Iain Stevenson pinpoints how the cost of living crisis could impact dentists’ retirement plans – and what they need to do to protect them.
What is the cost of living crisis?
There is so much going on in the world just now that it is actually quite handy to try and isolate what it is specifically that we’re talking about. I think one of the things I’m concerned about is that people get a bit desensitised to some of this stuff.
If we look specifically at the cost of living, what we’re actually talking about is all things that have happened this year.
For example, increased National Insurance contributions, and a freeze on income and capital gains tax. We’re experiencing the fastest growing inflation for over 30 years. We’ve got increased interest rates, which are expected to carry on increasing – certainly for the remainder of this year. What it basically means is the biggest fall in take home pay in the region of 30 years.
So people have got to take a step back and think about their own personal finances, especially when it comes to retirement planning.
There’s a lot to consider. There’s a lot of things that people need to be aware of when they’re starting to think about their retirement journey.
It does depend which stage of the journey they’re on but it’s certainly something which can and will impact retirement planning as we go forward.
Basically the cost of living challenge is all of the things that I’ve mentioned there and then asking, ‘how do I still plan for my retirement’?
What does the this all mean for dentists specifically?
If we look at dentistry, there is so much going on.
It’s probably the last thing that everybody in dentistry needed was to try to consider all the things that are going on from a financial aspect.
It does depend on what stage of retirement planning you are on. If we look at the people who are heading towards retirement – perhaps 50 or 55 – or those who are at least considering a reduction in their hours.
They do have to pause, take a step back and think ‘has there been any impact here? Is there anything I should be aware of?’ Some of the decisions around retirement are irreversible. So quite simply, once you’ve decided to go down a certain route, that’s it.
The first thing I would say is to find somebody who you trust – a financial advisor who you trust – and just start off reflecting on what you want to happen and what you expect to happen.
Take a step back
Take a step back and look at where you are and if there’s anything that’s going on that might be affecting the decisions that you make.
Some things you need to consider is if you have plans to live a certain standard and you need a certain level of income, it’s definitely worth taking a step back and making sure that that’s still the case. At the end of the day, inflation and the cost of living challenge means that the money in our pocket doesn’t go as far as it as it used to.
This interview was recorded on Monday 30 May 2022.
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