Add to 401k or save for student loans?

[Trave_]

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I'm not financially savvy enough to make this decision without some advice. I am fortunate to be closing in on a job pre-dental school that would make me enough money that I could potentially add a percentage (10-15%) to my 401k (I already have some money in my 401k from a previous job). I'm wondering if I should add that 10-15%, or if I should simply save up and take out less loans for D1. I am leaning towards the latter but that's simply due to instinct. Would it change if my company matches 6% of my 401k contribution?

Gracias!

 

[786783]

Dang, 6% contribution? What company do you work for? Do you have anything in your 401k already?

I'd save up and take out less loans for D1.

 

[Str82th]

Add to 401k. The time value of money cannot be underestimated. You will have that retirement fund compounding interest much longer than you will have your student loans.

Get the max in employer matching.

 

[Trave_]

Dang, 6% contribution? What company do you work for? Do you have anything in your 401k already?

I'd save up and take out less loans for D1.

I will be working for a healthcare IT consulting firm - been in the healthcare IT world for about 3 years now (so I do have 401k money at the moment).

Also just realized I should’ve created a poll! Although I’d still wonder why people would do one over the other.

 

[Lau Sang]

By pure numbers, it should be more worth it at the very end to put that money into 401k, but that money might be more valuable to you in the short term (it would be to me). What are your plans after graduating? How much do you expect to have to back and how quickly? I think as dentists we will have plenty of opportunities to set ourselves up with good investments by the time we retire anyways (and you'll probably be able to liquidate your office).

 

[Str82th]

By pure numbers, it should be more worth it at the very end to put that money into 401k, but that money might be more valuable to you in the short term (it would be to me). What are your plans after graduating? How much do you expect to have to back and how quickly? I think as dentists we will have plenty of opportunities to set ourselves up with good investments by the time we retire anyways (and you'll probably be able to liquidate your office).

You may have opportunities for good investments, but you will never have as much time to let the money grow if you wait to start.

Put the money away! Worst case, once you start dental school convert it to a ROTH Ira, pay income tax (which your only income would be the value of the 401) and manage it while it grows. If you “need cash” you can take the principal amount out of the IRA without tax penalties. But, don’t take it out.

 

[fit2]

Save money. Start saving as early as possible

 

[FlossyLady1]

You could save the money inside a conservative brokerage account to gain some compounding to use to pay for loans later.

 

[Trave_]

Thanks for all the advice - still open to more! I'm thinking I will do the 6% match and continue adding to my 401k since it will be a better long-term investment. I'll probably still save some money to lower my initial loan - ideally bring the total loan down by 10k if all goes well.