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Prioritizing Retirement Accounts for PGY-1

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  • Prioritizing Retirement Accounts for PGY-1

    Hey everyone, first time poster, total newbie, just finished reading WCI for the first time and had a question:

    WCI (book) suggests prioritizing retirement accounts for residents in this order:
    1) Roth 401k/403b up to the match provided by employer
    2) Traditional 401k/403b (if no roth option) up to the match provided by the employer
    3) Roth IRA
    4) Spousal Roth IRA
    5) Roth 401k/403b up to limit
    6) Traditional 401k/403b (if no roth option) up to limit
    7) 457

    Is it my understanding that the #1 and #2 choices are up there purely because of the match?

    Given my situation, I'm not too sure which accounts to prioritize.

    I'm a PGY-1, planning to be in training for 6 years.
    I'm enrolled in PSLF.
    My employer does not offer any match.
    My employer DOES offer a roth option for 401k.

    Thanks in advance!

  • #2
    Originally posted by 4flnibr View Post
    Hey everyone, first time poster, total newbie, just finished reading WCI for the first time and had a question:

    WCI (book) suggests prioritizing retirement accounts for residents in this order:
    1) Roth 401k/403b up to the match provided by employer
    2) Traditional 401k/403b (if no roth option) up to the match provided by the employer
    3) Roth IRA
    4) Spousal Roth IRA
    5) Roth 401k/403b up to limit
    6) Traditional 401k/403b (if no roth option) up to limit
    7) 457

    Is it my understanding that the #1 and #2 choices are up there purely because of the match?

    Given my situation, I'm not too sure which accounts to prioritize.

    I'm a PGY-1, planning to be in training for 6 years.
    I'm enrolled in PSLF.
    My employer does not offer any match.
    My employer DOES offer a roth option for 401k.

    Thanks in advance!
    With no match, either Roth 401k/403b or Roth IRA.

    Obviously matching beats anything. The logic for Roth is that you are in a low bracket and the compounding growth. Beyond that, an employer sponsored plan vs IRA really depends on options. An employer sponsored plan limits your options, while an IRA can be in literally anything. If you have good options in your employer sponsored program (total stock market index with ER <0.3 or so), I’d just do that since there is less friction with payroll deduction vs requiring you do your own IRA. There are also higher limits in employer sponsored programs vs. IRA although it probably won’t matter to you as a resident.

    At the end of the day, the most important thing for you to do right now is 1) get the right insurance 2) make a good decisions on loans and 3) avoid personal/financial catastrophe. Beyond that, the rest is mostly a rounding error. Save for retirement, don’t, whatever - as a resident, it doesn’t really matter. What matters is that you learn self restraint and don’t blow up.

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    • #3
      Build a rainy day fund first. Pay off credit cards. Put some money in a Roth, Don’t buy a house and dont buy a Tesla. Your goal for the next number of years should be having more money in the bank and no high interest debits on the balance sheet.

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      • #4
        Since no match, go for 3 and 4.

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