Selling your practice at retirement. Are there problems ahead?

BACKGROUND

The dental work force is maturing as fewer dentists enter practice. In this article, the authors considered two questions: "Will demographic trends in the numbers of dentists leaving and entering practice place additional downward pressure on the value of dental practices?" and "How important is the sale of practices for retirement income?"

METHODS

To address the first question, the authors estimated the number of retirees using 62 years as retirement age, and they projected the number of graduates using current trends of first-year enrollments. To address the second question, the authors used the ADA's 1995 Survey of Current Issues in Dentistry, which addressed dentists' retirement savings.

RESULTS

The annual rate of dentists' retiring is projected to be 2.1 percent compared with 1 percent among dentists projected to graduate during the period of 2001-2020. Although dental practice value is 40 percent or more of practitioners' reported retirement savings, the majority of dentists report that they do not depend on the sale of their practices to finance their retirement.

CONCLUSIONS

In the next 20 years, the number of retirees will grow faster than the number of graduates, exerting a downward pressure on the value of dental practices.

PRACTICE IMPLICATIONS

To successfully plan for retirement, dentists need to carefully assess their target levels of retirement savings, the time of their retirement and their dependence on the sales of their practices.