3 Thoughts for the Recently Graduated Physician Assistant

Congratulations on completing your PA curriculum and good luck as you start your career in the healthcare profession! After years of hard work and sacrifice, you are finally ready to start earning a steady paycheck. Given the significant change in income, it’s important to take the time now to develop smart financial habits. Here are 3 things to think about that should position you for long-term financial success:

• Evaluate Loan Repayment Programs – There are a range of repayment plans and options, either offered directly through your loan servicer or the federal government. Given the different career paths available for the PA profession and individual circumstances, there isn’t a one-size-fits-all solution in determining the optimal debt repayment strategy. One of the biggest considerations is whether you’ll be practicing at a public facility or private practice.
• Set a Target for Cash Reserves – In general, we recommend that everyone hold at least 3-6 months’ worth of living expenses in cash/savings as an emergency reserve. By setting this money aside, you protect yourself from needing to borrow in the event that unplanned circumstances arise.

This bucket could also be where money earmarked for 1-3 years goals is held, like a vehicle or home purchase. In today’s interest rate environment, it’s worthwhile to make sure these reserves are earning a reasonable level of interest (4-5%) by using a high yield savings account or money market fund.

• Make a Plan for Retirement Savings – As a general rule of thumb, 15% of gross income should be dedicated to retirement savings. This can be a combination of your own efforts, as well as potential matching or profit-sharing contributions from your employer.

In addition to determining the right amount to save, you will also need to determine where to save in terms of tax treatment. Pre-tax contributions to an employer plan allow you to save tax-deferred and pay taxes on distributions in retirement, ideally at a lower rate. Roth (or after-tax) contributions are taxed today, but all of the growth can be accessed tax-free at a later date.

Each person’s circumstances and goals are unique. If you have questions about your own situation, contact a Rockbridge advisor today.