I am 64 years old and financially able to retire now, but I am not mentally ready. Those of you who are younger than me should be planning for retirement now. You need to be both financially and mentally ready to retire when the time comes.
In order to help you plan, we’ll look at five key points:
- Start maximizing your pretax retirement contributions early.
- Consider investing in a fee-for-service financial advisor.
- Decide if you are mentally ready to retire.
- Find the right buyer for your practice.
- Stick to your plan.
Start maximizing your pretax retirement contributions early
I started in my late 40s; it was then that I mentally decided it was time for me to start getting ready. That was too late! It would have been much easier if I had started in my late 20s or 30s. I would not have had to work so hard at putting money away in my 50s and 60s.
As a small business owner, you have to remember that no one is going to give it to you. You have to save it yourself. Therefore, you must answer some questions related to your financial readiness, no matter how old you are or where you are in your career.
First, at what age would you like to be financially ready to retire? It is important to discuss this with your spouse or partner. The age you choose will affect your planning directly. Janet and I raised four children who we are very proud of and who are all “off the payroll” and doing great on their own. I can tell you that our expenses went up and up as they progressed through grade school, high school, and college. We planned for our expenses to increase as we raised them until we reached age 51. A good advisor will help you through this process with projections for your future. The right advisor will also take into account inflation and all the variables that will affect the assets that you are trying to grow.
An advisor will help you with another important question: how much money will you need? To answer this question, you need to think about the standard of living you (and your spouse or partner) enjoy right now. What do you want it to be for the rest of your life? Do not depend solely on the sale of your office and social security! The sale of your office might only be a small part of your plan, and social security might or might not even be there.
Consider investing in a fee-for-service financial advisor
Planning early—but also planning well—is an important component of ending up where you want to be. Without the help of a planner, Janet and I would be nowhere near our goal at this time in our lives. As with anything in life, there are good planners and not-so-good planners. Be sure to continually review your progress, your plan, and your fees. Have your report explained to you, as most are next to impossible to interpret. If you can, find a planner who evaluates and advises you on both your office and your personal expenses in order to combine the two for maximum effectiveness. I use Cain Watters in Dallas, Texas; the financial advisors are fantastic.
Decide if you are mentally ready to retire
As humans, we have requirements for happiness and contentment in life: a purpose or reason to get up in the morning, something we can do to help others, and time to maintain our relationships with family and friends. But to be ready to retire, we need a fourth thing: enough money to last our lifetime.
Dentistry gives us rewards in many important ways. We see results very quickly; we do not have to wait nine years to observe results, unlike the scientists who waited for the first pictures to be sent back from the space probe traveling to Pluto. As dentists, we also get appreciation from our staff and our patients. This internal reward is very important. Additionally, we get financial rewards without having to work 60–80 hours a week.
Two of the dental consultants that I look to for help are Larry Guzzardo and Kirk Behrendt. According to Larry Guzzardo, “Dentists who practice Complete Dentistry rarely need to see patients more than 30–32 hours per week to maintain their office productivity.”
Complete Dentistry has been well defined by my former partner and mentor, Peter E. Dawson, DDS. If you aren’t familiar with the Concept of Complete Dentistry, this philosophy, taught by the Dawson Academy, is based on a solid understanding of how the masticatory system works and protocols for gathering records and treatment planning. This philosophy has allowed me and thousands of other dentists to maintain productivity without working long hours and solve even the most complex cases without guesswork.
These rewards all have to be kept in mind when planning to retire. Do not retire from something—retire to something! The happiest retired patients I see still have a reason to get up and get going every morning. Some teach a class or two at the local university, while others have become very involved as volunteers with charities. They are doing something for others, traveling, and spending more time with family.
So, how are you going to spend your time? It is critical to answer all these questions and plan everything with your spouse or partner. Retirement can be very difficult on relationships when all of a sudden, the two of you are spending a lot more time together.
If you and your partner were asked separately, “What do you want to do when you retire?” would you each have an answer? Would the answers be the same?
Find the right buyer for your practice
Most of us would love to find the right person who will appreciate what we have built, want to learn what we know from years of experience, and treat our patients extremely well. This person is not easy to find. It takes time. That is one reason starting this process five years prior to your target retirement age is ideal. Beyond knowing your patients will receive great care from whomever you sell your practice to, you can also benefit from mentoring a younger dentist. The desire to mentor a younger person contributes significantly to our life satisfaction and is well documented in The Season of a Man’s Life by Daniel J. Levinson.1
I would recommend writing down some characteristics your ideal buyer might have and let your close friends and key people in your dental organizations know that you are looking. Then get professional help in structuring the associateship and the buy-in and buy-out so that it is a win-win for both parties.
Stick to your plan
At this point, all the hard work by you and your spouse is done. You still need good consulting help to stay on target, protect your investments, and make any of the small adjustments that almost always crop up in any plan.
You have worked hard helping people, provided job opportunities for your employees, and created a life for your family. Planning your retirement with your spouse to determine the timing, finances, advisors, and right buyer takes time and energy. In the end, control what you can and start early.
References
1. Levinson DJ. The Seasons of a Man’s Life. New York, NY: Ballantine Books; 1986.
