One Clever Way to Really Get Ahead

We’re often asked by clients how they can make more money save on taxes.  Here’s my answer: Move.  Move to a state with lower taxes and cost of living.  Unfortunately, it’s probably not going to be a state with great weather or beaches. Unlike some geographically-tethered professions, dentists can live and work anywhere and still make the same amount of money.  It’s just as easy to have a practice collecting $1MM in a rural area as a city.  Why?  Less competition in less populated areas.  Check out this map of a very nice suburb of San Diego.  Everyone wants to live and practice here.  And while it has low crime and great schools, the dental competition is fierce.  And this map is just dentists in a 4.5 mile radius.  There are more in the nearby metro areas.  Folks can definitely make it here, but only the strongest thrive. General Dentists in a San Diego Suburb Radius: 4.5 miles GPs: 20

4.5 Miles

What are the other advantages of practicing in a less competitive neck of the woods?
  1. Lower labor costs
  2. Lower rent (or you can own your building, a great wealth-building option)
  3. More loyal patients
  4. Lower advertising spend
What does this add up to?  More of that million dollar collections falls to the bottom line.  In urban areas, a strong GP has a 35% gross profit margin.  In rural areas, strong performers can have a 50% margin.  That’s $150K more per year. Then there’s the cost of living.  Wow.  As investment advisors, we encourage people to stuff their retirement funds and shoot for an 8% annualized return.  That’s all well and good and needs to be done.  But what if I told you could lower your cost of living by 40% annually?  Wouldn’t you jump at that “return”?  Well, the average home in Ohio is 67% less than California.  Plus you’re looking at a state tax rate of 4% in Ohio versus an average 8% in California.  There’s your 40% return and a lot more. So which states are the best for a dentist to live?  In this deeply unscientific study, I took the average W-2 salary (not practice profits) of dentists by state from 3 sources (BLS,, and and averaged them.   Then I divided that average salary by state into the median home price by state.  What you get is how many years of salary (disregarding taxes and eating, etc.) it takes to pay for the median-priced house in each state. Here’s what it looks like: In case anyone is interested, here is a really interesting geographical wage analysis by the Bureau of Labor Statistics. So…who wants to move?   Greg Maravilla with assistance from Jessica Graham CFO Advisor                Office Manager    
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