Producing More Dentistry is Not Your Problem
My two oldest boys, Tucker and Ty, babysat the 2nd grade class pet hamsters over the holiday. Steve and Phil are their names with Steve, the more energetic of the two, loving his “hamster wheel” – running his heart out but not getting very far. Sometimes I feel like dentists take the same approach, working harder all the time but not seeing any progress with what they save for retirement each year. So, it happened again today. I got a call from a dentist that heard about us. After some pleasantries and some kind jabs about the Colts playing the Jets, it came out laced with a little urgency. “I need to produce more.”
I slumped in my chair just a bit. Here we go again, I thought. That comment is like the really thin skin of an onion. You peel that away – and maybe a few more layers – before you get to the good stuff, the real problem. “I need to produce more” means “I need more income” which means “my cash flow is not good, I have a bunch of poorly structured loans, I spend more than I should, I take too much cash out of the practice, my overhead is high and I’m in the mouth all day so I don’t have time to figure this out.” Eventually I get down to the real core of it. Saving enough for retirement? Forget it. Let’s crawl before we walk.
The ADA surveyed dentists in 2008 and found out that they are not much different than most Americans, despite some rumors that they are. The results found that 96% of dentists are not saving enough money to maintain their current lifestyle in retirement. I’m not just picking on dentists here. Americans don’t save enough but it’s more alarming for the dentist for two reasons: a cash-based business won’t sell for enough to sustain lasting income and their lifestyle requires more income at retirement than average. We could all learn a lesson from our grandfathers that emerged from a depressive era with the sense to save and not spend what they don’t have. There is a movement back to this pragmatism and I champion it.
It was quiet on the phone by then. “That’s not your problem and you don’t have to produce your way out of this”, I said. He thought he was doing all he could. He has a rudimentary 401k that is loaded with commission, internal fees, and a lack of management – orphaned while his broker looks for new clients. His CPA means well but doesn’t have the skills to analyze overhead properly or suggest a cash-flow model that lends itself to saving a lot for retirement. The IRA got some attention as long as taxes were in check (that’s another article altogether) and he intended to save for the kids college some day. Imagine if you could press pause and take a hard look at how everything financial in your life and business is inter-related and then make changes to dramatically increase savings. Pure Savings. Not returns in the market, not real estate gains, and not promises from hedge funds, options, shorts, swaps, IPO’s, or complicated insurance products.
It is my belief that a dentist can save more than they think they can and their lifestyle doesn’t have to be compromised. Saving 10% of what you collect for retirement is possible – not easy – but possible. Do it with a pragmatic methodology that combines great cash flow, acceptable profit, and a custom financial plan. Are you going to produce your way out of it or are you ready to get serious about saving? 2011 will be an interesting year.
