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Retirement planning in residency

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  • Avatar bmc8519 
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    Status: Resident
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    Joined: 03/21/2019
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    Just started general surgery residency this year. My wife and I will have a gross income of about 100,000 combined. We currently max out our Roth IRA’s every year. My residency does offer a 403b but they have 0% match.  I’m not totally in love with any of their options, to be honest, and my Roth has had good returns using low cost index funds.  Is it worth it to put less in a Roth and shift some to my employer 403b for the pre-tax benefit?

    #241185 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3502
    Joined: 01/14/2017

    Max your two Roths. That’s $12k. Saving more at this stage in your career is more important than saving more later, all else equal. So eat free at the hospital, live frugally, and save as much as you can in the 403b – provides the investment options aren’t garbage.

    #241188 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4410
    Joined: 01/08/2016
    Is it worth it to put less in a Roth and shift some to my employer 403b for the pre-tax benefit?

    Click to expand…

    no. you are in 12% bracket. every single penny should be Roth.

    #241194 Reply
    Liked by Lordosis
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 511
    Joined: 06/12/2017

    No. Max Roth, and then put any extra into the 403(b).

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #241246 Reply
    Liked by CordMcNally
    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 554
    Joined: 06/14/2016

    Roth IRA. Then Roth 403b if available. No real motivation to save in a pretax 403b at your income level since withdrawals will likely be at higher rate in many years. If no Roth 403b I would likely build EF after funding $12,000 direct Roth IRA

    #241266 Reply
    Liked by TheDangerZone
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2817
    Joined: 01/03/2017

    Agree with the above. Also, it’s never too early to start planning for retirement.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #241276 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 1080
    Joined: 03/18/2017

    Money is money. Just because your tax rate will be higher in the future doesn’t mean that pre tax contributions as a resident are worthless… Obviously Roth options are ideal

    #241277 Reply
    Avatar JBME 
    Participant
    Status: Spouse
    Posts: 525
    Joined: 03/26/2018

    Try to see if your 403b has a Roth 403b option. If it does, do that instead of traditional. No student loans? Try to get $20k or 20% into retirement. So $12k into Roth IRA and $8k into Roth 403b. Does your wife have a 403:401K? Does she have a match? If so you need to use hers. She might also have better fund options

    #241278 Reply
    Liked by Lordosis
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2374
    Joined: 03/01/2018

    agree Roth IRA, and Roth 403b if avail
    HSA?
    Emergency fund?
    What about debt?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #241281 Reply
    Avatar bmc8519 
    Participant
    Status: Resident
    Posts: 3
    Joined: 03/21/2019

    Thanks for all the advice.

    I don’t have a Roth 403b option and my wife has no retirement options through her family business. We’re fortunate to have had some family help and I worked through med school, so no student debt. We do own a home and send our son to private school (public schools by us aren’t good and we want him to get the best education possible). I have two other retirement accounts from pre-med school jobs. We also have a joint brokerage account and some be money in crowd sourced real estate.

    From what the majority are saying, I think I’ll keep my original plan of max the Roth accounts and hope there is a better employer option in 5-6 years.

    #241293 Reply
    Avatar fishdoc 
    Participant
    Status: Resident
    Posts: 1
    Joined: 08/24/2019

    Related question, I am a first year resident with access to a governmental Roth 457 to which I can contribute up to 19K/ year (not going to be able to contribute nearly that much as an intern), my employer matches this account up to 3.5%.

    I am obviously making my 3.5% Roth contribution to this account to get the match, but I am looking to put away some more Roth dollars and am curious if there is any advantage to opening a Roth IRA or should I just put as much as I can in this Roth 457?

    The 457 offers low cost Fidelity index funds which is what I am invested in.

    #241279 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4410
    Joined: 01/08/2016

    From what the majority are saying, I think I’ll keep my original plan of max the Roth accounts and hope there is a better employer option in 5-6 years.

    Click to expand…

    if you have no debt, then i digress.

    20% to retirement is the goal since you have no other obstructions.

    100k -12k =8k that needs to go somewhere. it may as well be the 403 then.

    #241302 Reply
    Liked by JBME
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4410
    Joined: 01/08/2016
    The 457 offers low cost Fidelity index funds which is what I am invested in.

    Click to expand…

    rIRA would still be ideal as you wouldnt have to worry about rolling it over afterwards.

    #241303 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2374
    Joined: 03/01/2018

    If all income is in 12% bracket I’m not sure I’d defer any pretax with no match, what is your state tax rate?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #241313 Reply
    Avatar JBME 
    Participant
    Status: Spouse
    Posts: 525
    Joined: 03/26/2018

    If op has previous retirement accounts then op should roll those previous plans into Roth IRA and pay the taxes at 12%. Op should put 8k into 403b

    #241315 Reply
    Liked by Peds

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