ROTH IRA for medical students?

[akay00]

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i am still in my basic sciences in medical school. I have no financial acumen at all. However, i read recently that medical students should consider opening up a ROTH IRA. Although, i realize that its pretty difficult for even the most frugal to be able to do so. Does it make any sense to take out the full student loan amount now so that I have extra money to put into a roth?

 

[plauto]

Unfortunately, you can't contribute to an IRA (traditional or Roth) if you have no income.
However, you can (and should) rollover (any) previous traditional IRAs into a Roth IRA.

 

[freaker]

i am still in my basic sciences in medical school. I have no financial acumen at all. However, i read recently that medical students should consider opening up a ROTH IRA. Although, i realize that its pretty difficult for even the most frugal to be able to do so. Does it make any sense to take out the full student loan amount now so that I have extra money to put into a roth?

It really doesn't make much sense, even if you had an income to invest. The odds of you doing better than 6.8% (the interest rates on student loans) on any inverstment given the current global economic conditions (or at any given time) are quite dicey right now.

What happens if those investments in your ROTH lose money? (Well, the smart money would be to stay the course, but you get what I'm saying.)

Your best bet is to just live frugally now. If your residency offers a ROTH 403B, use that up to the match. You'll have plenty of time to invest down the road.

 

[DeadCactus]

It really doesn't make much sense, even if you had an income to invest. The odds of you doing better than 6.8% (the interest rates on student loans) on any inverstment given the current global economic conditions (or at any given time) are quite dicey right now.

What happens if those investments in your ROTH lose money? (Well, the smart money would be to stay the course, but you get what I'm saying.)

Your best bet is to just live frugally now. If your residency offers a ROTH 403B, use that up to the match. You'll have plenty of time to invest down the road.

I disagree. Most people don't have the option, but I'd put money into a Roth IRA before decreasing my loans. For most physicians, medical school and residency are the only times where our incomes are low enough for a Roth IRA with medical school representing a chance to plant a $25k retirement seed.

To me, the flexibility of having a tax-free income to withdraw from during retirement and starting to build the habit of "pay yourself first" is worth the percentage difference in loan interest and retirement growth over the time it takes you to pay it off.

Additionally, no one is going to give you extra money because you missed out on retirement savings and the government isn't going to let you contribute to a Roth IRA retroactively. The number of programs to pay off your student loans, however, is growing every day...

 

[Dr. USMLE]

I disagree. Most people don't have the option, but I'd put money into a Roth IRA before decreasing my loans. For most physicians, medical school and residency are the only times where our incomes are low enough for a Roth IRA with medical school representing a chance to plant a $25k retirement seed.

To me, the flexibility of having a tax-free income to withdraw from during retirement and starting to build the habit of "pay yourself first" is worth the percentage difference in loan interest and retirement growth over the time it takes you to pay it off.

Additionally, no one is going to give you extra money because you missed out on retirement savings and the government isn't going to let you contribute to a Roth IRA retroactively. The number of programs to pay off your student loans, however, is growing every day...

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