Prepare Now for Retirement

I retired from the private practice of dentistry on August 1, 1991 as I had no intention of practicing again once I was hired to take the reins at PIE (Professional Insurance Exchange Mutual, Inc.). However, I tried to keep abreast of the latest developments in dentistry and continued to take several CE courses over the years, not only to maintain my dental license to also to stay in tune with the real world of dentistry. After thirty years at the helm, I finally retired from full time work at PIE as of October 16, 2020 and have enjoyed my retirement so far, although I still cover at PIE one day a week when my successor, Dr. David L. Alvord has his County Council meetings since I agreed to do that for him once he won the election last November.

So why have I enjoyed my retirement after almost one year and what words of wisdom to leave with you loyal UDA members? Once reason I was able to retire now instead of waiting until I was 71.5 years old which was the average retirement age for Utah dentists at the end of 2020 is that I had set enough money aside for retirement and also expected some social security income when I turn 70. I have also had the advantage of my wife having a retirement program through her employer as well even though she plans to keep working for a few more years. But one word epitomizes what you have to stick with as a selfemployed dentist and financial security in your future. The word is Discipline.

Over the years I have seen a number of interesting scenarios. I know one dentist who had a goal to retire at age 55, did what he had to do to save financially and was able to retire at that age, only to die five years later at age 60. I have seen others who have set a goal to retire at a certain age, have been careful to set money aside, sold their practices and have enjoyed their retirement keeping busy with travel, church mission service, humanitarian service, and other pursuits they were able to enjoy for several years before they died. Others have lost their spouse but have been able to enter the dating world again, meet a compatible companion and have an enjoyable life anew. Others have not been so lucky, especially those that did not have a good pre-nuptial agreement signed first.

Still other dentists lost what retirement they had worked hard to save by being taken advantage of by people they met at church or other situations that gained their confidence, took their money in the form of an investment, often in real estate or other ventures with an unrealistic promise of a high return only to lose it all. Three of the five medical and dental professionals in the building where I practiced during the 1980s lost money to one of a few well known scams that plagued dentists in the mid-1980s to varying degrees. The scammers did not approach me since I was new in practice and would not have invested with them anyway and the wise physician they approached laughed them out of his office because he could see quickly that their spiel was not legitimate and could not succeed. Unfortunately, many of the dentists affected had to work a lot longer and pay a big price for their gullibility.

Other dentists I know have done well, but to quote the Beatles, “Their clinging wife doesn’t understand” and spent too much money too fast in their best earning years on expensive cars, jewelry, clothes, homes and the like such that there was not a lot set aside for retirement and selling their practices was not going to bring in enough money to make up what was spent. Now, of course, new graduates are in a large hole when it comes to debt, particularly if they buy a nice home and practice early on, so that is an issue to deal with. But the younger a dentist is when they start setting money aside for retirement, the better. The key is discipline.

One thing I found that I was able to do if I needed some extra money to buy a nice Christmas present for my wife such as a computer, etc. was to work an extra hour one day a week. Then it was easy to be able to buy the present without going into credit card debt, etc. Think of how this would work for you as far as setting that money aside in a retirement account.

Another thing to consider is compounded interest. You are not going to do well with current interest rates well under 1% so you have to find better alternatives. There are several legitimate financial planners who will let you call the shots and pick and manage your own portfolios. You simply have to ask around and talk to colleagues who are given good advice without having to pay exorbitant fees or have their money mismanaged by churning or buying and selling so fast the commissions eat up any profit. If you follow the advice of Warren Buffet, he will tell you that many money managers should not be hired by you at all as they make money no matter how poorly they do mismanaging your investments; instead you should invest wisely and let the value increase through simple compounding.

Following is a table that shows how fast money can grow. This idea has to do with what you can also do for a grandchild as soon as they are born by investing $1,000 in a blue-chip, dividend bearing stock or fund that can gain you 12% per year such that your money doubles every six years, which is not easy these days but still possible with the right one:

Year 1 $1,000

Year 6 $2,000

Year 12 $4,000

Year 18 $8,000

Year 24 $16,000

Year 30 $32,000

Year 36 $64,000

Year 42 $128,000

Year 48 $256,000

Year 54 $512,000

Year 60 $1,024,000

Year 66 $2,048,000

Year 72 $4,096,000.

Now, in a practical sense, what this means to you young dentists is that you start with $64,000 set aside by the time you are 36 years old. But you are not just letting the money sit but are adding to it every year with at least $1,000 per month if you can. That way you are adding more shares and increasing your compounding. And if you have fears of Social Security not being available when you retire, you have enough set aside anyway. The average dentist in Utah retires at age 70 based on statistics I have kept over the past several years, so you can see how much money you should shoot for having set aside when you are that age.

Dentistry can be a means to an end but for some it is the end as they love dental practice and don’t have a lot of outside interests and don’t want to stop. I have known several dentists that kept practicing well into their 80s because they wanted to! But I have known a few others that did not want to but had no retirement set aside for various reasons and had no choice. Finally, when you retire you need a plan as far as what you are going to do with your time so you don’t just waste away with no incentive to be productive at anything. For example, I have been building scale models since I was an 8-year old kid and I still build airplanes, cars, spacecraft, etc. and compete in contests, etc. I established a scale model museum in Bountiful with several display cases housing over 300 models so I still have room to grow. In the same suite I have a room I use as a studio to work on water color paintings which I do three days a week. I am also involved in several writing projects and of course play a lot of golf to stay in good physical condition (even though it often ruins a perfectly good walk). I have joined the local Rotary Club in Bountiful and do some fun things to serve my church. I am the public member of two licensing boards with DOPL.

Many of you have similar pursuits and may desire to use your dental skills in humanitarian efforts which is great. The point is, write down a plan of what you want to do when you retire so you can look forward to the day and enjoy being productive and useful, as work should be the means to an end and not the end!

Richard C. Engar, DDS