March 2015
Volume 36, Issue 3

Smart Practice Management: 7 Keys to Retiring Early

Roger P. Levin, DDS

Reaching financial independence as early as possible is a goal for many dentists. Most would enjoy being in the enviable position where going to the office is an option, not an obligation.

Fortunately, dentists are in a unique situation. Unlike most Americans, the majority of dentists are entrepreneurs—they own their own practices. In addition, dentists make on average $193,640,1 which is far above the average annual national wage of $44,322.2 Money magazine ranked dentists at No. 11 on its scale of highest-paying jobs.3

These two factors—being an entrepreneur and making a high salary—should give dentists inherent advantages when it comes to retiring early. However, that is not the case, as evidenced by a recent American Dental Association (ADA) survey that pinpointed the average retirement age for dentists at 68.3 years,4 which is 7 years later than the average American worker, who is retiring at age 61.5

In the past, the path to financial success for dentists was easier than it is today. Over the past 5 years, the vast majority of dental practices have experienced production declines, which have delayed retirement for many established practitioners. Furthermore, the addition of nine new dental schools—with more on the way—has created an influx of new dentists, increasing competition for new patients in many areas of the country.

Despite these changes brought on by the new dental economy, with the right strategy dentists can still have both a rewarding career and achieve early financial independence. Seven principles can be followed to help dentists—both newly in practice and established—reach their retirement “magic number” sooner.

1. Live Below One’s Means

This is an area where many dentists are susceptible. As professionals who have devoted considerable time, money, and effort to graduating from dental school and opening a practice, dentists often feel the need to reward themselves by owning a luxurious home, driving a fancy car, or going on expensive vacations. The author’s advice is this: Don’t max out personal spending or go into extreme debt to fund extravagant purchases. For example, instead of purchasing a $500,000 house as a first home, opt for a modest rancher. Rather than buy a new car for $50,000, purchase a used one for $15,000 or less. Excessive lifestyle spending can put dentists on the verge of bankruptcy. With fewer bills and debts, there’s more money to put into savings, retirement, and investment accounts.

2. Pay Down Loans ASAP

New dental school graduates are carrying an average of nearly $200,000 in student loan debt.6 Obviously, the longer it takes to pay off a debt, the higher the total payment. To reduce student loans, pay extra—as much as possible—each month. Those who live below their means will have more money to devote to reducing education and practice debts. Most dentists want to get to the point where they are working for themselves—not for their creditors. Loans are important financial tools that enable dentists to purchase big-ticket items, such as necessary equipment, that can’t be paid for out-of-pocket. But, for every year a loan exists, the cost of the original loan continues to increase due to accrued interest. For instance, the rule of thumb on a 30-year mortgage is that the borrower will pay three times the purchase price if taking the full 30 years to pay off the loan. That means a $200,000 house will cost approximately $600,000.

3. Make Saving a Habit

Create a monthly budget with a portion devoted to saving for emergencies and retirement. Putting the budget in writing creates more motivation to follow through with it. It’s important to remember that every little bit brings those who save closer to their goals. In addition, credit card purchases should be limited to items that can be paid for at the end of the month. Avoid impulse spending, especially for expensive items.

4. Begin Retirement Planning as Early as Possible

Do not wait to get started on retirement planning. Dentists at any point in their career can benefit from meeting with a certified financial planner, especially one who is dental-knowledgeable. Working with the right financial expert, doctors can begin to structure their debt to pay off loans early, develop an effective tax strategy, maintain a reasonable income, and save for long-term retirement.

All dentists need a financial plan—a step-by-step blueprint for reaching their financial goals. The plan should be revisited at least once a year to take into account life changes, personal goals, and career goals. A proper financial plan creates the foundation for growth throughout a career. The earlier the plan is started, the faster it will lead to the accumulation of the dentist’s targeted amount of wealth.

5. Focus on the Practice

The best investment dentists can make is in their practice. Some believe there is more money to be made outside of dentistry in ventures such as real estate, restaurants, etc. Such opportunities should always be approached with caution, as investing in a “sure thing” can quickly turn into a money pit that results in significant losses.

The practice is where dentists are likely to receive the highest return on investment for their time and money. This is where significant investment has already been made in terms of education, training, team development, and more. Having the most efficient, most profitable practice should be every dentist’s priority.

6. Refinance Loans for Facilities, Equipment, and Other Expenses

It is prudent to revisit all loans with an accountant and/or financial planner at least once a year. Consider questions such as: Might another lender offer a better rate? Will the manufacturer offer a more attractive rate if asked? Are there early repayment penalties? Staying out of debt and reducing debt are two strategies dentists should consistently pursue both professionally and personally.

7. Become Immersed in the Business of Dentistry

Practice success in today’s economy requires a deeper focus on the business of dentistry than in previous decades. The days of automatic growth are over. To be successful today, dentists need both clinical and business skills, and should, therefore, read practice management articles and books, attend seminars, view webinars and videos, and work with dental business experts. Practicing dentists may not have the time to go back to college and get a business degree, but having the right advisors can enable them to implement expert business systems that increase efficiency and production. Only by having successful and profitable practices can dentists fully fund their retirement accounts throughout their careers.


Despite the current challenges, dentistry is still a strong and vibrant profession. In today’s highly competitive environment, dentists need to improve practice operations by implementing proven business systems. By doing so, they put themselves in the best position to have a great career while also reaching their retirement goals.

About the Author

Roger P. Levin, DDS
Chief Executive Officer
Levin Group
Owings Mills, Maryland

To learn more about how to grow a practice in the new dental economy, attend an upcoming seminar by Dr. Levin. Seminar locations and dates are available at www.levingroup.com/gpseminars.


1. American Dental Association, Health Policy Institute. Research Brief: Despite economic recovery, dentist earnings remain flat. Oct. 2013. p.3.

2. Social Security Administration, National Average Wage Index. http://www.ssa.gov/oact/cola/AWI.html. Accessed September 12, 2014.

3. 20 highest paying jobs. Money. October 2010: http://money.cnn.com/galleries/2010/pf/jobs/1010/gallery.best_jobs_highest_paid.moneymag/11.html. Accessed September 12, 2014.

4. American Dental Association, Health Policy Resources Center. ADA Masterfile data.

5. CNBC. “Average US Retirement Is 61 – And Rising,” May 16, 2013. http://www.cnbc.com/id/100744474. Accessed September 12, 2014.

6. Critical trends affecting the future of dentistry: assessing the shifting landscape. Prepared for the ADA by Diringer and Associates. May 2013. p.8.

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