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.
I'm confused on the opening poster's position, guess that's what happens when you don't bother to read all 9 pages. The post prosopic quoted seemed to indicate the OP is totally against investing in stocks, preferring the safety of a savings account. I was also under the impression from the poll that he had no intestions of investing in a retirement account, planning to live on SS alone. But in his follow up posts he referenced IRAs and a withdraw rate of 30-50K
I wouldn't witdraw $50K a year, because of the receipt of Social Security. I would probably withdraw $30K at most. That's within the 15% tax bracket, for federal, and even less for state. So yes, a Roth would be stupid for me.
You have at least 30 years to retirement and possibly more. A lot can change in that time. I would build flexibility into your financial planning as your needs, expectations, market conditions, and the legislative and fiscal environment could change significantly over the period.
I read these 9 pages of posts purely for entertainment value.
Bottom line:
Social Security is an anti poverty program. If you want to live in retirement just barely above poverty, go for it. I'm confident Social Security, Medicare, and Obamacare will all be in effect in 30ish years when I retire. But that won't matter because it's still not enough to live a reasonable life in retirement. Can you do it? Absolutely, you can. That's why it exists. But I wouldn't ever advise someone who can save money, especially with a guaranteed return via a company match, to not save money.
Also, as it goes ROTH vs Traditional - I'm a believer in splitting between both. I'll probably try to target a 40% ROTH vs 60% Traditional mix. Hedging my bets, effectively. But currently i'm all Traditional.
Well, I had stocks since I was born, but at the age of 29, I decided to sell 100% of it because I intend to purchase a home in the next few years with that money. Why would I want to leave it in a risk position? It made sense to leave it in stocks for that 29-year period for long term growth. Obviously it's better than sitting in the bank. But now that I need the money soon, I prefer to preserve the capital, if you know what I mean.
On the other hand. retirement is a long term goal (37 years from now), and it would not make sense to leave that money in a savings account. Therefore, I am investing (401k) that money because over a 37 year period, the growth potential is huge.
Am I making sense here? It's all about timing of goals and when you need cash.
Not all stocks are risky, but you are quite correct that it does depend on timing and extent of your needs. I sold about half my stocks in 1999 or so to buy a house - those ones weren't in the retirement plan obviously. The funny part about that is that it was the first I'd heard of the coming bubble - the mortgage broker told us that there was no need to raise all that down payment, we'd have qualified with a small fraction of it. At the time I was surprised by that, but now it makes perfect sense.
The huge growth potential is there with stocks too over the long term - the advantage of the Roth is that you pay the tax on the contribution but not on the 37 years of compounded growth. Since I am in a low tax bracket and will likely always remain in it, the conventional IRA is the one that makes no sense for me. I've never had a job where a 401k was an option, so never looked into the pluses and minuses there. You would have to run the numbers with a few years of tax returns and adjust for expected inflation (impossible ) to figure it out for certain.
Currently the state retirement fund is the one I would get out of at the drop of a hat, even if it meant forgoing the employer contribution. Even accounting for the current inflated market, I've done better in stocks.
...
Either the money will be taxed today, or later in retirement.
...
You are missing the point. With a traditional IRA 100% of the money is taxed. With a Roth only the contributions are taxed.
So if after 40 years of saving and investing you contribute $200,000 and make $200,000 in investment gains, with the IRA you pay taxes on $400,000, but with the Roth you only pay taxes on the $200,000 you put in.
You are missing the point. With a traditional IRA 100% of the money is taxed. With a Roth only the contributions are taxed.
So if after 40 years of saving and investing you contribute $200,000 and make $200,000 in investment gains, with the IRA you pay taxes on $400,000, but with the Roth you only pay taxes on the $200,000 you put in.
That's not true. Investment gains in a Roth are certainly taxed upon withdrawal. But the contributions are not.
That's not true. Investment gains in a Roth are certainly taxed upon withdrawal. But the contributions are not.
Completely false.
You pay nothing withdrawing from a Roth IRA whether contributions or gains (once reaching retirement age). However, the money you initially put in was taxed.
This is why Roth's tend to be a good deal, the gains are not taxed as long as you meet the same pretty easy requirements as for a traditional IRA.
I still don't like Roth IRA's...stop trying to force me to get one again. They're too costly in the short term when I have other priorities like saving for a home.
That's not true. Investment gains in a Roth are certainly taxed upon withdrawal. But the contributions are not.
wrong wrong and wrong
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.
) to figure it out for certain.
