Many dentists who are actively planning for retirement in the next 5 to 10 years are members of the baby boomer generation. The baby boomer generation is defined as those born between 1946 and 1964.1 There are an estimated 76 million baby boomers in the United States.1,2 Since these boomers began working, the world has changed in many ways, and some changes affect life in retirement. For example, there has been:
- A shift from employer-managed plans (pensions) to individual-managed plans (401[k]s).
- An improvement in medical care leading to a longer life expectancy.
- A drastic increase in the cost of health care.
- Several economic recessions that have caused professional and market losses. This fact is especially true for dentists, many of whom saw a significant decrease in revenue in the years after the 2007 great recession.
Because of these changes, boomers may be less prepared for retirement than the generations that follow. In fact, approximately 35 million boomers do not have any retirement savings.3
In addition, if you own a practice, you may find it even more difficult to save for the future. A 2015 survey on self-employment and retirement reported that nearly two-thirds of the entrepreneurs cited “unpredictable cash flow as their biggest challenge.”4
Depending on your age, there are different things that you may be able to do to make up for the lack of savings and be better prepared for a comfortable life in retirement.
If you are in the pre-retirement stage or recently retired, below are a few tips that you may find helpful:
- The federal government allows those 50 years and older to save additional funds on a tax-advantaged basis in a retirement savings plan through catch-up contributions. Take full advantage of being able to save more money for retirement.
- Social Security and Medicare regulations do change, and it’s important to be educated about your options, since a misstep may cost you. A few milestones to keep in mind:
- 62 years: you may begin taking Social Security at a reduced payout amount instead of waiting until full retirement age.
- 65 years: you might qualify for Medicare benefits (depending on work history).
- 66 or 67 years (depending on birth year): you may be able to apply for full Social Security retirement benefits.
- 70½ years: you are required to begin taking required minimum distributions from tax-advantaged retirement accounts, such as 401(k)s and individual retirement accounts.
- Consider delaying retirement to build up your nest egg or plan for semi-retirement or transition to a different career.
- Review your current spending habits and look for ways to cut back on expenses to fund your retirement more effectively.
- Pay close attention to your existing accounts and statements, evaluating where your savings are, how the money is allocated and any fees you may be paying.
- Seek assistance from trusted financial professionals to better understand your options, including savings that offer tax advantages, remaining invested after taking required minimum distributions and evaluating your firm in preparation for your transition.
To ensure that your retirement journey is a positive experience, there is a need to plan today. Make it a priority to think about your goals for the future and take steps to put money aside. Use these tips to help you get started on a strategy, no matter where you are in the nearly 20-year span of the boomer generation.
The ADA Members Retirement Program is here to help
As you review these helpful tips, keep in mind there are many points to consider. You may want to evaluate your practice’s unique needs and goals. For these reasons, it is generally advisable to speak with a retirement planning professional before making any decisions. The ADA Members Retirement Program is endorsed by the ADA to help dentist employers and their employees regarding retirement planning.
AXA Equitable Retirement Plan Specialists
The ADA endorses retirement savings and distribution plan products through AXA Equitable that can assist you toward achieving your retirement goals. With 50 years of experience working with ADA members, AXA Equitable Retirement Program Specialists are licensed to provide the expertise and resources to assist you and your dental team evaluate the plan options best suited for your personal retirement goals. In addition, AXA Equitable provides a full range of recordkeeping and plan administration services to complement its suite of retirement product offerings for ADA members and employees. For additional information on these ADA-endorsed member benefits, please call AXA Equitable at 1-800-523-1125 or visit www.axa.com/ada to learn how you can start saving today.
Mr. LoPorto is senior director and client relationship manager at AXA Equitable. He has more than 25 years of experience in the retirement and financial services industry.
This article has been written for general information purposes only. This material does not constitute an offer or solicitation of any kind and is not intended, and should not be relied upon, as investment, tax, legal, or financial advice or services.
The Members Retirement Program contract form #6059 is funded by a group variable annuity contract issued and distributed by AXA Equitable Life Insurance Company, NY, NY. Annuities have limitations and restrictions. For costs and complete details contact a Retirement Program Specialist. AXA Equitable and its affiliates do not provide tax or legal advice. You should consult with your attorney and/or tax advisor before purchasing a contract.
- Wikipedia. Baby boomers. Available at: https://en.wikipedia.org/wiki/Baby_boomers. Accessed December 6, 2018.
- Transamerica Center for Retirement Studies. Perspectives on retirement: baby boomers, generation X, and millennials: 17th Annual Transamerica Retirement Survey of Workers. Available at: https://www.transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2016_sr_perspectives_on_retirement_baby_boomers_genx_millennials.pdf. Accessed December 6, 2018.
- Insured Retirement Institute. Boomer expectations for retirement: sixth annual update on the retirement preparedness of the boomer generation. Available at: https://www.myirionline.org/docs/default-source/research/boomer-expectations-for-retirement-2016.pdf. Accessed December 6, 2018.
- TD Ameritrade. 2015 Self Employed Survey, Available at: https://www.amtd.com/news-and-stories/research/research-details/2015/2015-Self-Employed-Survey/default.aspx. Accessed December 6, 2018.