Managing Your Practice

Financial planning in the COVID-19 era


Less than a year ago, I wrote a column on retirement strategies; but that was before COVID-19 took down the economy, putting millions out of work and shuttering many of our offices. Add extraordinary racial tensions and an election year like no other, and 2020 has generated fear and uncertainty on an unprecedented level.

Dr. Joseph S. Eastern, a dermatologist in Belleville, N.J.

Dr. Joseph S. Eastern

Not surprisingly, my e-mail has been dominated for months by questions about the short- and long-term financial consequences of this annus horribilis on our practices and retirement plans. Most physicians have felt the downturn acutely, of course. Revenues have declined, non-COVID-19-related hospital visits plunged, and only recently have we seen hospitals resuming elective procedures. As I write this, my practice is approaching its prepandemic volume; but many patients have been avoiding hospitals and doctors’ offices for fear of COVID-19 exposure. With no real end in sight, who can say when this trend will finally correct itself?

Long term, the outlook is not nearly so grim. I have always written that downturns – even steep ones – are inevitable; and rather than fear them, you should expect them and plan for them. Younger physicians with riskier investments have plenty of time to rebound. Physicians nearing retirement, if they have done everything right, probably have the least to lose. Ideally, they will be at or near their savings target and will have transitioned to less vulnerable assets. And remember, you don’t need to have 100% of your retirement money to retire; a sound retirement plan will continue to generate investment returns as you move through retirement.

In short, the essentials of postpandemic financial planning remain the same as before: Make a plan and stick to it.

By way of a brief review, the basics of a good plan are a budget, an emergency fund, disability insurance, and retiring your debt as quickly as possible. All of these have been covered individually in previous columns.

An essential component of your plan should be a list of long-term goals – and it should be more specific than simply accumulating a pile of cash. What do you plan to accomplish with the money? If it’s travel, helping your grandkids with college expenses, hobbies, or something else, make a list. Review it regularly, and modify it if your goals change.

Time to trot out another hoary old cliché: Saving for retirement is a marathon, not a sprint. If the pandemic has temporarily derailed your retirement strategy – forcing you, for example, to make retirement account withdrawals to cover expenses, or raid your emergency fund – no worries! When things have stabilized, it’s time to recommit to your retirement plan. Once again, with so many other issues to deal with, retaining the services of a qualified financial professional is usually a far better strategy than going it alone.

Many readers have expressed the fear that their retirement savings would never recover from the COVID-19 hit – but my own financial adviser pointed out that as I write this, in August, conservative portfolio values are about level with similar portfolios on Jan. 1, 2020. “Good plans are built to withstand difficult times,” she said. “Sometimes staying the course is the most difficult, disciplined course of action.”

“If your gut tells you that things will only get worse,” writes Kimberly Lankford in AARP’s magazine, “know that your gut is a terrible economic forecaster.” The University of Michigan’s Index of Consumer Sentiment hit rock bottom in 2008, during the Great Recession; yet only 4 months later, the U.S. economy began its longest expansion in modern history. The point is that it is important to maintain a long-term approach, and not make changes based on short-term events.

COVID-19 (or whatever else comes along) then becomes a matter of statement pain, not long-term financial pain. The key to recovery has nothing to do with a financial change, an investment strategy change, or a holding change, and everything to do with realigning your long-term goals.

So, moving on from COVID-19 is actually quite simple: Fill your retirement plan to its legal limit and let it grow, tax-deferred. Then invest for the long term, with your target amount in mind. And once again, the earlier you start and the longer you stick with it, the better.

Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at

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