Retirement Savings of Dentists in Private Practice

ABSTRACT

Background Retirement planning is an issue that concerns all working people. In this article, the authors present their analysis of the results of a 1995 American Dental Association survey that asked dentists questions about their plans to finance their retirement.
Methods. The ADA's Survey Center conducts a periodic "Survey of Current Issues in Dentistry," which gauges dentists' opinions about a variety of topics of interest to dentistry. The authors analyzed the results of the 1995 survey in which retirement savings was one of the topics.

Results The majority of responding owner/dentists whose primary occupation was private practice (40.7 percent) indicated that they were relying only "a little" on the sales of their practices to finance their retirements. Overall, dentists whose primary occupation was private practice reported saving an average of 10.5 percent of their income specifically for retirement. The average total amount of money dentists invested in various retirement plans increased with age and was highest for the 55 to 59 and the 60 to 64 years of age cohorts. The only exception was the 401(k) plan, in which the peak occurred in the 65 years of age and older cohort.

Conclusions Fifteen years ago most dentists retired between the ages of 60 and 69 years. Recent trends show that dentists are retiring at younger ages. This means that while in practice, dentists must save enough to support themselves for 20 or more years of retirement.

Practice Implications The transition from private practice to retirement can be difficult. Therefore, planning for the future is important. Dentists can benefit from making appropriate decisions based on age, investment goals, risk tolerance, monetary constraints and time until retirement.


Brown LJ, Lazar V. Retirement Savings of Dentists in Private Practice. JADA 1999; 30(8):1210-18. Copyright © 1999 American Dental Association. All rights reserved. Reproduced by permission. For free access to the full text of the article, please click here; http://jada.ada.org/cgi/reprint/130/8/1210.

What Does Your Future Look Like?

Some say that tomorrow's dental industry will become more polarized, with the more successful practices working, acting, and looking radically different from the less successful ones. This is pretty important in light of a 2004 CNN study that found that only 43% of American workers were happy with their employer.

Leadership is often the quality that separates the great practices from the good ones, where are your going with yours? To advance into the future with confidence create a business vision by involving your entire team in the process. Please note that ultimately, handling stress, teamwork, working in a professional manor towards patient satisfaction and service is our goal, the higher purpose to which we serve. Yet, we have to arrive in the future financially sound and to provide dentistry of the highest quality, the dentists themselves have to be financially fit. What to do?

Did you know that in 2010, demographically speaking, there will be more baby boomer dentists selling there practices than is any time in history before or sense. It will be a peak year in supply; it will be a buyers demand market placing downward pressure on the value of dental offices. What else do we know? We know some good news and we know some bad news. Let’s take a look at some good news first. According to a study on ‘The Economics of Dental Practice – Present and Future’ by H. Barry Waldman and Steven P. Pealman released late last year in CDA Journal, the good news is “The combination of increased practitioner income, increases in proportion of the population reporting visits for dental services, decreases in the number of dental school graduates, decreases in the dentist-to-population ratio, and increases in the numbers of female students and practitioners (many of whom report significantly fewer work hours than their male counterparts), portends favorable economics for the dental practice.”

The bad news is that “the cost of dental care is “felt” in a greater extent than for other health services. Current and future funding arrangements for dental services could be vulnerable to economic downturns, efforts to control business overhead costs and continued minimal government support… Compared to other health services the reliance on 1) out-of-pocket funding for a major share of dental expenditures, and 2) limited government support of dental services raise questions regarding the infrastructure of dental economics.” The details of these findings are in the report, November 2006, Vol. 34. No. 11, CDA, Journal.