Since you cannot count on the sale of your practice to support you for what could be a 20- to 30-year retirement, as we discuss later in this article, the question of how much money you need becomes: how much do you need to fully fund your pension? What may have seemed a wonderful idea in the first instance can turn out to be unfeasible for any number of reasons a few months down the line. The seller will present the buyer with a few key facts about the dental practice such as: Turnover Having an associate ready and willing to buy your practice may sound ideal, but the process is rarely as straightforward as it seems. Gather Key Documents: Before selling a dental practice it is important to organise your documents so that they are to hand when requested by the Buyer. Selling your dental practice can be an extremely lucrative part of that equation. Dental practice owner costs. Since 1998, we have worked with general and specialty dentists guiding them through seamless transitions. One client in his early sixties was beginning to phase into retirement by working for nine months and spending the three winter months in Florida. In this example, the dentist would receive gross sales proceeds of $468,000 minus the brokerage commission of $46,800, and minus income taxes of $136,890, for a net amount of $284,310. If you are ready to sell your practice with a buyer in place, contact Mediestates, a specialist broker of dental practices, today to get everything moving in the right direction. Determine the percentage you may safely withdraw from your retirement capital each year. The assumptions we are using are: 1) a 3 percent annual inflation rate until retirement, dropping to a 1.5 percent inflation rate at retirement (half of the inflation index is housing inflation); and 2) 30 years of retirement. Keep it simple! Thus, in 10 years, the value of a dental practice could fall to an estimated 50 percent of its current market price of approximately 55 to 60 percent of adjusted production. Minimum of 2,000 active patients. Today’s college costs are rising faster than inflation and most doctors do not qualify for need-based financial aid, so it’s likely you’ll be responsible for the majority of your children’s college costs. The handwriting is on the wall: there are fewer dental graduates this year than 10 years ago and America`s population is increasing. Had you retired in 1967, you would have lived through periods of raging inflation along with a Dow Industrials that dropped from 1000 to 750 over a 15-year period, ending in 1982. Exchange and completion. The solution is to invest in stock and bond returns during good economic times and move your money into treasury-bill-like investments during bad economic times to avoid losses, thus allowing you to withdraw as much as 8 to 10 percent per year during retirement. Funding contributions early allows you to invest the funds to maximize your tax-favored earnings during the year. Martyn undertakes dental practice valuations, sales and consultancy work advising internal buy-ins and buy-outs and structures. Just like for associates, I have this as a con as well. Review of your dental or medical practice, including actionable steps you can take to improve it's marketability and sale price; Marketing and Strategy ideas to grow your valuation We can provide a few guidelines. This, coupled with the fact that the average life span is increasing, means that you need substantial money for your retirement. Thus, the young owner begins to resent the former owner for not relinquishing control of the practice and for meddling in the new order. The increasing patient population will make it easier for the new dentist to start a practice from scratch. One frequently used indicator of practice value is 60 percent of annual production. Pre-Contract. For 4 percent, use a factor of 21.03; 5 percent, use 18.51; 6 percent, use 16.42; 7 percent, use 14.67; 8 percent, use 13.19. Step 2 of our formula is an inflation calculation. We need to challenge the premise that the only way the dentist can retire is to sell early and then work for another 10 or more years as the second in command. The restaurant conversation frequently turned to the same topic: how to live like a king on $50,000 per year of retirement income. A doctor’s will and trust are great examples of items that need to be reevaluated consistently—not just for changes to wishes, but to accommodate changes in net worth. 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