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re: Traditional IRA contribution limits?
Posted on 2/15/10 at 2:33 pm to Dr Rosenrosen
Posted on 2/15/10 at 2:33 pm to Dr Rosenrosen
quote:
But if you can afford to max out your 401 and IRA and still have money left over you are a special person indeed.
401K max is only $16,500 and IRA is $5,000, right? Doesn't seem like nearly enough to cover retirement investing (assuming a Roth is not an option). But I could be missing something.
Beyond 401K and IRAs, you're pretty much looking at traditional mutual funds to make up the difference, right?
1
Posted on 2/15/10 at 3:32 pm to Thomas Hudson
quote:
Doesn't seem like nearly enough to cover retirement investing
A 25 year old maxing out 401k and IRA at today's limits until age 60 would have the following at age 60, assuming these annual returns:
5% = $2.1MM
6% = $2.6MM
7% = $3.2MM
8% = $4.0MM
And this doesn't even factor in catch-up contributions available at age 50+.
What really hurts are the highly compensated employee limitations. It's entirely possible that someone spending a large portion of his/her career just above the HCE hurdle (currently $110k) could be in a world of hurt at retirement, having severely limited access to tax sheltered retirement saving as compared to those below and well-above the hurdle. Brilliant move, Congress.
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