Dentists and other medical professionals who focus too much on reducing student debt can risk not having enough money going into retirement savings. If you are a dental practitioner beginning to plan for retirement, visit websites like sdtplanning.com for more advice on how to make good investments.
Saving for Retirement
A 2018 survey conducted by the American Dental Education Association (ADEA) found that the average dental school graduate exits school with more than $250,000 in debt. This drives dentists to devote most of their financial efforts to reducing that debt.
Focusing too much on reducing debt, however, means missing out on years of compound returns and risking not being able to save enough money for retirement.
Putting away just a few thousand dollars a year can already mean a million dollars in retirement savings.
Quickly eliminating high-interest debt like that from credit cards is a good idea, but low-interest debt from mortgages and student loans should not necessitate the same sense of urgency. This is true especially if doing so enables one to save for retirement and to be able to work towards other long-term financial goals.
Selling a Dental Practice
It is a mistake to think that you can fund most of your retirement by selling your dental practice.
It can be a struggle to find a successor or a buyer who wants to live the same lifestyle as you and this is true particularly if you live in a remote area.
A successful practice in a sought-after area will not always translate into a large sale for a retiring dentist. Given the potential uncertainties that surround selling a dental practice, dental professionals should not focus solely on the proceeds from the sale of a practice to fund their retirements.
The sale price of a dental practice can be much less than a retiring dentist originally intended if technology isn’t kept up to date. New owners may think about the extra costs of making considerable investments to bring the practice into the 21st century.
If you are a dentist planning to retire, remember that student loans should not be your main priority. It can also be difficult to sell your dental practice, so don’t expect too much from its sale.