Setting yourself up for retirement

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setting yourself up for retirement
Dr Philip and Kathy Wilson enjoying their retirement!

It’s all about planning when it comes to setting yourself up for a well-funded and enjoyable retirement. By Lynne Testoni

It’s a sad truth, but even the most dedicated of veterinary professionals might want to retire eventually. We all have a point in our lives where we might want to relax, travel (COVID permitting) and spend more time with family.

And, of course, if you want to make the most out of this next chapter of your life, it’s important to make sure you have a bank balance that can fund it. 

For many veterinarians, retiring from work is much more than just handing in a resignation letter one day, collecting a gold watch and heading off into the sunset. There’s often a practice to sell or close, patients to manage and perhaps a balance sheet to sort out.

Certified financial planner Chris Morcom of Hewison Private Wealth, says that retirement plans don’t come in a one-size-fits-all solution, which is why he recommends getting advice from a qualified person, who can help you organise your finances and work with your accountant. 

“If you’re thinking of retiring, the first thing I would say is get some advice, because you can’t be an expert in everything,” he explains. “Often when we are looking at retiring, particularly professionals such as vets, they’ll have gathered various structures over the years such as family trusts and maybe even a self-managed super fund, and there’s going to be all sorts of things to deal with.

“It’s important that their adviser has the experience and expertise to be able to talk to them about those structures and understand them. They will also need to converse with their accountant as well, to make sure that any strategies put in place are tax effective.

“If you’re thinking about retirement, one of the things you have to ask yourself is, ‘What am I trying to do here? What’s my objective?’ Are you going to travel the world? Or you might have an interest in something else that you want to pursue, or you might be looking for a quiet retirement, where you spend time with friends and family.

“It’s really up to the individual and what they—and their family—are wanting to achieve. And that’s a very important discussion to have early because that determines how much money you will need to fund that lifestyle.” 

Morcom says that vets usually have three broad options when they retire. 

“First option is you shut the door and walk away, but you’re not going to get value for your hard work there,” he explains. 

“The second option might be to sell the practice to another practitioner, train a younger professional in the practice to take over the running of the business and buy you out, or advertise for a non-corporate purchaser. That could be a structured process and takes some planning, so generally you need to plan those succession strategies up to 10 years in advance.

“The third option is selling out to a larger player, such as a consolidator in the sector or listed firms like Greencross and others, who can potentially buy you out, if what your practice offers is what they’re looking for.

It’s really up to the individual and what they—and their family—are wanting to achieve. And that’s a very important discussion to have early because that determines how much money you will need to fund that lifestyle. 

Chris Morcom, financial planner, Hewison Private Wealth

“It all takes a bit of understanding of what the market is for practices in your area and where your practice fits into that sector. There’s always a bit of work to do to maximise value for any business owner.” 

Case in point

Retired vet Dr Philip Wilson looked at all those options when he started considering retirement, he says. Over more than 30 years, Dr Wilson had built up a successful practice in Lake Macquarie NSW, starting from a single practitioner operation and ending up with three successful clinics in the area and employing seven veterinarians.

Working with his business partner of 25 years, Dr Geoff Shumack, Dr Wilson, now 69, says they both took time to plan their exit from the business, which involved, he says, probably “three years of organising, negotiating, working out what we wanted to do ourselves. 

“It was a planned process because it had to suit both of us, which it did. But these plans were probably hatched earlier because you don’t suddenly decide you’re going to retire. There was a goal set vaguely, maybe five or six years beforehand, but just very informal thoughts.”

Dr Wilson was 60 when they sold the practice and says he was lucky that Dr Shumack wanted to retire at the same time and that the two of them had always worked well together. 

“We were only a year apart in age, and our children were at a similar stage so we had similar goals and needs,” he explains. “We were a close partnership; we respected each other. There were no conflicts, so it was an easy partnership, and we’re still friends. Probably we were lucky in our situation that we were a happy partnership so there wasn’t that extra stress of trying to deal with poor relationships, which is sometimes the case.”

Easing out

Drs Wilson and Shumack ended up selling the practice to a younger vet hoping to move into the area, who intended to run the practice in a similar way. They organised a planned transition period as part of the sale.

“We agreed to work for two or three years after, part-time. I worked for two years, Geoff worked for three years, both two days a week. We did that for continuity for our staff, our clients, and to assist the new owner. And it worked out well for everybody.”

Dr Wilson also felt this arrangement helped him adjust to life after work, by easing into retirement, which is an option that Morcom suggests to many of his professional clients. 

“All entrepreneurs and small-to-medium-size business owners probably have these problems,” he says. “They’ve spent their life building something, and if they just walk away, that’s a pretty big change of life, and not everyone is geared up to have such a massive change in one go. 

“Sometimes it can be better to have a slower transition to not being involved in your profession. And so that might be a situation where you sell, but stay on for a couple of years to smooth the transition to the new owners, but in a reduced capacity, so you’re not there every day. It allows you to practise being retired, so to speak.”

Dr Wilson says both partners still have a good relationship with the vet who bought their practice. “We still own the buildings; he’s our tenant,” he says. “So there were three practices involved and two buildings. It was a big investment for him, but he’s done well, we were happy. He was our preferred person to sell it to.”

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