retirement on my mind
I haven’t been talking about my retirement savings much lately, but it has been on my mind… I have a traditional IRA, mainly because I started a 401K at my previous job, and when I was laid off, I rolled the balance over into the IRA to keep from having to pay taxes on the money. I couldn’t roll it into a Roth, so there’s my little bit of money in a Fidelity account. I’ve been adding about 10% of my net pay into it - not always 10 and not every pay period, but most of the 10 and most of the time. I know I should do better, but dangit, all I can think about lately is this house I’m saving for. Besides, I’m kind of hoping that I’ll be able to catch up with my next 401K and matching. All I can say is, don’t be like me - all the advice I’ve been reading says that the key to retirement savings is to save early, save regularly, and save with discipline.
Anyway, I want a Roth, for its tax advantages and for its flexibility. It’s what I’ve wanted for a while, but I didn’t get around to it because I was so busy getting rid of my credit card debt. By the time I got rid of my revolving debt, I’d already started and lost the 401K. Now, as my rollover IRA is growing and approaching an amount where I’m comfortable putting less than $100 a month in it, as long as I’m also contributing a more substantial amount to another retirement account, I’m thinking that I might want to open a Roth with Vanguard… I need to do some research. Or maybe talk to someone. I’m worried about whether or not I’m making my retirement saving situation more complicated than it needs to be, especially while I’m still looking for a job, saving for this house, and 401K-less.
Hi Sistah Ant,
When you have competing financial priorities it can be very difficult to feel like you are covering all of them adequately. The good news about a Roth IRA is the contributions you put in today can be withdrawn penalty free in the future (just the contributions - not the gains mind you) - so many folks in your situation use their Roth IRA as a dual purpose pool of money. The primary purpose is for retirement savings, but due to the no penalty withdrawel issue, it is also tagged as emergeny savings.
This is particularly good news since establishing an account can sometimes have a hefty entry fee. In other words, check out Vanguard and see what the minimum is for opening a Roth and for purchasing the fund you are interested in - then see if you have that amount already set aside in your Emergency fund. If you do - go ahead and open your Roth and continue to save for your home quilt free
Thanks, Boston Gal!
Comment by Boston Gal — May 28, 2008 @ 7:30 am