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Medical Forum / General / Dentistry / October 2005economics of dental profession
Hi, Anyone have any thoughts on the economics of the dental profession? Suppose you spend $120-200k for dental school tuition, plus maybe $80k lost wages from studying in dental school for four years instead of working. That's maybe $200-250k spent when you're in your early 20's. If you put that money in a retirement fund at that early age and it doubles every 8 years via 8% return on investment, you make maybe $2 million by the time you are 60, in addition to whatever you'd make doing a low-wage job. Now, if you become a dentist, and shell out another $200k to start a practice, you might make $65-100k after taxes, about $3 million total by the time you are 60, which is maybe only $1-2 million more than you'd make if you had a low-wage job and worked it until you are 60 (but you have lost that $2 million retirement nest egg you would have had if you dumped the dental school tuition money and 4 years wage money in an investment fund while in your 20s). In other words, it seems that you work your a.s off to be a dentist, but basically wind up with the same amount of money, breaking even, as you would have if you never became a dentist. Do the economics of this career make any sense, or can they only make sense if the government pays for dental education and it becomes free for every dental student? Otherwise it seems that you make a blood-hemmorraging investment from the start for the privilege of working like a dog to make it all back and wind up where you would be if you never bothered with the undertaking. The U.S. government doesn't care, they figure, well, he's a dentist, he's making over $75k per year, let's put him in a high tax bracket and make him pay a tax penalty because he's rich. But the taxman doesn't consider how the dental student bled himself dry to become a dentist. In fact, most dentists have only saved about $250k by the time they reach age 60. It seems that the economics of this career don't permit much saving by the dentist, and he'd wind up with much less at retirement age then if he put a big lump sum in during his 20s and then just worked at McDonald's for the rest of his life. Any thoughts on this argument? --JM >Hi, > >Anyone have any thoughts on the economics of the dental profession? REPLY Ummmmm, yes. For about 30-40 years or so, and I still cannot figure it out! >Suppose you spend $120-200k for dental school tuition, plus maybe $80k >lost wages from studying in dental school for four years instead of >working. That's maybe $200-250k spent when you're in your early 20's. >If you put that money in a retirement fund at that early age and it >doubles every 8 years via 8% return on investment, you make maybe $2 >million by the time you are 60, If you are at Dentaltown you make that in six months, or so they say. > in addition to whatever you'd make >doing a low-wage job. Now, if you become a dentist, and shell out [quoted text clipped - 4 lines] >you would have had if you dumped the dental school tuition money and 4 >years wage money in an investment fund while in your 20s). And, you would have peace-of-mind from knowing you are doing your job as it should be done instead of making up stuff every day. > In other >words, it seems that you work your a.s off to be a dentist, but >basically wind up with the same amount of money, breaking even, as you >would have if you never became a dentist. Yes but if you are a plumber or a dry wall contractor how would you exploit dentist/Independent Contractor/Employee/ Slaves who could work for you? Joel > Do the economics of this >career make any sense, or can they only make sense if the government [quoted text clipped - 3 lines] >and wind up where you would be if you never bothered with the >undertaking. The U.S. government doesn't care, Ahhh, true words Comrade! > they figure, well, he's >a dentist, he's making over $75k per year, let's put him in a high tax >bracket and make him pay a tax penalty because he's rich. But the >taxman doesn't consider how the dental student bled himself dry to >become a dentist. No many do. They check for slices and cuts as they audit. > In fact, most dentists have only saved about $250k >by the time they reach age 60. It seems that the economics of this >career don't permit much saving by the dentist, and he'd wind up with >much less at retirement age then if he put a big lump sum in during his >20s and then just worked at McDonald's for the rest of his life. Any >thoughts on this argument? One good way is to build up a cheezy practice and sell it to some unsuspecting young guy! Joel >--JM > Hi, > [quoted text clipped - 8 lines] > another $200k to start a practice, you might make $65-100k after taxes, > about $3 million total by the time you are 60, which is maybe only $1-2 You compounded your inital $250K savings over 30 years but you didn't compound the earnings you would make for each debt free year. For example, the first $200K you make after you pay of your debt (say 4 years) will be compounded at 8% for almost as long as the initial $250K you saved (34 years vs 40). I also believe you forgot to factor in the cost of malpractice insurance and the fact that dentist salaries will gradually rise (with everyone elses) over time. >> Hi, >> [quoted text clipped - 14 lines] >years) will be compounded at 8% for almost as long as the initial $250K >you saved (34 years vs 40). Deduct expenses from first year 200k gross earnings. $200k NET sounds high for a relative beginner who is probably working in someone elses office, or has just bought someone elses practice. > I also believe you forgot to factor in the >cost of malpractice insurance and the fact that dentist salaries will >gradually rise (with everyone elses) over time. > >You compounded your inital $250K savings over 30 years but you didn't > >compound the earnings you would make for each debt free year. For [quoted text clipped - 5 lines] > $200k NET sounds high for a relative beginner who is probably working > in someone elses office, or has just bought someone elses practice. I said the first 200K you make (see above), not one years salary. I meant that after you pay your loan off the first 200K you make would compound over about 34 years (assuming it took 4 years to pay off the loan and say 2 years to make $200K). Although, I guess the interest rate on the loan would be a significant factor now that I think of it. I.E low interest rate and the principal is paid off quickly. High interest rate and you could spend a long time paying it off, like a mortage, so you would never get to the point where you could invest your salary at the compounded 8% interest rate. these days though what are they charging for interest on student loans .01%? > Hi, > [quoted text clipped - 12 lines] > you would have had if you dumped the dental school tuition money and 4 > years wage money in an investment fund while in your 20s). Frankly, this is just a sort of mental masturbation. It is unlikely that your average guy will have $200-250K early in life, combined with the brains and desire to squirrel it away for a distant retirement. Hell, if I had the money and the brains (I had neither) and the foresight (nope, not that either) I could now have a large fortune in Florida real estate. So the comparison of a fictional investment made with non-existent capital against a real education followed by a real career that makes a real contribution to society and our GNP simply has no basis in reality. The average aspiring dentist does not actually own the capital to go to school and then purchase a practice. Our society has ways of helping promising young people through school with family help, subsidized schools, and low cost loans. The government, the banking industry, and other elements in our society see that the most motivated graduates are somehow able to obtain the necessary capital so that they can become productive. All these things are in place in our society and are there for the taking, but it is unlikely that anyone will step forward to offer you a small fortune to invest in lieu of a productive lifetime career which would have been valuable to society. Vaughn > Hi, > [quoted text clipped - 4 lines] > If you put that money in a retirement fund at that early age and it > doubles every 8 years via 8% return on investment, I thought this canard went out about March 2000. In any case, as Vaughn says this is mental masturbation. Trying to predict the present is tough enough, without predicting the long run. You remember what Lord Keynes said about the "long run", don't you? Steve you make maybe $2 > million by the time you are 60, in addition to whatever you'd make > doing a low-wage job. Now, if you become a dentist, and shell out [quoted text clipped - 24 lines] > > --JM  Signature{\rtf1\ansi\ansicpg1252\deff0\deflang1033{\fonttbl{\f0\fswiss\fcharset0 Arial;}} {\*\generator Msftedit 5.41.15.1507;}\viewkind4\uc1\pard\f0\fs20 Remove "nospam" to reply\par } > You remember what >Lord Keynes said about the "long run", don't you? > >Steve Nope, but do know that his economic theories are utter poppycock. -- W_B Take out the G'RBAGE wubbabubbazG@RBAGEyahoo.com I look at this and wonder what you're talking about. If you want to become a dentist, then become a dentist. I would not figure out the economics as you did; if you become a dentist, and you have an ethical, patient-centered practice, you will certainly will earn enough money to have a comfortable life. The issue is not: should I become a dentist or if not, will I just become a millionaire doing something else. No matter what you end up doing, there are plusses and minuses, and you just need to weigh them. From all your mathmatical calculations, it looks like you might be better off in accounting. > Hi, > [quoted text clipped - 32 lines] > > --JM >I look at this and wonder what you're talking about. If you want to become >a dentist, then become a dentist. I would not figure out the economics as [quoted text clipped - 5 lines] >your mathmatical calculations, it looks like you might be better off in >accounting. I was thinking of becoming a dot com millionaire myself. Does anyone know if anyone has already invented an online auction site? Joel >> Hi, >> [quoted text clipped - 32 lines] >> >> --JM > It seems that the economics of this >career don't permit much saving by the dentist, and he'd wind up with [quoted text clipped - 3 lines] > >--JM I like being my own boss. -- W_B Take out the G'RBAGE wubbabubbazG@RBAGEyahoo.com Interesting. >Hi, > >Anyone have any thoughts on the economics of the dental profession? >Suppose you spend $120-200k for dental school tuition, plus maybe $80k >lost wages from studying in dental school for four years instead of >working. That's maybe $200-250k spent when you're in your early 20's. Assuming the student pays off the school loans.. some don't pay it back,some work in gov't facilities after to pay the debt, some are trained in the military, families pay for school, there are a few variations. >If you put that money in a retirement fund at that early age and it >doubles every 8 years via 8% return on investment, you make maybe $2 [quoted text clipped - 15 lines] >and wind up where you would be if you never bothered with the >undertaking. My childhood dentist agreed with your assessment: During a visit when I was a teenager, the dentist suddenly started telling me what a GREAT patient I was and how he wished all his patients were like me. He was really emotional, practically on the verge of tears. Then he said, "I should have done like my brother and opened a gas station in Arizona. HE was the smart one!" I listened and felt really bad for him. That was my last visit there because he was dead from a heart attack 3 months later >The U.S. government doesn't care, they figure, well, he's >a dentist, he's making over $75k per year, let's put him in a high tax >bracket and make him pay a tax penalty because he's rich. Yes, work hard, heavily taxed, no doubt. >But the >taxman doesn't consider how the dental student bled himself dry to >become a dentist. In fact, most dentists have only saved about $250k >by the time they reach age 60. It seems that the economics of this >career don't permit much saving by the dentist, And the time spent, the opportunity cost, does not permit time for the study of economics and investments. Seperately, one doctor told my mother that doctors can't retire because they are always spending too much on alimony for their ex wives. >and he'd wind up with >much less at retirement age then if he put a big lump sum in during his >20s and then just worked at McDonald's for the rest of his life. Any >thoughts on this argument? I think you have a point here, but the reason is not only the initial cost of school. If he bought the McDonalds franchise in his 20's he'd do well, or if he becomes a dentist and buys the building he works in. Some of them collectively own the building they work in. Maybe that is not typical, but I've seen it done. I would guess there are variations in what they've saved at age 60, but generally doctors are not known for making great business investments. You may be correct that not much is saved at the end of the career, much is lost, and they don't have pensions. I believe if he goes into it only for the money he's making a big mistake. |
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