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Hello Everyone,
I am a recent Cardiac Anesthesia Fellowship grad starting my faculty job at an academic institution. My wife and I are admittedly not the most educated or savvy in regards to financial planning and retirement planning. I would like to give a little financial background story in order to help with our future direction. I apologize if this is a lot of information; however, we feel a bit lost right now especially with the change in income.
Financial Plan of Attack/Questions
1. Pay down student loans ASAP. I have been making IBR payments since Med School Graduation and my wife has received several cash gifts from her grandmother to help pay down the loans. Current balance is approximately $106 K and I am not counting on PSLF to be around in 5 more years.
2. What funds should I chose for retirement from fidelity for 403b/401a/457?
3. Should I transfer-in-kind our retirement accounts from NMIS to Vanguard for lower fee investments?
I am very thankful for this website and the WCI book (I read the entire book on my flight home from my oral board exam). It has been an immensely useful resource for the difficult transition from resident to faculty. Thank you for you advice!
I am a recent Cardiac Anesthesia Fellowship grad starting my faculty job at an academic institution. My wife and I are admittedly not the most educated or savvy in regards to financial planning and retirement planning. I would like to give a little financial background story in order to help with our future direction. I apologize if this is a lot of information; however, we feel a bit lost right now especially with the change in income.
- While attending medical school, my wife paid for room and board since she worked as a neonatal ICU RN. During that time, she opened Roth IRAs for both of us and contributed during the 4 years as much as we could. I graduated with student loans totaling $165K at 6.8%.
- We moved back home for residency at a large academic institution (minutes away from both sets of grandparents). We ended up building a home with a physician loan due to poor inventory shortly before starting residency in June 2011. Purchase price was $230K with a mortgage for $220K. Recently refinanced in January with same bank (Huntington, would not recommend due to many issues with the customer service/closing for both loans) to a 5/1 ARM at 2.65% with the plan not to stay in the home for more than 3 more years.
- I recently starting using the spouse of an attending in my department as our financial advisor. She is a representative for Northwestern Mutual and mostly attempts to sell insurance. We opted for term life coverage and disability for myself. Unfortunately, we also naively moved our investments to her as well (we did not know of any other options given the other person at Edward Jones essentially ignored us). Transferring our Roth IRAs, my wife's traditional IRA and our daughter's 529 from Edward Jones to Northwestern Mutual Financial Services cost us at 4.5% fee (about $2700). Even worse, the financial management/assistance fees are quite high and I did not realize this until asking directly. Here is her response:
"What is your fee structure for the financial planning? Right now we have everything as separate…There is a minimum of 50K to open a fee based plan. At 50K the breakpoint fees decrease as the assets increase. We would enter into a Signature Portfolio Agreement. These fees start at 1.65% at 50K and then decrease to 1.21% at 1M and down to .75% when you reach 5M. Again, I make 35% of these annual fee based plans."
- I started my faculty position at my training institution on July 1. Base salary is $229K with approximately $50-65K in average yearly bonus pay. I opted for the 403b and 457 through fidelity, but I have yet to decide on the funds. I have heard mixed reviews on the fidelity freedom index 2045/2050 for target date funds. The retirement is 5% employee contribution with 10% employer contribution after 1 year of employment.
Financial Plan of Attack/Questions
1. Pay down student loans ASAP. I have been making IBR payments since Med School Graduation and my wife has received several cash gifts from her grandmother to help pay down the loans. Current balance is approximately $106 K and I am not counting on PSLF to be around in 5 more years.
2. What funds should I chose for retirement from fidelity for 403b/401a/457?
3. Should I transfer-in-kind our retirement accounts from NMIS to Vanguard for lower fee investments?
I am very thankful for this website and the WCI book (I read the entire book on my flight home from my oral board exam). It has been an immensely useful resource for the difficult transition from resident to faculty. Thank you for you advice!
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