Retirement Dilemma: Balancing Slowdown with Success

Announcer:
Hello, everyone. Welcome to The Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello and welcome. This is Casey Hiers, back at The Millionaire Dentist Podcast, in studio with co-host Jarrod Bridgeman.

Jarrod Bridgeman:
Casey, how are you?

Casey Hiers:
Cold.

Jarrod Bridgeman:
Cold? Yeah, zero degrees outside today.

Casey Hiers:
It's real cold.

Jarrod Bridgeman:
My kids had two-hour delays today and yesterday due to it.

Casey Hiers:
I wonder if our grandparents had two-hour delays when it was cold.

Jarrod Bridgeman:
I don't think my grandparents even finished high school.

Casey Hiers:
Yeah, I get to fly to sunny Florida tomorrow for an event, and the high is in the 50s.

Jarrod Bridgeman:
Well, it snowed in Florida.

Casey Hiers:
Yeah, there were airports shut down.

Jarrod Bridgeman:
Yeah, there goes my oranges this year, disappointed.

Casey Hiers:
How are you going to fight scurvy?

Jarrod Bridgeman:
I know. Ugh, all those pirates. Casey, again, you're going to come back next week. You're going to tell us about the... We were going to Jacksonville this week. We're going to Fort Myers after that. We're going to be in Birmingham, Alabama. We're going to Shreveport, Louisiana. We're going to be all over the place, and I'm really excited to hear some feedback that you hear from the dentists in those areas, but until then, something came up on our mind recently. You speak with a lot of dentists who maybe are towards the end of their path of their career, thinking about retiring, and they might start to cruise a little bit. Maybe it's that senioritis. They're kind of like, "I'm already on my last leg here. I'm almost done." What do you say to them when that topic comes up?

Casey Hiers:
Well, I'll talk to practice owners who are in the front end or the middle of their career, and they're thinking about retirement. Some of that's the dream, and sometimes there's physical ailments that can come into dentistry. It's a physically demanding job, and when the body starts to tell you things, like it hurts, that can change the mindset too, with thinking about retirement. And it's like two opposing views, because as a dentist, if you're producing great dentistry decade in, decade out, towards the end, what's the natural disposition?

Jarrod Bridgeman:
It really is.

Casey Hiers:
I want to slow down a little bit. And really the whole thing, we can get into psychology of not being complacent and finishing strong, but if you go to sell your practice, they're going to look at the last three years' financials, and they're going to look at them inside and out, and you want those to be the most pristine that they ever are. Why?

Jarrod Bridgeman:
To make it more appealing to the buyer.

Casey Hiers:
Yeah, and to maximize what you sell your practice for.

Jarrod Bridgeman:
Otherwise, they'll look at the numbers, and even if they go back a couple more years, they're going to wonder why you went from collecting a million, then all of a sudden you dropped to $750,000, or worse.

Casey Hiers:
Yeah, they're going to look at production, collections, profit and loss statements, balance sheets, and a whole bunch of metrics, and that whole "I want to back off, I want to take it easy." Well, they're doing that because their mind and body's telling them they need to retire.

And if they haven't mastered the topics that we talk about week in and week out, then they're probably not in the best position to do so, so they need to string out their career because they need the money. And so their body and mind needs a break. Their instinct says, "I want to back off," or bring in an associate, which, if you're bringing one in as a tenure strategy to transition, that's one thing. If you're bringing one in because you want to work less and your overhead's high, that's just going to make your financials and numbers look even worse.

Jarrod Bridgeman:
Right, because, I mean, you've seen some cases where the owner is their associate. They're paying more to have the associate around than what they're bringing in.

Casey Hiers:
Unfortunately, there's a fair amount of cases where people bring in an associate at the wrong time, and the practice owner, when you compare apples to apples, their income is less than the associate they're paying. That's no-

Jarrod Bridgeman:
Good for the associate.

Casey Hiers:
That's no good.

Jarrod Bridgeman:
That's a good deal for the associates.

Casey Hiers:
Yeah.

Jarrod Bridgeman:
Yeah. In terms of their actual retirement plan, let's say the last 10, 20 years, they've been pretty decent with it. They've kept up as best as they can on their own. What can the last three or four years of not staying strong, staying steady, how will that affect them in the long run?

Casey Hiers:
Well, it's going to affect their income and cash flow and that practice owner's money at that time, but ultimately, if they're not going to get as much out of their practice, if they haven't been able to save, grow, and plan properly for retirement, which takes decades to do that, right, they're not going to be in a good position. They're going to be cynical about dentistry because it wasn't what they thought it was. Yes, they enjoyed dentistry and helping people, but when they look and they can't retire, they can't retire with the lifestyle they want, that's really, really frustrating, and there's shame in that. Practice owners will tell me that all the time. They feel bad, they feel shame, and they want to ignore it.

Jarrod Bridgeman:
And I hope they know too that this is not just something that happens in the dental field. Talking about money in general can be very shameful. It can bring up a lot of embarrassment or a lot of nervousness and anxiety. That's why we preach day in and day out how important it is to have an external team of people that can at least help you in some way.

Casey Hiers:
Well, you need to be a good steward of your talents, so you want to produce good dentistry, and you want to have a good culture and a good staffing team, and those are all important. Between that and producing good dentistry, most practice owners tell me they're maxed out. They're redlined, their capacity for more is not there. And so if you're looking at decision-making, strategy, taxes, and investing in personal financial planning and the practice advisory and good decisions in there, again, we've said it before, if there's three of you as a practice owner, like one practice owner, but you have 24 times three hours in the day, maybe you could get that right, but it's really, really challenging for people to get that right.

Jarrod Bridgeman:
And until we get the whole cloning situation down, that's...

Casey Hiers:
Yeah.

Jarrod Bridgeman:
Yeah.

Casey Hiers:
Yeah. I guess people could, fingers crossed, hold out for that.

Jarrod Bridgeman:
A little multiplicity.

Casey Hiers:
But that finishing strong and not being complacent at the end of a career, it's important throughout a career, but at the end of the career, the natural instinct is to back off, when in reality, they need to be sure they are producing, creating the best practice that they possibly can from all angles so that, number one, it's attractive for somebody to buy. But let's say somebody wants your practice. If your financials are not pristine and attractive, you're not going to get as much for your practice, for your baby. The thing that you-

Jarrod Bridgeman:
You've raised, you've been with for decades.

Casey Hiers:
You value with essence. Nobody's going to pay. Something's only worth what somebody's willing to pay for.

Jarrod Bridgeman:
100%.

Casey Hiers:
And so it's like having good financials is like honey to a bee. You're going to get more interest, and ultimately you're going to get more out of your practice, and you're going to go out on your own terms and retire the best way.

Jarrod Bridgeman:
Right, right. Let's say we've got a doc listening out there, who maybe in his 50s or whatever, not quite where he wants to be-

Casey Hiers:
He or she.

Jarrod Bridgeman:
He or she, thank you.

Casey Hiers:
Wow, Jarrod.

Jarrod Bridgeman:
I know, my bad. We almost had a female president. I'm really behind the times here. What are some inclinations do you get from practice owners that you've spoken to when they've reached that age, in their 50s, they're like, "Retirement ages coming up sooner than I thought it would. I'm not where I want to be"? What are some of the solutions you've seen some doctors try to put into place to correct that?

Casey Hiers:
Yeah. I'll get to the solutions in a second, but here's the ingredients of where you don't want to be, again, mind and body are tired, you want to back off, or you want to bring in an associate, you want to retire with a great lifestyle opportunity. You want to retire sooner, if possible. Well, those things are all great, but they don't work unless you have maximized the profitability of your practice with good decision making and all those things throughout your career, and so it's unfortunate what they want and what their vision is versus what their reality is.

A lot of times they don't match up and that's frustrating for them, and that's why some of them go for that Hail Mary DSO offer, which we're going to talk about a lot in our new courses this year and we talked on our last podcast, but sometimes they go, "Okay, in the pit of my stomach, I know that I haven't done the best that I could have on the business, the financial side of my practice, so great. I'm going to sell for all this money and go out this way." Well, in our courses, you're going to hear the pros and the cons of DSOs, and the unfortunate part is EBITDA, and 6x, 7x, 8x, 9x, 10x of EBITDA is what people... That's the glitter. The fine print is another thing.

Jarrod Bridgeman:
Do you think, in terms of retirement plans, you want to stick with something boring?

Casey Hiers:
What do you mean?

Jarrod Bridgeman:
You know what I mean? I feel like sometimes this might be the crowd I run, and I run with some rough city kids, but I feel like a lot of people try to chase maybe buying and selling the hottest new stock or a meme coin and things like that instead of planning and trying to think of things for the next 20 years, not just the high of winning $100 next week.

Casey Hiers:
I think TLC put it best. Don't go chasing waterfalls.

Jarrod Bridgeman:
Right, yes, yes. Thank you. Yeah, Left Eye Lopes.

Casey Hiers:
Yeah, no, that's... Again, we've talked about this in the past, but unfortunately, those who then undersave or, quite frankly, underperform on the business and financial side of their practice, they're looking for the Hail Mary. They're looking for that bailout where, "Yes, ooh, I'm going to potentially do some higher risk investment strategies."

Jarrod Bridgeman:
Yes, and when those-

Casey Hiers:
Mainly out of necessity.

Jarrod Bridgeman:
And when those don't work out, which more often than not they tend not to, then they're sunk that money, and then psychologically they're rushing to find the next thing that, "Now I got to make up for that $10,000 I dropped on that."

Casey Hiers:
If you've ever been to Las Vegas or a casino and you start out with $100 or $1,000 or wherever you're at, when you win, it feels good. When you don't, it feels like shame, and you want to hurry up and win the next hand so you feel better because you just lost two hands in a row. Same principle. Yeah, they're trying to fix it and make up for it really quick so nobody finds out. Nobody knows.
There's a lot of psychology to this, but the natural inclination of tapering off at the end of your career, it needs to be the opposite. When you're in your 30s and 40s, you need to be crushing it. You need to be working on overhead and insurance adjustments. Your income needs to probably be 25% to 50% to sometimes 100% higher. Your retirement savings need to be tripled and quadrupled, and you're not getting punched in the back with tax surprises. You've got to master this early, so then you are in a position with options, so then if slowing bet down is part of a strategy, well, guess what? You've done the right things over the course of your career to make that possible, but those are tough conversations when it's an older person who's ready to retire and they're not close to being in the position to retire. And the awareness, there's some lack of awareness sometimes. Again, they just think and hope it'll all work out.

Jarrod Bridgeman:
I can feel that. I just turned 41 this past year, and I'm halfway towards an ideal retirement age, but-

Casey Hiers:
Halfway? You want to be 82?

Jarrod Bridgeman:
Well, I meant in terms of my working years, from 20 to 60, whatever, but I remember my 20s being like, "Ah, retirement. That's so far away," and then 20 years later, and here I am. Now, I'm obviously going to retire. I just meant in terms of it creeps up faster than you think it does.

Casey Hiers:
Yeah. Time's like a slingshot, right? I mean, a semester in college felt like an eternity.

Jarrod Bridgeman:
Then, all of a sudden, you have kids, and time is sucked out of you.

Casey Hiers:
Your 20s, your 30s... Yeah, I'm starting to get to that point where I look up, I'm like, "Holy cow."

Jarrod Bridgeman:
I'm going to tell you, this week I could not remember. I lost track of my days of the week this week.

Casey Hiers:
Well, that's fine.

Jarrod Bridgeman:
I was so confused. I thought... Yeah, anyways, that's where I'm at now.

Casey Hiers:
But yeah, no, it sneaks up. I mean, most dentists that retire, they will say... What's the old saying? The days are long, the years are short, but they will say, "Wow, that went by fast," even though it was hard in some cases.

Jarrod Bridgeman:
Yeah. Casey, thank you so much for stopping by today. If you don't have someone to talk to about these things, you need to find an external team. You can find us online. You can find our phone number. You can fill out a form where you can always chat with us and maybe set up a call, and we can see if maybe we're able to help you or not help you. In that case sense, we don't help everybody. You can also attend one of our events to find out more information. Again, we're going to be all over the country this year. Go to fourquadrantsadvisory.com/events. You'll see the dates, times, place, venues. We're going to be... You can register right there on the spot. Casey?

Casey Hiers:
It's a nice first step for people.

Jarrod Bridgeman:
Yes, and it can be a very good wake-up call for a lot of you, or maybe you already know these things and you're kicking ass, and you just get reaffirmed with that.

Casey Hiers:
It's always good to be validated.

Jarrod Bridgeman:
That's right. Thank you so much, Casey, and have fun in Florida.

Casey Hiers:
Thank you.

Announcer:
Hello, everyone. Welcome to The Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.