While your retirement may be years, if not decades, down the road, your debt is in plain view right now, gathering interest. It may seem that paying it off as quickly as possible is the financially responsible choice; however, in terms of long-range financial security, planning for retirement should demand your attention as well.
Without question, debt is intimidating. According to a report from The American Dental Education Association (ADEA), 2017’s average dental school debt was $287,331 per graduate. Combined with the average price of a dental practice – $650,000 – a new dentist can expect to go into debt just shy of $1 million.
While adding even more debt to your student loans seems counterintuitive, it may be exactly what you need to get in the black. An existing business comes with an established patient base, saving you years of work building a practice from scratch. And if you research potential practices thoroughly, purchasing a thriving one with a healthy cash flow, you can watch your debt begin to shrink almost immediately. Seek out the advice of an expert who specializes in the financial needs of practicing dentists in order to develop a strategy for reducing debt while putting money in the bank.
There is no getting around the fact that dentists graduate with much more debt than their non-dentist counterparts. While employees in other career fields can feel good about putting away 10% of their salary in savings, dentists who stick to that same rule of thumb will find themselves working well into their 70s, with an even more worrisome outlook for Gen-Xers and Millennials. For this reason, some advisors recommend putting away at least a quarter–if not 30%–of your salary to secure a comfortable retirement at a reasonable age.
While an increased savings rate may require turning away from some luxury expenses, it will pay off in the future for you and your family.
The most important part of the debt/savings equation? A plan. For help with managing your debt and planning for retirement, visit Collier & Associates or subscribe to our C&A Newsletter for ongoing financial advice from trusted dental practice management advisors.« Back to Blog