IN TODAY’S culture, “retirement planning” is relative to the definition of retirement. For example, “Drive,” by Daniel Pink, delineates this relativity along generational lines in the need for autonomy and self-direction: Baby boomers possess a “work, work, work” mentality, with the ultimate reward of play at retirement. In contrast, millennials see play as a passenger on the journey of life. They desire autonomy and freedom now and believe they can, and will, find an employer who affords them this lifestyle. Meanwhile, Gen X is caught in the middle.

Regardless of which generation you may fall under, many of us are shooting for the independently wealthy line ­— that point where we choose what we will do and when we will do it. Whether you have the old-school “work, work, work” mentality or you are playing through life’s journey, do so intentionally. Be intentional about understanding who you are and what you really want —whether you are in your 20s or 50s — and then manage your finances to achieve it.

To navigate to independent wealth, you must reach the tipping point at which you move your net worth from negative to positive. When this happens depends on your goals and your ability to achieve them.

Here are five ways to manage your finances to hit that tipping point:

1 CREATE A DEBT REDUCTION PLAN

The biggest hurdle to independent wealth is debt. As healthcare education has increased exponentially, new graduates are finding their debt load to be more than $200,000, which can be very daunting. Fortunately, the education is well worth the investment, but living simply initially is difficult. Create a debt reduction plan, and work the plan. (For more information, I recommend following the steps for debt reduction outlined by financial coach Dave Ramsey.) Be aware of the debt you are carrying and the implications for the bottom line through the life of the loans. Here are a few examples:

1. If you have $200,000 in student debt at 5% and pay it off in five years, it will cost you $26,455.
2. If you have $200,000 in student debt at 5% and pay it off in 10 years, it will cost you $54,557.
3. If you have $200,000 in student debt at 5% and pay it off in 21 years — the average number of years to pay off a bachelor’s degree, research from One Wisconsin Institute, a non-profit research and education organization, has shown — it will cost you $123,426.

2 FIND JOY OUTSIDE OF MATERIAL “THINGS”

Things are great, if those things are not holding you hostage to work or to a lifestyle that requires you to do activities you don’t want to do. Believe it or not, you may reach a time in your life when you don’t want to see patients five days a week. What if you had that choice sooner than later? If you minimize your wants now and plan for later, you will find that delayed gratification is well worth it.

3 CREATE YOUR PERSONAL “BOARD OF DIRECTORS”

This should begin when you start practicing optometry in your 20s or 30s and continue to evolve through retirement. Key professionals on your business or your “Circle of Influence” are a: financial planner, CPA familiar with healthcare small business, estate attorney, contract attorney, pastor or religious advisor (to keep you honest) and colleague with similar values and financial goals.

Meet with these people regularly. (They don’t have to be local! In my experience, we do most of our communication via mobile phone.) Remember: You are the president and CEO of your life, and this is your active leadership counsel.

4 BUY THINGS THAT GROW IN VALUE

After graduation, opportunities for those big-ticket purchases are abundant. Some may increase your timeline to independent wealth, and some may decrease it. For example, a car loses value a day after you purchase it. Financing for a new car purchase works in the same way as the student loan examples, with interest adding to the purchase price you will pay for a depreciating asset. However, real estate is something you can live in and potentially rent out on AirBnB or VRBO. If you live in a large city, plenty of people are looking to visit your city who would pay to stay at your place. The latter could be a great start to growing your wealth.

On a related note, remember that passive, or renewable, income is king. One of the best things that I did was get in to real estate and stocks early in life. This allowed me to see that stock are much more difficult than what they appear from the outside. The experience provided me the knowledge that real estate fit me much better than stocks. Consider these passive, renewable forms of income; others include goods in your practice, online resell business and real estate crowdsourcing.

5 DON’T COUNT YOUR PRACTICE AMONG YOUR “ASSETS”

Unfortunately, many of us have looked at the revenue that our optometry practices generate, and we calculate what expert opinion states our practice is worth. Then, we put that in our asset column of net worth and assume we can relax because the sale of our practice will launch us into financial freedom. The problem with this comes when it is time to sell and either your buyer is unwilling to meet your sale price or — worse yet — you do not have a buyer.

Instead, view your optometry business as a great “dividend-producing company.” It provides a good income and may or may not increase in value. Watching the landscape of practice valuations and the new interest from private equity has taken the valuation from a set percentage of revenue to a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). This could result in your practice not being worth much if your profit margin is 5% or less. (For more on preparing your practice for sale, see p.14.)

CONSIDER YOUR GOALS

Retirement planning is relative to what your generation considers valuable in the second half of life. For many of us, we will use optometry to keep our minds active for many years into retirement, allowing for “play” all along the journey. For others, optometry will be a great profession to move on from, after 25 years of practice, to do things with less financial reward but more personal benefit. Whatever your journey, put a plan together way in advance; start in your 20s and, at the latest, 30s, to maximize the chance you have of “retiring” when and how you want. OM

DR. FLEMING is an owner and optometrist at Wichita Optometry in Wichita, KS. His focus is primary care optometry, while he enjoys treating ocular surface disease. He graduated from the Oklahoma College of Optometry at Northeastern State University in Tahlequah, Okla. He is a fellow in the American Academy of Optometry. He has extensive experience in optometric business software and is a speaker/consultant for illuma Care Connections, iMatrix, Johnson & Johnson Vision, RevolutionEHR, SolutionReach, Weave and is founder of OptometryCEO. Email him at chad@optometryceo.com