- Joined
- Jul 11, 2016
- Messages
- 298
- Reaction score
- 571
A lot of the talk on here is about how dentistry is a profession going south. With rising tuition and stagnant pay there is good reason to be concerned. A common misconception is that specialization is the key to financial success. I just want to provide some positive light on the profession, and make an argument for general dentistry. To be clear, there are obviously more things to consider than finances when considering which field of dentistry you want to work in, and there are excellent opportunities as specialists as well. Below is something similar to what I posted on a thread previously, but I think it’s valuable to consider. None of this gets talked about. None of my post includes practice ownership either, in which the sky is the limit and it becomes more dependent on how well you run a business.
Here are two examples.
The first is Student A. The second is student B. Both students went to the same dental school and graduated with $250k in debt. Reasonable.
Student A went straight out and practiced as a GP. Their mindset was to work hard for the first few years while their colleagues were in residency so that they could maximize their knowledge and experience. They wanted to “work and live like a resident” their first few years. Student A worked 5 or even 6 days per week. Student A made a good amount because of this intentional work ethic. Let’s just say $200k year one, $300k year two, and $400k year three while student B was in residency (I know people may think this is high, but I know it’s possible because I’m a 2022 grad and making over $400k). So Student A averaged $300k per year while student B was in a three year residency. After taxes, Student A took home about $200k per year on average for the three years student B was in residency. Student A lived off of $50k per year and put $150k towards loans/investments. After 3 years, they have paid off their dental school debt. They are now 29, taking home $259k per year after taxes without any debt, and they’ve managed to invest $200k in the S&P500 ($600k in total earnings after tax over those three years - $150k in living expenses - $250k in student debt) They don’t touch this $200k again until retirement age of 67. Without taking into consideration any future investing, that $200k invested while student B goes to residency, grows at 10% (historical average of the S&P500). At 67 that $200k invested while student B is in residency is worth $8.8 million. Should student A continue investing, even if they cut back their annual contributions and start to increase the quality of their lifestyle, they’ll accumulate A LOT more than $8.8 million. If you don’t want to get into the nitty gritty of Student A’s situation, the key is that they have a decent income at a young age, and if they’re intentional about where they invest their money, the extra time in the market is a big benefit of general dentistry.
Student B also graduated with $250k of debt. At today’s current interest rates of grad plus loans (8%), by the time they graduate from a three year residency the balance on that $250k is $315k. They took out an additional $200k for residency. So when they graduate they are $515k in debt.
So at the age of 29, Student A has no debt and is taking home $259k after tax with $200k invested in the S&P500.
Student B has $515k in debt. They make $1,750 per day (Now this could be low for a specialist. I don’t really know. I’m just going off of what I hear for many specialists. And I’m making a lot more than I thought a general dentist associate would, so it’s possible specialists are doing much better). 5 days per week, 50 weeks per year, student B makes $437,500 per year. They take home $281k per year after taxes. So student B is making about $20k more than student A per year at the age of 29. But the interest on Student B’s $515k in loans is over $41,000 just for that first year. So JUST TO MAINTAIN the $515k in debt AND MAKE NO PROGRESS IN PAYING IT OFF Student B will have to pay $41,000. This leaves Student B at AN INCOME DISADVANTAGE compared to student A each year. Their income is $20k higher, but they need to pay $41k just to keep their loan balance the same.
Now I know everyone’s income will vary. The point is that the opportunity cost of those few early years practice as a general dentist CAN be significant. The takeaway is that there are still opportunities for massive financial success in dentistry despite the rising costs of dental school. You don’t have to specialize to be successful. You just have to be intentional. Don’t blindly take out loans. Don’t graduate and buy yourself a new Mercedes. When you’re young with the income of a dentist, you have every reason and ability to make smart investment decisions which can and will give you a quality of life you never even dreamed of having.
Here are two examples.
The first is Student A. The second is student B. Both students went to the same dental school and graduated with $250k in debt. Reasonable.
Student A went straight out and practiced as a GP. Their mindset was to work hard for the first few years while their colleagues were in residency so that they could maximize their knowledge and experience. They wanted to “work and live like a resident” their first few years. Student A worked 5 or even 6 days per week. Student A made a good amount because of this intentional work ethic. Let’s just say $200k year one, $300k year two, and $400k year three while student B was in residency (I know people may think this is high, but I know it’s possible because I’m a 2022 grad and making over $400k). So Student A averaged $300k per year while student B was in a three year residency. After taxes, Student A took home about $200k per year on average for the three years student B was in residency. Student A lived off of $50k per year and put $150k towards loans/investments. After 3 years, they have paid off their dental school debt. They are now 29, taking home $259k per year after taxes without any debt, and they’ve managed to invest $200k in the S&P500 ($600k in total earnings after tax over those three years - $150k in living expenses - $250k in student debt) They don’t touch this $200k again until retirement age of 67. Without taking into consideration any future investing, that $200k invested while student B goes to residency, grows at 10% (historical average of the S&P500). At 67 that $200k invested while student B is in residency is worth $8.8 million. Should student A continue investing, even if they cut back their annual contributions and start to increase the quality of their lifestyle, they’ll accumulate A LOT more than $8.8 million. If you don’t want to get into the nitty gritty of Student A’s situation, the key is that they have a decent income at a young age, and if they’re intentional about where they invest their money, the extra time in the market is a big benefit of general dentistry.
Student B also graduated with $250k of debt. At today’s current interest rates of grad plus loans (8%), by the time they graduate from a three year residency the balance on that $250k is $315k. They took out an additional $200k for residency. So when they graduate they are $515k in debt.
So at the age of 29, Student A has no debt and is taking home $259k after tax with $200k invested in the S&P500.
Student B has $515k in debt. They make $1,750 per day (Now this could be low for a specialist. I don’t really know. I’m just going off of what I hear for many specialists. And I’m making a lot more than I thought a general dentist associate would, so it’s possible specialists are doing much better). 5 days per week, 50 weeks per year, student B makes $437,500 per year. They take home $281k per year after taxes. So student B is making about $20k more than student A per year at the age of 29. But the interest on Student B’s $515k in loans is over $41,000 just for that first year. So JUST TO MAINTAIN the $515k in debt AND MAKE NO PROGRESS IN PAYING IT OFF Student B will have to pay $41,000. This leaves Student B at AN INCOME DISADVANTAGE compared to student A each year. Their income is $20k higher, but they need to pay $41k just to keep their loan balance the same.
Now I know everyone’s income will vary. The point is that the opportunity cost of those few early years practice as a general dentist CAN be significant. The takeaway is that there are still opportunities for massive financial success in dentistry despite the rising costs of dental school. You don’t have to specialize to be successful. You just have to be intentional. Don’t blindly take out loans. Don’t graduate and buy yourself a new Mercedes. When you’re young with the income of a dentist, you have every reason and ability to make smart investment decisions which can and will give you a quality of life you never even dreamed of having.