What Every Dentist Needs to Know About Retirement Planning?
Is retirement something that you are looking forward to? Do you already have a vision in mind for it? By taking the necessary steps of dentist retirement planning now, you can make that happen. This will ensure that you have the financial means required to live the life you have envisioned during your retirement.
The Traditional Dentist Retirement Planning Model is Flawed
Most dentist retirement planning is based off of “conventional” wisdom that is becoming increasingly outdated. The problem with the traditional financial model of “work hard (harder and longer), save and accumulate as much as possible,” is that there is no certainty of “how much is enough?” This simple question for which traditional financial advisors and money managers have no answer keeps already decades-long hard-working professionals at the hamster wheel of active income into their late 60's and their 70's. Accumulated wealth without a cash flow constant means irregularity, unpredictability, and uncertainty – which doesn't work when one is contemplating leaving the active income career.
Most financial advisors move their clients from the stock market (volatility) to the predictability of bonds, Treasuries, CD's and annuities – with just one additional problem – the returns are relatively predictable but abysmally low. Add in the potential of higher costs of living over the next several decades, and it's easy to understand how difficult it is for the majority to be able to consider a life after work with any peace of mind.
Keep in mind, dentist retirement planning will be constantly evolving. Your life circumstances will continually be changing, so retirement plans must keep up with all those changes. At Freedom Founders, we begin with a Freedom Blueprint, a customized working document that first defines non-negotiables – core beliefs and values that we will never give up or trade for money or things. Then we determine our “Financial Freedom Number” – the monthly cash flow before tax required to pay for our desired lifestyle. At that point we reverse engineer to the specific capital asset base needed to produce that income. Through our network, we are able to deploy the capital into assets that generate the annuity income without ever depleting the capital base. That’s security. That’s peace of mind.
Work With A Guide Who Has Achieved the Freedom You Desire
It’s always wise to seek guidance from professionals and allow them to guide you through the dentist retirement planning process. The problem is that most “financial professionals” are not financially free, they are really just running on the hamster wheel just like you. If you want to achieve anything in life, you have to learn from those who have actually created the results that you seek. Find a guide who will work with you to create the steps for an exit strategy, using some of the following questions:
• How much you will need to retire comfortably?
• What is your monthly burn rate – how much do you need on a monthly basis to sustain your lifestyle?
• What are your current and future expense?
• What is your debt load?
• Do your current investments fall short anywhere?
• How are you going to create the recurring cash flow you need to replace your active income?
• How will you hedge against inflation eating away the purchasing power of your wealth in the coming years?
What Are the Plans For Your Practice?
Your future plans for your dental practice must be considered during the dentist retirement planning process. Work with those that will have a significant impact on the direction your exit strategy takes. The value of your practice, taxes and profit associated with selling it, and what your transition strategy will look like must all be factored in. This information will determine if the retirement plans you have in place will be sufficient to meet your future financial needs. Just as it took time to build up your practice, it will also take time to exit. Including your future plans as part of the dentist retirement planning process, will give you time to realize those plans.
Most dentists think that their practice sale will be the “golden ticket” to retirement. But there are big shifts happening in the industry – it is impossible to know with certainty what the valuation of private practices will be in the coming years. You need a solid plan for financial Freedom that does not rely on windfall profits from a practice sale.
Retirement should be a time to relax and enjoy, make sure this happens by taking action now. It is no longer feasible to believe you can sell your dental practice and live off that during retirement. By understanding the importance of dentist retirement planning and making it a priority, you are laying the foundation for financial freedom during retirement. Click here to know more.