This article originally appeared in the November/December 2020 issue of the Ontario Medical Review magazine.
By Preya Singh-Cushnie
Director, OMA Insurance Advisory & Education Services
Long hours, high stress, personal protective equipment (PPE) shortages, and the challenges of caring for patients during a pandemic: if Ontario’s Doctors ever needed a reason to look forward to a brighter future, it’s now. With so many competing priorities to juggle, it may be difficult to think beyond getting through the next few days or weeks, let alone saving for a retirement that may be decades in the future.
Yet now is unquestionably the right time for physicians to start a retirement savings plan if they haven’t already done so. Delaying that decision by even one year can have a significant impact on future retirement income, limiting lifestyle choices down the road – whether that means travelling, living at the cottage, spending time with family, or focusing on recreational activities. It’s up to every Ontario physician to act now so they can enjoy the well-deserved benefits of a lifetime of achievement during their retirement years.
OMA Insurance launched the Advantages Retirement Plan™ early in 2020 to meet the need for a retirement savings plan built around the specific objectives and time constraints of busy Ontario physicians. With the Advantages Retirement Plan™, OMA members and their spouses/common-law partners now have access to an easy-to-use online platform that makes retirement planning convenient, straightforward, and extremely time and cost-efficient. The key is to move forward and set up a plan now, whether you’re still in medical school, or in the early, middle or later years of your career.
The case for financial planning during a pandemic: the longer you wait to start saving, the less you’ll have down the road.
Retirement planning has often been an afterthought for many physicians. But without the security of an employer-sponsored pension plan, it’s up to individual physicians to set and meet their own retirement saving objectives, a daunting and time-consuming task for many. Those who turn to their financial institutions for help often receive “off the shelf” financial advice once a year, if that.
Research by OMA Insurance shows that about 80 per cent of OMA members don’t feel confident that they are on track with saving for the retirement they would like to have. Thirty percent have not yet started contributing to a retirement savings plan.
“Physicians are focused on their profession, their education and their current lifestyle,” explains Preya Singh-Cushnie, Director of OMA Insurance Advisory & Education. “Preparing financially for the future is not top of mind. As a result, only 20% of our physicians feel comfortable with their financial future. That’s a big gap.”
“When they get to 65 or 70 years of age and look at the kind of lifestyle they want to have in retirement, that’s when it becomes an eye-opening experience. They realize, ‘Wait a minute, I’m going to have to cut out all these things I love (because I haven’t saved enough) … if only I paid more attention to this earlier on when I was in my 30s, 40s, 50s.’”
“Our members have been asking about a pension plan for about 10 years,” says Singh-Cushnie. “So starting early in 2017, we began working on the launch of a group retirement savings program that was pension-like—built from the ground up.”
The Advantages Retirement Plan™ is a group savings plan designed exclusively for OMA members and their spouses and common-law partners. It was designed to answer a growing need for a flexible, time-efficient way for time-strapped physicians to start planning and saving with registered products that meets their personal objectives. Depending on their income and time horizon until retirement, they can choose from a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TSFA), starting with a contribution of as little as $100 a month.
Everything is done online, through a secure, self-serve intelligent online platform, with personal support and information available as needed from OMA Insurance Advisors. The process starts by simply selecting a target age for retirement. The flexible platform can then easily adapt to changes in a physician’s retirement goals.
“The platform is designed for every stage of a physician’s career, even while still in medical school,” explains Singh-Cushnie. “They can start anytime and pause contributions if they need to.”
An easy-to-use retirement readiness calculator simplifies and demystifies the planning process, taking into account both longevity and tax implications.
The amount that each Canadian is eligible to contribute to their RRSP is set by the Canada Revenue Agency (CRA), based on their annual earned income. But for medical students and physicians just starting out, who may have little or no income, a Tax-Free Savings Account may be the better choice, as long as the member is 18 years old and a Canadian citizen, they can invest up to $6,000 a year, regardless of their income. (It is important to note that incorporated physicians don’t have the option of investing in these registered savings plans.)
It’s time to get your retirement savings back on track. Watch to learn how the multi-award winning Advantages Retirement Plan™ can help you stay connected to your retirement.
The Advantages Retirement Plan™ also keeps costs down with management fees that are typically lower than most Canadians pay to invest their retirement savings.
In addition to the RRSP and TFSA funds available to OMA members now, the Advantages Retirement Plan™ will eventually offer an annuity-based product that provides guaranteed lifetime income. Look for this new option to launch in the near future.
Why start planning as soon as possible with the Advantages Retirement Plan™? Because the earlier you start to save regularly, the more you should have when you are ready to retire.
The impact of compound interest means that small amounts invested regularly over a longer time horizon will benefit a physician more than one-time lump-sum contributions made later in life.
But Singh-Cushnie emphasizes that it’s never too late to start saving for retirement. “Anything you can save before age 71 or your desired retirement age is still savings you can use. The problem is when you don’t do anything at all. When physicians don’t start a savings plan, they end up working longer – into their 70s and 80s. Take the first step toward saving for your retirement by contacting your OMA Insurance team at 1-800-758-1641 (option 1) or email email@example.com.”
For more information about the Advantages Retirement Plan™, including frequently asked questions and a retirement readiness calculator, visit the Advantages Retirement Plan™ website.
The information contained in this article is provided for educational purposes only and should not be construed as advice to be acted upon. The information is not intended to offer investment, taxation, accounting, financial or similar professional advice, nor is it intended to replace the advice of independent tax, financial, accounting or legal professionals. Employees of OMA Insurance are not licensed or authorized to provide investment products, services or advice to you, except as it relates to insurance.
The Advantages Retirement Plan™ received the Innovation Award in Plan Design at this year’s Pensions & Investments’ World Pension Summit, held virtually and co-hosted by the city of The Hague, Netherlands. P&I is one of the world’s leading industry publications for money management, and its awards recognize innovative initiatives and proven solutions in the global pensions and retirement community.