You’ve just been put through the ringer training to be an anesthesia clinician, trying to find a job, and maybe get married, buy a house, and start a family. Admittedly, you’ve had a lot on your plate for years, all the while no one ever sat you down for lesson on personal finance and how to handle the debt load, cost of children and saving for the future. So, here is the 90 second version of what you need to know about contributing money to your company funded retirement account so you can retire form anesthesia early!
Do not push it off!
Your first day on the job you’re going to bombarded with loads of paperwork, paperwork you may think nothing of and want to put off until later. Mixed in with your new hire packet will be options to sign up for your retirement benefits with either a 401k or 403b. Do not push it off! You may have the urge to say “I’ll sign up later.” Frequently, many new anesthesia providers put off signing up for retirement benefits and before they know it two or three years have gone by before they remember to sign up.
After signing up, you may wonder what a good number to start with is. The key here is at the very least to start with how much the company is willing to match. To keep it simple, let’s say you make $200,000.00 a year. The anesthesia group matches up to 5% and you start with that number (putting away 5% of your salary), you will have personally saved $10,000.00 dollars by the end of the year and your company will have put an additional $10,000.00 dollars away for you.
Conversely, if you were in the “I’ll do it later” camp and you forgot to sign up for three years, you have saved $0.00 for retirement vs $60,000.00 without taking into account potential market returns over that same period of time.
3 Year Mistake
Investing early keeps you in the driver seat. Let’s say you are 35 years old after your first three years in the work force and you’ve saved up the $60,000.00 in your 401k. Hypothetically, if you continued the same contributions to your 401k for the next 30 years and the market gave you average annual returns of 7%, your contributions and company’s matching by age 65 would be worth roughly $2.1 million. However, those who put off starting their retirement contributions for three years and followed the same contributions and market returns would have saved around $1.6 million! That three year mistake can end up costing you $500,000.00, or two and a half years of salary! Investing early in your retirement plan keeps you in a better position to control your retirement goals to retire from anesthesia early.
On top of the potential investment gains you may benefit from, the money you contribute to your traditional employer sponsored plan (not including Roth 401k’s) will help reduce your tax burden. What better way to reduce your tax bill and at the same time save money for yourself! These plans make it very simple, convenient and beneficial not only from a tax stand point but also a savings standpoint to invest.
There are many professional money managers or advisors that would love to help you create a plan based on your financial priorities and guide you toward your goal of financial safety and your desired retirement lifestyle. They do this day-in and day-out for hundreds of individuals and families. Don’t put another task on your already busy plate, outsource this part of your life like we all do by hiring a mechanic, paying a plumber, or visiting the doctor. Don’t wait! Invest early, meet with your advisor often, and stay disciplined with your contributions.
This article is for educational purposes and should not be taken as investment advice. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Hypothetical returns are provided for informational and illustrative purposes and may not reflect actual future performance. Please consult an investment professional for help making your investment selections.
Authors: Team Flaherty Fryer
• Kevin Flaherty and Max Fryer team-based culture is focused on investment advisory, asset management and legacy planning services. Financial Advisors at Folger Nolan Fleming Douglas they have worked with physcians and nurses to meet their financial goals.
Email: KFlaherty@FNFD.com Email: MFryer@FNFD.com
