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Is it worth it to contribute 4k to a roth IRA?

Yes. The more you put away to retirement the happier you'll be come retirement time. 😉

My wife and I currently max out our 401k's and I max out my IRA. Now I just need her to start an IRA.
 
I'm 23 just started work (got my Masters--I was not a super senior) and I'm contributing 15% to my 401k and max (4k) to roth ira. So I would have to say yes. Contribute as much as you can as early as you can.

That way I can drive expensive, fast cars 10 under the speed limit like all the old farts now.
 
most defintely. the amount you put in there each year and the amount it earns is free of tax(since you contributed with after-tax money). This means when you money grows to 5million or however much when you are 59.5. You can take it all out, each and every penny is yours.
 
its probably already been said, and it depends on your income, but if you're the typical young worker, your order of contributions should be:

If you get a company match in 401k

Put in the minimum amount to get the FULL company match.
Max out Roth
Put any more you can afford to contribute into the 401k.
 
Originally posted by: blipblop
most defintely. the amount you put in there each year and the amount it earns is free of tax(since you contributed with after-tax money). This means when you money grows to 5million or however much when you are 59.5. You can take it all out, each and every penny is yours.
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Assuming you are talking about Roth IRA's then correct. Otherwise with a Traditional IRA you get a deduction in your taxes now, but when you pull money out of it later you will be taxed on it.

If your marginal tax bracket will be higher when you retire than it is now contribute to a Roth IRA, if your mtb will be lower than what it is now then contribute to a Traditional IRA.
 
1) Calculate your monthly bills (full cost of living), multiply by 9, and put that into a CD at your local bank. This is your "oh crap, i lost my job" money.

2) Max your 401k. When you are over the yearly limit (~15k), put the rest into a Roth. This will take care of you when you reach 401k age. Make sure your investments in the 401k and Roth accounts are in index funds.

3) Put anything else you can save into a solid S&P500 no-load mutual fund. This will start moving in the date you can retire.

4) If married/homeowner, get good term life insurance. Make a will. Get a living trust if you have/plan kids.

Some people pay a crapload of cash for a financial adviser to tell them that.


 
Originally posted by: merlocka
1) Calculate your monthly bills (full cost of living), multiply by 9, and put that into a CD at your local bank. This is your "oh crap, i lost my job" money.

2) Max your 401k. When you are over the yearly limit (~15k), put the rest into a Roth. This will take care of you when you reach 401k age. Make sure your investments in the 401k and Roth accounts are in index funds.

3) Put anything else you can save into a solid S&P500 no-load mutual fund. This will start moving in the date you can retire.

4) If married/homeowner, get good term life insurance. Make a will. Get a living trust if you have/plan kids.

Some people pay a crapload of cash for a financial adviser to tell them that.
Click to expand...


While not bad advice, I don't really agree.

1) Calculate your monthly bills (full cost of living), multiply by 9, and put that into a CD at your local bank. This is your "oh crap, i lost my job" money.

I think it's too conservative to tie up 9 months of expenses for emergencies. 6 months is enough. Also, don't put EMERGENCY money into a CD. CDs have early withdrawl penalties, you can't time an emergency for when a CD matures. Put it into a High Yield savings account like HSBC.

2) Max your 401k. When you are over the yearly limit (~15k), put the rest into a Roth. This will take care of you when you reach 401k age. Make sure your investments in the 401k and Roth accounts are in index funds.

If a person does this great, however, I would change the order of contributions to be what I equaled above. 401k till you qualify for the full match (often 6%) then max Roth, then put any more into the 401k.

3) Put anything else you can save into a solid S&P500 no-load mutual fund. This will start moving in the date you can retire.

Nothing wrong here, I do this myself. T. Rowe Price has a good S&P index fund that you can put in as little as $50 a month. Fidelity and Vanguard have slightly better ones, however they require more than $50/mo to start.

4) If married/homeowner, get good term life insurance. Make a will. Get a living trust if you have/plan kids.

Agreed, min 10x your salary on Term. Also, get max liability on your auto insurance (usually 250/500) and maybe even add an umbrella policy.


 
Originally posted by: Jadow
Originally posted by: merlocka
1) Calculate your monthly bills (full cost of living), multiply by 9, and put that into a CD at your local bank. This is your "oh crap, i lost my job" money.

2) Max your 401k. When you are over the yearly limit (~15k), put the rest into a Roth. This will take care of you when you reach 401k age. Make sure your investments in the 401k and Roth accounts are in index funds.

3) Put anything else you can save into a solid S&P500 no-load mutual fund. This will start moving in the date you can retire.

4) If married/homeowner, get good term life insurance. Make a will. Get a living trust if you have/plan kids.

Some people pay a crapload of cash for a financial adviser to tell them that.
Click to expand...


While not bad advice, I don't really agree.

1) Calculate your monthly bills (full cost of living), multiply by 9, and put that into a CD at your local bank. This is your "oh crap, i lost my job" money.

I think it's too conservative to tie up 9 months of expenses for emergencies. 6 months is enough. Also, don't put EMERGENCY money into a CD. CDs have early withdrawl penalties, you can't time an emergency for when a CD matures. Put it into a High Yield savings account like HSBC.

2) Max your 401k. When you are over the yearly limit (~15k), put the rest into a Roth. This will take care of you when you reach 401k age. Make sure your investments in the 401k and Roth accounts are in index funds.

If a person does this great, however, I would change the order of contributions to be what I equaled above. 401k till you qualify for the full match (often 6%) then max Roth, then put any more into the 401k.

3) Put anything else you can save into a solid S&P500 no-load mutual fund. This will start moving in the date you can retire.

Nothing wrong here, I do this myself. T. Rowe Price has a good S&P index fund that you can put in as little as $50 a month. Fidelity and Vanguard have slightly better ones, however they require more than $50/mo to start.

4) If married/homeowner, get good term life insurance. Make a will. Get a living trust if you have/plan kids.

Agreed, min 10x your salary on Term. Also, get max liability on your auto insurance (usually 250/500) and maybe even add an umbrella policy.
Click to expand...

Sorry for bumping this back up... but I'm researching roth's now and did a search. Better than starting a new topic right? 🙂

The benefit of maxing your 401k is that you can put the money in pretax, which means you'll make interest on money that you would have given to the govt(and when you're in the 30% tax bracket, that's a lot of extra money). You will have to pay taxes on this moeny when you retire, but you will also be in a lower tax bracket(or at least you should be.) So i'd agree to max 401k first.

 
putting all your money in the stock market is not good advice, particularly once you have built up a sizable balance.

index funds are a good way to invest in the stock market, but it's still the stock market.

 
Im a noob at this retirement stuff.

How does 401k work if now-a-days it is expected that you change jobs every 4 years? When you change your job, does all of your 401k just get lost and you have to start a new one with each job (and subsequently, you are SOL for 401k?)

Also, I am in Grad school. In economics class in high school, i remember learning that it is recommended to start some sort of retirement fund in the low-mid 20s (year old). Roth IRA seems to be the appropriate one, but I am not really sure...

So far, all my money is in ING orange...
 
Originally posted by: Tiamat
Im a noob at this retirement stuff.

How does 401k work if now-a-days it is expected that you change jobs every 4 years? When you change your job, does all of your 401k just get lost and you have to start a new one with each job (and subsequently, you are SOL for 401k?)

Also, I am in Grad school. In economics class in high school, i remember learning that it is recommended to start some sort of retirement fund in the low-mid 20s (year old). Roth IRA seems to be the appropriate one, but I am not really sure...

So far, all my money is in ING orange...
Click to expand...


No, you can take the 401K with you or pay your old company to continue to manage it.

ING is not bad, but once you have your emergency fund built up (3 months is enough for me, 9 and 6 have already been recommended here), I would start a mutual fund or if you know you don't need the money untill retirement, a Roth IRA with your savings.
 
Originally posted by: Tiamat
Im a noob at this retirement stuff.

How does 401k work if now-a-days it is expected that you change jobs every 4 years? When you change your job, does all of your 401k just get lost and you have to start a new one with each job (and subsequently, you are SOL for 401k?)

Also, I am in Grad school. In economics class in high school, i remember learning that it is recommended to start some sort of retirement fund in the low-mid 20s (year old). Roth IRA seems to be the appropriate one, but I am not really sure...

So far, all my money is in ING orange...
Click to expand...
A 401K is not like a company pension plan, if you leave the company you can roll over that money into another 401K plan and not lose it.

Most people start 401K's when they're working at a job that offers one. If you want to start something now, a Roth IRA should be a good choice. I'm in grad school too, but I have no money for retirement savings right now, so I'll have a bit of catching up to do when I start working in may (I'm 25 now)

 
Originally posted by: Tiamat
Im a noob at this retirement stuff.

How does 401k work if now-a-days it is expected that you change jobs every 4 years? When you change your job, does all of your 401k just get lost and you have to start a new one with each job (and subsequently, you are SOL for 401k?)

Also, I am in Grad school. In economics class in high school, i remember learning that it is recommended to start some sort of retirement fund in the low-mid 20s (year old). Roth IRA seems to be the appropriate one, but I am not really sure...

So far, all my money is in ING orange...
Click to expand...


Roll the previous employers 401k into the new companies 401k..

HOWEVER, lets say you have only worked for a company for 1 yr, and don't have squat invested in the 401k.. the 401k provider may require to withdraw the funds .. if you have enough.. that 401k provider will allow you to maintain that account

*edit*
I fvcked up my post
 
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