Question about Retirement Funds

[JelloBrain]

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Reading through the "Medicine worth $300K debt" thread has got me wondering if (any) residents manage to contribute the maximum towards their retirement funds-403(B), 401(K), or whatever options are available to them. If you are successful in doing so and reducing your taxable income, how does that affect your student loan repayment structure, if at all?

As a postdoc (salary kinda equivalent to residency I think) in one of the most expensive cities in USA, I find it very hard, rather impossible, to do so. I barely manage to contribute 50% of the max. Hence my question. The other reason for this query is all this retirement saving is new to me-only since I moved to USA, so it's a burning topic in my life at all times, especially with this economy.

Any insights and/or personal experiences are appreciated. Thanks.

 

[clift]

We were told we were students, not employees and were not offered the opportunity to contribute to retirement plans like the rest of the hospital employees.

 

[UserNameNeeded]

Wow, clift. That's just cold. Did they also reimburse you all the taxes taken out of your salary?

 

[physicsnerd42]

Why not contribute to an IRA? That will decrease your taxable income (although a Roth might be a better deal if you have the $).

 

[Neuronix]

Since your debt is probably accruing interest faster than any savings will earn interest, it's almost always most advantageous to pay off your debt before you begin saving.

 

[staylor21]

Since your debt is probably accruing interest faster than any savings will earn interest, it's almost always most advantageous to pay off your debt before you begin saving.

Depends on the interest rate--also need to take into account the tax benefits from retirement savings (e.g. tax deduction vs tax free growth).

E.g., roth IRA is tax-free growth--I imagine over the long run (which is what retirement savings are for anyhow), you'll likely do better than the interest on your loans.

To the OP, people way too big a deal of 300k in debt. You'll likely pay it off and still live quite comfortably to spare (if nothing else, it's not like we med students are the only ones with crazy loans--law school is 3 years, MBA is 2 years).

 

[JelloBrain]

Thanks for your varying perspectives.

I personally have no debt though-born and bred, and trained abroad-merit scholarship (in my case) and parents take care of everything anyways, 🙂. Having moved to USA at a rather financially tricky and professionally precarious time, I have gotten obsessed with retirement income. I am in my mid-30s and I guess I should have at least 100K or more saved by now, but even living frugally, I can barely make 50-60% pre-tax contributions.

If a lot of residency programs don't even offer this benefit, and you guys are hopeful of living comfortably in the future, maybe I should just stop worrying about this at least for now.

 

[Bobblehead]

The key is compounding time. Anything you can add early on to tax-deferred/exempt accounts allows for additional time in compounding which can translate into thousands by the time you hit retirement age. With medical training you already lose several key years in your 20s.