An Occupational Therapist’s Guide to Retirement Planning – New Grad Guide for How to Save for Retirement

How much should an occupational therapist save for retirement?

It depends on where you live and the cost of living, future family planning, whether you will leave a trust, when you plan to retire, how long you expect to live, etc. My calculations come in between $1.5 million to $2 million for myself (alone) and currently.  Yeah, that much, based on today’s calculations. Thankfully, OT’s are compensated nicely as well! There are many calculators online that can help with this too. Remember to factor in not just your income, but your assets too (house, cars, jewelry, side business, things of value).

TL;DR

  1. Start early. Yes, even if you are still in school. If you have income, save 10-15%. If this is too much, start with 1%, then add another 1% each month. You will gradually start saving up to 12% in a year.
  2. Research OT salary and negotiate salary. Traveler OTs often make more than full-time OTs.
  3. Start chipping away at student debt. (I know, this one’s obvious, haha)
  4. Eliminate your credit card debt. Pay your bills in FULL each cycle. Set up an automatic payment from your checking account.
  5. Consider cutting out/back on unnecessary expenses. (Eating out, coffee, monthly subscriptions, entertainment & events)
  6. All debt is not bad (e.g., car, mortgage). Live within your means. If your investments are making more than your debt, it makes sense to have that debt.
  7. Contribute to your employer’s savings plan. Match up to employer’s 401K or similar type plan. Pick low expense, index funds if available.
  8. Contribute up a ROTH IRA (if eligible). Contribute up to the maximum each year if you can afford to. Invest in low cost/expense index funds or mutual funds. Set up automatic investment and reinvestment. Avoid day, frequent trading, IPOs.
    I personally use Vanguard with VTWAX mutual fund.
    – General rule, allocate your current age in bonds, e.g. a 25-year-old has 25% in bonds, rest in others such as stocks.
  9. Save in a high yield savings account.
  10. Protect your purchasing power from inflation. Consider TIPS (Treasury Inflation-Protected Securities).
  11. Bonus:
    – Buy used/2nd hand (especially cars, which depreciate value quickly for new car owners).
    – Buy things on sale & use price trackers to alert you of a good deal such as CamelCamelCamel for Amazon purchases.
    – Use cashback or rewards credit cards. I personally use Costco Anywhere, Chase Freedom, and Citi Double Cash.
    – Stack these credit cards with rewards programs such as Rakuten Ebates, Honey, etc.
    – Enroll in family plans instead of stand-alone (cell phone, video game, entertainment streaming).

Occupational Therapist follows guide and plans to save coins for their retirement

Psychosocially

  • Stay the course – especially when the economy is down.
  • Be thankful for what you have.
  • If you are an impulsive shopper, take several days to consider a purchase.
  • Balance your occupations (work, family, spiritually, leisure, self-improvement).
  • Manage burnout – balance your own life too!

Get Married or Stay Single?

There are so many factors depending on your specific situation, where you live, how much debt you each have, occupation, etc. but I can give you my own experience.

After I got married, my wife was still a full-time student and lost her health benefits due to my income. I was still Per Diem and purchased my own insurance via CoveredCA, which was expensive, even though I was getting paid a 15% bonus/differential. She would have had to purchase her own as well for almost $300/mo, totaling $600/mo for both of us.

Things worked out as I became benefited full-time and have my wife covered through my employer (marriage benefit!), but there was a lot of stress leading up to this. If we had stayed single and waited until she began working, things would have worked out differently. Consider childcare costs as well, including have a kid single vs. married.

Marriage is a whole nother topic itself, so definitely do your research on the pros and cons. Not to mention, weddings can be costly, but they can be done cheaper. Use your OT skills for wedding planning and execution! 😉

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