending, be honest with yourself about your habits with money. Use accurate information, which is the key to success in developing your plan. I’ve worked with a variety of doctors, some of whom thought they had a good grasp on their spending, and others who didn’t really track expenses based on anything other than feel. When you’re making significant income, it can be easy to lead yourself into believing that you can spend freely up to your income level, but sadly, this isn’t the case.

A mid- to high-six-figure salary allows you a lot of luxury, but poor spending habits can be a detriment to your future goals if not monitored and managed correctly. Reviewing your cash flow throughout the year will help you stay the course. And remember, your spending today might be vastly different from your spending goals in the future. For example, when the kids are grown and out of the house, you may be spending less, or if you’re planning on traveling more in retirement when you have more free time, this too should be factored into your plan.

In retirement, you’ll no longer have a salary, but you will be able to draw from other sources of income to support your lifestyle. Common sources include Social Security, possibly pensions and your retirement savings from your working career. Additional factors, like the sale of your practice, rental real estate or an inheritance, also can play a part in funding your expenses when you stop working.

Budgeting Hack #3: Focus on Risk Management

Third, manage significant risks. Outside of investment risks, there are a few large threats that, while statistically unlikely, can significantly derail an otherwise good financial plan. Risks like dying too soon, becoming disabled or being liable for an accident can, in fact, be addressed with simple and usually inexpensive insurance policies. Conversely, the risk of living longer than anticipated and making sure your portfolio lasts can best be met if you start saving early.

As a medical professional, ensure that you have sufficient malpractice insurance to cover potential lawsuits and policies to replace your income if you were to become disabled or in need of long-term care later in life. One longstanding client of ours comes to mind in this regard. Upon hiring the firm, we reviewed his existing insurance policies and recommended purchasing an additional independent disability policy to support his income beyond his employer’s policy. Employer policies are typically pretty minimal and do not fully cover your income. He is very thankful to this day because a few years later, he was diagnosed with nerve damage in his hands and was no longer able to practice.

Because of our advice and his move to purchase the additional disability policy, he now makes more than he did while working due to the disability benefits from his independent policy being tax-free because he paid for the policy out-of-pocket with post-tax money.

Building an emergency fund to cover unexpected expenses will also help reduce stress if a tough financial situation arises. Whether you need to replace your hot water heater, purchase a new kitchen appliance or suddenly lose your job, your emergency fund can be used to cover such unexpected costs. As a rule of thumb, three to six months of living expenses should be set aside and readily available for emergencies.

Your assets also need to be protected from annual inflation. This has been a major topic over the last few years: Everything from your house to your weekly grocery store bill has gotten more expensive. The interest earned from your standard checking or savings accounts likely isn’t keeping up with today’s pace of inflation. You need to use a wide variety of vehicles to properly protect your assets. A high yield savings account or money market fund can be a useful place to store cash like your emergency fund and earn a higher return. Your retirement and investment portfolio will also play a part in managing this risk, through a combination of equities and fixed income.

Budgeting Hack #4: Determine a Realistic Timeline

The longer your time horizon, the greater your ability to take on market risk. You’ll need your portfolio to keep growing throughout retirement while you rely on it for income. A financial advisor can help you evaluate the appropriate asset allocation for your current stage of life.

Be realistic with yourself in developing your plan. Think through how long you will work and in what capacity. In your last few working years, will you still be earning the same income or will you dial it back? We have physician and dentist clients who practice well into their 70s, not because they need more money to retire, but because they enjoy what they do and couldn’t imagine not seeing their patients anymore. Some may work fewer hours and days per week in the office. This provides them with income past the typical retirement age and has an additional benefit of allowing them to not withdraw a portion of their required minimum distributions (RMD) from their employer retirement plans until they have fully retired. So not only are they still receiving income past the retirement age, but they’re not forced to withdraw funds from their employer retirement accounts until they completely stop working. This is definitely a useful strategy, and not something that’s fit for every physician, but if possible for you, it’s certainly a big benefit.

How long do you expect to live? There could be quite a span of time between when you retire and the end of your life. The top 10% of individuals in your cohort live to age 97 for males and 99 for females. This could mean a 30-plus-year retirement. A far too common mistake is planning for a shorter retirement and outliving the rate at which you’re spending your retirement savings.

In addition, determine if it’s important for you to leave a legacy. Whether it’s for your kids or a cause you’re passionate about, you’ll need to plan for this accordingly.

Are you ready for retirement? Calculate your current assets, like your home, savings and investments. Each of these assets are there for your benefit, but they also have different tax implications and characteristics, like liquidity. You will need to carefully consider how long these assets must last you to accurately budget for your expenses, now and in the future.

Budgeting Hack #5: Partner with a Professional

Last, work with a financial professional. We know that you’re busy and may not have time to put in the hours needed to manage your investments and plan for the future. A financial planner can help you put your time to its best use, so you can rest more easily knowing that someone is overseeing your finances with your best interests in mind.

Some of the tactics we use to create your personalized financial plan develop from advanced simulations used to determine your plan’s viability and stress-test the potential outcomes. A Monte Carlo analysis will run upwards of 1,000 scenarios for various inflation metrics and investment returns to help evaluate how your plan fares under different financial conditions. The top 20% of scenarios represent your plan in an above-average market with great investment returns and low inflation, while the bottom 20% represent subpar returns and high inflation. What actually will happen is likely to be somewhere in the middle, but it’s necessary to plan for a wider range of outcomes.

For clients whose plan doesn’t result in at least a 90% probability of success, we help make adjustments to increase their likelihood of success. There are some levers that we can pull, as well as adjustments made throughout your career, that could greatly affect the quality of your savings, as well as manage your expenses.

An advisor will not only help you save and invest while you’re working but also can help you determine your capacity for spending in retirement, to meet your goals. You work hard for your money over your career. Advisors and the plans we develop can help make you comfortable spending the assets that you’ve accumulated and ensure that you remain on track to meet your goals and enjoy a retirement with less stress.

Most of all, when developing a cash-flow optimization plan, it’s important to remember that this is not a one-time activity, and that your spending needs throughout retirement will be dynamic. This is why there’s a need to regularly make updates to our assumptions, run new scenarios and alter your strategy through regular check-ins.

Get Help with Your Financial Planning

At Altfest, we strive to understand who you are and what matters to you from the first consultation. We work to gather information that allows us to identify ways to help you make the most of cash-flow planning that ultimately leads to your best retirement. Then we’ll put together a road map to help you get to where you want to go.

If you’re not yet an Altfest client, please book some time for a complimentary consultation.

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.