DMD Staff

As people live longer and healthier lives, many also choose to work longer. This can be especially true for dentists, who tend to score highly on surveys measuring overall career satisfaction. If you do plan to work past the typical retirement age of 70, you will benefit both from the extra income you’ll earn from working longer and the extra retirement investments you’ll make over that time.

But there is also an age at which you must start taking required minimum distributions (RMDs) from tax-deferred retirement vehicles such as 403(b), 401(k) or individual retirement accounts (IRAs). Why? Well, it’s mostly because Uncle Sam can only wait so long to get his designated portion of those funds.

Once you reach age 70½, the IRS requires you to start taking annual distributions of at least a minimum amount from each tax-deferred retirement account you own. (One of the key advantages to Roth IRAs, which are not tax-deferred, is that they are not subject to RMDs.)

The minimum amount you must withdraw is subject to change each year, but you can find the amount you’ll have to withdraw from 

 on the Internal Revenue Service website. The IRS page also has detailed information on exactly when you need to start taking RMDs. Many financial services companies and retirement providers also offer RMD calculators, and most offer guidance on what you’ll need to withdraw and when.

But it’s very important that you know what, and when, you have to begin taking distributions. Failure to comply with these regulations can result in hefty excise taxes of up to 50% of the full amount that was required to be distributed. That can very quickly add up to a significant hit to your nest egg.

Let’s say you’re a dentist in a group practice setting or at an academic health center. That plan may, under certain circumstances, allow you to wait until after you’re retired to take your first RMD from that plan, even if you’re over age 70½. Ask your plan administrator or read the plan documents to see if this is the case. In the meantime, you may be able to consolidate tax-deferred money from other retirement accounts into your current employer’s retirement plan, which would allow you to put off taking RMDs on the transferred money until retirement. Not all plans allow for such rollovers, and they can become a bit complicated, so check with your plan administrator or your financial advisor.

For many dentists not covered by an employer-sponsored plan, generally your RMDs for whatever tax-deferred retirement plan you have must start by April 1 following the year you turn 70½, 

• After taking a first RMD from a particular account, you must take an additional RMD from that account for each subsequent year by December 31 of the year.

• You—not your retirement provider, tax professional, or financial advisor&mdash;are ultimately responsible for calculating your own RMDs.

• You can, of course, withdraw more than the required minimum.

 take money from an RMD and roll it over to another retirement account. Remember, the purpose of the RMD rule is to make what was previously protected from taxes taxable.

RMDs can be a little complicated, so if you’re nearing your retirement date and aren’t sure when to start taking distributions or how much to take, talk to a trusted financial professional. Just don’t be caught off guard if your savings plan involved keeping your investments locked in past the age at which you’ll need to start taking distributions.

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Planning to work into your 70s? You need to know about Required Minimum Distributions.

Working Longer Doesn't Always Mean Saving Longer

The biggest uncertainty most dentists face as they near retirement plan is whether or not their savings and investments will be enough to cover the rest of their lives. And while 

 that few retirees actually outlive their income, the simple fact that so many fear doing so means it has an impact on at least their mental well-being.

If you’re getting closer to retirement, you may want to consider a few ways you can boost your income beyond what you can expect from social security, pension payouts, or your own savings and investment income.

In a recent two-part series on the need for dentists to take more vacation (

), we discussed the option of using a retired dentist to fill in while away. Once you’ve retired, if you still have sharp skills, reach out to practicing dentists you know to gauge their interest in such an arrangement. Another possibility is to do some consulting for businesses related to dentistry.

A part-time job doesn’t have to be in dentistry, and it doesn’t have to be taking orders at the local Burgers N’ Brew. If you are considering a part-time job, seek out something that you’ve always had an interest in and see if you can find a position in that field. By taking this approach, your part time work may feel more like pursuing a hobby, but with a little extra cash thrown in for good measure.

If you’re like many, you’ve acquired many consumer goods throughout the years. While many of those things may be dear to you or essential for your post-dentistry pursuits (such as the fishing rod or gardening set), many will likely be items you’re unlikely to use as you near your sunset years. Consider a garage sale to shed yourself of some of the items you’re no longer interested in owning. If a garage sale seems like too much work, see if your neighbors might be interested in a “block sale,” which is where multiple households on the same street get together for a sale.

If you love animals or kids, you can consider a sitting job. Keep your eyes open for neighbors who may be in need of your services, or postings on bulletin boards or Craigslist looking for help.

If you have multiple residences you only use for certain times of the year, such as vacation home or timeshare, consider renting out during those times you won’t be around. You can earn also earn some extra cash by signing up for a car service (such as Uber) or opening your home to a lodging-share service. (Note that each of these strategies involves some risk to your property and, in some cases, to your personal safety.)

Granted the extra time of living in retirement, there are dozens of options you can pursue. Many come with the dual benefits of satisfying the sense of purpose that likely drove your career as a dentist and earning some extra income at the same time.

Worried about having enough money in retirement? Here are a handful of ways to pad your income in your post-practice years.

5 Tips to Give Your Retirement Income a Bump

Millennials are an interesting bunch. Just a few weeks ago, we 

 that 71% of millennial investors predict a bull market in the next one to three years, compared to only half of boomers who share that confidence. And research shows that millennials are ready to seize the day with their savings and investing strategies.

 suggests that those same prepared folks consider the goal of having $1 million in retirement savings “impossible.” What gives? Is this a confident, emerging generation? Or one that feels woefully inadequate when it comes to preparing for their future?

The truth is likely somewhere in the middle. But for now, let’s take a closer look at the “impossible.”

There’s a running gag in the classic spoof 

Austin Powers: International Man of Mystery. 

Dr. Evil, played hilariously by Mike Myers, is defrosted after being cryogenically frozen for decades. He hatches a plan to kidnap and ransom world leaders, unless he’s paid the exorbitant sum of “one meeeelllion dollars.” Assorted henchmen get a good chuckle at the good Doctor’s failure to keep his price more in line with today’s exorbitance.

The same can be said for today’s young retirement savers. $1 million is a good solid round number. It’s easy to remember, and it sounds like a lot of money. But the truth is that the amount is arbitrary and doesn’t really reflect inflation, cost increases in big categories like healthcare, and the fact that average life expectancy has increased significantly since the 1960s. Today, a goal of $1 million may not be enough.

So, if millennials are panicking about generating a level of income that may, in fact, not be sufficient for their retirement needs, then it must 

 be time to hit the panic button, right? Not so fast. First of all, the Wells Fargo study illustrates a very unsurprising concept: retirement savers’ biggest fear is not saving enough for retirement. The survey methodology was also weighted toward those earning significantly less than dentists typically earn.

Still, the numbers are jarring, and even dentists share the fear of not having enough to retire on. If you find yourself sharing this fear, take a few simple steps now.

 If you’ve already started, invest more. Virtually no matter what you invest in, you’ll be better served by starting as early as possible.

 Investors who lack confidence are more likely to do things that inspire…a lack of confidence. Short-term starts and stops in investment vehicles are more likely to harm the overall performance of your portfolio than an established, longer term investment window. Find a strategy that works for you, and stick to that strategy.

 We’ve written often of the psychological impact of trying to reach far-off goals with small, incremental steps. The payoffs often aren’t big enough to seem worth it. Which is part of the reason a Dr. Evil-sized goal may seem out of reach. Break it into smaller increments, and the marathon of lifetime investing can seem much more attainable.

When it comes to retirement savings, millennials seem to be of two minds. So, do they have a chance at successfully saving an adequate amount for retirement?

The Impossible Dream? How to Bring Your Retirement Goals Within Reach

, you know that we’ve often covered the pros and cons of working with an advisor. It is a big decision, and one that requires a lot of thought about your financial goals, your investing style, and your level of trust in putting another person in charge of some financial decisions.

Yet, even if that decision is in your rear-view mirror, many people struggle with how to choose the right advisor. Here, then, are some questions you should ask your advisor before cementing the relationship.

One way to tell is to simply ask for references and then be diligent about contacting those references. Working with an advisor can be as important a relationship as working with a physician, so put the same rigor into your choice that you would in choosing your own doctor.

2. Have you worked with dentists before? Are you familiar with the unique financial and career challenges dentists face?

3. Do you work with others at my income level?

4. Are you specialized in any specific area of financial advice?

5. Do you have references, preferably from other dentists?

7. How do you stay current? For example, do you take continuing education courses and keep your licenses up to date?

8. Do you have any industry affiliations, awards, or other credentials you’d like me to know about?

9. Will I be working only with you, or will you refer me to others at your company if there are areas in which you lack expertise or licensure?

10. What categories of financial planning do you offer?

11. Do they include retirement planning or estate planning? Investments? Life insurance and long-term care insurance? Dental practice succession planning or sales planning?

12. Do you have experience with college education funding plans?

13. How are your fees calculated? Are you commission-based or transaction-based?

14. Will the new DOL regulations establishing a fiduciary standard impact you?

15. Is there a minimum level of investment I need to meet? Or a minimum level of fees I will be required to pay?

16. Are there potential conflicts of interest I need to be aware of? Incentives to sell one company’s products at the expense of products that may work better for me?

Those are the main nuts and bolts questions. But you should also assess the chemistry between you and any potential advisor. Consider asking:

17. How do you prefer to work with clients?

18. How much contact do you typically have with them?

19. How will you keep me informed about investment performance and changes in the markets that impact me?

20. How often will we review and adjust my financial goals?

21. Give me an example of how you would explain a financial concept or product to me.

22. What happens if you leave your current firm?

23. Have you ever been disciplined for professional actions you’ve taken?

24. What privacy measures do you and your firm practice?

Obviously, you can prioritize these questions according to what’s most important to you. And this is not by any means a comprehensive list. But it should be enough to get you started. The important thing to remember is that just like in any job interview situation, interviewing an advisor is a two-way process. The best advisor-client relationships are ones in which there is a cultural fit and a mutual trust.

A financial advisor is only as good as the advice they give. Use these questions to help determine if an advisor is right for you.

24 Questions to Ask a Prospective Financial Advisor

, we made the case for taking more vacation time and returning to work recharged. But how do you actually accomplish this? If you run your own solo practice, you have patients who count on you year-round, and your income is dependent on seeing those patients. You also have staff who have vacation needs and wants that may not always directly correlate to yours.

Let’s look at some factors to consider when ramping up your vacation plans.

If you have a non-contentious or not overly competitive relationship with a local dentist, consider an arrangement under which you cover for each other for a period of a couple of weeks. This kind of arrangement has the advantage of not disrupting your patients’ schedules or your staff’s seasonal plans. If you don’t have someone you’d consider for this kind of role, you can look into a retired dentist who would like a few weeks’ worth of work over the course of the year. Note that under either of these arrangements, you’ll need to check in with your malpractice insurer and ask whether your practice will be covered under this kind of scenario.

Some dentists worry that a replacement dentist who is still actively in practice may either mistakenly or purposely steal a patient. That is not an unfounded concern, of course. But it is also not out of the question that a more negative attitude that comes from having no time off will turn patients off anyway.

For many, the “replacement” arrangement may simply not fly, for any number of reasons. Dentists can also consider simply closing their office—either for a longer stretch than may feel comfortable to you or, perhaps, at regular intervals over a certain period. If you’re like a typical dental office, you are probably scheduled six months out or perhaps even longer, so a full office closure would require a significant amount of advanced planning. You’ll also want to solicit feedback from staff members and maybe even some patients about the approach.

As an alternative, you could consider simply cutting back your office hours over a month. August is a popular month to do so, but for that reason, it may be more advantageous from a business perspective to consider the extra time off during October, around the holidays (a busy time for many of your patients), or perhaps even next Spring. The disadvantage to this approach is that it doesn’t allow for the kind of extended time off that an office closure or full week or two of vacation offers. But the advantage is that it’s easier to schedule and easier on patients.

This can be hard for many dentists to do, because many are people-pleasers who rightly believe that great customer service will keep patients returning to your practice for years to come. But setting and enforcing limits is important, as is your mental health. Everyone will be happier in the long run if your patients understand when they can see you and reach you—and when you limit the incursions on your personal time.

When and if you do manage to get away, it’s important that you really be away. You can’t refresh and recharge if you’re constantly on the phone with the office, or looking at x-rays over Instagram. If you’ve managed to carve out some vacation time in any form, make sure it’s uninterrupted.

If you're a dentist, particularly one in solo practice, it can be tough to take a vacation. Here are three strategies to help you win some much-needed recharging time.

Ready for a Vacation? 3 Ways to Find Time to Recharge

It is now August, the month that we in America call “the dog days of summer.” In France, they call it “vacation.” It’s not much of an exaggeration to say that the entire country pretty much shuts down. French workers are 

 to take 31 days off per year. Yes, you read that correctly.

Few of us in the States have the necessary vacation time to replicate this model. But dentists who own their own practices are in a unique position to do so. Your overall productivity and effectiveness may significantly increase if your downtime expanded.

Of course, this goes against our instincts. Entrepreneurs—and most dentists are, indeed, entrepreneurs&mdash;consider rest not as a necessary component of life, but as a luxury for the lesser beings who need it. “We’re tougher than that,” the thinking goes. “We’ll rest when we’re dead!”

This attitude doesn’t work, because studies have shown that the longer we work, the less productive we become. There is even a name for it: 

 This isn’t exactly news; no less an entrepreneur than Henry Ford cut the work week for his factory workers in the 1920s after discovering that his workers’ output precipitously declined after 8 hours a day, 5 days per week.

Yet, dentists often drive themselves to exhaustion, seeing patients at multiple locations, opening every day of the week, double- and triple-booking appointments and so on. Reasons why may include need for business growth, personal and professional drive, a belief in the nobility of work, and a feeling that if patients can’t be seen when and how often they want to be seen, they’ll switch to Dr. Always Available across the street.

But would they? Would patients who know and trust you switch dentists if they could no longer make appointments on Sunday or in August? If they knew in advance about the schedule change and could be scheduled accordingly?

Noted philosopher Aristotle wrote that “we work to have leisure, on which happiness depends.” Some dentists might say that work is their leisure, but for others, work must surely feel like, well, work. Many who work long hours do so because it feels irresponsible to work less. But what about the idea that leisure time isn’t time wasted on a trivial pursuit, but time spent recharging for the next round of labor?

Easier said than done for most dentists, you may be thinking. In part 2, we’ll look at how a structure that includes more time off could work.

Vacation refreshes, recharges, and makes us better when we do return to work.


Want to Be a Better Dentist? Take More Time Off

Dentists just embarking on their careers in dentistry are likely to face a host of financial challenges, headlined by the battle that will likely define your early years: paying off student debt. Even as your income rises and your debt ratio shrinks, however, you may face another challenge known as “lifestyle creep,” which we 

Put simply, that is the tendency to spend more aggressively as you earn more, thus leaving you with less wiggle room in your monthly expenses—and your money to save and invest for your future. As noted in that column, there’s nothing fundamentally wrong with a little lifestyle creep. As you earn more, you should feel free to spend more and improve your quality of life. But you also should be aware that the tendency to do so may mean that waiting for your “peak earning years” to start really kicking up your investment percentage isn’t the best idea.  A better one is to start saving aggressively now, and then ramp up those investments as you begin to earn more.

Sounds easy, right? But how do you do it?

Short-term goals are easy to set and stick to, because they provide the immediate gratification of a daily to-do list. “Clean out garage,” written on a Sunday “honey-do” list, can be crossed off in a couple of hours, giving both the satisfaction of finally being able to put that SUV in the garage and being able to cross an item off your list. Long-term goals lack that immediate sense of task-accomplishment. These goals are, by their nature, more difficult to set and stick to.

How do you get past this? One strategy is to break the long-term goal into a series of short-term goals. If you have a retirement savings finish line in mind, for example, that’s great, but projecting out 40 years may bring less utility than, say, establishing a yearly or even monthly goal. If the rewards are more frequent, that will likely make the behavior more sustainable.

Single-minded devotion to a long-term spending goal is admirable, but is it exciting? It is not. The same reason many of the best diets include a “cheat day,” during which you can eat those baby back ribs, is also effective in long-term planning: Total deprivation can lead to resentment and could actually derail your whole plan.

Going off budget for an impulse buy may seem like it would circumvent your long-term goals, but going a little impulse-y, as long as it doesn’t become a regular thing, provides a series of little rewards that make the bigger picture worth pursuing. No matter how you feel about the potential for an after-life, there’s something to be said for making this one as good as it can be.

Dentists who run their own practice face very difficult choices when it comes to income. Let’s say the practice is going well, patient numbers and visits are up, and higher-revenue services are driving business forward. But as a good small business owner, you see needs in future development, perhaps an expansion of your practice, and the need to upgrade to some newer equipment.

Do you stash away your revenue surplus now for future retirement, or reinvest it in the practice? There is no simple answer, of course, but the key is to consider the question in the context of your larger business and personal goals. Carefully analyze the risks and potential benefits in both approaches before deciding, and consider that a “middle of the road” strategy, in which you build the business slowly while also diverting some money to your future self is a kind of hedge that gives you some protection in both your personal and professional life.

For dentists just starting out, give some thought to your career and earning arcs.


Establish a Career (and Savings) Plan

Advances in medication and technology continue to extend life beyond what our forefathers could have envisioned. This is mostly good news, of course, but those concerned about their retirement savings have yet to catch up to longer life expectancy. Survey after survey finds that most people still consider a $1 million nest egg to be their goal for retirement. This was a worthy goal a few decades ago, and it’s still better than people of modest incomes are likely to reach. But will it be enough?

In 1966, the pension was at its height as the 

 form of retirement coverage, and average life expectancy was 66.6 years for men and 73.1 years for women. Fifty years later, the pension is all but gone, and people are living longer and better. To put it bluntly, most people are now likely to spend as much as a third of their lives in retirement. Dentists spend their first couple dozen years (and even longer for specialists) preparing for their careers, and two decades or more in retirement. That leaves a very short window for actually saving for retirement. That’s not meant as a scare tactic; it’s simply a fact.

Here are some tips for securing a more comfortable retirement in this era of living longer.

Be prepared to fund up to three decades in retirement. Simply working longer isn’t always an option for healthcare workers, who often rely on motor skills that can decline with advanced age. Saving for such a long period time may mean going significantly above the established limits to contributing to a 401(k) plan. Consider an individual retirement account (IRA) to supplement your savings if you’re at or near the saving maximum.

Use caution when calculating your retirement needs. 

Projecting the income you’ll need 15 to retire 30 years from now is an inexact science, to be sure, but it’s a necessary part of your retirement planning. When you plan, steer clear of one key underestimation and one key overestimation. Retirement savers tend to 

 the money they expect to receive from Social Security—a program that, depending on how close you are to retirement, may not even be around long enough to benefit you. As part of your planning, consider that Social Security payments could, at best, decline. Savers also tend to 

 how much income they’ll need to maintain their lifestyle, thinking that savings on commuting costs and other cutbacks will be more significant than they may actually be. When considering your post-retirement estimates, be more conservative about how much you think you’ll save. 

 This little tidbit always gives me pause, because I don’t want it to discourage anyone who perhaps didn’t start as early as they’d like from aggressively saving now. But the fact is that the earlier you start saving, the more comfortable your retirement is likely to be. Compounding interest is a primary factor, as is simply having a longer retirement savings window. Even if you didn’t start as early as you’d like, starting today is better than starting tomorrow.

Consider maintaining more risk in your portfolio. 

The general rule is to scale back on high-risk, potentially higher return investments the closer you get to retirement age. This is still a good idea in general. Risk tolerance is informed partly by the time window until retirement; a longer window allows your investments to ride out some short-term losses in pursuit of longer-term gains. Pushing your projected retirement date farther out may mean that you still have that longer window to bear risk. Target-date funds, of course, won’t automatically adjust; you’ll have to reallocate funds yourself. And if you’re working with an advisor, make sure you keep him or her informed about any changes to your retirement plans.

Living longer is unquestionably a good thing. Just make sure the extra years are good, comfortable ones, with a savings plan designed to last a while.

Most people are now likely to spend as much as a third of their lives in retirement. Are you financially prepared?

If You Plan to Live Longer, Better Save More

When I was just starting out in my career, I had this magic number in mind at which everything would be gravy. If I could just earn X, the thinking went, all my expenses would be paid, my investments would be maxed out, and I would have a constant cushion in my bank account. Today, I earn well past X, and while I have made some pretty good progress on my nest egg, I have still been known to squeak by on any given two-week interval.

Dentists and physicians are often lumped in together as being “wealthy,” but the truth is often very different. You’re not alone if you are earning well but might still be counting down the days until the next payday. It can be a very uneasy feeling.

Not all debt is bad, of course, and some of it is actually financially responsible, such as low-interest mortgage debt. But certain kinds of debt, including high interest credit cards and the dreaded “payday” loans are not only insidious, they tend to be self-perpetuating. That is, being in more debt makes you more likely to…accumulate more debt.

Before starting down that spiral, consider where you may be able to cut some expenses. Compensation may vary from year to year for many dentists, but for most, it will be easier to make changes on the “liabilities and expenses” side of the ledger than on the “assets” side. If you’re constantly stretching to make it to the next pay period, see where you can reasonably make cuts in your ongoing expenditures.

Coupons. Groupons. Poupons. Only one of these is a mustard. The other two are really easy to find and to use. Yes, clipping coupons or finding them online can take time, which is often at a premium for busy dentists. But online couponing is really easy, and the savings can be substantial. Two things worth noting: some people who are considered “affluent” might feel a little strange using a coupon. Don’t let that be you. Second, using coupons can cut down on impulse buys at the grocery store, the mall, or even online.

Extra effort doesn’t have to be limited to couponing. You don’t have to be at an auction house, a convention or an estate sale to find a seller willing to negotiate price. It never hurts to ask. And somewhat in the same category, shop around for things like auto or home insurance. Insurance companies are notorious for charging more to dentists and other busy professionals who may be less likely to aggressively shop around. Never assume that your current company is the cheapest, or that changing circumstances—such as a move to new home&mdash;might not lead to a lower insurance premium.

Even if you’re living paycheck to paycheck right now, that doesn’t mean it will be like this forever. If just getting by is stressing you out, take comfort in the fact that your earnings are likely to increase though your late 30s and early 40s, typically peaking for most dentists around age 50 or even higher. But “

What you’ll need, then, is a plan. Developing one will help you in two ways. It will give you some peace of mind and encouragement that the stresses of living barely within your means won’t last forever. And it will also position you best to take advantage of any increase s income. Knowing what your priorities are, and how you plan to meet them, will give you a much better shot of making that plan a reality when your ship eventually does come in.

Yes, even dentists often live juuuuust barely within their means.


Solve the Scourge of Paycheck to Paycheck

Many in my parents’ generation had some hang-ups that seem ridiculous to Generation X’ers and beyond. In our current culture of sharing everything over social media, it can seem quaint to think of a generation that mostly avoided revealing who they planned to vote for, and 

 avoided the subject of money, no matter the audience.

But talking about money, while uncomfortable for some people, doesn’t have to be taboo. In fact, having someone you trust with a money discussion can make you a better investor. At the very least, it can make you a more trusted partner or parent. So, to whom should you start these conversations?

 If you’re single and dating around, you don’t want to take every date on a tour of your finances, of course. But as you get serious with someone, it’s important to talk about money. You want to make sure that if there’s a financial calamity afoot, you both go deeper into the relationship with full knowledge of the other’s situation. How in depth your conversations get depends on your relationship and comfort level. Make sure that, even if you’re the main breadwinner, the conversations don’t sound like money lectures. Ask for your partner’s input, even if you are comfortable with your strategy and even if you’re more financially savvy than your partner.

 Ok, so the idea of trusting someone else with a discussion about money is a tough one for many. Let’s simplify it. Do you trust your advisor? (And have you confirmed that trust with a visit to 

No? Find a new advisor—one that you do trust.

Yes? Talk to your advisor about money. All things money. Your current income, debts, goals, hopes, and fears. Helping you navigate all of those things is what they do. It’s their reason for being, and the vast majority of them are really good at it.

. But while it’s always a good idea to raise good savers early, there’s another good reason for talking to your children about your finances. When most of us fall down on our savings or investing goals, it’s because we avoid the subject, start saving too late, or don’t realize the very real impact that not saving could have on our futures. Talking to your kids about money—including your current state of preparedness&mdash;will make it impossible to avoid the issue.

Research from T. Rowe Price earlier this year found that 73% of parents say they talk regularly with their kids about spending and saving, although only 61% of the kids agreed. Still, that number is much higher than it was when I was a kid. And it’s an unmistakable sign of progress. 

Many treat money like a taboo topic. But talking about money may help you save and invest.