Paying back loans/saving for retirement as an older student

[theITcrowd]

Hi all,

Did some searching and was unable to find anything particularly specific to my question, so here goes. I'm currently 27 (almost 28) and am finally in a position work-wise where I can potentially take pre-med courses part-time at my local college/CC and/or online while still working full-time. I put together a rough plan for myself that would see my applying in 2021 and hopefully matriculating in 2022, when I'm 32. That puts me at 36 when I would graduate. My dream residency would be orthopedic surgery, which would make me 41 when I actually start practicing as a fully-qualified surgeon.

So here's my question: anyone here have any thoughts or insights about paying back loans and saving for retirement after 40? Is it possible to save for retirement during residency? I have no illusions about what it will be like financially after med school (not to mention the physical/emotional toll!), but I just want to have as much information as possible before jumping in.

Thanks in advance!

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[atomi]

If you go into ortho, you will be making $500k to potentially way more than this depending on where you work. In other words, money and savings, and paying back loans won't be a problem. Yes, during residency you should max out a roth IRA, since you'll never be eligible to contribute to it again, and if you have any left over after the $5500 IRA limit, contribute to your hospital's 403b. But don't live too much like a pauper since it won't matter much if you really do go into ortho.

I don't know how much money you are making now, but you should be maxing out a roth IRA if you are eligible based on income, and getting your employer's maximum match to a 401k. Time value of money and all, saving now is more important than saving in residency. Invest everything in a low fee total market index fund (no bond funds). You can pay back your loans immediately after graduating, just pay the interest during residency.

But be warned, you will likely change your mind about surgery - I did!

 

[theITcrowd]

If you go into ortho, you will be making $500k to potentially way more than this depending on where you work. In other words, money and savings, and paying back loans won't be a problem. Yes, during residency you should max out a roth IRA, since you'll never be eligible to contribute to it again, and if you have any left over after the $5500 IRA limit, contribute to your hospital's 403b. But don't live too much like a pauper since it won't matter much if you really do go into ortho.

I don't know how much money you are making now, but you should be maxing out a roth IRA if you are eligible based on income, and getting your employer's maximum match to a 401k. Time value of money and all, saving now is more important than saving in residency. Invest everything in a low fee total market index fund (no bond funds). You can pay back your loans immediately after graduating, just pay the interest during residency.

But be warned, you will likely change your mind about surgery - I did!

Thanks atomi. I've got a pretty good head start with retirement savings, but the retirement calculators can be confusing.

Do you have an estimate about how much would be reasonable to save during residency while also paying back loan interest? Also, just curious, what made you change your mind about surgery?

 

[redfish955]

If you save 5k a year from 45 to 60 you should have approximately 142.5k. if you save 5k a year from 45 to 65 you should have 250k. Basically, if you can pay off your loans by the time your 45 and save 75k a year you should have about two million at 60 which should be enough for a retirement bringing in 80k a year as long as the market is fine. If the market is up when your sixty I would move the funds to a little more conservative and safer place. If it's down work a few more years until it rebounds. For every 100k over 200k you earn you will see about 65k of it after taxes. I would talk with an accountant about anything extra you can do while paying down loans. I think as long as your making 200k you should be able to pay off a 250k-300k home, go out once or twice a week, eat decent groceries, drive a 25k car, and save two million by the time your sixty.

 

[atomi]

Thanks atomi. I've got a pretty good head start with retirement savings, but the retirement calculators can be confusing.

Do you have an estimate about how much would be reasonable to save during residency while also paying back loan interest? Also, just curious, what made you change your mind about surgery?

To go into surgery, it pretty much will have to be your life. You can usually squeeze one other thing into your life, and for most people it's family. For me, sleep, exercise, and extracurricular hobbies were important (that's 3 right there -- you know, normal healthy people stuff). Surgery is absolutely incompatible with this until mid/late career.

As regards to retirement savings during residency, I would suggest posting a question on the bogleheads forum. There are a lot of doctors there and you will get much better advice there than here.

 

[theITcrowd]

If you save 5k a year from 45 to 60 you should have approximately 142.5k. if you save 5k a year from 45 to 65 you should have 250k. Basically, if you can pay off your loans by the time your 45 and save 75k a year you should have about two million at 60 which should be enough for a retirement bringing in 80k a year as long as the market is fine. If the market is up when your sixty I would move the funds to a little more conservative and safer place. If it's down work a few more years until it rebounds. For every 100k over 200k you earn you will see about 65k of it after taxes. I would talk with an accountant about anything extra you can do while paying down loans. I think as long as your making 200k you should be able to pay off a 250k-300k home, go out once or twice a week, eat decent groceries, drive a 25k car, and save two million by the time your sixty.

Thanks for the detailed reply. Definitely a goal of mine to pay down any loans as quickly as possible.

 

[theITcrowd]

As regards to retirement savings during residency, I would suggest posting a question on the bogleheads forum. There are a lot of doctors there and you will get much better advice there than here.

Thanks for the tip!

 

[EKGdoc]

Check out the White Coat Investor, posts on SDN often and great advice.