This is for all my fellow NPs or anyone who wants to chime in, not sure if this is right location for thread, please relocate if need be.
How is everyone saving for the future? I started my 401k 2 years ago after realizing the biggest financial mistake of my career. As an RN I never started a 401k because frankly I was young and dumb and didn't know too much about them. 8 years later I finally realized a 401k doesn't really change your paycheck by much because the money comes out before taxes. So now I put 10% of my pay a month into a 401k and my pay check may be 300$ lower each month which isn't bad. 3600$ a year I lose after taxes but 12000 goes into my 401k, it's a no brainier now!!
I also have a Roth IRA which by law only allows 5500$ I think each year. This allows me to put post tax money into retirement and any growth I make I can take out tax free after the age of 65 I think.
I started a money market account with a brokerage company as well last year which acts like a retirement account as far as growth but I can touch it at anytime if I need the funds with no penalty.
This is is my PSA to anyone who reads this, don't make the mistake I did, please start a 401k with your employer if you haven't started one already!!!
I am extremely fortunate in that my practice contributes 17% of my base pay to any investment plan I choose so that is a huge benefit!.
I've calculated 17% of my base salary more times than I can count since reading this. Unless they justify paying your really poorly to offset I'm severely jealous.
While I agree that people should educate themselves ... I don't thinking taking one course at a community college qualifies you to give financial advice. I see that you are a fan of Suze Orman and yet you contradict her advice (She always strongly recommended against bond funds) ... and you give lots of advice that would be inappropriate for many of our readers. ( Example: many of us will be making less in retirement than we are making now -- putting us in lower tax brackets later. And my investment income will not be taxed as "ordinary income" in retirement, but rather as capital gains, which are taxed at a lower rate.)
Readers, I encourage you to seek advice from professional, certified financial planners -- and not make specific financial decisions based on what a stranger says on the internet. Seek good counsel from qualified professionals tailored to fit your specific situation.
I appreciate your comments, but it's not solely a personal finance class at a community college I've taken; I've just finished my prerequisite classes I've been taking for an MBA (I completely all the courses required for a BS in finance, minus the general elective stuff). While I do know Suze advised against bond funds, they've been performing remarkably well for a long time, and it depends on what type of bonds they are. For example, the Cali Muni Bond Fund I mentioned has been earning much better returns than average. I've also been making way better a return than the market right now due to how I'm investing. The advice I gave on 401ks and Roths is also sound.
If people think they'll be earning less in retirement than they're making now, then sure, a 401k makes sense. However, tax rates can increase, plus you'll be drawing from a 401k AND social security which can increase your taxable income. If you know your income won't be higher in retirement and you'll be in a lower tax bracket, than yes, a 401k makes more sense than a Roth IRA or 401k (though I think people should have a 401k AND a Roth if their income allows). Obviously the advice I gave was general and not tailored toward a specific person. You make it seem like I'm out to ruin people's lives and that's just not the case (but that is the tone I felt you conveyed).
I've calculated 17% of my base salary more times than I can count since reading this. Unless they justify paying your really poorly to offset I'm severely jealous.
There's a psych hospital near me that contributes 15.65% of your yearly salary to a retirement fund for you in addition to a 401k match. If only I were credentialed as a PMHNP *sigh*
I was planning on doing 20 years in the service so I could retire and live off the currently ~5k/month pension High3 plan. Who knows if that or SS will be around in a few years anyway. Seems like congress is always tossing around the idea of cutting military spending.
Anyway, I'm getting out of the military now, and I don't have a 401k or TSP or anything. I just saved as much cash as I could. Maybe I should have done those. But I know they are both capped and you can't add more than a few thousand a year. I remember looking into those "retirement" accounts and just shaking my head. They are on average very low returns or tied to the stock market in one way or another (which went no where for almost a 13 years).
I educated myself about the stock market, and am waiting for the market to bottom out again where I can put a big trade. There are clear patterns in stocks. Wish I knew what I do now and had the money in 2008/09. Also, don't buy bonds. You should never buy something at all time highs. Bonds and the stock market are at all time highs.
But as others pointed out, get out of debt first. Then if anything, buy some crude oil!
I can't believe llg called me out on my advice but not this. Don't buy bonds? Bonds are stable investment vehicles and great for those close to retirement. They also change in value inversely to interest rates, so if you buy a bond when interest rates are high, if interest rates plummet you'll be able to sell that bond for a huge profit and use the income to invest in something else (provided the time to maturity on the bond isn't nearing its end anyway). Also, stocks do not have clear patterns, otherwise we wouldn't have stock brokers and analysts and hedge funds, et cetera. "What goes up must come down; what goes down must come back up" does not apply to every stock. Also, if the market was earning a return of say, 10%, and you only had student loan debt at 5%, it would be silly to pay off debt faster and not invest since you could be earning 5% more investing. With interest rates low now, it makes more sense to pay off (interest accruing) debt faster, but that isn't always the case.
There's a psych hospital near me that contributes 15.65% of your yearly salary to a retirement fund for you in addition to a 401k match. If only I were credentialed as a PMHNP *sigh*
Dagnabit I'm getting rooked! Lol. My guess, hope? is their wages are considerably lower than mine like if I were to go back to VA or work for the state. Great benefits and much better retirement but $50,000 a year less than I make now? Trying to stay on top of all this is exhausting. :)
I've calculated 17% of my base salary more times than I can count since reading this. Unless they justify paying your really poorly to offset I'm severely jealous.
Lol Jules - we are actually at the top of the payscale in my area - I make over 6 figures base pay. We also receive free healthcare insurance for ourselves - am not sure what it is for families as my husband has his own free healthcare insurance from his employer.
I will say this is why we have so little turnover - we currently have 8 APRNs and 1 PA:
PA has been with the practice 18 years
NP #1 with practice 17 years
NP #2 with practice 16 years
NP #3 (me) with practice 10 years
NP #4 - 2 years
NP #5,6 - 1 year
NP 7,8 - just hired
NPs 5-8 were hired recently due to huge expansion of our practice. And our docs and practice have a very solid reputation in our area.
403b- 25 percent of my ft job's salary. Match is a pitiful 2 percent and I am still not eligible for it. Plus they do an additional contribution that is another 2 to 5 percent.
Roth IRA- Maxed. Through vanguard. Always check expense ratios as high fees can kill your returns. Vanguard is the gold standard.
457b- Through prn job, I add an additional 150 dollars per paycheck.
The combined amount contributed to all designated Roth accounts and traditional, pre-tax accounts in any one year for any individual is $18,000 in 2015 and 2016, plus an additional $6,000 in 2015 and 2016 if you are age 50 or older at the end of the year.
I've heard about the "backdoor" Roth before, but I'm still confused on some points. I have both a Traditional IRA and a Roth IRA (not with the same company). Because of my income, I won't be able to contribute to the Roth anymore.
Do you have to open a new traditional IRA every year, and then convert into a Roth IRA? Meaning you'd have multiple accounts? Or do you just open a traditional IRA for your contributions and convert to a Roth (within the same company), keeping all the money between two accounts?
Lastly, this is a taxable event, correct? Meaning if I want to convert $10,000 from a Traditional IRA to a Roth the $10,000 would count towards my yearly income? Or am I interpreting this incorrectly since I would be contributing after tax-dollars to the traditional IRA?
Specializes in Psychiatric and Substance Abuse Nursing.
Townhouses and single family. I got started because I had a friend who was a broker and did investment properties. The best deals are usually ugly that picky buyers won't consider but really only need some updating. Note as a small individual investor its rare to make a huge amount of monthly income like you will see on the infomercials. My minimum goal is to make enough rent to pay the mortgage and build the equity which has been very successful long term. You have to be very particular about the neighborhood and tenants. I also don't ever recommend leveraging your principle residence to purchase anything. Keep your home free in case things go south.
I'm a huge fan of real estate as well! I don't trust the entire financial/banking system, especially IRAs, 401Ks, etc, because all that $ in those accounts is at the mercy of government and the tax rates of the time. The rules (withdrawal periods, tax rates, etc.) can change at any time to bail out the government. With more and more states teetering on the brink of bankruptcy, I shutter to think what kind of solutions the federal government might come up with to bail out all the states (one time 25% cut out of our savings accounts, or IRAs, etc, with the "promise" to pay back at the time the individual reaches retirement age?). Something similar happened in Cyprus Could the U.S. government ever directly tax your savings account? | AL.com . Also, I am leery of paying too close attention to the advice of the financial magazines and financial planners out there because if you don't buy a stock/bond product that they sell, they will not have a means to make money. A fun activity is to research who are the main advertisers/shareholders of popular consumer financial magazines that you see on the news stands...of course these magazines will only preach "the market only goes up over the long haul" and "dollar cost average," but the inherent problem is that humans are not like the stock market, that is being immortal, which is what you would need to be to ride out the lows and still make a decent return on your money.
In the early days of my career when I worked 3rd shift as an LPN and RN I was able to get my real estate agent license, and then broker's license (which are surprisingly easy to acquire...few courses and you're done. Nowhere near the difficulty or length of schooling that nursing/NP requires!) and acquire 13 apartments (3, 3-families, 1, 2-family, and 3, lower price condos). My two target tenant demographics were/are low income (section 8) and college rentals. Real estate is great because you are creating wealth for yourself in five different ways: 1) Mortgage paydown - your tenants are making your payment for you! 2) Tax shelter/benefits - although a lot of this benefit gets phased out once your ordinary income from a high paying job goes above $155K 3) Capital appreciation - your property will likely go up in value over time 4) Cash flow - if you make a $300.00-500.00 monthly profit each month on each property it adds up when you combine them at the end of the day 5) "Usability" - you can borrow (cash out refinance, equity line of credit) against the equity value in your rental properties (to fund kid's college; to buy more investment property or your own retirement/vacation home in a warm climate; emergencies; etc) without disrupting the rental income coming from that property. You can also use your investment property, eventually, later down the road and receive favorable tax advantages (i.e. turning your once investment condo in Orlando, FL into your primary home after a certain amount of years). You can also use your current properties as trade chips and do a certain tax strategy (1031 exchange) and trade all of your high labor (babysitting tenants) smaller rentals into a different type of business use property (i.e. retail strip mall, larger apartment building) that you can find quality professional management companies to run for you, which you can teach and leave for your heirs to enjoy.
As you can tell from above, I love real estate! I have to offer the disclaimer that the low income landlording route is not for the faint of heart or those with the shortage of patience. The poverty that you will have to deal with is something you have to prepare/brace yourself for....but if you can do it the payoff is huge because you are able to grow quicker because you can buy cheaper properties that offer the same rental rates as properties that cost two, or three times, as much in purchase price. Affordable rentals near colleges where you can rent to students is my favorite niche that I prefer to buy these days.
I think it is a worthy consideration to add real estate into anyone's retirement plan. And any nurse that works an off shift like 2nd or 3rd shift, yes, it's the pits with regards to social life, but it can be a great luxury if you choose to get involved in real estate because you can get so much done with regards to rehabbing/overseeing your rental properties.
Real estate is actually one of the riskiest places to invest in (see: the housing bubble).
Also, your income is at the mercy of your tenants. If they don't pay, you have to go through a whole eviction process which does not favor the landlord in many states.
Specializes in Psychiatric and Substance Abuse Nursing.
If you screen properly and acquire good tenants, it's highly unlikely you'll have to evict a tenant. In 7 years and 13 units I have had to only evict one tenant (I inherited the tenant when I bought the building and it took 24 days via the court system in my state). As far as risk and housing bubble, as long as the tenant is paying who cares what the housing market is doing...of course your capital appreciation will suffer temporarily (but that is only one leg of the 5 legged wealth building table...and you should never invest in real estate to lose money each month hoping to make money on appreciation) you're still receiving your income stream, tax benefits, mortgage paydown and usability. That's what makes it such a great investment. When bubbles crash is the time to buy because prices will be depressed. I would argue that stocks are the riskiest places to invest because companies fold and/or slash their dividends during stock market bubble collapses and you don't have anything to show for it except a nice write off against your next year's income tax. This is not to mention the always present possibility of the chief financial officer cooking the books causing you to wake up one morning and your stock price is halved because of it. At least if your tenant is setting fire and cooking your property you will be able to see it and tell your insurance company about it to get reimbursed. Lol.
Real estate is actually one of the riskiest places to invest in (see: the housing bubble).
Also, your income is at the mercy of your tenants. If they don't pay, you have to go through a whole eviction process which does not favor the landlord in many states.
Your income is at the mercy of the tenants but hopefully the good tenants will out number the bad ones especially if you are particular going into the arrangement. As for the housing bubble I took almost a decade off from buying properties when prices went so high. It was like with the stock market it just couldn't have possibly made sense that it would continue so I waited it out. It definitely isn't liquid and requires work and can be annoying at times such as when you get that late night call that the sewer is backed up but overall my net worth is 10Xs what it would have been if I didn't invest in real estate.
Jules A, MSN
8,864 Posts
I've calculated 17% of my base salary more times than I can count since reading this. Unless they justify paying your really poorly to offset I'm severely jealous.