5 reasons dentists retire 7 years later than the average American (and how to fix that)

In a national income and retirement study of dentists throughout the country, the American Dental Association found that the average retirement age for dentists is 69.¹ When Gallup did a survey of the general population, it concluded the average American is retiring at age 62.² What’s interesting is that the typical dentist earns more than three times the average American. So, if that’s the case, why are dentists retiring seven years later? As dedicated professionals working with dentists for nearly 15 years, our team at Dentist Advisors has found that there are five distinct reasons dentists have a harder time retiring at an earlier age.

1. Dentists tend to be prime targets for product-focused, commission-based salespeople.

Because dentists are among the highest earners in the country, it’s no surprise they can attract salespeople like flies to honey. Understandably, it can be difficult for dentists to know whom to trust and where to turn when they need support with financial planning and investments. All too often, they get talked into buying insurance and investment products that serve the best interests of their “advisor,” who was motivated by the commission rather than the best interests of the dentist.

Advice: Be wary of salespeople who present themselves as financial advisors and try to sell you products instead of advice. Before hiring an advisor, ask how he or she is compensated—by fees, commissions, or both—and how you will know exactly what you’ve paid them for their services. And remember, the best advice comes from advisors who put your interests first. Make sure you ask a potential advisor whether he or she is a fiduciary, which means the advisor is legally bound to put their clients’ interests first.

Further reading: Membership plans—a coverage solution for your retiring baby boomer patients

2. Dentists can be more susceptible to a pent-up demand for lifestyle purchases—especially in the early years of a career.

By the time you get out of dental school, many of your friends might already have nice cars, new houses, or are going on exotic vacations. There can be pressure to keep up, and with a high income, it’s easy for spending to get out of control before you realize what’s happened.

Advice: Keep your spending under control by making sure you save a healthy portion of your income every month. It’s common advice that the average person should save 10%–15% of their income, but this generally won’t cut it for dentists who want to maintain the same lifestyle in retirement they enjoyed during their working years. I recommend dental professionals aim for a savings rate of 20% or higher. A great way to prioritize saving is to set up a direct deposit or schedule automatic transfers to your savings account on the same day you get paid.

3. Dentists tend to need more money to retire comfortably.

Because you’ve been used to more income (and its associated lifestyle benefits) during your career, it’s likely you’re going to need more money than the average American to support a comfortable retirement and maintain your current standard of living.

Advice: No one wants to downgrade their lifestyle once they retire. Take the necessary steps to have a solid understanding of how much you spend (what you’ll need) and save (what you’ll have) now to help ensure you’re not faced with uncomfortable changes in the future.

4. Dentists have a higher degree of financial complexity than the average American due to the fact they, more often than not, are the owner or part-owner of their own practice.