The Rule of 72 for Dentists

January 8, 2025

The Rule of 72 converts a percentage growth or inflation rate into a clear, estimated timeline for how long it takes to double.

It estimates how long it takes for money or prices to double at a steady rate. For dental practice owners, the Rule of 72 provides clear timelines for retirement and spending goals.

What is the Rule of 72?

To estimate doubling time:

• Years to double ≈ 72 ÷ annual rate (as a whole number).

For example:

• If your investments average 8%, your money doubles in about 9 years (72 ÷ 8 = 9).
  
  
• At 6%, doubling takes about 12 years (72 ÷ 6 = 12).
  
  

It’s an estimate, not an exact forecast. Its strength is speed: a clear benchmark for “what if” scenarios.

Why it matters for dental practice owners

Dentists often use percentages daily, whether evaluating loan rates, overhead allocations, or investments. The Rule of 72 translates these percentages into practical timelines, showing how long it might take to achieve the results.

It highlights that consistency and time are key drivers of wealth. Starting early gives investments more time to grow, making even small contributions significant.

Using the Rule of 72 for retirement planning

The Rule of 72 provides a quick way to determine if your retirement timeline aligns with your return assumptions by converting expected returns into estimated years of growth.

For example, at a 7% long-term average return:

• 72 ÷ 7 ≈ 3 years to double.

That rough timeline can help frame questions such as:

• Does my savings rate align with when I want the option to retire?
  
  
• If I plan to retire earlier, how much compounding time am I giving up?
  
  
• If I increase contributions now, how many years does that effectively buy me?
  
  

It can also help you compare tradeoffs. A plan with a 6% return implies a significantly different growth timeline than one with a 9% return. Using the Rule of 72:

• 6% → doubles in about 12 years.
  
  
• 9% → doubles in about 8 years.
  
  

Time matters in retirement planning. With 10–15 years, you get one “doubling.” With 25–30 years, you get several. The Rule of 72 makes this clear.

This rule won’t replace a detailed plan, but it can quickly show whether expectations are reasonable.

The inflation version of the Rule of 72

The same shortcut applies to inflation:

• Years for prices to double ≈ 72 ÷ inflation rate.
• At a 3% inflation rate, costs double in approximately 24 years. Retirement planning must address both growing investments and rising expenses.
• A simple example: if you currently spend $15,000 per month, a long-term 3% inflation rate suggests that the same lifestyle may cost roughly $30,000 per month in about 24 years. Inflation changes the long-range target.

Apply this to spending and business costs. With 3% inflation, $30,000 in overhead could increase to $60,000 in 24 years unless you effectively manage costs and fees.

This is why inflation deserves a dedicated spot in planning conversations. If your plan focuses solely on investment growth and not on cost growth, the gap tends to appear later, often when you need the plan to provide the most security.

Choosing a rate that makes sense

The Rule of 72 is only as useful as the rate you plug into it. A few practical guidelines can keep the estimate realistic and relevant.

• Use a return assumption that matches your actual investment mix, not a best-case scenario.
  
  
• If you’re thinking about long-term lifestyle funding, compare your return assumption against inflation, since purchasing power is what matters.
  
  
• If you’re investing in taxable accounts, remember that taxes and fees can reduce the effective rate that reaches you.
  
  

Think in two layers: nominal return (statement value) and real return (after inflation). High inflation can erode real returns.

You don’t need a perfect number, just a reasonable one that you can revisit periodically.

How to use the Rule of 72 in day-to-day decisions

The simplest approach is to run the rule on one or two numbers you care about right now:

• Expected investment return (to estimate growth timelines).
  
  
• Inflation rate (to estimate how fast spending targets may rise).
  
  
• Loan interest rate (to understand how quickly interest can compound if a balance isn’t being reduced).
  
  

Use the rule’s results to check your plan: do the timelines align with your goals, and do the assumptions still make sense?

A quick reference table

If you like having a quick benchmark, here are a few common rates and their estimated doubling times:

• 3% → about 24 years.
• 4% → about 18 years.
• 5% → about 4 years.
• 6% → about 12 years.
• 7% → about 3 years.
• 8% → about 9 years.
• 9% → about 8 years.
• 10% → about 2 years.

Where dentists often apply it

Dentists can use the Rule of 72 in a few places:

• Retirement contributions: translating an expected return into a realistic growth timeline.
  
  
• Taxable investing: understanding how long it may take for non-retirement investments to become meaningful.
  
  
• Debt strategy: comparing interest rates on practice or personal loans against expected investment returns.
  
  
• Lifestyle planning: testing whether today’s spending target accounts for inflation over a 20–30 year horizon.
  
  

Used this way, the Rule of 72 becomes less about “doing math” and more about building intuition for time, growth, and cost creep.

Common questions

Is the Rule of 72 accurate?

• It’s a shortcut. Use it for quick estimates and comparisons, not precision. The goal is speed and clarity.
  
  

Can I use it for debt?

• Yes. If a balance grows at a stated interest rate, the Rule of 72 gives you a quick sense of how fast that cost can double if you are not paying the balance down aggressively.
  
  

What rate should I use?

• Use a rate that fits the decision you’re making. If you’re modeling long-term investing, use an assumption that matches your portfolio’s mix. If you’re modeling retirement lifestyle funding, run the inflation-adjusted version as well, so your spending target remains realistic over time.
  
  

The Rule of 72 provides dental practice owners with a quick and practical way to estimate how long it might take for money or costs to double, connecting investment, inflation, and retirement goals without the need for complex calculations.

Use this rule to quickly test financial assumptions, check expectations, and bring clarity to planning, but remember to revisit rates and decisions as circumstances change.

Not sure where to start? Contact us today!

References

U.S. Bureau of Labor Statistics. (n.d.). Consumer Price Index (CPI). https://www.bls.gov/cpi/.

U.S. Securities and Exchange Commission. (n.d.). Compound interest calculator. Investor.gov. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator.

U.S. Securities and Exchange Commission. (n.d.). What is compound interest? Investor.gov. https://www.investor.gov/additional-resources/information/youth/teachers-classroom-resources/what-compound-interest.