RETIREMENT DONE RIGHT: YOUR RETIREMENT PLAN
May 30, 2019
I retired from private practice four years ago. I had a successful 40+ year run doing general restorative and cosmetic dentistry. The dental practice had dentist-associates, while I worked as a solo practitioner.
In the end, a couple of young entrepreneurs, new grad dentists, bought my dental practice and I worked as an associate for four years before stepping away from the chair.
Retirment, done right.
It is not just the act of stepping away from clinical dentistry. There are many things that need to be considered before leaving your dental practice.
- Can I get full value at the sale?
- Can I even sell the practice?
- Do I have adequate funds to be able to live well for the next 20-30 years?
- What will I do in retirement?
Let’s continue this discussion of retirement done right and your retirement plan.
Can I get full value at the time of the sale?
This is also tied to the question, do you have enough saved to retire? I worked with practice management consultants about ten years before I sold to analyze my situation. I discovered I needed to increase the value of the practice by increasing the production and collections in the practice.
Most dental practice sales are based on one of several evaluations, but mostly a three- year average of your collections. What that meant for me was the need to get another practice management consultant to help me improve my systems, train my staff to be more productive, and save a large portion of my increases.
Values and production have changed in the ten years since I did this, but back then the magic number was to get production/collections above one million dollars. I am sure the ideal number is higher than that now. The proposition is that you have to create an asset that someone finds valuable.
To get top dollar, you must create something that is something of value, but also something the buyer sees as having growth potential. This sometimes means improving the physical plant or doing cosmetic things to increase value. The biggest thing you have to do is increase the total collections.
Can I even sell the dental practice?
I bought the records of a practice for $5000 when the aging doctor decided to retire. Unfortunately, he had ridden the practice down to next to nothing. His physical plant was old and the equipment was ancient.
I have seen several doctors just walk away from their dental practice. For that reason, I intentionally positioned myself to sell at the peak of production and I made my office attractive and functional.
Some small rural areas may have the same problem as this dentist I bought out because it is hard to find doctors who want to live in the area. You can discuss what you have with a broker or a consultant that helps with transitions to see if you have a problem practice you want to sell.
Do you have adequate funds to be able to live well for the next 20-30 years?
We are living longer. My financial planner told me we have to plan to survive until age 93. The good news is that we are enjoying a longer life.
The bad news is that we need more money and other assets to support us for more years. This is something I did not have the skill to project, so I found another dental expert to help me plan. Hopefully you will have a paid-for home and other cash producing assets in addition to your retirement funds to help.
You also have to figure what your standard of living is and how much it will cost you to have a lasting income. The answer to this is to start early, defer as much gratification as you possibly can, so that you can survive your extra years in comfort.
My reality was that I did not have enough and I wasn’t on the correct financial trajectory at first, but with planning and execution, I finally made it. At the rate I am going, I should spend my last dollar at age 93.
What will I do when I retire?
Some people are lucky enough to feel good just laying back, resting, playing golf every day and generally just taking it easy.
Unfortunately, I was not wired that way. I wanted to do something that fulfilled my need to create a legacy and create more income to do extra things around the house or for my family.
I work part-time in an FQHC clinic, teach, coach and consult, along with lecturing and writing. I call that being “REPURPOSED”, not retired. That is me.
What about YOU? As long as you have a plan that makes you feel good and cares for whatever your needs are, go for it.
All of us will retire or die first. The sad news is that our bodies cannot continue to do the hard work of dentistry forever.
Plan, Save, Enjoy!
ABOUT DAVID BLACK, DDS,FICD, FACD
Dr. Black is currently an associate dental coach and consultant, for Dental Practice Solutions, one of the leading consulting firms for nearly twenty years. As a seasoned dental practitioner, Dr. Black adds to the proven dental hygiene profitability coaching that Dental Practice Solutions is well-known for providing, to dental practices around the world.
Dr. Black’s expertise as an EQ and DISC trainer, makes him the best person to help more patients to say “YES!” to your patient care, as well as to enjoy working together as a team and loving what you do for your patients!
You can contact him for a FREE Coffee Chat HERE.