Three Reasons Sole Prop Dentists Can’t Save for Retirement
As a result of the economic uncertainty in the last few years, we are seeing a gradual turn back to a more pragmatic time where saving a lot of money was cooler than how you spent it. According to the American Dental Association’s 2010 Survey on Investments and Retirement, the average dentist (including specialists) saves about $26,000k per year, 17% of net income, and realizes it’s not enough. Dentists that were surveyed and over 40 years old said they would retire at 67. Dentists asked that same question, but were 40 years old and younger, replied they’d retire at 61. What the heck happens at 40 yrs. old? The idealism of the younger dentist begins to wear off and a fine patina shows through that reveals the business of dentistry is tough - simply put. Compound that with a troublesome stock market and the difficulty of failed transitions and you have a perfect storm, one that damages the hopes of a fine retirement at a reasonable age.
When I share these stories with Darren Kaberna, Founder and President of Accelerate My Practice, a top-notch dental Practice Management firm, we nod in agreement to each other; however, we come at this from different angles. Darren’s techniques hone the skills of the clinician and team: improved communication, improved process/procedure, and boosted productivity. Darren knows too well that his success doesn’t always translate directly into the dentist saving more for retirement. Over breakfast at a big dental meeting, Darren said to me “I can increase productivity 25% but that doesn’t mean their retirement benefits automatically from it”. Darren’s concern for clients goes beyond the dental practice so he wanted to learn more about how to help with life goals. What gets in the way? One saying that rings true is that “the more you save, the less often you chase high returns in the stock market” - it’s a pragmatic and predictable way to build wealth; however, figuring out how to save more is tricky. If you’re a Sole Proprietor, start with getting incorporated.
