retirement accounts

[Modoc]

Are you guys actually maxing out retirement accounts straight out of residency/fellowships (e.g 60-70k/year)? It seems like a huge sum of money to put to the side untouched for 30 years lol

---

Members don't see this ad.

 

[aneftp]

Are you guys actually maxing out retirement accounts straight out of residency/fellowships (e.g 60-70k/year)? It seems like a huge sum of money to put to the side untouched for 30 years lol

Keep doing it man (or woman). The earlier u start. The more it grows. I was self employed for the first 10 years of my career. Maxed out every year with my sep (than solo 401k plus put money in for non working spouse 401k as employee”.

I was able to put away 20k (just half a year of being self employed my rookie 6 months) half residency half attending

Then put away a min 40k each year. Later on as spouse as employee in solo 401k. Put away 75k each year.

That’a millions in my retirement account alone over the years and I’m not even 50.

Now if guys are w2 and have no employer matching. That would be harder to achieve. But still try to max 22500 (or whatever the irs limit is). Anything helps

It teaches savings as well. Sure. It’s nice to have fun and spend. But unless u got 4 young kids already and can’t afford it. Save save save.

Guess none of u read the old post by one of the anesthesia docs who died at age 40 on sdn of lung cancer. He spent it all on cars etc. didn’t save at the beginning and died with young kids.

 

[rowsdower88]

I don't think there are many who would advise against making use of tax advantaged retirement accounts.

"Compound interest is the most powerful force in the universe." - Einstein

 

[Greenbayslacker]

Max 401k and backdoor Roth every year no exceptions. Putting away $28,500/year should be easy for any anesthesiologist. Shift your holdings between index funds and bonds as you grow and based on the market.

 

[aneftp]

Max 401k and backdoor Roth every year no exceptions. Putting away $28,500/year should be easy for any anesthesiologist. Shift your holdings between index funds and bonds as you grow and based on the market.

Anyone who mentions back door Roth likely finished residency after 2010.

Pro rata rules make it more complicated for those who had hundreds of thousands in pretax accounts in sep ira prior to that. There was a one year mega Roth conversion in 2010 that allowed for taxes to be paid over 2 years. This is even more complicate for pre martial accounts you don’t want to co mingle after getting married with any currently 401k that started after getting married.

 

[sloh]

If you're making 400-500k/yr, which you should be as an anesthesiologist, maxing out your retirement accounts should be easy and only the beginning. Funnel a lot into VTSAX as well.

 

[abolt18]

Anyone who mentions back door Roth likely finished residency after 2010.

Pro rata rules make it more complicated for those who had hundreds of thousands in pretax accounts in sep ira prior to that. There was a one year mega Roth conversion in 2010 that allowed for taxes to be paid over 2 years. This is even more complicate for pre martial accounts you don’t want to co mingle after getting married with any currently 401k that started after getting married.

Do a bit of Locums, open a solo 401k, and roll your IRA into it? Then BAM you can do a Backdoor Roth IRA.

 

[aneftp]

Do a bit of Locums, open a solo 401k, and roll your IRA into it? Then BAM you can do a Backdoor Roth IRA.

Can’t roll over pre martial Ira accounts into any “new” accounts with marriages. It would be considered co-mingled assets even with pre martial agreements. The law is extremely vague in many states with this matter. Not worth it to risk almost a million currently in sep ira for what amounts to $6000 extra each year.

 

[abolt18]

Are you guys actually maxing out retirement accounts straight out of residency/fellowships (e.g 60-70k/year)? It seems like a huge sum of money to put to the side untouched for 30 years lol

You should EASILY be able to save a minimum of 20% of your gross income every year. And yes even max out your retirement accounts the year you graduate from residency/fellowship!

I had 1 year as an attending between residency and fellowship.

First 6 months as an attending, maxed out Roth403b and Post tax 457b ($19,500 each), and did backdoor Roth IRAs for my wife and me ($12K total o believe) and saved a bunch of cash.

Second 6 months (Jan-June), did all the same, but limits increased to $20,500. So in that 12 months I saved a total of $104,000 in retirement accounts and saved a bunch of cash to supplement my income during fellowship.

We still increased our spending a little compared to residency and had a very comfortable life. Grow into your income slowly. You will not regret it.

It is 100% worth it to max out every retirement account available to you immediately. If you can't do that, you've got a spending problem, considering you were just surviving on a resident salary of 60-70K I'd expect.

 

[abolt18]

Can’t roll over pre martial Ira accounts into any “new” accounts with marriages. It would be considered co-mingled assets even with pre martial agreements. The law is extremely vague in many states with this matter. Not worth it to risk almost a million currently in sep ira for what amounts to $6000 extra each year.

Oh dang!?! Never thought about the "pre-marital" issue, as I never saved any money before I got married.

 

[abolt18]

Can’t roll over pre martial Ira accounts into any “new” accounts with marriages. It would be considered co-mingled assets even with pre martial agreements. The law is extremely vague in many states with this matter. Not worth it to risk almost a million currently in sep ira for what amounts to $6000 extra each year.

Not sure I understand actually. I don't see any reference to anything that would restrict this, unless you're talking about a Pre-nup or something?

Rollovers of retirement plan and IRA distributions | Internal Revenue Service

Find out how and when to roll over your retirement plan or IRA to another retirement plan or IRA. Review a chart of allowable rollover transactions.

www.irs.gov

 

[aneftp]

Not sure I understand actually. I don't see any reference to anything that would restrict this, unless you're talking about a Pre-nup or something?

Rollovers of retirement plan and IRA distributions | Internal Revenue Service

Find out how and when to roll over your retirement plan or IRA to another retirement plan or IRA. Review a chart of allowable rollover transactions.

www.irs.gov

Prenup and premarital assets. U gotta be super careful not to co mingle “new assets” in any rollover. So I can’t touch my sep ira and rollover to 401k to avoid the pro rata rule.

I have a lot more complicated tax issues than most of the people here. That’s why I joke a lot about taxes and my run around from taxes. But I know the rules.

 

[ChiDO]

Yes. Save 20% min for retirement. Seven figures turns into 8 and 9 with compounding interest.

 

[Volatile]

Im a few years out from training and absolutely max all retirement accounts, between my wife and I we get about $110k into tax advantaged accounts. The left over goes into our brokerage accounts. I wouldn’t say we live frugally either w/ a couple kids. I agree with above, once you’re making >400k/yr it shouldn’t be difficult unless you’ve inflated multiple aspects of your life (house, vacations, cars, wife). You can afford anything, just not everything

 

[finalpsychyear]

I live by the mantra what you save in your first 10 years as an attending is the most significant money you will ever make.
I did the 401k, hsa,backdoor PLUS a cash balance and also tried to save post tax what i put in all my retirement accounts yearly. Some years i couldn't but looking back maybe the best thing i ever did. After 2026 not sure i'll contribute anything other than max 401k. That's how powerful it can be.

 

[Iso4ane]

Im a pretty junior attending, but the earlier you make it a habit the less it hurts. If you do it from the get go, it's as if your never had that money in the first place, So what if I'm only making '200K' when i could be making 250K, still is a lot more money than many bring in. But if you go from 250K and living on 250K to 200K that hurts. Same with 500 to 450 or even 650 to 600. Still nearly a 10% cut back if you get used to that higher lifestyle.


In fact, I can front load the 401K/$03B/457/etc and it feels like I have a mini raise half way through the year, so it makes it easy to continue saving and put money into other investment vehicles than spend it if i choose to.

 

[aneftp]

I live by the mantra what you save in your first 10 years as an attending is the most significant money you will ever make.
I did the 401k, hsa,backdoor PLUS a cash balance and also tried to save post tax what i put in all my retirement accounts yearly. Some years i couldn't but looking back maybe the best thing i ever did. After 2026 not sure i'll contribute anything other than max 401k. That's how powerful it can be.

Depends how many kids u have and if u have a second income in the family.

I saved most of my money the first 10 years as well. Been cruising. That’s on one income.

But remember it seems like u been an attending since AFTER 2008.

I say this time frame cause most of the people who finished before 2008/2009 have face stock market crashes in the late 1980s, the early 2000/2001 and the 2008

Those who finished after 2008 haven’t seen a prolong 2 year slump yet. And back door Roth didn’t exist till after 2010.

 

[GoBeers]

through s-corp, would you rather max solo401k/ sep ira or give yourself as much distribution as possible? you'll still be in the same crappy tax bracket upon withdrawal of your massive retirement savings as you are getting taxed now on w2. there's always the potential for taxes to be even worse in the future

 

[anbuitachi]

depending on your personal situation, not always easy to max retirement. remember residents are constantly graduating, and new anesthesiologists entering the work force. everything is getting way more expensive.

try refinancing your 300k student loans. its not going to be a 2% rate anymore.
and many other factors. tax rate is approaching 50%. that home payment eats up over half of take home salary. food rising. do you have kids?

i still max my retirement but i have noticed it has gotten way more difficult. my wife no longer max, as we need the money. i do 20k in 401k and 20k in 457. and 6k in backdoor roth.

however with just the amt i put in, 45k, we should have 1.3M in 30 years in retirement. assuming it doubles, we should have close to 3M, which is more than most peoples retirement in this country, so it should be ok! And by then, we wouldve paid off on our 2b apartment

 

[aneftp]

through s-corp, would you rather max solo401k/ sep ira or give yourself as much distribution as possible? you'll still be in the same crappy tax bracket upon withdrawal of your massive retirement savings as you are getting taxed now on w2. there's always the potential for taxes to be even worse in the future

Remember u don’t pay taxes in solo 401k with dividends pay outs that are reinvested over time.

If it’s in taxable account. It’s exposed to annual 23.8% taxes plus state income taxes (where applicable ). So there is tax advantages keeping money in tax shelters account. Also putting money in 401k can limit ur personal liability so creditors cannot touch it in a lawsuit.

 

[tdub878]

You are onto something. Keep improving it. Good luck

 

[forchinet121]

Yes. Save 20% min for retirement. Seven figures turns into 8 and 9 with compounding interest.

7 figures pretty much never turns into 9 figures unless you know how to invest, stashing it away in the stock market without a thought in the world will not get you there. It will make however sure you’re safe and may possibly get you into 8 figure range decades later, definitely not 9 figures though that’s reserved for people that know how to manage money.

 

[<(^_^)>]

depending on your personal situation, not always easy to max retirement. remember residents are constantly graduating, and new anesthesiologists entering the work force. everything is getting way more expensive.

try refinancing your 300k student loans. its not going to be a 2% rate anymore.
and many other factors. tax rate is approaching 50%. that home payment eats up over half of take home salary. food rising. do you have kids?

i still max my retirement but i have noticed it has gotten way more difficult. my wife no longer max, as we need the money. i do 20k in 401k and 20k in 457. and 6k in backdoor roth.

however with just the amt i put in, 45k, we should have 1.3M in 30 years in retirement. assuming it doubles, we should have close to 3M, which is more than most peoples retirement in this country, so it should be ok! And by then, we wouldve paid off on our 2b apartment

Also remember anesthesiologists/CRNAs are always retiring too.

Your taxes also aren’t as bad as you fear. Say 400k in 2022 married filing jointly + standard deduction + 40k pretax contributions = 32.5% effective tax rate. In 2023 it will be lower (if your income stays the same) since tax brackets move up with inflation and New York shockingly cut income taxes by 0.2% this year.

It sounds like you’ll have two social security incomes + ~3-4M personally + whatever in your wife’s accounts + a 2 bedroom condo in New York which is a pretty solid retirement overall.

Maxing at least one person’s retirement accounts should be seen as the bare minimum. If you cannot afford to do so, you cannot afford to live/practice in that area.

 

[anbuitachi]

Also remember anesthesiologists/CRNAs are always retiring too.

Your taxes also aren’t as bad as you fear. Say 400k in 2022 married filing jointly + standard deduction + 40k pretax contributions = 32.5% effective tax rate. In 2023 it will be lower (if your income stays the same) since tax brackets move up with inflation and New York shockingly cut income taxes by 0.2% this year.

It sounds like you’ll have two social security incomes + ~3-4M personally + whatever in your wife’s accounts + a 2 bedroom condo in New York which is a pretty solid retirement overall.

Maxing at least one person’s retirement accounts should be seen as the bare minimum. If you cannot afford to do so, you cannot afford to live/practice in that area.

I mentioned new grads not about labor force, but bc these folks are graduating with 6 figure loans in high interest environment. When i graduated, many colleagues refinanced their 300k loans down to rate of 2-3%, which drastically lowered payment. Back then student loans was like 6.5% . I dont know what the finance rate is now, but its def not 2-3% probably.

2 bedroom co op in outer border of nyc. if it were in manhattan itd be like 3M probably. But its only worth <1M where i live. and its a co op...

 

[<(^_^)>]

I mentioned new grads not about labor force, but bc these folks are graduating with 6 figure loans in high interest environment. When i graduated, many colleagues refinanced their 300k loans down to rate of 2-3%, which drastically lowered payment. Back then student loans was like 6.5% . I dont know what the finance rate is now, but its def not 2-3% probably.

2 bedroom co op in outer border of nyc. if it were in manhattan itd be like 3M probably. But its only worth <1M where i live. and its a co op...

Oh yes 100%. Loan burden is truly egregious these days, although PSLF seems to be panning out for those jumping through the hoops and worst case you’re still debt free by 34-36.

The other huge issue for new grads is trying to buy a house at probably the worst time in the last 15 years. I bought a house 3 years ago now and if I wanted to switch into the same exact house down the street my monthly payment would more than double (and I would need 20-25% more of a down payment).

It’s one reason many HCOL areas are having trouble recruiting these days from what I have heard.

 

[ERRES2288]

depending on your personal situation, not always easy to max retirement. remember residents are constantly graduating, and new anesthesiologists entering the work force. everything is getting way more expensive.

try refinancing your 300k student loans. its not going to be a 2% rate anymore.
and many other factors. tax rate is approaching 50%. that home payment eats up over half of take home salary. food rising. do you have kids?

i still max my retirement but i have noticed it has gotten way more difficult. my wife no longer max, as we need the money. i do 20k in 401k and 20k in 457. and 6k in backdoor roth.

however with just the amt i put in, 45k, we should have 1.3M in 30 years in retirement. assuming it doubles, we should have close to 3M, which is more than most peoples retirement in this country, so it should be ok! And by then, we wouldve paid off on our 2b apartment

If your tax rate is 50% you are making over 500k so 45k is probably not enough

 

[anbuitachi]

If your tax rate is 50% you are making over 500k so 45k is probably not enough

well right now its expensive bc of kid + mortgage. once thats paid off, cost should go down

 

[FutureInternist]

Before one puts $ away in to retirement accounts, they have to have a stable base.

Short term disability.
Long term disability.
Life insurance for self & spouse (even if non-working… pays for childcare while you work)
Maybe Umbrella insurance
Then start on the retirement accounts

Also… if kids & if planning in helping them with college, 529 (if your kids don’t use it, they can give it to THEIR kids - so you fund grandkids’ education)

 

[anbuitachi]

If your tax rate is 50% you are making over 500k so 45k is probably not enough

well right now its expensive bc of kid + mortgage. once thats paid off, cost should go down

 

[aneftp]

well right now its expensive bc of kid + mortgage. once thats paid off, cost should go down

“Kid” is all relative. I have colleagues with 22-28 year old post graduates (in the work force) still being subsidized by bank of mom and dad.

Considering most docs I know have their kids ages 26 (younger end) to up to age 45 (most docs have kids ages 28-38 females). The men obviously can be older. But if u are still subsidizing ur adult kid at age 25 and had kid at age 34 You are close to winding down ur career at age 59. Even if the house is paid for. The wife who is also a fellow doc wants the 100k new windows replacement on the 2 million dollar intercostal Home (which has been long paid off)

Aka your expenses really don’t go done till you are in your 60s.

 

[abolt18]

well right now its expensive bc of kid + mortgage. once thats paid off, cost should go down

How much does this kid cost? Cause I have 3 kids 10 and under and none of them have cost me all that much money yet.

 

[chessknt]

How much does this kid cost? Cause I have 3 kids 10 and under and none of them have cost me all that much money yet.

Idk man some of the people here have 300k saved up for education + private school at 20k+/yr + all the other usual expenses, so approaching 1 MM each

 

[abolt18]

Idk man some of the people here have 300k saved up for education + private school at 20k+/yr + all the other usual expenses, so approaching 1 MM each

But they definitely don't have to cost that much. And he's talking about how they've stopped maxing out his wife's retirement accounts because the kid is expensive and so is the mortgage. But all that sounds like to me is spending too much on a kid. Nevertheless, to each their own. We each have our own priorities.

 

[anbuitachi]

“Kid” is all relative. I have colleagues with 22-28 year old post graduates (in the work force) still being subsidized by bank of mom and dad.

Considering most docs I know have their kids ages 26 (younger end) to up to age 45 (most docs have kids ages 28-38 females). The men obviously can be older. But if u are still subsidizing ur adult kid at age 25 and had kid at age 34 You are close to winding down ur career at age 59. Even if the house is paid for. The wife who is also a fellow doc wants the 100k new windows replacement on the 2 million dollar intercostal Home (which has been long paid off)

Aka your expenses really don’t go done till you are in your 60s.

oh funny one of my colleagues just got 100k windows

 

[aneftp]

How much does this kid cost? Cause I have 3 kids 10 and under and none of them have cost me all that much money yet.

Between music, cheer, baseball, tennis , tutors it costs me around $500-750 per kid in activities So budget that much per kid.

Than budget $500-1000 a month for putting money into 529 account per kid

That’s before feeding and clothing them! So each kid costs at min $1000/month even if you are the cheapest parent and up to $3000/month per kid for “doctor’s kid”

That’s why childless (single) adults have so much free money to spend or save.

 

[anbuitachi]

How much does this kid cost? Cause I have 3 kids 10 and under and none of them have cost me all that much money yet.

well, we had to upgrade to a larger apartment. we were in small studio. rent was 2400. we had to get a larger place so now we are in 2 bed, rent is 3900$, so that is extra 1.5K a month. nanny cost another 3k a month. his food, diaper/wipes, medications, toys, health/dental insurance, add up to about 1400$ a month. so that is extra 5.5k per month due to kid. we also thinking of buying a car soon. parking costs 250 to 300$ a month... and i dont know how much monthly car cost/insurance will be yet.

my mortgage for my 2 bed starts later this year, total about 6000s per month. we havent started 529 yet


so later this year, just for mortgage + kid it'll be ~8k post tax per month. not including car and parent expenses

 

[ERRES2288]

well, we had to upgrade to a larger apartment. we were in small studio. rent was 2400. we had to get a larger place so now we are in 2 bed, rent is 3900$, so that is extra 1.5K a month. nanny cost another 3k a month. his food, diaper/wipes, medications, toys, health/dental insurance, add up to about 1400$ a month. so that is extra 5.5k per month due to kid. we also thinking of buying a car soon. parking costs 250 to 300$ a month... and i dont know how much monthly car cost/insurance will be yet.

my mortgage for my 2 bed starts later this year, total about 6000s per month. we havent started 529 yet


so later this year, just for mortgage + kid it'll be ~8k post tax per month. not including car and parent expenses

I think important to note though it’s unlikely the kid expenses are going to decrease over time. They will more than likely increase.

 

[nimbus]

oh funny one of my colleagues just got 100k windows

Haha. I grew up in a house that cost $62k.

 

[FiO2@21]

Are you guys actually maxing out retirement accounts straight out of residency/fellowships (e.g 60-70k/year)? It seems like a huge sum of money to put to the side untouched for 30 years lol

Short answer yes.

I thought about when I wanted to retire and how much I wanted to live on for the remaining decades.

Working backwards, that basically amounts to putting away as much as you can get away with. And to be honest, that still leaves me with the ability to have an amazing lifestyle. I am single without kids though.

 

[Dr. Rude]

Haha. I grew up in a house that cost $62k.

What does it (or the lot that it is on) go for now?

 

[abolt18]

Haha. I grew up in a house that cost $62k.

Yeah I believe that's about what my parents paid for my home I grew up in... And now Zillow values it at $500K!

 

[pgg]

What does it (or the lot that it is on) go for now?

My parents paid $39K for the 4 bedroom home in Encinitas CA where I grew up when they bought it in 1972 (or maybe it was 1973). Nice view (inland not ocean).

$1.7M on Zillow today. Same structure on the lot.

About 8% year over year for 50 years, although most of the price growth has been in the last 15-20 years.

 

[Splenda88]

Haha. I grew up in a house that cost $62k.

I wonder what was the median household income when your parents bought that house.


FWIW, there are still places in the south and the midwest where regular homes (1800-2200 sqft) are still relatively inexpensive.

 

[aneftp]

I wonder what was the median household income when your parents bought that house.


FWIW, there are still places in the south and the midwest where regular homes (1800-2200 sqft) are still relatively inexpensive.

They are inexpensive in the south (80-100k) cause the public schools pretty much suck. Property taxes are low but that means they can’t pay the teachers enough. It’s a chicken and egg problem in many parts of the country. Property taxes for school vs quality of public school education.

 

[Splenda88]

They are inexpensive in the south (80-100k) cause the public schools pretty much suck. Property taxes are low but that means they can’t pay the teachers enough. It’s a chicken and egg problem in many parts of the country. Property taxes for school vs quality of public school education.

Yeah, it's a conundrum for many people. I guess one has to find the few pockets where price is still ok and the schools are not bad.

 

[triggermaster]

7 figures pretty much never turns into 9 figures unless you know how to invest, stashing it away in the stock market without a thought in the world will not get you there. It will make however sure you’re safe and may possibly get you into 8 figure range decades later, definitely not 9 figures though that’s reserved for people that know how to manage money.

It wasn’t really clear but I assumed the poster meant growing from 7 figures (1,000,000) to 8 or 9 million not 8-9 figures. That is more realistic anyway.

 

[triggermaster]

I’m not saying you aren’t enjoying life if you save money but at some point you are sacrificing meaningful experiences in your relative youth for lots of money when you are old and feeble and can’t enjoy it- if you even survive to old age.
I mean I save a good amount and I’d like to leave money to my kids (mostly life insurance at this point), but this thread ignores life in exchange for savings. Who cares if you are rich when you are old? You’re just going to sit in a chair and watch FoxNews all day anyway. That doesn’t cost much.

 

[aneftp]

I’m not saying you aren’t enjoying life if you save money but at some point you are sacrificing meaningful experiences in your relative youth for lots of money when you are old and feeble and can’t enjoy it- if you even survive to old age.
I mean I save a good amount and I’d like to leave money to my kids (mostly life insurance at this point), but this thread ignores life in exchange for savings. Who cares if you are rich when you are old? You’re just going to sit in a chair and watch FoxNews all day anyway. That doesn’t cost much.

Kids get expensive.

I suspect half the posters here are still younger (late 20s to early 30s). I saved most of my money in my first 6-7 years as an attending The second child really hurts in terms of savings.

Every vacation costs double. We average 40k a year on vacation the last 10 years. Is that living it up? I’m about to drop 30k on last minute trip to Europe. So I’m still able to max out 60k of my own money into retirement plus employer match. That’s on a 450k ish salary.

I put money into 529 as well. Kids prepaid college paid off also.

You just have to manage your money. You can save and still have fun.

 

[Angus Avagadro]

The quest for life balance is elusive. Being comfortable in retirement is different for everyone. I have found it satisfying to be independent and content. My definition is not worrying about the cost of a dinner, leaving generous tips for servers,(as my wife and I both have held those titles), flying business class, enjoying our different properties, toys, etc.. Some would want more, others less. Kids wil slow you down during school years as they won't get much time off during the year. Then summer activities come into play. Most importantly for me, my healthcare and extended care will not be a burden on my family. This is why we saved for retirement. But, @triggermaster, you have a point. I have heard it said that he who dies owing the most money wins. Something to be said for that.

 

[pgg]

It wasn’t really clear but I assumed the poster meant growing from 7 figures (1,000,000) to 8 or 9 million not 8-9 figures. That is more realistic anyway.

Making such elementary mistakes talking about money (LOL @ "9 figures") doesn't lend much credibility to anything else in the post. Just laugh and move on.