Retirement Planning for Dentists: Coordinating Practice and Wealth

For most practice owners, the practice is the biggest asset and the biggest variable in the retirement plan, and its value depends on decisions made years before the sale: patient base, payer mix, staff, systems and how dependent the practice is on the owner's own schedule. A retirement plan that ignores the practice is planning around only part of the picture.

Practice and personal finances are also deeply connected. The owner's compensation, the entity structure, the retirement accounts and the practice real estate all interact, so the retirement plan has to be built as one coordinated picture rather than as separate accounts and a separate practice plan.

The sale proceeds, whether to an associate, a family member, a private buyer or a dental support organization, typically fund a large share of retirement income, so the plan starts with a realistic view of what the practice is worth and what it could be worth by the target date. Valuation depends on collections, earnings quality, payer mix and transition readiness, and DSO buyers value on normalized earnings with employment and earnout terms.

Practice real estate adds a second asset. If the building is owned separately, it can be sold or leased, and the timing of the real estate decision interacts with the practice sale. Modeling the practice value, the real estate and the post-sale income together is what turns a target retirement date into a funded plan.

Retirement contributions are also a tax decision: funding a plan can reduce current taxable income while building wealth, and the contribution capacity depends on the entity structure and how the owner is compensated. Roth conversions, the qualified business income deduction and the timing of income all interact with the retirement picture, and the right combination depends on the owner's facts and current tax law.

The estate and gift exemption is $15 million per individual for 2026, indexed for inflation, which matters for owners coordinating retirement with wealth transfer. These rules are subject to individual circumstances and can change, so the plan should be reviewed with an advisor rather than set once and forgotten.

Five years before the target date is a practical planning horizon, and longer for a family succession. That window allows time to build the practice's transferable value, develop a successor, structure the real estate and line up the tax and retirement pieces. In Pagac's dental case study, a specialty dentist planned a transition of the practice to the dentist's son while relocating the practice and acquiring the real estate for the new location, all coordinated in one financial plan.

The earlier the coordination starts, the more options the owner has. Retirement planning for dentists is not a single event at the end of a career; it is a running plan that gets sharper as the transition date approaches, and the practice decisions made along the way determine how much of the practice's value the owner actually keeps.