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Retirement Question for Dentists

Ever dreamt of trading drills and fillings for sandy beaches and blissful relaxation? As a dentist, you've dedicated years to crafting healthy smiles, but what about crafting your own dream retirement? Learn below everything you need to know to build sustainable income streams. Remember, we can get your brand recognition strong, ready for sale, and attractive to new partners. We even have dental legal experts we can introduce you to so you are assured everything is set up in excellence.

This is the number one question I get asked regularly by doctors who are beginning to plot a pathway out of the “grind” of clinical dentistry. Often, what they mean by this question is whether the accumulated stockpile of savings they have gathered will be enough once they no longer receive income from their practice. Will it last the rest of their lifetimes? This is the wrong question to be asking. That definition of “enough” will never truly be enough. No matter how much you save, you can run out of money. A better question to ask would be: “Are my investments currently creating enough sustainable, predictable, and recurring cash flow to sustain my current lifestyle without needing to live on savings?” The answer for most is “no.” We are not taught how to create cash flow or replacement income from our investments. Most financial advisors do not have a viable construct for this. The typical path is to focus on building your practice and following the traditional route of investing in a 401(k), index funds, and other “standard” investments. This is what most of us have been taught by well-meaning mentors, advisors, and colleagues. But when faced with the prospect of stepping away from the active income generated by your practice, and realizing that your hard-earned nest egg — upon which you will be relying for your future — is at the mercy of the rise and fall of Wall Street, more certainty is desired. For many doctors, the investment portfolio is largely “randomized” based on the options they have crossed paths with over the years. It’s what I call “spaghetti on the wall” investments. They aren’t necessarily bad by themselves, but they aren’t coordinated to produce cash flow for the years ahead. Equity or net worth has to produce for you once you leave active income. It needs to provide reliable cash flow for the rest of your life.

So, how do you know if you’ll have enough money to retire? Real estate can solve the replacement income puzzle. It is what allowed me to exit my practice decades ago (in my mid-forties). When I started college, I bought my first house with my father. This initial real estate investment covered my housing costs, and I was fascinated by the entire process. I continued to invest in real estate, studying and later practicing dentistry during the day and doing real estate at night. I had no idea that this “side hobby” of real estate would be my financial parachute when I needed it most. Specifically, when my daughter became very ill some twenty years ago, I was able to stop practicing dentistry and spend more time with her. As I sat in her hospital room, I calculated exactly how much I needed on a monthly basis to take care of my family. This was not about having an opulent lifestyle. It was about having just what we needed. I compared that with the replacement income that my real estate portfolio was already generating. When I saw that my passive income exceeded my monthly “Freedom Number,” that’s when I knew that I had enough. I could leave my practice and be with my daughter… time that money could never buy back. I had a monthly recurring income from investments that would continue whether I worked a day in the practice or not. This gave me the confidence and permission to make changes in my life. Thanks to investing in single-family rentals back then (although there are better options today) that produced a certainty of predictable income each and every month, I could generate income without drilling one tooth or placing one implant. It was predictable, sustainable cash flow—replacement income for what I did as a dentist. That is what bought back my time when I needed it at that moment, not in ten or twenty years or some mystical retirement date. Having a portfolio of speculative Wall Street investments would not have given me the replacement income I needed. Not only that, had I locked those funds up in a 401k, I would have had the ability to utilize them in my mid-forties. I would have been faced with the prospect of working for another 15 years before I could access those funds. If you already have a 401(k), this can be a starting point. If nothing else, a 401(k) can create the discipline to save, which is much better than nothing. However, a 401(k) can inadvertently lead to higher taxes (it is tax deferral, not tax mitigation—do you think taxes will go up or down in the future?) and a much lower return on investment compared to what you could achieve in your own business. Plus, it’s in a “lock box,” as you can’t access your funds until you are 59.5 years old without paying a significant penalty.

If you really want to know if you’ll have enough to retire, you have to take control.

By keeping your capital free and clear of retirement accounts, you obtain the flexibility to buy back time on your own terms. You do not need to wait until a distant retirement “someday.” This means you’ll need to go against the status quo and do some work. You can’t simply hand over your hard-earned nest egg to a financial advisor. Should you take all of your money out of Wall Street? That’s not a decision anyone can make for you. To find the right answer, you’ll have to research alternative investments, find experienced mentors to help you, and surround yourself with a supportive network of people who can guide you through the process. Yes, this takes effort, but it’s not rocket science and well worth it. After all, we’re talking about your life savings and all the sacrifices you made to get where you are today. Real estate offers better opportunities to create cash flow in a way that Wall Street cannot replicate. The Wall Street system is not designed to create cash flow.

Replacement income from your investments is what provides the certainty, confidence, and peace of mind needed to know that you have enough.

“How much is enough” should be defined by the cash flow that your investments are creating. That is what provides the specificity and confidence to know that your retirement plan can sustain you in life after practice. Once you know how much income you need and how much cash flow your investments are generating, you know your gap to Freedom. Will you have enough? Only you can answer that question, and I suggest you start working on it before it’s too late and you are stuck behind the chair without an exit day in sight. Fuel your retirement with a thriving practice now. We offer expert digital marketing strategies for dentists, empowering you to build a stronger practice and achieve your long-term financial goals. Schedule a meeting today at 561-777-2439 to learn more or find us on Instagram!