For medical practitioners who have built a successful practice over decades, planning for succession and eventual retirement is often put on the back burner. However, the reality is that the decisions you make today can have a significant impact on your financial independence, legacy and peace of mind in retirement. The key is to take action early.
In our work with practitioners across Australia, we’ve seen first-hand the challenges faced when planning is delayed. This article outlines a structured approach to help you exit confidently, protect your wealth and ensure your family’s long-term security.
Step 1: Align business and personal objectives
Succession planning starts with clarity. What does retirement look like for you? Are you exiting entirely or transitioning gradually? Do you want to maintain ownership of your business premises? Without clearly defined goals, it’s difficult to make financial decisions that support your ideal future.
By aligning your business exit strategy with your personal objectives, you create a roadmap that supports both wealth accumulation and lifestyle sustainability.
Step 2: Don’t underestimate risk
Personal and business risk protection is essential in the lead-up to retirement. Many practitioners are underinsured or have outdated buy/sell agreements that are not properly funded. In the event of disability or death, this can leave families and business partners exposed.
Ensure you maintain and regularly review your personal insurance such as Life, TPD, Trauma and Income Protection, through to retirement. On the business side, buy/sell agreements should be reviewed and fully funded, typically through insurance.
Step 3: Diversify and structure your wealth
A common challenge for practice owners is having too much of their wealth concentrated in the practice itself or tied up in the premises. While these assets may have served you well during your career, they can limit flexibility when it comes to generating income after you exit.
The goal should be to progressively diversify your investments so you’re not reliant on a single asset or income source. This might involve:
- Using existing structures such as trusts, SMSFs and companies more effectively
- Building liquidity by transferring surplus cash into diversified investments
- Taking advantage of contribution strategies to boost superannuation, including catch-up concessional and non-concessional contributions
- Accessing small business CGT concessions to minimise tax on sale proceeds
- Structuring investments to create sustainable, tax-effective income streams that support your desired lifestyle
- Reviewing debt structures and considering debt recycling strategies to enhance tax efficiency while building wealth
By acting early, you can smooth the transition from a business-dependent income to one supported by multiple, well-structured investment sources.
Step 4: Retirement planning – living from wealth
Once the practice is sold or your ownership is reduced, the focus shifts to ensuring your wealth works for you. This means creating a clear drawdown strategy that balances lifestyle needs with long-term sustainability.
An effective approach often involves:
- Establishing ‘investment buckets’ to segment funds for short, medium and long-term use
- Building and maintaining a sufficient cash buffer to fund near-term expenses and avoid selling investments in volatile markets
- Maintaining flexibility in investment allocation to adapt to changing markets and personal circumstances
- Using rental income from premises or other assets to supplement pension withdrawals in a tax-efficient way
- Managing sequencing risk — the risk that market downturns early in retirement could impact your long-term position
- Structuring pension drawdowns strategically to optimise tax outcomes and preserve capital
Having a well-defined strategy provides the confidence to spend in retirement without the fear of outliving your savings.
Step 5: Estate and legacy planning
Even with a solid retirement plan, it’s important to consider what happens to your wealth in the longer term. Estate and legacy planning ensures that the assets you’ve worked hard to build are protected, transferred according to your wishes and structured for the benefit of future generations.
Key strategies include:
- Updating wills and powers of attorney to reflect your current circumstances
- Using testamentary trusts to provide asset protection and potential tax benefits for beneficiaries
- Reviewing and updating superannuation death benefit nominations
- Formalising family loans and documenting gifting arrangements
- Considering Binding Financial Agreements (BFAs) to safeguard family assets in the event of relationship breakdowns among beneficiaries
- Reviewing ownership structures of key assets (e.g., family home, investments) for tax and estate planning efficiency
- Discussing estate plans with beneficiaries to manage expectations and minimise potential disputes
A well-considered legacy plan not only protects your family’s financial future but also provides peace of mind knowing your intentions are clearly documented and legally supported.
So what should you be doing?
Whether you’re 10 years or 2 years away from retirement, it’s never too early to start planning. Here are the key takeaways for medical practice owners:
- Start now. Early planning offers more flexibility and better outcomes.
- Align your business and personal goals. These decisions are deeply interconnected.
- Structure your wealth. Use SMSFs, trusts, and companies to your advantage.
- Protect your risks. Insurance and legal agreements should be reviewed regularly.
- Exit with confidence. A complete plan ensures you retire on your terms.
If you’re thinking about retirement, or even just exploring your options, now is the time to act. Strategic advice can help you maximise your wealth, minimise risk and ensure a smooth transition for you, your family, and your practice.
For more information or to discuss your personal situation, contact your local William Buck Advisor.
