Saving for retirement as a graduate student

[Marissa4usa]

I am wondering what options are available as a full time doctoral student to save for retirement. I'm about to begin a PhD program in clinical psychology, however, I will not hold a "real" job until I am 36 years old. I have a 403b from my previous position as a research assistant and I was hoping that I can continue voluntary contributions as a graduate student through my current graduate institution. However, it seems like this is not possible. Since I am also single, I cannot rely on a significant other to make up for the loss I'd be taking the next 5-6 years.

I was hoping to hear how others have handled this situation, especially if you were an older student. Did you just not save anything? Did you maybe figure out a way to talk your university into letting you contribute to a 403b (if so, how did you do it)? Did you open an IRA?

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[PHD12]

I am wondering what options are available as a full time doctoral student to save for retirement. I'm about to begin a PhD program in clinical psychology, however, I will not hold a "real" job until I am 36 years old. I have a 403b from my previous position as a research assistant and I was hoping that I continue voluntary contributions as a graduate student through my current graduation instituiton. However, it seems like this is not possible. Since I am also single, I cannot rely on a significant other to make up for the loss I'd be taking the next 5-6 years.

I was hoping to hear how others have handled this situation, especially if you were an older student. Did you just not save anything? Did you maybe figure out a way to talk your university into letting you contribute to a 403b (if so, how did you do it)? Did you open an IRA?

Wow, a graduate student in psychology who is financially savvy?!? I didn't save for retirement until internship/later years, but it is an awesome idea to start early!

I now use Roth IRA (you can open one through Ameritrade, Fidelity for free and many funds are free). There is also a regular IRA. Anyone can open these as long as combined income is less than 178K, and you don't even need an income/employment to use Roth. Both are better options than 401K in my opinion (unless there is a match) because there are zero administrative costs and wider range of low cost options (free ETF's etc). You can contribute a max of $5500 to Roth IRA and IRA for 2013. The difference between the two is that Roth is after tax (so you don't pay anything in Retirement). Regular IRA is pre-tax so you will be taxed when you withdraw. With both of these, you cannot withdraw without penalty until you are 59 (unless you are a first time home buyer, disabled etc). If your income is lower, I think Roth may be better since you will make more money in the future (and thus it's better to pay the tax now when your a student). AS a postdoc, I am using a Roth IRA because I know that my income will only increase in the future.

 

[Marissa4usa]

Wow, a graduate student in psychology who is financially savvy?!? I didn't save for retirement until internship/later years, but it is an awesome idea to start early!

I have a retirement account in my home country that I started in my pre-college days (i.e. from when I wasn't even 20 years old) that I've been contributing to ever since (admittedly only very small amounts, but still) - I'm pretty good about this stuff

I now use Roth IRA (you can open one through Ameritrade, Fidelity for free and many funds are free). There is also a regular IRA. Anyone can open these as long as combined income is less than 178K, and you don't even need an income/employment. Both are better options than 401K in my opinion (unless there is a match) because there are zero administrative costs and wider range of low cost options (free ETF's etc). You can contribute a max of $5500 to Roth IRA and IRA for 2013. The difference between the two is that Roth is after tax (so you don't pay anything in Retirement). Regular IRA is pre-tax so you will be taxed when you withdraw. With both of these, you cannot withdraw without penalty until you are 59 (unless you are a first time home buyer, disabled etc). If your income is lower, I think Roth may be better since you will make more money in the future (and thus it's better to pay the tax now when your a student).

Thanks for that. Based on my research a Roth IRA seems to be the way to go. I'd only contribute a very small amount but it's clearly better than nothing. I'm very lucky in that I'll be receiving a pretty generous stipend considering the cost of living so that I am even able to do that.

What are other people's experiences?

 

[WisNeuro]

I'm assuming that you won't be putting a ton of money into retirement given grad student status. In that case, if you go mutual funds, pay attention to the expense ratio. Vanguard funds have some good ones with very low ER's.

 

[PHD12]

I'm assuming that you won't be putting a ton of money into retirement given grad student status. In that case, if you go mutual funds, pay attention to the expense ratio. Vanguard funds have some good ones with very low ER's.

Yes. You can also use ETF's (Vanguard has many good ones) instead of mutual fund to lower the expense ratio even more.

 

[paramour]

What are other people's experiences?

I'm assuming that you won't be putting a ton of money into retirement given grad student status.

I'm sorry but I actually chuckled when I read your OP.

Save? As in money? Long-term? Muahahahaha!

I hope that your attempts work better than mine. To be fair, I had a considerable amount of unexpected expenses rear their ugly heads during grad school that certainly did not help the situation. I had a 401k prior to grad school. It dwindled pretty darned quickly. However, I do still have a relatively small retirement account thanks to my teaching gig. The CC actually requires that everyone participate in it. I was able to successfully opt out of a similar automatic enrollment program at the hospital where I worked, but not so with the CC's program. As CC employees did not contribute to social security, 8% (I think?) of gross income is contributed to your retirement account.

 

[nessa34]

I have a Roth IRA through Vanguard with no fees... although with my $20 monthly contribution I'll be on track to retire in about 2250 There are some funny loopholes with Roth IRAs that can be helpful- for example, you can withdraw money from it penalty-free to buy your first home.

 

[LivingOffLoans]

I nearly laughed out loud when I saw the topic title of this in the forum.

 

[LisaLisa86]

My grad school retirement plan is "try not to get into too much credit card debt". :-D

That being said, an IRA is probably a really good choice, since it's more flexible with amounts and timing than other options. You could also put some money into a conservative mutual fund, or buy a bond for x amount of years. (The bond could be a good choice- for example, you could do a 5-year bond where that money would be available to you at the next stage of your life, but if you don't need it then, you can put it into a retirement fund).

 

[PhDToBe]

I just save as much as I can in my bank account. Of course, there is very little interest to be made off of that. You could also invest in silver or gold since the dollar is becoming more and more worthless.

 

[Marissa4usa]

Well, I'm glad my thread caused some amusement Like I said, I ended up choosing a graduate program in an area of the country with an extremely low cost of living. In addition, the program I'll be attending provides an above average stipend (at least for the cost of living), so that definitely helps. As a matter of fact, I qualified for a mortgage just based off my stipend that'll allow me to own a nice little home while in graduate school.

Anyways, I appreciate the feedback that I've gotten. It confirms what I had already researched, but I wanted to hear what other people had done. I realize it's unrealistic to expect that I'll be able to put a meaningful amount of money towards a retirement account while in grad school, but even just putting in $20-$30 each month is going to benefit me in the long run and is better than nothing.

 

[PHD12]

Well, I'm glad my thread caused some amusement Like I said, I ended up choosing a graduate program in an area of the country with an extremely low cost of living. In addition, the program I'll be attending provides an above average stipend (at least for the cost of living), so that definitely helps. As a matter of fact, I qualified for a mortgage just based off my stipend that'll allow me to own a nice little home while in graduate school.

Great financial planning. Too bad most people don't think this way. You will own assets and have retirement savings by the time you graduate. I am used to people coming on this forum and trying to justify 200K for an unaccredited PsyD after completing another sham graduate program online.

 

[CatsFan]

As a matter of fact, I qualified for a mortgage just based off my stipend that'll allow me to own a nice little home while in graduate school.

My program is in an area with low cost of living and I thought our stipend was pretty decent...but this makes me jealous!

 

[affectiveH3art]

I wish I could save through grad school...wow jealous. I had to cash out my IRA from working as a surgical assistant and childcare is $700 a month so no saving for me =(

Thank goodness for funding though. Can't complain there!

 

[psychologue]

I'm thinking about this now! I have a very modest 401k from my current employer, but am thinking about rolling over to a Roth IRA when I leave/start grad school. Anyone have a recommendation for a low minimum, low/no fee Roth? I was looking at Ameritrade but I can't tell if there's a minimum opening investment.