More and more dentists are emerging every year. This is going to be an ongoing trend since the present workforce of dentists are aging closer to retirement. A study by the American Dental Association stated that although 37% of dentists are about to retire, less than 4% are financially stable by 65.
The best solution to combat this statistic: genuinely plan your retirement.
Retirement comes for everyone. The sooner you acknowledge its impending arrival, the better off you’ll be. To help you start planning, here are four things every dentist should know before they retire:
1. Build an exit strategy
Have you thought about selling your practice? If yes, then is it going to be with a one-time payment or a transitional division of payments? Whatever you plan on doing, you need to have an exit strategy long before the retirement comes.
If you are planning on selling your practice, you can’t place the value on it yourself. You may require the services of a dental practice sales consultant to have the correct value to plan for your sale. You may get a huge amount of money from the sale which you can use when you retire, but you may also have to spend a good deal on taxes and broker fees.
If you are going to sell it to an associate on a transitional buy-in, you can direct your money into a retirement plan. This may put off taxes and enable you to have a long-term plan for stuffing your pre-retirement treasure chest. The drawback is that you are going to have to work with another dentist, which some solo practitioners dare not think of.
2. Know how Medicare works
When you turn 65 years old, there is a requirement to apply for Medicare. This government program may present some confusing terms, but it is important that you know about what it covers and requires. Medicare does not cover all medical expenses, so you still have to set a budget every month to use for other medical expenses.
Here is a quick look into the different coverages:
a. Medicare Part A
- Free
- Covers hospital visits
b. Medicare Part B
- Pays for medical services e.g. doctor visits
c. Medicare Part D
- Prescription drug coverage
Talk with a Medicare representative to get a full grasp on what they cover and what they don’t. This way, you will be able to make educated financial decisions on future costs. The Department of Health and Human Services has a guide for you to learn more about Medicare.
3. Don’t pay for unnecessary insurance
While it is a good thing to be insured at all times, there is a such a thing as having too many insurance premiums. You may have friends or family who call you on a regular basis to sell you things, particularly insurance. It’s no surprise as dentists are among the list of high-income professionals who are targeted by big insurance policies. Consequently, there are people who pay a lot of money for insurance they don’t even need.
Insurance is highly important for you and your family. However, if you’re not able to lessen your insurance costs over the years, you will be spending more than what you need. Don’t blame yourself if you have purchased one of these plans, because there are thousands of salesmen who are just too good at luring people into plans they don’t necessarily need. As a result, numerous dentists are making hasty insurance purchasing decisions without examining them thoroughly enough.
4. Get the help of a financial advisor
How much money do you actually need before you can relax and retire?
What should you do with your money so that you still have an active income?
These are just a couple questions you will have to go examine when you create your retirement plan.
A financial advisor will help you to organize your plan and keep it going with your guidance once you have everything in place. There is no one size fits all plan. Every dentist is going to have a different retirement goal from their peers, and that means that it will require your feedback every step of the way.
With the help of a financial advisor and these tips, you can create a solid plan for your monthly budget, investment options and more, to help you get prepared for your golden years.
