Is RETIREMENT IN YOUR FUTURE?

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Is Retirement in Your Future?
What do you visualize when you say the word Retirement?  Some visualize Caribbean Cruises; others see fly fishing on a mountain stream, while others see nothing at all.  Personally, I visualize flying an open cockpit biplane.  For all who hope at some point to retire in some level of comfort and confidence, what follows are some topics to consider before you lock the office door and throw away the key.
The vast majority of dentists look forward to freedom to pursue other facets of life beyond running a business and performing the intricate work of dentistry.  Whether your goal is to just be done with work or you still wish you were there at the office most retirees notice that suddenly they have more time on their hands.  You still have just the same 1440 minutes per day available – how you manage it is the difference.  You are now in control and your choices will determine much about how you feel about your life. 
Over the past years we have met several folks who are glad to be done working but who are not happy about retirement.  They complain about all sorts of things.  They often indicate they are bored.  They missed a key element of retiring – preparation. 
If work is your life then you have a lot of preparation to do to retire happily.  Before you “pull the plug on work” start to figure out some things you like to do or want to try when you have more time.  My unhappy retired friends generally have no other avocations besides work.
 
 Are you financially ready to retire?   The question is important but not the only concern. A recent ADA survey found that dentists will need funds from four different sources in order to retire.[1]These expected sources of income in retirement included private savings such as IRA, simplified employee pension, or 401(k) funds (62.4%); social security (13.4%); sale of practice (12.7%); and other (12.5%).  Take the time to sit down with your spouse or significant other and do the math together.  Realistically look at your goals, your health and your expected life expectancy.  Do you want to leave a financial legacy to your kids or a community charity?  That will impact your spending patterns in retirement.  Financial planners use something called “The 4% rule “ as a rough estimate for spending if you want to not deplete your savings over your lifetime [2]  Check the footnote below for a link to an explanation and examples.  No matter where you are on your glide path to retirement, consider using the services of a fee only financial planner.  Financial consultants point out that only 50% of dentists have made time to determine the retirement savings needed in retirement to maintain their lifestyle[3]. Until the recent pandemic, data showed that dentists were saving only about 3% for retirement while an ideal rate would be closer to 10%.  Dentists, and professionals in general, have good cash flow.  However, we tend to earn and spend, not earn, save and spend. This is a matter of choice and habit that is in our control.[4]
Unfortunately, only 26% of dentists use a certified financial planner.2[5] Seeking assistance from a certified and trusted financial professional can help you better understand your options, including saving in ways that offer tax advantages, remaining invested after taking required minimum distributions, and evaluating your practice in preparation for your transition. Although you may find a professional transition service that meets all of your needs, those services often call upon a specialist for nonstandard cases, which is something that you can do too.  Most important in our opinion, is that you are paying for an outside opinion of your situation and advice in an area of the financial world that is constantly changing.  Another resource that has a wealth of information on the internet is Dentist Advisors[6].  The financial planner should ask very personal questions as they cannot really help you if you don’t disclose all your information.  In the end, however, you need to determine when it is right for you to enter the ranks of the retired. 
 
Money is not the critical barrier.
  You do not need a lot of money to be happy in retirement.  Rather, if you are happy you will find a lifestyle that fits your budget. This is why it is so important before retirement to set some goals, both personal and financial and to include your spouse or significant other.   This is the time to have a “come to Jesus moment” about your finances if you have not been sharing your total picture.  Remember among young and old the most common reason for divorce is lack of communication and 55% of arguments are over money.  A good financial planner or consultant will help in this area.  One significant issue is selling your practice.   No longer can you count on a big boost in your retirement savings from the sale of your practice.  Young doctors are leaving school with such a high level of debt that getting financing for a practice purchase is often not possible or rational.  In the current market there are far more sellers than buyers.  Thus, what you might have been counting on to boost your net worth from the sale is not likely to be the number you hoped for.  In fact, many practices are not selling at all.  This is one reason the average of retirement age for dentists has gone up lately.  In 2005 the average dentist was retiring at about 55 years old. In 2018 that number had jumped to 68 years old! [7] Dentists are working a few years longer and accepting that their practice will not sell.  This tactic has been extensively discussed by Dr. Roger Levin in his practice Management courses.[8] 
 
Consider working longer.   One of the key points I have discussed with dentists over the years is whether you should retire at all.  I have seen dentists who did all the proper planning and had strong finances become unhappy and angry in retirement.  If you are enjoying your practice and your health allows you to continue to practice, maybe retirement is not for you.  If you don’t have hobbies outside of dentistry, don’t have a social circle outside of your peers and your life revolves around your practice and you, you may be happier never retiring.  Several options exist: If you can manage to deliver excellent care and your office arrangement allows you to be profitable, consider moving to just two days a week.  Your practice will become smaller and you can ease into retirement.  If you have an associate or partner, consider working just one week per month.  These arrangements require a skilled staff and mutual discussion with all involved – doctor, staff and patients – to be successful. 
 
Soft skills have value.   When you do decide to retire we believe that your behavioral skills and emotional intelligence are the keys to enjoying life.  We suggest you build on things you already like to do, build in some personal time and some together time as well into every day.  Look for something to do that is a new challenge – learn a new language, take a class at the local college or try gardening.  If you were not already in a service club or similar group now you have the time to give that a try.  This may seem like a Pollyanna approach but it has psychological merit.
The happy retirees we have met talk much more about the new friends they have met than about themselves.  They seem to be outward focused not self-focused.  It seems my less happy retiree friends assumed that in retirement the world would revolve around them – maybe that is how it was at their work.  In the real world the active listener is who the world revolves around. 
Create a schedule and stick to it.  If you used to get up at 5:30am and liked doing so, don’t change just get up and do something you did not have time to do in the past.  Get out and take a walk or go swim.  Make a commitment to have time with and without your spouse.  There is nothing sadder than watching some old geezer  following his wife around the grocery store.  It only takes one person to do the shopping.  Get out and go to church at the same time on Sunday.  You will be amazed at the nice folks you meet in church that might be interested in you as a person not what you did in your professional career. Another aspect of successful retirees is that they don’t talk about what they did as a career until they get to know you quite well.  Once you retire, what you did is not who you are.  It sounds circular but once retired you are who you are at this moment in time and nothing more or less.  Accept it and find joy in it.
If you are missing dentistry and want to give back and are near a dental school consider applying for an adjunct position, If you enjoyed the business side of your practice consider volunteering at SCORE[9].   If we are really lucky we will help a few young folks be more successful or to at least avoid some of the errors in life that cost us time, gut lining or money.
The folks who prepared for retirement often say they cannot figure out how they ever had time to do anything besides work as their days are so busy in


[1] . Levin R. The 10th anniversary of the Dental Economics-Levin Group Annual Practice Research Report. Dental Economics Website. September 22, 2016. Accessed September 19, 2018.
 

[2] Aug 23, 2021, https://www.schwab.com/resource-center/insights/content/beyond-4-rule-how-much-can-you-safely-spend-retirement

[3] DE, Pride and Hufford, Ready-Set-Retire, 2001

[4] Harper & Isaac, The Dentist Money Show Podcast, #298

[5] https://www.dentaleconomics.com/practice/overhead-and-profitability/article/16385046/a-profession-in-transition-findings-from-the-2018-dental-economicslevin-group-annual-practice-survey

[6] www.dentistadvisors.com . 

[7] ADA.org/HPI, info graphic 11/21

[8] https://levingroup.com, Practice Management
 
 

[9] https://www.score.org