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Retire by 50

March 1, 2008
Retire by 50? You've got to be kidding! Yet, Dr. Charles Howe retired from active practice with substantial reserves for his family at age 43!
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by Doug Carlsen, DDS

Retire by 50? You’ve got to be kidding! Yet, Dr. Charles Howe retired from active practice with substantial reserves for his family at age 43! Although we are using a fictitious name to protect his privacy, Dr. Howe is a real dentist who retired early.

He graduated from the University of Pacific Dental School in the mid-1980s. His San Diego area office was unpretentious and he had only two employees — a front-desk administrator and an assistant. He provided care in all areas of general dentistry and referred few patients. He cast his own gold and provided all the office cleanings.

Retire by 50? Even in high-priced California? How can that be? Could there be more dentists out there who opted for early retirement? Yes, indeed! There is a small and quiet group of dentists who amass wealth early and then fall off the radar before the rest of us even notice. They don’t feel their careers are unique, and they certainly are not flashy.

Yet, they are the ones who were able to work — or not work — on their own terms. In Figures 1 and 2, you will find a list of traits shared by the dentists I interviewed, dentists who have retired at age 50 or younger. All are contemporary dentists who have retired within the last five years.

A commonly quoted figure is that only four out of 100 dentists can retire by age 65 and maintain the same lifestyle that they enjoyed while they worked. My mission is to accelerate early retirement for dentists, through lectures, writing, and consulting. Before further scrutiny of Dr. Howe, however, I will examine three major keys to wealth.

1. Lifestyle

The first is lifestyle ... or rather, purchase style. The book, The Millionaire Next Door, details the lifestyles of more than 1,000 people who have one element in common — wealth! Their median savings was $4.5 million in 2007 dollars. Of this group, only 6 percent had an American Express account, and more than 50 percent used MasterCard, Visa, and Sears cards. The most popular vehicles were the Ford Explorer and the Ford F-150. The most money any of them ever spent on a suit was $600; the most on a watch was $350, and the most spent on shoes was $200. These people thrived in modest, middle-class neighborhoods. They all learned to live well below their means. To accomplish this, at least one of the spouses was a meticulous saver.

2. Compound interest

A second key to wealth is the power of compound interest, both in savings and spending. An example comes from my stepson, Scott. He received an inheritance of $75,000 at age 25. He invested it all in a total stock market index fund at a no-load brokerage. If Scott doesn’t touch that $75,000 until age 65 — with historical rates on return — he will have amassed $1.2 million in today’s dollars! That will provide him with an income of $54,000 per year for life.

For my next example, I’ll use two fictitious dentists, Dr. I.B. Smart and Dr. Wanda Beemer, who became financially prudent at slightly different ages. From ages 30 to 65, Dr. Smart purchased two-year-old moderately priced, yet nice vehicles, such as a Toyota Highlander. He bought the vehicles with cash and replaced them every four years. The second dentist, Dr. Beemer, did the same, with one slight difference. She splurged at age 30 on a four-year loan for a new BMW 7 series. Four years later, she became enlightened about the high depreciation inherent in a luxury auto, and prudently bought two-year-old Highlander-type vehicles for the remaining 31 years of her career. That one-time purchase created a savings difference between the two dentists for those four years of $35,480 — a difference that compounded to $309,000 (in age 30 dollars) by age 65, or the equivalent of $14,000 per year for life! After all fees and taxes, the average sale amount of a dental practice is around $300,000. In other words, an expensive capital purchase early in one’s career can have an effect as powerful as the sale of a dental practice.

3. Debt structuring

The third key is debt structuring. In Dr. Howe’s case, this may be called debt avoidance! Dr. Howe’s practice loan of $150,000 was paid off in 3.5 years. You see, he assiduously avoided debt. His annual production was $500,000; net income was $350,000, and overhead only 35 percent. He kept employee salaries, including all benefits, below 20 percent, supplies at less than 3 percent, the lab at less than 10 percent, and he was quite diligent with rent payments, which were less than 5 percent. A practice with less than 50 percent overhead is very achievable with some effort.

In addition to routine general dentistry, Dr. Howe took GP residency training. As a result, he did many oral and periodontal surgery-sedation cases which were lucrative and had low overhead.

Dr. Howe saved more than $120,000 per year.

Dr. Howe never hopped on the “new” bandwagon. “Don’t be a sucker for technology sold to you by someone seeking a high commission,” he would say. “Wait a few years and gather positive and negative information, especially in regard to your return on investment before purchasing anything new. By then, you can consider buying used at a substantial discount.

“Any decision to spend capital is a decision to work longer to pay for that decision. Your retirement age will be extended accordingly. Don’t get caught in the sizzle of the moment,” adds Dr. Howe. “People use shopping as a recreational activity. They become addicted to the next big ‘thrill’ purchase.”

Dr. Howe’s personal philosophy followed the same path as Dr. Arthur Dugoni, former Dean of the University of Pacific Dental School, and Warren Buffett. Dugoni’s humanistic and patient-centered philosophy of finding value in relationships harmonizes well with Buffett’s view of finding value in finance.

Dr. Howe paid off his personal residence in 6.5 years. “Do not buy a home as an investment — buy it because you need a place to live,” he emphasized. Dr. Howe made any large purchase, such as an auto, stocks, or home improvement, with great care and research, and always at a price lower than the prevailing rate.

His mantra: “The ability to discipline, and delay gratification in the short term — in order to enjoy greater rewards in the long term — is the indispensable prerequisite for financial success. Those greater rewards provide less stress with the ability to purchase items for cash that one only dreamed about in dental school, without worrying about financing or credit.”

Howe strongly recommends writing down financial goals and reviewing them annually to monitor your progress.

Howe’s advice for new graduates is to be a massive saver and always seek value. He notes, “There are no market timers in the Forbes 400 Most Wealthy List. In searching for a practice to purchase, do not rush the process. Spend time researching the area you desire, and spend several years networking, if needed. Look for a unique opportunity to arise from someone who genuinely wishes to leave a practice. Watch out for those merely wishing to take advantage of a young graduate financially. Be able to say ‘no’ often! Your opportunity will eventually pay off in ways you could not have imagined.”

What is Dr. Howe doing in retirement, besides almost anything he desires? He is monitoring, researching, and financially advising others using the tenets of Warren Buffett. Howe reads a tremendous amount of mostly financial related material to keep him abreast of possible investment opportunities, using the principles he learned from Buffett.

In my next feature article, I will outline how a 55-year-old with little-to-moderate savings may use the above philosophy to energize and shorten a retirement scenario. It is not too late!

Douglas Carlsen, DDS, owner of Golich Carlsen (, retired at age 53 from a 25-year private dental practice and clinical lecturing at the UCLA School of Dentistry. Currently, he lectures on “The Dentist’s Number,” a retirement workshop for dentists and their spouses, and “The New Dentist 2007 — Future Financial Scenarios and Solutions.” He lectures, writes, and consults dentists on business and personal finance with emphasis on simplified budgets. Contact him at (760) 798-0886, or via e-mail at [email protected].

Figure 1
Practice characteristics of supersaver dentists

  • Few had more than two employees
  • Few employed a hygienist
  • None had a high tech office
  • Specialist referrals were rare
  • Practice overhead was 50 percent or less
  • Practice startup debt was minimal, and was paid off quickly. Any large purchases were paid in>All practiced in one location
  • None had superstar employees

Figure 2
Personal habits of supersaver dentists

  • All bought one home and remained in it until retirement
  • All were massive savers — more than 25 percent of net income per year
  • All paid cash for cars, and kept the cars for more than five years, usually for eight to 10 years
  • All paid off any credit cards monthly
  • All had one of the spouses monitor the budget
  • Investing: Some used active management advisors, some invested by themselves, yet all saved consistently every year

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