The following is an excerpt from Module One of Mark McNulty’s new book, The Patient $6 Million Dentist: Successful Succession in 8 Modules
Baby Boomer dentists are selling their practices and retiring. I know this because our firm works with many of them. McNulty Group manages more than 1 Quarter Billion dollars in retirement savings for 85 professional families.
This guide is about your colleagues who did it right. The McNulty team and I went through thirty years of files our firm has on the finances of individual Canadian dentists. We found two interesting results. First, only nine of all the dentists we have ever met have achieved in excess of a $6,000,000 portfolio. Second, we estimate that over 70 per cent of the dentists practicing today will likely not achieve their financial goals.
Our objective IS NOT for you to learn how to become a $6 Million Dentist in 8 Modules. Our objective is ultimately to help you “Live the FULL Life” — and every dentist has different priorities for getting there.
Each Module is an executive summary of McNulty knowledge and programs. We provide the basics that will help you evaluate your own financial goals—real numbers showing how colleagues have done financially.
True—Some dentists will build their $6,000,000 portfolios. But—70 per cent of dentists will not even meet their goals.
Together—in 8 Modules—we discover how dentists measured up yesterday, and how you will measure up today.
The average dentist I know spends $150,000 per year after-tax ($12,500 per month) in retirement. This means if you want to retire by age 62, you’ll need $3.8 million in savings. Most dentists don’t reach this target. Having said that, you’re probably beginning to understand why having a $6 million portfolio is impressive.
My average client retires at age 62 with $3.8 million in the bank —which is richer than most dentists. But the $6 million dentist has 58 per cent more than our average client. Again, an impressive accomplishment.
What will I learn from studying the McNulty Modules©?For the purposes of this guide, we’ll look at the various aspects of success as it pertains to those dentists who are approaching retirement with sizeable savings.
Here’s an overview of the topics we will study together…
MODULE 01:THE $6 MILLION DENTISTIn Module 01—We are given a bird’s eye view of the Modules ahead.
MODULE 02:DENTISTS WITH $3.5 MILLION PORTFOLIOSIn Module 02—We will cover what dentists with $3.5 million portfolios do— and what those who fail to reach this level of financial success don’t do. Those with $3.5 million portfolios are in the top five per cent of dentists, so it’s something to shoot for.
MODULE 03:HOW MUCH MONEY DO I NEED TO RETIRE?In Module 03—We will look at various ways to calculate your financial needs to ensure your numbers are accurate. This will include factoring in your current financial position, retirement calculation examples, and more.
MODULE 04:HOW MUCH IS MY PRACTICE WORTH?In Module 04 —We will look at your most valuable asset and best investment. For most dentists, their practice is the cornerstone of their retirement savings, so we’ll go over the various things you’ll need to consider before the sale. In fact, valuating your practice is an important part of your transition process and we’ll touch on this process here, too.
MODULE 05:MY LIFETIME TAX BILLIn Module 05—We will explore how to get the most out of your government pensions, corporations and RRSPs after-tax. This is the area where the greatest opportunity exists to add more money to your retirement, yet it’s generally a poorly managed area. You must create a long-term exit strategy from your various taxable accounts i.e. the money in corporations, RRSPs, etc. Done properly, this will ensure you avoid a large tax bill in the future, as well as Old Age Security clawbacks.
MODULE 06:INVESTING TO FUND MY RETIREMENT CASH FLOWIn Module 06—We will explore how to create retirement income from your savings. Rest assured that you have many alternatives to choose from. Dentists often think that once they retire, they have a short-term time horizon because they’re drawing on a finite amount of money to fund their lifestyle. Not so. You’ll be funding your retirement lifestyle for decades to come and we’ll look at using your practice and personal resources to create a pension that will last.
MODULE 07:LIVING THE FULL LIFEIn Module 07—We will discuss the end goal from a lifestyle perspective. Fast forward, you’re retired, you get a monthly deposit of $12,500 after-tax into your bank account. You feel confident that things are optimized from a tax perspective and that risk is being managed in your pension. What are you going to do? It’s time to travel and enjoy the good life!
MODULE 08:MEET THE MILLION DOLLAR DENTISTSIn Module 08—Our Final Module—We will wrap up the guide by introducing you to some dentists who have $6 million portfolios and $3.5 million portfolios. I think you’ll appreciate hearing what these folks have to say about transition planning and retirement.
By: Mark McNulty
Mark McNulty is President of McNulty Group, a firm responsible for managing $200 million of Ontario dentists’ retirement savings. McNulty Group helps professional families transition from a life of successful practice to a stress-free retirement by using a holistic approach of practice and personal retirement planning. Mark is the author of The Transition Coach 2.0–A Canadian Dentist’s Guide to a Perfect Retirement.