The Secrets to Doing Retirement Right

An astonishing number of dentists don’t start seriously begin planning their retirement until their time in the practice is drawing to a close. By that point, though, options become limited, and any shortfall in retirement funds means either scaling back current lifestyle or drastically revising retirement expectations. We are living in a new age, and the rules have changed. People are living longer, which means more retirement years to finance, not to mention the cost of the all-but-inevitable health issues that go with that extended lifespan.

This new reality requires a new way of thinking. It isn’t about work versus retirement anymore, it’s about optimizing the three things that drive our lifestyle – time, money and relationships – in and out of the practice, for as long as we live. To do this right you need to start planning as early as possible. Sit down with your spouse and your financial advisor (ideally someone who understands dental practices and can offer integrated personal and professional advice) and start putting real numbers to things. Get aligned on your expectations for your retirement lifestyle, and get down to specifics on everything. 

You may have already accounted for your children’s education, for instance, but what about grandchildren? Will you be contributing to their education funds? How much will you be traveling? What about taxes on the investments you’ve made? Then honestly assess what you’re doing now towards that goal in terms of your current rate of savings—to get a clear picture of where you stand. If you’re like a lot of people, you’re going to see a gap between what is and what needs to be.

The good news is that you have the time to conquer that gap—if you start now. You’ll conquer it by using the time you have left to optimize the value you get from the practice. And the best way to do that is usually by transitioning in an associate who will drive growth, and by adopting strategies to increase the value of your time. Finally, you can ease into retirement by spending your last years in the practice in a “grand-doctor” position where you serve the practice in a limited role—a day or two a week, or maybe a week a month—working only with your preferred selected patients, on selected cases, at a favorable compensation rate. This is a great way for the practice to be assured of a smooth transfer of ownership and to continue to benefit from your experience.

Meanwhile, the income you earn offsets the need to draw on your retirement savings, so your portfolio maintains maximum earning power. It’s an ideal, low pressure, enjoyable way to cap a career and to exit your practice on your own terms. This is the way every dentist should retire—financially independent, professionally fulfilled, and secure in the knowledge that their legacy endures in the practice they built. And the thing is, every dentist can do this. The point is to have a plan, so that by the time you stop working in the practice, the practice will be working hard for you.