1. WELCOME TO
Financial Planning
And Residency

2. Disclaimer
Pacesetter Planning LLC is a registered investment adviser offering advisory services in the State of
Pennsylvania and in other jurisdictions where exempted. The opinions voiced in this material are for general
information only and are not intended to provide specific advice or recommendations for any individual. To
determine which investment(s) may be appropriate for you, consult your financial planner prior to investing.
This information is not intended to be a substitute for specific individual tax or legal advice. We suggest that
you discuss your specific situation with a qualified tax or legal advisor.

3. Today…. Student Loans: Avoiding Common Pitfalls
How to Think About Retirement Savings During Residency
What to Look for in a Financial Advisor

4. Avoiding Common Pitfalls
Student Loans
Avoiding Common Pitfalls

5. What’s Your Goal? Minimize your monthly payment?
Pay as little as possible over the life of the loan?

6. Two Major Types of Loans
Privately-Issued Loans
Federal Loans

7. Federal Loans Are Complicated
FFEL
Perkins
Subsidized Stafford
Unsubsidized Stafford
Grad PLUS
Parent PLUS
Consolidated

8. You Need Your Federal Loan Details
Text File from

9. Once We Know What Loans You Have, and What Your Goal Is, Consider These Strategies

10. Federal Loan Benefits: Income-Driven Repayment
Primarily for older loans, generally not the best option for almost everyone
Income-Contingent Repayment
Payments amount: 15% of (joint or separate) discretionary income
All Federal Loans qualify
(Old) Income-Based Repayment
Payment amount: 10% of (joint or separate) discretionary income
Older loans don’t qualify, can’t have had a loan balance on 7/1/2014
(New) Income-Based Repayment
Can’t have had a loan balance on 10/1/2007, need to have had a loan disbursed on or after 10/1/ Some older loans don’t qualify
Pay As You Earn (PAYE)
Payment amount: 10% of JOINT discretionary income. No hardship requirement
Revised Pay as You Earn (REPAYE)

11. Federal Loan Benefits: Income-Driven Repayment
Primarily for older loans, generally not the best option for almost everyone
Income-Contingent Repayment
Payments amount: 15% of (joint or separate) income
All Federal Loans qualify
(Old) Income-Based Repayment
Payment amount: 10% of (joint or separate) income
Older loans don’t qualify, can’t have had a loan balance on 7/1/2014
(New) Income-Based Repayment
Can’t have had a loan balance on 10/1/2007, need to have had a loan disbursed on or after 10/1/ Some older loans don’t qualify
Pay As You Earn (PAYE)
Payment amount: 10% of JOINT income. No financial hardship requirement
Revised Pay as You Earn (REPAYE)

12. { { Those who qualify for PAYE should choose between: PAYE REPAYE
Those who DON’T qualify for PAYE should choose between:
Old IBR
REPAYE

13. Student Loan Strategies
Make sure your Federal Loans are on the right repayment plan (Standard, PAYE/REPAYE or Old IBR/REPAYE)

14. Consolidation vs. Refinance
Consolidation: Government loan program replaces your student loans (multiple) with a new loan at the same blended interest rate
Refinance: Private bank replaces your student loan(s) with a new loan at (hopefully) a lower interest rate

15. Consolidation Consolidation Only Federal Loans can be consolidated
1. $50,000 Federal loan at 8% interest
2. $50,000 Federal loan at 4% interest
Consolidation
1. $100,000 Federal loan at 6% interest
Only Federal Loans can be consolidated
No interest rate benefit!

16. Reasons to Consolidate
Simplicity
Consolidating older Federal Loans (or Perkins Loans) can make them eligible for newer repayment plans/forgiveness

17. Reasons NOT to Consolidate
Lose ability to pay down high interest rate loans first
Extending loan term = paying more over time

18. Refinancing
Private loans:
Federal Loans:

19. Student Loan Strategies
Make sure your Federal Loans are on the right repayment plan (Standard, PAYE/REPAYE or Old IBR/REPAYE)
Consolidate Federal Loans as needed to qualify for repayment or forgiveness provisions
If you have private loans, try to lower your interest rate through refinancing
Refinance Federal Loans at your own risk

20. Strategy: Don’t Defer Payments During Residency
Example:
$100,000 in Student Loan Debt
$55,000 Salary for 3 Years of Residency, then $165,000 Salary
6% Interest Rate on Loans
Not Married
The Student Loan is or can be made eligible for any repayment plan

21. Strategy: Don’t Defer Payments During Residency
Scenario A: No Payments During Residency
Monthly Payment During Residency: $0
Monthly Payment after Residency for 10 years: $1,329 (9.66% of Income)
Total Cost to Repay the Loan: $159,495.
Scenario B: PAYE During Residency, 10 Year Standard Repayment Plan After Residency
Monthly Payment During Residency: $308 (6.72% of Income)
Monthly Payment after Residency for 10 years: $1,194 (8.68% of Income)
Total Cost to Repay the Loan: $154,368

22. Student Loan Strategies
Make sure your Federal Loans are on the right repayment plan (Standard, PAYE/REPAYE or Old IBR/REPAYE)
Consolidate Federal Loans as needed to qualify for repayment or forgiveness provisions
If you have private loans, try to lower your interest rate through refinancing
Refinance Federal Loans at your own risk
Income-driven repayments during residency are better than no payments at all

23. Strategy: Don’t Defer Payments During Residency
Scenario C: PAYE During Residency, 10 Year Standard Repayment Plan After Residency, Public Sector Loan Forgiveness after 7 years post-residency
Monthly Payment During Residency: $308 (6.72% of Income)
Monthly Payment after Residency for 7 years: $1,194 (8.68% of Income)
Loan Balance Forgiven: $39,248
Total Cost to Repay the Loan: $111,384

24. …which brings us to….

25. Public Sector Loan Forgiveness (PSLF)
“Forgiveness of loans for people who work for nonprofits (hospitals can count) after 10 years. So, I’ll defer payments for three years of residency, maybe even another year of fellowship, make payments for 6 or 7 years as an attending and be forgiven”

26. Public Sector Loan Forgiveness (PSLF)
“Forgiveness of loans for people who work for nonprofits (hospitals can count) after 10 years. So, I’ll defer payments for three years of residency, maybe even another year of fellowship, make payments for 6 or 7 years as an attending and be forgiven”

27. Public Sector Loan Forgiveness (PSLF)
Make the right kind of payment
On the right kinds of loans
While working at the right kind of job
Repeat 120 times
Prove it

28. COUNT THE PAYMENTS, not years
Key Points
COUNT THE PAYMENTS, not years

29. Key Points Not All Loans Qualify!!!
Private, Perkins, FFEL (pre-2010) loans don’t qualify. Can consolidate non-qualifying Federal Loans

30. File Employment Certification Form Annually
Key Points
Burden of Proof is
on you!!
File Employment Certification Form Annually

31. Student Loan Strategies
Make sure your Federal Loans are on the right repayment plan (Standard, PAYE/REPAYE or Old IBR/REPAYE)
Consolidate Federal Loans as needed to qualify for repayment or forgiveness provisions
If you have private loans, try to lower your interest rate through refinancing
Refinance Federal Loans at your own risk
Income-driven repayments during residency are better than no payments at all
If pursuing PSLF- file Employment Certification Form annually, and make sure your loans/payment plan/job qualify

32. After Residency…. Pay Extra on Student Loans?
Example: Sarah, Age 25
$25,000 in Student Loan Debt, Standard 10 Year Repayment Plan, $265.16/month
Able to save an extra $200/month on top of that
Should She….
Save the $200/month for retirement? Or
Save $100/month for retirement, and pay an extra $100/month for her student loans?

33. After Residency…. Pay Extra on Student Loans?
*Assumes 7% Investment Return

34. Retirement
How to Think about Retirement Savings During Residency

35. The Earlier You Start… $2,000,000 $1,000,000 Saving $500/month
8% Return

36. How Do We Catch Up? As…. Your income increases You pay down your loans
You get married
Keep your cost of living (mostly) the same

37. How Do We Catch Up? Example: Joe and Sally Both make $65,000/year
Starting at age 35, Joe saves 15% of his income
Starting at age 35, Sally saves 25% of her income
Income grows 3% every year, their savings earns an 8% return

38. Double Benefits Higher saving increases retirement benefits……
and decreases retirement needs

39. How To Save (in Addition to Your 403(b))
Traditional IRA
Roth IRA
Contributions
Up to $5,500 per Year, Tax Deductible
Up to $5,500 per Year, No Tax Deduction
Withdrawals Before Age 59.5
Taxable, Plus 10% Penalty
Contributions: Tax Free, No Penalty
Earnings: Taxable, Plus 10% Penalty
Withdrawals After Age 59.5
Taxable
Tax Free, No Penalty*
Income Restrictions No
Yes! Maximum Contributions start to be reduced at:
Individuals: $118,000/year income
Married: $186,000/year income
*As long as the withdrawal is made 5 years after deposited- Not relevant to you until age 54 

40. Important Things to Know About the Financial Advising Industry

42. Things You Should Know #1:
Most Financial Planners Aren’t Required to Act in Your Best Interest

43. Two Standards of Care: Suitability Standard Fiduciary Standard
Is the product/advice
appropriate for you?
Fiduciary Standard
Is the product/advice
the best thing for you?

44. Two Standards of Care: Suitability Standard Fiduciary Standard
Is the product/advice
appropriate for you?
Fiduciary Standard
Is the product/advice
the best thing for you?

45. Department of Labor Fiduciary Rule
Retirement Investments (401k, IRA)
Non-Retirement Accounts (Savings, Brokerage)
Debt (Student Loans, Mortgage)
Life Insurance, Annuities, Disability Insurance
Only Applies to Retirement Accounts

46. Questions to Ask Your Financial Planner
Are You a Fiduciary?
All the time, or just for retirement accounts?

47. Things You Should Know #2:
The Financial Industry has a lot in Common with How the Medical Industry Worked years ago

49. Three Types of Financial Advisors
Paid by Mutual Fund or Life Insurance Companies to Sell Financial Products
Commissions
Kickback payments
Clients Pay a Percentage of Investments Managed
Clients Pay Hourly, Project-Based, or Subscription Fees

50. Three Types of Financial Advisors
Paid by Mutual Fund or Life Insurance Companies to Sell Financial Products
Commissions
Kickback payments
Clients Pay a Percentage of Investments Managed
Clients Pay Hourly, Project-Based, or Subscription Fees

51. Questions to Ask Your Financial Planner
Are You a Fiduciary?
All the time, or just for retirement accounts?
How do you get paid?
Only acceptable answer: “Only by my clients”

52. Example Fee Structure
“I have $5,000 to invest. What should I do with it?”
Invest in a Mutual Fund*
Commission: $287.5
Invest in a variety of funds under my advisement for a 1% annual fee
Annual Fee: $50
Buy a disability insurance policy with a $5,000 annual premium
Commission: $5,000
*A Share Class

53. Questions to Ask Your Financial Planner
Are You a Fiduciary?
All the time, or just for retirement accounts?
How do you get paid?
Only acceptable answer: “Only by my clients”
Does the amount you get paid vary depending on the recommendations you give me?
If the answer is “Yes”, it will be difficult to get impartial advice

54. One Last Thing….

55. What Brings You In Today?
I woke up with a sore throat.

56. I’m sorry to hear that. Here’s a prescription for Amoxicillin.

57. Get Thoroughly Diagnosed

58. Why is Money Important to You?

59. (Without Using These Words)
Freedom
Independence
Security
Flexibility

60. Get Thoroughly Diagnosed