North Texas Dentistry Volume 8 Issue 4 2018 ISSUE 4 DE | Page 22

financial planning
PLANNING FOR RETIREMENT
BY AVOIDING MISTAKES
I
by Amanda Mombert and Ben Mombert
t’s always difficult to plan for retirement, especially to a
group of professionals like dentists who are at many
points along a long continuum of a career timeline. Some
are just starting out, some are in their prime years, and some
are close to “calling it a day.”
But we do think it is important to generally discuss the goal of
a healthy and comfortable retirement. Of course, the biggest
problem with retirement planning is that for most it is a long
way off, and like most dentists we know, you’ve got so many
other priorities that get in the way each day. It’s the old battle
between planning for tomorrow and acting today.
Here are some common ways to avoid mistaken actions today
that will help you move forward toward that healthy and com-
fortable retirement down the road.
Avoid a bad spending loop
There can be a very vicious cycle with earning more and more
income. As you earn a little more, you might start spending a
lot more. A great habit to get into is diligently tracking your
spending. Use some kind of money management tracking soft-
ware to show you your spending patterns. By seeing those pat-
terns on a screen, you can get a handle on where your spending
is going and act accordingly.
And remember, spending is less about the actual money you are
laying out – it’s more about how much of your income is being
eaten away. Software can help you see not just how much you
spend on meals out, but how much of your income is dedicated
to that pursuit.
Tomorrow’s savings begins today
There’s an old adage about saving for retirement: pay yourself
first. What this means is that while it’s great to try and pay down
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debt right now, if you are sacrificing retirement dollars tomor-
row for some debt reduction in your practice today, you might
be sorry.
If you are trying desperately to pay down the debt on those new
dental chairs, or new pano, are you sacrificing some savings that
is going to be critical toward your retirement? Reducing debt
sensibly and prudently is a long-term strategy that must take
into account all kinds of factors like interest rates, your age, tax
rates, and your retirement goals. I will address this further into
the article, but having an expert like a CPA or financial advisor
who can work with you to develop a sound debt reduction plan
is most likely going to help you today and when your retire.
Don’t let growth lead to inefficiency
When you first opened your office or first became an associate,
you were probably meticulous with expenses. You knew exactly
how much you were earning, your rent, your ancillary expenses
– if you were an owner, your office equipment – if an associate,
your paydown of student debt – everything. Your growth was
small and manageable and so was your overhead.
But as you grow in your career and/or within your practice and
you become more and more successful, the money you collect
increases – which is great – but so does your overhead and
expenses. What used to be an easy task of account for everything
within your career and your practice might now become a night-
mare of confusion.
It is critical to get a handle on that overhead and make sure you
can manage it effectively. Again, a software solution like a
Quickbooks can help you keep track of the percentage each
item, like supplies, rent, marketing, and other vendor costs and
show you how they are growing and what percentage they are
taking out of your collections.