How Much Money Do PAs Need to Retire Comfortably?

As a Board Certified PA, your financial goal should be to end your career a multimillionaire. This may seem like an overly ambitious goal, but it’s a necessary one to create an inflation-adjusted income replacement in your retirement.

When you retire, you’ll need to use a portion of your investment portfolio to live off of each year. So how much can you use without running out of money?

For those retiring in their mid-60s, the classic answer is to withdraw 4% of your portfolio each year. This means that having $1,000,000 invested will provide you only $40,000 per year to put towards living expenses – ignoring social security payments. 

However, most of the data behind the “safe” 4% withdrawal rate is relatively old, and there are plenty of critiques on the methodologies used. For example, the assumptions ignored investing fees and assumed a fixed withdrawal that ignored market conditions.

That all being said, this data tells us that if you withdraw 4% of your portfolio per year to live after retiring at 65 you are statistically unlikely to run out of money before you die. That’s the goal, right?

Let’s assume you are a PA-C earning $120,000 per year with annual expenses of $70,000. Using a 2.5% annual inflation rate, it will cost you $146,830 in 2053 to have the same purchasing power that $70,000 delivers in 2023.

With these example numbers, you would need $3,670,750 invested to retire and replace your inflation-adjusted expenses, ignoring social security.

How in the world can anyone generate a multimillion-dollar investment portfolio? The recipe for becoming a multimillionaire is this: consistent savings rate + time + compound interest.

Let’s look at the following scenario for a sample PA-C earning $110,000. If this PA-C started investing 15% of gross salary at age 28, and continued this until retirement at 65, the PA-C’s portfolio balance would be $3,618,317 assuming 8% investment returns.

What it ultimately comes down to is this – you can’t afford to wait.

While starting by contributing enough to an employer-based account to receive the full amount of employer match available is a great first step for most clinicians, it’s not enough to create a secure financial future. Learning to consistently invest should be one of the first tasks you prioritize in the first few years of practice.