Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Anyway, my big question is, how in the hell do you figure out what an appropriate amount per month should you contribute to an IRA, to reach your goal?
Even bigger, how the hell do i figure out my retirement savings goal?
There are various calculators on the internet for this, however this story has been posted a number of times (see below). If you max out your 401k and IRA in one year (before age 26, and never put another $1 in the accounts) and can get 10% per year, you will reach 1 million by retirement. You must take advantage of the time value you have while you are young. Therefore, put all you have that you don't need into them, then later when you need the money for house, child, etc... you can reduce the contributions. At least this is my opinion.
A general guideline I saw was you want at least 12x your salary as the amount in your retirement savings. So whatever your salary before retirement may be, 12x. That's probably the minimum you'd want.
Let me be more precise. Whatever you put in your 401k is not taxed on your current tax returns. Its possible to never pay tax on it, it depends how you handle matters when you're retired.
Regardless, Traditional IRA, Roth IRA, 401k etc all reduce your tax burden.
I suppose that it is a matter of perspective.
I do not pay income taxes, therefore I look at investments which are tax-free and which provide tax-sheltering as an important part of their benefit.
Whereas others may seem to confuse 'tax-free' with 'tax-deferment', in the hope of maybe someday lowering taxes.
One great habit...
Pay yourself first !!!
This means whatever you decide to save & invest comes out of your
check as soon as you get it. Then you budget what is left.
The other way around leads to less left to invest than you planned.
Another tip. If you are living comfortably and get a raise ,then invest the whole raise instead of increasing your lifestyle with a bigger house,
newer car. (or at least invest some of the raise).
I have a few questions, continuing on the theme of this thread:
(1) So, the Roth IRA is the best if you make over 60K. Period. Right?
(2) What is the salary cap for the Roth IRA that everybody here is talking about? If you make greater than X, you can no longer contribute to the Roth IRA. What is X?
(3) How does the salary cap relate to the combined income of a husband and wife?
(4) I have read that the rule for saving for retirement are:
Step 1: Contribute to the 401(k) plan up to the maximum that the company will match.
Step 2: Contribute the maximum (5K) to a Roth IRA.
Step 3: Contribute any extra to your 401(k) up to the allowed maximum (already beyond what the company will match).
Step 4: Tax deffered annuities.
Am I right here?
(5) What is the best company to open a Roth IRA with - Fidelity, Vanguard, or another?
(6) Will I be able to check the earnings of my Roth IRA online with these companies?
(7) What is the best underlying Mutual Fund to choose?
Thank you for the replies! Any advice on ANY of these questions would be appreciated!!
So, the Roth IRA is the best if you make over 60K. Period. Right?
It depends on your particular situation as a general rule its not true. If you can contribute to an employer retirement plan the IRS does not allow you to deduct your contributions to a traditional IRA if you make over 60k.
Quote:
What is the salary cap for the Roth IRA that everybody here is talking about? If you make greater than X, you can no longer contribute to the Roth IRA. What is X?
If single $99k for full contribution, $156k for married.
Quote:
Am I right here?
It sounds like decent advice.
Quote:
What is the best company to open a Roth IRA with - Fidelity, Vanguard, or another?
They are both good. But with Fidelity you'll be able to invest in a bigger variety of mutual funds among other things. But Vanguard has some of the lowest cost mutual funds and they have a pretty good selection. Personally my IRA is with vanguard.
Quote:
Will I be able to check the earnings of my Roth IRA online with these companies?
Yes.
Quote:
What is the best underlying Mutual Fund to choose?
You will need to make this choice yourself. Each fund has different pros/cons. In general if you want low risk go with a bond fund, balanced for medium and stocks for high risk. If you don't want to think about it much then going with one of the lifestyle funds may be the best. You pick the fund based on your retirement date and the fund will change the as you get older - as you get closer to retirement the fund will contain more and more bonds.
So, the Roth IRA is the best if you make over 60K. Period. Right?
In general, the lower your tax bracket, the more favorable the Roth is supposed to be. But IMO the Roth ends up being better than a traditional IRA for most people (assuming they qualify) because of the reasons I stated previously in this thread.
Quote:
What is the salary cap for the Roth IRA that everybody here is talking about? If you make greater than X, you can no longer contribute to the Roth IRA. What is X?
I answered this in my previous post.
Quote:
I have read that the rule for saving for retirement are:
Step 1: Contribute to the 401(k) plan up to the maximum that the company will match.
Step 2: Contribute the maximum (5K) to a Roth IRA.
Step 3: Contribute any extra to your 401(k) up to the allowed maximum (already beyond what the company will match).
Step 4: Tax deffered annuities.
Am I right here?
You're right on the first three. Number four is very debatable. It depends on one's situation, but it's often a better move to go with tax-managed/tax-efficient mutual funds or ETFs in a taxable account than tax-deferred annuities for a variety of reasons.
Quote:
What is the best company to open a Roth IRA with - Fidelity, Vanguard, or another?
I'd suggest going with one that gives you a large selection of no-transaction-fee (NTF) mutual funds. That could be either of the above or a discount brokerage such as Scottrade, TDAmeritrade, Schwab, etc. A few, like Scottrade, offer no-fee IRAs, which is another consideration.
From my research, the optimal retirement strategy for a person starting out is:
Step 1: Contribute the maximum that your company will match any of to your 401(k) plan (~6% of your salary)
Step 2: Make the maximum contribution to a Roth IRA from Vanguard each year, register online and agree to receive electronic statements in order to avoid the fee for having an account. If you are starting to work now, use the Vanguard Target Retirement 2050 fund as the underlying investment.
Step 3: Contribute up to the maximum in your 401(k) plan.
Step 4: Not rich enough to worry about that right now....
The guideline is that you should always be putting ~15% of your salary away for retirement.
I beleive that you can start an IRA at any time, and dump money into it up until you reach the max.
Personally I do not like IRAs as they have always had such low caps.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
