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Consumer Reports' (CR) lead article for the February 2011 issue was entitled "15 ways to never run out of money."
I'd like to comment on three of the 15 points with attention to dentists' pre-retirement issues. Diversify, diversify, diversify: A CR survey states that USA retirees that owned seven types of holdings had a net worth of $1.4 million while those with three or fewer had an average net of $678,000. This does not include one's home. Having a mix of different equity classes, bond classes, and possibly REITs and other holdings paid off incredibly in the past decade. Dentists I've dealt with who have lost money in the "aughts" either did so because of using market timing on their own, had a money manager who practiced market timing or active management, or invested in only a couple of products. The classic example is the dentist that owned 100% NASDAQ funds until 2002, leaving the market in disgust until 2007, losing out on huge market gains from 2003 until 2007. He then bought only REITS and large cap stocks. In March 2009 he bailed again with more huge losses. Finally he decided to jump back in late 2010, this time in gold and copper investments. Using these tactics, it has been possible to turn 1998's $1M into 2011's $150K quite easily. There are a huge number of dentists in American that did something like the above. They are not alone. They do not lack intelligence. They do listen to salesmen tout a way to beat the market. The odds of beating the market long term are miniscule; it's been proven over an over with academic studies. Yes there are outliers like Buffet and Lynch, yet even they knew the odds of them beating the total market were very slim. Prioritize retirement over college: Another boondoggle for many of us. We want our children to have a chance in a world that looks like it will provide less than what we had. Remember, one can always borrow money for college, not for retirement. And this does not mean you, the dentist, borrowing money for your children's education. I've recently worked with four dentists, ages 48-58 with the same problem: Large amounts of debt for a practice or practice upgrades, a large home, sometimes home equity loans, and college tuition bills of anywhere between $20,000 per year to over $120,000 per year. All were struggling to keep up with the debt load. And all wished to refinance and consolidate debt. In three out of four cases, I strongly suggested the dentists' children take out college loans. $20K to $120K per year makes a huge difference in debt reduction and savings possibilities for the above dentists. Those three dentists put up an initial hissy-fit. None had ever discussed the family finances with their children. Two dentists had an easy time with the kids; one had an emotional mess with two of three children. The later dentist didn't have $120K per year in loans. I think many of us who, as children, were aware of what the family's basic financial state was, with it's many ups and downs, were better prepared to take responsibility for our lives in adulthood. To provide carte blanche five-star financial service to our kids can create financial disaster for both the parents and the children. Check my Dental Economics article, "Is It My Children's Retirement or My Own" at www.dentaleconomics.com/index/display/article-display/282201/articles/dental-economics/volume-97/issue-1/features/is-it-my-retirement-or-my-childrens.html. Pay off debt [before retirement]: A CR survey found that retirees with lack of significant debt were more satisfied with their lives. A mortgage is normally the largest debt in retirement. The largest obstacle to retirement for dentists is lack of savings; the second is a continuing mortgage, often more than $3,000 per month. Interestingly, large practice debt is almost always "worked out." Possibly the third largest obstacle, and there is no survey evidence, is financial assistance to children and grandchildren. For even more information on this topic, read Stanley and Dankow's The Millionaire Next Door. Download on your Kindle for $9.69 and read chapter 5. I guarantee your life will never be the same. Please note that the preceding information is for educational uses only. Please consult your financial adviser before making any financial decisions. Also in the Feb. 2011 Consumer Reports issue is a great review of Infiniti QX56, Porsche Cayenne, Chevy Tahoe, Ford Edge, Jeep Grand Cherokee, and Lincoln MKX SUVs. If that's what it takes to get you to read the financial article, then it's worth it! You can order the Feb. 2011 back-issue of Consumer Reports for $7.95: Consumer Reports Attn: Customer Relations Dept. 101 Truman Ave. Yonkers, NY 10703-1057 Final thought: To subscribe to CR and CR Money Adviser is one of the most powerful investments you can make. All information is academically based and CR Union is a non-profit organization. It's a must for any prudent consumer. | 
