Going for a STEM PhD and funding retirement at the same time?

My daughter is getting ready to start her 1st year in a fully funded masters to PhD program (still has to decide on Chemistry discipline but currently leaning towards Biochemistry or Analytical Chemistry) in a very high cost area with adequate benefits (full tuition and fee coverage, 30K per year stipend, student health, dental and vision insurance covered, a yearly travel award for conferences, and guaranteed grad student housing for up to 6 years that is definitely subsidized).

How have others who have gone through PhD programs worked to fund retirement costs (if at all), while actually in graduate school? She is off to a very good start (No undergrad debt, 6 months of expenses already saved, and fully funded the 1st year of a Roth IRA she started as a senior in college), but I am trying to understand how others dealt with the challenge of funding retirement.

I’m not sure I get the challenge? Do you mean the merits of Roth vs other forms of retirement? Do you mean being able to afford funding it while on a grad student income in a high-cost area?

Treat it as a job (as she should: grad student stipend tax treatment is not entirely straightforward): do the math on incomings, outgoings, taxes, etc; identify your preferred retirement vehicle and contribute to it at an appropriate level. If it’s a very high cost area, that may be rather small- and then it’s the calculation that a PhD in chemistry will lead to a career that creates ample room for funding a solid retirement plan.


I’m sure someone more knowledgeable will chime in. I think one challenge to contributing to a Roth now is I believe the stipend may be seen as unearned income? So not eligible to contribute from that pot? That may not be the case though. How about a part-time job earning enough to contribute to a Roth?

Congratulations to your daughter. Sounds like she is doing well for herself.

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I was looking to see if other PhD students were funding retirement due to their lower incomes (The higher cost of living will probably come into play at some point). Now that you mention it, I am interested in the forms of retirement that other PhD students used well, although I gave my daughter my own personal opinion that the Roth IRA makes the most sense.

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I believe that her stipend may be considered earned income because she will have teaching assistant responsibilities for year 1 and research assistant responsibilities tied to her program, but she will find out more info once her program starts having meetings in early September.

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The answer is most don’t. The stipend is often not enough to live on by itself let alone save. Some in more lucrative areas, like math, physics, and CS work good paying industry jobs during the summers and can save some from those earnings

Congrats to your DD!


Thank you for the response. Even though her housing will be almost 50% of her take home pay, she is lucky that her only other expenses will be food/entertainment in a city that she can do a lot of things for free. She has a HSA debit card for out of pocket medical expenses, 2 home visits a year and her cell phone bill covered by my wife and I, but she is covering her remaining expenses. I wasn’t sure how other Graduate students saved or if was normal or not to do so.

My D is in a similar situation, also fully funded Chem PhD in a high cost location. She is pretty frugal but there is very little money to save that she can lock up in an IRA. She had worked for 2 years and has some retirement funds built up from her prior employment.

If you are in a position to do so and perhaps concerned about potential estate taxes (especially if the exemption gets rolled back in 2026), you could consider gifting an amount each year under the gift tax exemption (which won’t be part of your estate) as part of your estate planning. Your D will then have enough liquidity to contribute to a Roth IRA out of earned income, assuming she has earned income generated by her stipend.


Will your daughter have a job over the summer? If so, can you afford to give her about the same amount of money as she will be earning in the job (or $6,000, whichever is less)?

My understanding is that people are only allowed to put as much money into an IRA as they earn. I do not know whether the PhD funding counts as “earning”, but for a summer job this would seem sort of obvious. At a minimum, if your daughter starts a PhD in September, she might have some earned income this year in the eight months prior to September.

Also, I think that fully funded PhD programs generally in most cases give the student just barely enough to live on.

However, if your daughter is relatively young (let’s guess “20’s” for someone in a PhD program) then this is indeed a very good time to gradually over time add money to an IRA. Of course the market looks a bit weak right now, but the real issue for someone in their 20’s adding money to an IRA is whether the market will be higher in 40 or 50 years, which seems like a good bet to me.

Thus if the parent can afford to help the student out then to me this looks like a really good idea.

Also, congratulations! It sounds like your daughter is doing very well.


She is expecting to be doing research in her lab next summer since her stipend is for 12 months. She is immediately out of undergrad so she is still very young, so any money that she is able to put up today will have at least 40 years to sit in an S&P 500 index fund and grow.


We gave her a small lump sum of money at her graduation. We have also offered to cover any shortage towards her retirement fund, but she assured us that she has it covered (It may be tighter than she expects, but she has some wiggle room in her budget). So we will continue to save money for her that I am sure she would take when buying her 1st home. I am very thankful for her good fortune so far, and thank you for your input.

If the amount you are saving and gifting for the first house down payment exceeds the annual gift tax exclusion, you will want to split the gift over a number of years to keep under the exclusion threshold ($16k in 2022, $32k for married couples).


@BKSquared, has your D applied for more funding over the years? I don’t really understand how Grad school funding works, but just wondering if outside fellowships can be stacked on top of current funding?

She is only coming up on her second year and is TA’ing this year (TA first year as well) and is earning money as a researcher for her prof’s lab. She will be applying for research grants for her third year forward, and I believe the professor who runs her lab may also have funds in her budget/grants for researchers. We are learning as we go ourselves.

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Your daughter has a great deal - her stipend is above average and she has subsidized grad housing. Most students don’t get such a good deal, and most students struggle to make financial ends meet in grad school, and such, most wait until later in their careers to start funding their retirement.

Starting early is good advice, but you can’t save what you don’t have.


My daughter got accepted into 12 programs and saw 8-9 graduate school offers from those schools. She got 3 offers that had a larger stipend, but the guaranteed subsidized housing for 6 years and her fees and insurance being paid from outside of her stipend made her final choice one of the best 2 offers financially. I now see that most grad students do not have the income to fund retirement, but it makes me wonder if some parents are possibly funding IRAs for their grad students. In my family’s case, we did not pay for undergrad, so funding her retirement fund would have been a viable option if she needed us to. There have been strikes over the housing costs and a lack of a living wage at her new institution, so we are not taking my daughter’s early financial independence for granted.

So my daughter is doing a post bac then grad school and works part time mm. We gave both kids an Roth and set up a fund for them. They now put in money as they can. Also interest saving money accounts, help. We don’t care what they put in as long as they do it on a regular basis is the idea. Of course of its Sushi vs putting something away then it might need to wait till next month,lol. They have been doing this since high school and now they see the importance of compound interest. This is motivating to them now :moneybag:

My son during the last crash like 2 years ago bought stocks at 22 year lows. He keeps buying on the low now. It will payoff in 30 years but he has a real job and 401k etc etc

Didn’t your daughter just start college… Lol. Man time flies. Congrats to her and your family.


Why? The primary benefit of funding a retirement account is the tax deductibility of the contributions. The secondary benefit that the earnings can grow tax free is small for a grad student who is presumably in the low tax bracket. Besides, there’re alternative ways she can accomplish the virtually same thing (e.g. by putting money into US government savings bond or other Treasury securities).

When I said fund her retirement account, it would be through a yearly gift that my daughter could then redirect towards her own Roth IRA (assuming she had 6K in earned income). Sorry for the confusion.


I looked into this when I thought my son might be pursuing a PhD. I found this.

Read first comments to see how tax software is handling the reporting as IRS guidance does not match the change to the law, but TT seems to have been updated to reflect the change.