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, 24 July, 2023

The Role of Financial Planning in Retirement for Dental Practice Owners


Retirement is an important phase of life that requires careful financial planning and preparation. As a dental practice owner, it’s essential to understand the unique challenges you may face when it comes to retirement planning. It’s important to consider saving and investing, real estate ownership, dental practice transitions, succession planning, and business valuations to maximize your retirement finances.

In this blog post, we’ll explore building a solid financial foundation, investment strategies, retirement accounts, and estate planning – to help you navigate this crucial phase of your life.

Building a Solid Financial Foundation

Before diving into retirement planning, it’s crucial to assess your current financial situation and set clear saving and retirement goals. By understanding where you’re at now and setting specific goals, you can calculate the amount of money you need to make it a reality, and the time it will take to get you there.

To do this, you’ll need to create detailed business and personal budgets broken down over a weekly, monthly and annual timeframe. You might look at making additional repayments on your home loan, calculating the net profit you need to make in your practice each year, or analyzing unnecessary expenses and reducing them.

Additionally, it’s important to evaluate and optimize your retirement accounts. By understanding the various options, such as 401(k)s, Roth IRAs, Traditional IRAs, self-directed IRAs, Simple IRAs, SEP IRAs, Solo 401(k)s and Defined Benefit Plans, you can decide which plan best suits your retirement needs, which will change over time. Each of these accounts has various tax benefits depending on your cash flow and goals.

It’s also important to consider health insurance, disability, and long-term care options to protect your financial well-being during retirement. Failing to invest in a quality health insurance may create more stress for you and your family down the track.

The Retirement Landscape for Dental Practice Owners

Dental practice owners face specific challenges when planning for retirement, particularly when it comes to practice transitions and business valuations. Succession planning plays a vital role in ensuring a smooth business transition and finding the right buyer for your practice. It’s important to consider whether you’ll sell your practice to a family member, dentist professional, DSO, or other investor organization. 

It’s crucial to time the practice transition strategically and maximize the value of your practice, as buyers like to see growth trends. There are various financial and tax implications of selling or passing down your practice, and this can impact your retirement funds significantly.

For example, will the buyer organize their own financing and transfer the full sale amount to you? Or will they pay you out through a combination of cash, equity, or seller-financing?

These are important things to consider as they will impact the amount of tax you’ll pay, as well as the price you’ll receive for your dental practice. There are various ways you can increase the value of your practice in the years leading up to your transition, like setting up internal processes and online systems, reducing overhead costs, and negotiating leasing options for the dental practice premises.

Investment Strategies for Dental Practice Owners

To prepare for retirement, it’s important to start investing your dental practice profits early. The power of compounding is undeniable when it comes to investing. Smaller amounts invested earlier in your career can have huge growth potential by the time you reach retirement age.

Balancing risk and reward is a key factor in retirement investments. As a dental practice owner, your investment strategies may differ depending on your age and risk tolerance. Generally, higher-risk investments with potential for greater rewards are more suitable in the earlier stages of retirement planning, while a more conservative approach with balanced investments is more effective as you get older.

Real estate investments can be an attractive option for dental practice owners, providing income and diversification. Not only is real estate a stable, long-term investment, but if you own your dental practice premises, it can eliminate leasing costs and enhance your future practice value.

It’s important to consider the tax implications of your entire investment strategy, to ensure you’re maximizing your investment returns while minimizing your tax liability.

Estate Planning and Wealth Transfer

Once you have planned out your retirement goals, reduced expenses, and created a suitable investment strategy, the next step is estate planning. Creating an estate plan is essential to ensure the smooth transfer of your wealth to the next generation, according to your objectives. Estate taxes only apply to estates valued at over $12,920,000 (2023).  

Consulting with estate planning professionals can help ensure that your wishes are carried out effectively, while also minimizing dispute issues among family members.

Continual Monitoring and Adjustments

Retirement, investment, tax, and estate planning is an ongoing process that requires regular review, monitoring, and adjustments to ensure that you stay on track to meet your goals. It is essential to consider changing circumstances such as market conditions, industry evolution, and lifestyle changes.

Seeking professional advice and guidance from a Dental CPA and a specialized financial planner helps provide valuable insights and expertise to navigate the complexities of retirement planning. Here at Drilldown Solution we have a network of financial planners who specialize in retirement planning for dentists.


Financial planning plays a vital role in securing a comfortable and fulfilling retirement for dental practice owners. By building a solid financial foundation, implementing investment strategies, engaging in estate planning, and continually monitoring and adjusting your retirement plan – you can ensure a smooth transition into retirement. 

The long-term benefits and peace of mind that come with effective financial planning are invaluable. Here at DrillDown Solution, we are a team of expert Dental CPAs who can provide assistance with retirement planning. It’s never too early to start planning for your retirement goals.

Book a free consultation with us to find out more. 

Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ed Gabriel is President and Partner at DrillDown Solution. With over 20 years of experience, he holds a bachelor's degree in accounting from Brigham Young University and is a Certified Public Accountant (CPA).