Dental Finance 101: The 10% Savings Rate Myth

By Dentist Advisors    |   Finance 101

We’re beneficiaries of an incredibly diverse and rich economy. And that’s a good thing. Today traveling to far-away destinations is easy, we’re surrounded by wonderful technologies, and there are a ton of luxuries out there that provide us with an unprecedented quality of living.

As society continues to become wealthier, products and services improve at an exponential rate—groceries delivered to our doorsteps, homes that talk to us, and car seats that both heat and cool. However, if you can’t develop the behavioral discipline to make “yes” or “no” decisions with your money, then our abundant, modern economy can actually become a financial hindrance.  

There is so much out there that could be consumed, if you’re going to have any money left then you need to say “no” to a lot of things. But with one of the highest average incomes in the world, dentists often fall into the habit of saying “yes” more than they should. Just remember, the rate at which you say no to at least some expenditures will represent what you can save. And that savings rate will quantifiably and measurably determine your overall financial security.  

Dentists Have More and Will Require More

Take a look at data about the typical American earners from 2017. The median household income was $61,372.1 At a normal retirement age of 66, social security makes up about 70% of that income.2 For these Americans, saving 10% of their income puts them in a good position at retirement as their savings can fill in for what social security doesn’t cover.

But that 10% just won’t work for dentists! The average GP income from ADA statistics in 2017 shows an income of around $200,000. Specialist were in the $300,000 range.3 And the top quartile of specialists were in the $500,000 to $600,000 range. That’s payroll income, which means many dentists are earning much more than that. 

The average dentist we work with is spending around $15,000 to $16,000 a month. Now Social Security will most likely cover around $3,000 a month, but that’s not going to make much of a dent in a $16,000-a-month lifestyle. As you can see, for dentists to save merely 10% is not going to cut it. 

Here’s How Much Dentists Should Save

A dentist’s ability to save increases as their career unfolds. So 10% is probably fine for a new dentist coming out of school. Even 15% is OK if you have a good associate job, or are early in your practice. 

But during the accumulation phase of your career, we recommend saving at least 20% of your gross income, especially if your income is average or below average. If you make more than the average dentist, push your savings rate higher—closer to 30%. With some good planning, you’ll still be able to live a comfortable lifestyle. Real money-saving masters set up automatic savings drafts at 20%+ of their income and commit to them—with few exceptions. 


Be realistic about where you are right now. And whatever your current savings goal is, it should make you feel just a little uncomfortable. Then, as your income rises, your savings rate should increase too. In the long run, this savings strategy will pay off as you stretch to reach that target of saving 20%+ of your income. 

Incrementally increase your savings, then stay in control of your lifestyle expenses, and you’ll never jeopardize your financial future. Plus life ends up being just a little more stress-free too!


To learn more about Dentists Advisors and the importance of saving at a good rate, listen to our “How Much Money Does a Dentist Need to Save” podcast.   

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