Wealth Management FAQs for Dentists

Dentistry is a profession with tremendous financial opportunity — and tremendous financial complexity. Managing patient care, running a practice, handling taxes, and planning for the future can raise specialized financial questions.

Whether you’re starting in dentistry, in your best earning years, or nearing retirement, smart wealth management for dentists can help. It has the potential to enhance your current income and contribute to your financial stability.

Below are answers to some of the most frequently asked questions dentists ask about building, protecting, and transitioning wealth.

9 FAQs for dentists

1. Why is wealth management different for dentists?

Dentists often start their careers later than other professionals due to many years of schooling. They also often have a lot of student loan debt when they begin to earn money. At the same time, many dentists own or want to own a practice. This adds a layer of business and finance complexity to their personal financial choices.

Dentists also have high, but variable, cash flow. Production doesn’t always equal collections, and collections don’t always equal personal take‑home pay. This variability means that careful planning for savings, taxes, and investments is important. It helps avoid inefficiencies that can reduce wealth over time.

The bottom line: your career structure, earning pattern, and practice economics create a financial profile that can benefit from specialized guidance.

2. How should I prioritize debt repayment while also trying to save?

Student loan debt can be one of the largest obstacles to early financial progress. Many dental professionals graduate with six‑figure loans at relatively high interest rates. The key is balancing repayment with long‑term wealth building, rather than focusing on loans alone.

A few strategies to consider:

• Refinancing can lower interest rates for some borrowers.
• Federal repayment programs or income‑driven plans may offer flexibility when starting out.
• A “parallel path”: making aggressive progress on loans while still contributing to retirement and building emergency savings.

A good rule of thumb is not putting off long-term investing just to pay off debt. The time lost in compounding can cost you more than the interest on the debt.

3. How do I make the most of my practice income?

Strong income doesn’t automatically result in strong wealth. Effective cash-flow management can contribute to wealth-building.

Start with a clear budget that distinguishes between personal and practice expenses. For dental practice owners, knowing about overhead is very important. Equipment, payroll, supplies, and rent can quickly cut into profits if not watched closely.

Dentists have the potential to grow their wealth by:

• Tracking and benchmarking practice overhead.
• Maintaining three to six months of both personal and business reserves.
• Reinvesting strategically in their practice (technology, patient experience, staffing) rather than reactively.

Doing this well helps create stability, reduce risk, and support long‑term financial goals.

4. What retirement options work best for dentists?

Retirement planning for dentists is important, especially for those who start saving later. A dental practice is often one of their biggest assets.

Common retirement vehicles for dentists include:

• 401(k) or profit‑sharing plans: Great for solo or small‑group practices.
• SEP IRAs: Often beneficial for high‑income, owner‑only situations.
• Cash balance plan for dentists or defined‑benefit plans: Allow very high tax‑deductible contributions for dentists trying to accelerate retirement savings.

Dentists can gain from using a 401(k) and a cash balance plan together. This is especially true in later career stages when their income is highest and retirement is near. This allows for significant tax-deductible contributions with substantial long-term savings potential.

5. How should dentists invest their savings?

Investment strategy should reflect your goals, time horizon, and risk tolerance.

Consider these strategies:

• Aggressive investing early, especially in tax‑advantaged accounts.
• Proper diversification to avoid concentration risk.
• Holding high‑growth assets in tax‑free or tax‑deferred accounts, such as Roth IRAs or 401(k)s, to maximize compounding.

Dentists close to retirement may start to move to safer investment portfolios. However, this change should be made carefully to keep long-term growth potential.

6. Should I hire a financial advisor who specializes in dentists?

Your financial situation includes personal finance, practice finance, taxes, business value, and retirement planning. Therefore, you might want to work with advisors who know the dental field.

Key benefits of dentist‑focused wealth management can include:

• Coordinated tax, investment, and business‑transition guidance
• Help evaluating practice value and preparing for an eventual sale
• Clear integration between personal financial planning and practice financial decisions
• Avoidance of “random acts of finance,” replacing them with a structured, long‑term roadmap

While not mandatory, advisors who specialize in financial planning for dentists can help reduce stress and avoid costly mistakes.

7. What should I know about selling my dental practice?

Your dental practice may represent decades of effort and a significant portion of future retirement income. Planning early, ideally five to 10 years before retirement, can be beneficial for your financial future.

Key considerations should include:

• Dental practice valuation: Factors such as patient inflow, profitability, technology, and staffing impact sale value.
• Tax planning: Large tax liabilities can occur, particularly from capital gains on dental practice sale and depreciation recapture. Strategic structuring, installment sales, and entity considerations can reduce taxes.
• Timing: Dentists nearing retirement should align the sale with personal, financial, and market conditions.
• Use of proceeds: A plan for integrating sale proceeds into retirement income is essential to helping ensure financial stability after the transition.

Dental practice transition planning is both an emotional and financial choice. Preparing early can lead to better results.

8. How do I coordinate taxes with my investment and practice decisions?

Dentists often fall into higher tax brackets, making tax planning a critical part of wealth management.

Key strategies may include:

• Maximizing retirement plan contributions
• Leveraging deductions tied to practice ownership
• Structuring investments to minimize taxable distributions
• Reviewing entity structure to improve tax efficiency
• Planning practice‑sale taxes well in advance

Consistent tax planning for dentists can increase the amount of wealth you get to keep.

9. What insurance protections do dentists need?

Your income relies on your skills and how well you can use them. So, having the right insurance is key to maintaining your financial security.

Dentists generally consider:

• Disability insurance: For dentists, this is critical
• Life insurance: For family protection or business continuity
• Malpractice insurance
• Business overhead insurance: To keep the practice running if you can’t work
• Long‑term care insurance: Especially as retirement approaches

Proper coverage helps reduce risk and preserve long‑term financial stability.

Key takeaways

Dentists have exceptional income potential. But without strategic planning, many of the opportunities can slip through the cracks.

By managing cash flow deliberately, investing wisely, minimizing taxes, and planning early for practice transition, you can build durable wealth and enjoy greater confidence in every stage of your career.

Mercer Advisors has been collaborating with dentists for more than 40 years to provide them with tailored strategies that can help them maximize their earnings, secure their future, and transition smoothly into retirement with confidence. If you want to work with an advisor who knows the dental field, let’s talk.