You've slaved away for years with single-minded dedication to your science, caring little for monetary reward. You've toiled and sacrificed for that day (surely soon) when you get that job as an assistant professor and finally start earning the lofty sums someone with your training and talent deserves. You have friends in other fields, surely not nearly as smart and hardworking as you, who get bonuses that are more than you make in a year. You watched, stockless, as the technology market boom passed you by. And, you have almost nothing in the bank.

If you are a postdoctoral fellow in the life sciences, at least parts of this scenario probably sound familiar. Despite our extensive education and long hours, the compensation for postdoctoral fellows isn't quite what we might hope. Worse yet, most institutions don't even treat postdocs as full-fledged employees (see Postdoc Status, Part 1 and Part 2). We are relegated to an ambiguous underclass status in which we often are ineligible for the benefits extended to all other employees of an institution. This article will focus on one perk most postdocs don't get, retirement benefits, and what you can do to maximize your savings for the future.

At nonprofit institutions, the 403(b) has become the retirement vehicle of choice. Named after the section of the IRS code that established it, the 403(b) is a powerful tool for building retirement savings. Typically, an employee contributes some percentage of salary to the 403(b) plan. The employer then kicks in a matching amount, often half of the employee contribution. This is like getting an automatic and instant 50% return on your investment. The employee then decides where to invest the combined money, typically choosing from among several mutual fund families selected by the employer.

Upon changing jobs, you'll have a number of options for your 403(b) accounts. Often they can simply be left in the former employer's plan. They can be transferred to a new employer's plan, but only if the new employer is also a nonprofit. Or, they can be converted to a more versatile Individual Retirement Account (IRA) that can be invested in any mutual fund, or even a brokerage account to buy individual stocks.

One of the best features of 403(b) plans is that they are tax-deferred. That is, no income tax is paid on any of the money contributed or earned through investments until distribution of the money begins upon retirement. The combination of portability, the employer's matching contribution, and its tax-deferred status makes the 403(b) a powerful way to save for the future.

Although employment shortages in other fields have prompted more companies to offer immediate participation in retirement plans (go to the Profit Sharing/401(k) Council of America's Web site to learn more), many postdocs may never be offered this opportunity. However, this doesn't mean you can't do anything about saving for retirement. On the contrary, it is essential that you start putting money away now. Years of low pay as a graduate student and postdoc probably mean you are hopelessly behind many who started work right after college. You may be thinking, "I'll start when I get a real job." But it is important not to wait. Through the miracle of compounding, even small amounts put away in your 20s can make a big difference 40 years later when you retire.

So, we've established that it's never too early to start saving for retirement, but what's a postdoc to do? The first thing to do is call your benefits administrator. First, explain your situation. The two most important factors are how long you have been there and how you get paid--whether from a training grant, your PI's grant, or a private fellowship. Then ask if you are eligible for employer matching contributions for a 403(b) plan. At that point, you'll probably have to pause for a bit while you wait for the administrator to stop laughing....

Once the giggles subside, you're likely to hear a blanket statement that postdocs are not eligible for matching contributions. If this happens, ask to see this policy in writing. Is it in the employment manual? Ask for an explanation of the reason.

One strategy worth a try is to ask your PI for a name-only promotion. This will make you a legitimate employee and render you eligible for all benefits, including matching contributions.

Even if your institution won't give you free retirement money, it still may let you participate in the 403(b) plan. This is still worth pursuing. In this situation, you still get the tax-deferred savings and portability of the 403(b), just no employer contribution. Even as little as $50 per month will help, and you literally won't miss it from your paycheck.

Looking for some retirement advice on the Web?

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Other retirement savings options postdocs should investigate include Regular and Roth IRAs. These are individual accounts that you can set up independent of your institution. They currently have an annual contribution cap of $2000 per year, whether or not you also can or do contribute to a 403(b) (subject to overall income limitations that postdocs are extremely unlikely to meet). You can start a Regular or Roth IRA with any mutual fund or brokerage company of your choice. A Regular IRA is similar to a 403(b) in that you don't pay tax on your contribution or gains until retirement. With a Roth IRA, you must pay income tax on the money contributed; in this sense it differs from the 403(b). The beauty of the Roth, though, is that once you've paid income tax on the $2000, that's it. Your $2000 may grow to $200,000 by the time you retire, but you never have to pay any taxes on the other $198,000 of gains your investments have returned over the years. Aside from the tax benefits, both types of IRAs even allow you to withdraw money for education or to buy a first house without penalty (although withdrawing retirement money should be avoided if at all possible).

An important caveat: Another peculiarity of the postdoctoral condition may render you ineligible for an IRA. You can contribute to one of these accounts only if your income appears in Box 1 of your W-2 form. Unfortunately, the salaries paid to postdocs on fellowships are usually not reported in this way.

If you have to choose between contributing to a 403(b) without any employer match and a Regular or Roth IRA, fund the Roth IRA first. Although you don't have to pay taxes on the money contributed to a 403(b) or Regular IRA now, you will have to pay tax on it, as well as the accumulated returns, when you receive the money after retirement. In contrast, with a Roth IRA you have to pay tax now on the money you contribute. But low postdoc salaries mean you will (hopefully) be in a higher tax bracket when you retire than you are now. Not to mention that investment returns on a Roth are tax-free forever. Thus, the Roth results in more substantial tax savings in the long run.

Remember, your retirement nest egg is your responsibility. Ask questions of your institution's administration and human resources department. Educate yourself about the advantages of saving early and often for retirement and about the details on how to do it (check out this article's list of online resources). And begin saving today for the retirement you will richly deserve after years in the lab!

Michael Campbell received his Ph.D. from the University of Virginia in Charlottesville and now studies mitotic regulation as a postdoc at Fox Chase Cancer Center in Philadelphia. He started saving and investing while making a paltry $12,000 per year as a graduate student, and he continues to do so for fun and profit today.