In 2007, the American Dental Association released some survey data that raised quite a few eyebrows. Their data revealed that only 4 out of 100 dentists in the United States are saving enough money for retirement to support their current lifestyle. Now, I’m not one to just pick on the dentist. Americans don’t save enough and the economic challenges of the last few years have begun to wake some people up. For the dentist; however, saving money becomes and even more critical challenge. Dentists are saddled with two other problems that make their savings requirements tougher than most: they are in a cash-based business that will not sell for what most think it will sell for and they enjoy a higher standard of living. When you couple this with the fact that few strong business courses are offered in dental school to help the dentist, you have a perfect storm. I speak with dentists across the U.S. daily and my clients are scattered with the wind and settle into different geographies, demographics, and economies. One thing remains the same – there is a disconnection between good productivity/income and great savings for retirement. I refer my clients to the best Practice Management Consultants in the country and those consultants all share the frustration of helping their clients grow the top and bottom line, only to find there is not the financial harmony one would expect from those results.
Why does Dr. J call me from Orange County, California because he collects 200k per month between two practices and cannot pay his bills? Dr. W in rural Arkansas produces 1.4M and takes home 120k. Dr. N in Ohio is a specialist, earns a tremendous income, and can’t figure out how to save more than 35k per year. Dr. C lost 42% of his retirement savings in 2008 and delayed his retirement 7 years as a result. Dr. B in Chicago cannot comprehend how to properly bring on a partner and what a great Transition could mean to his retirement wealth. What begins to appear is a pattern of many mistakes and misfortunes that could be prevented with a more holistic, comprehensive approach to the business of dentistry. As a partner in a fee-only asset management firm that only has dentists as clients, I will testify that there is a better way. I believe most dentists are on an island by themselves. Sure, many have great advisors around them: good CPA’s, super PM Consultants, investment brokers, dental dealers, attorneys, coaches, etc. but they are not communicating with each other! Nobody is pulling the brake on the train and saying, “what is the master plan?” It’s my opinion that a more reliable and pragmatic approach should be taken for those dentists that are really serious about building retirement wealth. Stop chasing high-risk returns in the market and get a great advisor that can impact how much you save each year. Then, find a specialist to help weave all you’re financial threads together holistically: partnerships, practice profit, personal finance, tax, and debt positions. Don’t mistake me, I’m an optimist on economics and the stock market is a wonderful vehicle to help build wealth over time. Simply put, good mathematics suggests that the more money you can save, the more you reduce the risk and market gains necessary to build wealth. It’s time to get back to the basics and leverage the business you’ve worked so hard to build.
Steve Steinbrunner is a graduate of Indiana University with twelve years in management and leadership positions for two leading dental supply companies – in three different states. Also a Registered Investment Advisor Representative, he currently advises dental professionals in areas related to finance in their dental business and personal lives. His firm provides business consulting, transitions, and fee-only investment advisement to dental professionals serious about their retirement wealth. Steve is a member in good standing with the Academy of Dental Management Consultants and serves on the board of directors for Donated Dental Services, Indiana’s chapter of the National Foundation for Dentistry for the Handicapped – an organization helping to provide dental services to those in need but that don’t have access to care.
Tip of the Month: How much should you be saving now?
Monthly savings, by age, required to grow a retirement account to $4 million by age 65. This will allow net annual retirement income of $365K to age 90 with a 9% rate or return.