No. of Recommendations: 4
<<<My questions are: Do I need to start investing for retirement (IRA) now? I will be able to open a Roth IRA for my wife and I this year, but do I really need to? Or would I be better off waiting until my residency if over? Is is silly to cough up 4 K now when I will be making very good money starting 3-5 years from now? I know the earlier I start, the more my interest will grow (hopefully), but with my future income, does it matter?>>>

Some advice from some one who's "been there, done that", only ten years ago.

Yes, start investing now, especially while you can still qualify for the Roth IRA. Over the next 5 years with the increase in funding limits, you could have 30k+ between you and your spouse. By the time you retire it could easily be 250k+, all tax free. That's some serious change no matter how you slice and dice it. You should also check into residency retirement programs. When I was a resident we could invest about 5% of our pay tax deffered. That smattering over my 4 years has now compounded to 40k+ (even with last year's unpleasentness). Again, not a whole lot, but it's 40k less I have to save.

You should three important goals to achieve over the next 3 years. Number one, pay off debt. That includes student loans. Interest on debt, even if it's tax deductable, is money lost that could be better spent elsewhere. Number two, get six months living expenses stashed into an emergency fund. When you hit private practice, it means you are your own boss, but you are also your own retirement/disability package as well. I consider disability insurance part of the emergency fund. Most residency programs offer this or is included in the "employment" terms. Check into it, be careful, many will just slough you off into Medicare/Medicaid which isn't worth crap when you consider how much you've invested into yourself. Also, make sure your that turning HIV positive or becoming a Hepatitis carrier is considered a disability, some do not. An interesting statistic, when I was a resident (anesthesia), it was more likely that I would contract HIV or Hepatitis than die in a car wreck, which was amazing because that is the #1 killer in that age group in the general population. Let's you know about the dangers of our profession. And finally, number three, definitley live below your means now so you will be used to it when the "big money" rolls in. Many people see physicians driving their BMWs, living in 5000 sq ft. homes and think they have it made. All those trappings, for the most part, are still owned by the bank. Many of my friends are slaves to debt and appearances. I know it's tempting after denying yourself material pleasures for so long, but be smarter than that. If you get used to living on 80-90% of your income now, you can still do it later when you have bigger money. Think about it, you've been disiplined enough to survive the riggors of med school, why not budgeting?

JLC (LSUMC-Shreveport, class of '91)
PS, if you have any more questions, feel free to e-mail or continue to post.
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