Inside Dentistry
Nov/Dec 2005
Volume 1, Issue 2

Financial Independence Strategies

Roger P. Levin, DDS

Financial independence does not happen overnight, nor does it magically occur at an appointed age (e.g., 50, 55, or 65). However, it can be achieved at those ages—or even earlier—with the right planning. Unfortunately, many dentists fail to plan and often must keep practicing into their late 60s or, in some cases, even later. This is why I recommend being proactive when it comes to your financial future.

Dentists have 2 mechanisms for achieving financial independence. The first is accumulating wealth through practice performance. The second is managing that wealth accumulation. Many dentists today are working significantly longer than they should have to simply because of poor asset management.

The journey to financial independence requires a number of strategies for practice and personal success, including:

  1. Implementing data-driven systems
  2. Starting to save as early as possible
  3. Managing debt
  4. Creating a financial plan

1. Implement data-driven systems.
Business systems are critical to a practice’s survival and success. It is therefore important to carefully analyze each system and create documented, step-by-step management approaches to generate positive, sustainable changes within the practice. Without strong systems, practices will not achieve their production or profitability potential. Systems in the practice that require analysis and possible revision are:

  • Scheduling
  • Case presentation
  • Hygiene productivity
  • Financial management and budgeting
  • Patient finance
  • Accounts receivable
  • Customer service

When analyzing business systems, dentists should start by developing an ideal model of how the practice will look in the future. Carefully answering the following questions begins the process of developing an ideal practice model.

  • What is my annual production goal?
  • How many days do I want to work per week?
  • What new opportunities exist within my practice?
  • What are the challenges that I face in my practice?
  • What training does my staff need?
  • What new skills and continuing education courses do I need?
  • What can I outsource?
  • What is my top priority?
  • What does my ideal practice look like?
  • How is my patient base changing?

The key to properly managing the practice is the implementation of the right business systems to achieve practice objectives. Managing a practice properly can make a difference of $6 to $8 million in excess gross revenues over a span of 25 to 30 years. Without data-driven systems, most dentists will find it extremely difficult to maximize the profitability potential of their practices.

2. Start saving as early as possible.
Dentistry is a rewarding but often stressful profession. After investing years in undergraduate education and dental school, not to mention the time spent in a practice as associates, dentists are ready to reap the rewards of their hard work when they become practice owners. Unfortunately, many dentists (especially younger ones) delay saving for retirement while focusing on the accumulation of material possessions. This lack of savings can lead to excessive debt; uncontrolled spending, coupled with an expensive lifestyle,  may cause dentists to remain in debt for many years. Such debt accumulation may require some dentists to retire much later than anticipated. Without a reduction in debt, many dentists will struggle to achieve financial independence by the age of 60.

The old axiom, “The sooner you save, the more you accumulate,” is absolutely true. Compound interest is one of the miracles of our era, and it is incredible how fast you can accumulate wealth if you start saving early enough. Never forget that with rates of return being constant, a person who saves $2,000 per year between the ages of 20 and 30 will always have more money than a person who saves $2,000 per year between the ages of 30 and 50.

3. Manage your debt.
There are 2 types of debt: necessary and unnecessary. Many young dentists are now starting out with $100,000 or more in student loan debt—a necessary expense to achieve a fulfilling career. An example of unnecessary debt is high credit card bills due to excessive personal spending too early in a career. Planning the right lifestyle choices is critical to avoiding unnecessary debt and establishing a sound financial footing.

4. Create a financial plan.
Professional financial planning is one of the best strategies for accumulating financial wealth. However, financial planning is not an event; it is a process that takes place over a lifetime. Life and world events, both positive and negative, often change a dentist’s needs, goals, or reasonable expectations about the future. A financial plan should be a living document, comprehensive in scope and updated on a regular basis.

“Just as good oral healthcare must be practiced consistently to be sustained, so must your financial plan be constantly followed and regularly updated,” explains Michael C. Smith, Vice President of Levin Financial Services, Inc. “In today’s world, a financial checkup is just as necessary as a recare appointment.”

Financial planning should begin as early as possible in a dentist’s career, but you are never too young or old to start. A financial plan is more than just a snapshot of current financial status. The right plan is a road map showing how it is possible to achieve financial independence. Areas of review include investments, insurance, retirement funding, estate planning, salary, and savings. These are all critical to a dentist’s financial future.

Practice-based financial planning examines each dentist’s lifestyle individually; it should not just be a standard financial plan punched into a software program. The creation of the right plan requires examining a number of professional and personal factors, including:

  1. Projecting personal expenses, such as student loan payments, home ownership, cars, children’s education, and vacations.
  2. Assuming the purchase of a dental practice. Practice cost is incorporated into the financial plan and divided into the number of years needed to pay for the practice.
  3. Determining retirement cost. Consider how much money you will need to continue the lifestyle you’ve acquired during your retirement years.
  4. Projecting the annual income from the practice, annual retirement plan contribution, additional net savings from net income, and the financial net worth of the dentist every year based on increased wealth accumulation and retirement debt.
  5. Projecting the payment of debts and establishing a plan to become debt-free.
  6. Projecting normal and major life expenses.

In order for dentists to achieve their professional and retirement goals, it is essential to plan for the future. Failing to plan is the same as planning to fail, notes the old saying. Many dentists get caught up in day-to-day issues and lose sight of the big picture when it comes to retirement planning. Remember: retirement may seem decades away, but planning for it should begin decades in advance.


Smart dentists today are doing everything possible to create outstanding business systems that allow their practices to reach significantly higher levels of income. Such a strategy allows these practitioners to continue having an excellent quality of life and adequately fund a financial plan. Saving for retirement and managing debt are 2 necessary components of a comprehensive financial plan. Creating the right plan will help you significantly as you journey toward a state of financial independence.

About the Author
Roger P. Levin, DDS
CEO, Levin Group, Inc.
Owings Mills, MD

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