“busdriver do you contribute any of your pay to fund the pension?”
No, @tom1944, it is a negotiated union benefit. I don’t think it’s typical to contribute pay to fund a pension if you are working at a private company, but generally you might if you’re working for the government. At least that is my impression, I could be wrong.
@AttorneyMother, agree but the doctors have higher earnings and therefore they can contribute more. Small business can set up SEP IRA to, I set up one for my daughter.
Then, there is the ever envy-inducing self-directed IRA, which was made more famous by Mitt Romney:
Bob, my old 401k did allow it too, I don’t know if it closes the loop hole or not to new employees.
@DrGoogle , I understand. One has to have earnings to come close to maximizing contributions, of course. 
As for your D, she is lucky to get an early start. The thing young people have if they have nothing else is TIME. And your D is lucky that she also has a thoughtful parent. I hope she hits a home run or two or three in her SEP-IRA.
NOMB, but, I assume that she is also starting her Roth, right? Because young people’s tax rates are so favorable that post-tax Roth is the best thing going forward.
She has both. TIME is on her side.
Timing is everything when it comes to other things, like the real estate world. We had three houses in our neighborhood all sell w/i 2 weeks of listing in the last couple of months, while some more expensive homes a neighborhood over are just starting to sell and have more reduced inventory (and have cut prices, some by a lot). Where we live, you may have to sit a while to get the price you want - they keep building new houses, so you are competing, competing; take it on and off the market sometimes, or have a unique feature - our house 25 years ago in a terrible school district sold because it had a long garage (workshop on end) that could hold the new male single owner’s long boat - he was thrilled!
H wanted to know why I was so interested in real estate…I guess he needs to take my lead on that. I have learned from friends that having a house looking beautiful and as a new listing at a hot time can mean a very quick sale. Realtor friend had her house sell in 4 days - and another in her neighborhood followed shortly behind her and sold in 2 days. She went room by room to de-clutter and have it looking beautiful.
Very few doctors are self-employed now. The ones who used to have their own businesses, have joined larger organizations or have multiple partners. Their retirement plans changed as their businesses merge and consolidate.
It’s still available.
@cbreeze , though the trend is towards consolidation, it still depends on the region. New physicians need to know what their Econ.
@busdriver11 That is an excellent pension. You are correct about government pensions in NJ we contribute between 7.5-10% depending which pension you are in.
To follow up on Post 6749, which was interrupted by family…
New physicians need to know their economic situation more than ever. Many are faced with earning real money for the first time in their lives, yet equally many are coming out with incredible mountains of debt. (One of my H’s new hires has $500K in student loans between himself and his wife!) Many are starved for consumption so they like to believe that their incomes will sustain their spending.
It’s really boring, but I tell any one of my H’s group’s new physician-hires who cares to listen that it’s not a great idea to buy/build that new 6000 sq. ft. house just because they can, despite the seduction. That it may be a far better investment to max out their retirement contributions now because, just because, we are older and have more mileage on us and we know better. But, eh, what do I know, because I’m their nemesis attorney-type. But it’s been interesting to see the rounds of new hires.
@attorneymom, but that sounds too boring even for a to be retiree like myself. I mean 10-12 years of hard work, they need to enjoy the fruits of their hard work.
I told my daughter to save, even not able to max out. Get into the habit. Enjoy her money too. Life is too short to be all sensible and I’m serious.
@DrGoogle , boring and dull it may be, but there is a significant burn-out rate at 20 years and then what do they have to show for it? A giant white elephant house. And, I am thinking of all the downsizing that goes on around pre-retirement.
Enjoying the fruits of one’s labor can also mean travel, financial flexibility to work less, retire earlier, whatever your heart’s desire. I heartily endorse those things. Encumbering oneself with a gigantic fixed-cost 7-figure house needing 7-8 months of air conditioning, when it’s not necessary in our neck of the woods, not so much. But, it’s an occupational hazard from what I see. I can cite chapter and verse of examples, but I won’t because it’s really NOMB.
I also agree that life is too short and is unpredictable. The trick is to find the happy medium.
I like this sentence: “Life is too short to be all sensible.”
We actually had a conversation about our S and his GF like this recently (between us parents only, not sharing it with them): They may lead a very diffeent kind of life than us in the future. If they can manage to afford it, why not? Isn’t it what we always hope for: He could have a better life (in terms of financial reaourcefullness only) than us. To be sure, he will start working with a significant amount of debt in his name but we did not. (So there is a big difference here.)
I know how much student loan debt DS has accumulated but we have no idea (and do not want to be nosy about it either) how much debt she has had. We also do not know whether they will still be together a couple of years from now but we hope they could make their relationship a success - at least it seems this could be the “best shot” DS has had in his life so far. (Knock! Knock!!)
As regard to our own retirement savings, we have accumulated our nest egg mostly through our 401K, not through our IRA. We have zero Roth (IRA or 401K.) We have had a (very) small penson. It was small mostly because we started to collect it when I left that company after 55 (which is distributed 10 years before the normal retirement age for this pension plan so the benefit is only half of its expected amount) and their pension rule (and IRS’s rule also) said we are allowed to take the distribution after 55 in this situation (we kind of regretted it but we did not have any income for many months at that time when I lost that job during the 2008-2009 downturn.)
@AttorneyMother, I get what you are saying but was just thinking from the young people point of view. My kid has budget for travel, budget for eating out, new computer, new clothes, etc… I just want to ease in the retirement saving slowly for her. The happy medium. Who knows, she might be happy living one room with her smart phone.
I would say 90% of couples I know where both spouses are MDs, the women chose part time work after childbirth. They are choosing lifestyle balance vs. earning most money.
My H is the most senior MD(39th year in practice) in his 100+ physician group. He takes time off (at least 6-7 weeks a year) and will work half time next year.
attorneymother- we are both physicians (59/64) and when we first got out of residency there were many classmates with exactly what you talked about in homes. we decided to pay off our med school loans which were small as we went to state schools, get a cute home we liked, travel with the kids and really I do not think that we were deprived . school for the kids was a big priority and having them not have college loans. I cannot tell you how many realtors/banks tried to up the home style. eventually we built our own home 15 years ago which is very nice but we called it out retirement home at 2800 SF it is the perfect size for retirement and paid off. we do not have to downsize and we saved all along. now I did continue to work full time after our kids were born but my specialty was good for it. lately not so but the kids are launched , as it has become very busy and I work for the government. however this has allowed us to retire really soon and at a fairly young age for me.
I agree that it is an occupational hazard- the delayed gratification does it. but if you are OK with spending some , saving some you don’t feel deprived.
Per SS… “It seemed a lot depends on when you die.” - Yes, that is the theme for retirement planning. In the end, I think the important thing is the retirees/couples have a plan than reasonably covers most scenarios as best it can.
Interesting topic. Uncomfortable to think about tho!
I think I will need about 3-4m. Vangaurd says I am on track for between 170k (bad markets) and 290k a year at retirement (combined with SS). I think that should be more than enough. (They calculate using inflation, but give the amounts is todays $.)
I have no pension. My old company got rid of it, so I put it in an IRA when I left that co, along with my old 401k. My new company also has no pension, but they do match 5% of contributions to 401k. Outside of the $ I have saved for colleges, most of my wealth is in retirement funds and home equity.
In 2016, I will turn 50, so looking forward to the extra catch up contributions, as I max out right now.
It’s just me, so I have to plan for more, as a small house for 1 is not likely much cheaper than one for 2! in 7 years I will have both kids out of college. I’ll be 56…(oy). I will sell this house and downsize. When I retire, likely to Texas. Lower COL and tax burden, and warmer. That would cut expenses IN HALF even if I don’t downsize!!