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ROTH IRA better than traditional for my situation?
Posted on 12/10/12 at 11:44 pm
Posted on 12/10/12 at 11:44 pm
Just curious, my wife and I won't ever make a whole lot of $. We gross 78k and will probably stay in that area for a long time.
I'm 24, with $6,100 in a roth and my wife is 28 and only has 1k in a 401k with a former employer. No IRA set up for her.
I'm 24, with $6,100 in a roth and my wife is 28 and only has 1k in a 401k with a former employer. No IRA set up for her.
Posted on 12/10/12 at 11:50 pm to wegotdatwood
I would say it is, for the obvious reasons.
Someone alluded earlier on the board that, being so young, the benefit of not paying taxes up front from the traditional IRA offset the money you put into a Roth. The whole principle behind that is the time-value of money, being able to compound more of your actual earnings and so on.
I'm not exactly sure which one is the best vehicle, but both are great tools. Need to do more research on the subject, but those are my thoughts
Someone alluded earlier on the board that, being so young, the benefit of not paying taxes up front from the traditional IRA offset the money you put into a Roth. The whole principle behind that is the time-value of money, being able to compound more of your actual earnings and so on.
I'm not exactly sure which one is the best vehicle, but both are great tools. Need to do more research on the subject, but those are my thoughts
Posted on 12/11/12 at 1:04 am to wegotdatwood
A Roth would be good because you can withdraw the original money you put in without penalty. As far as how much you would earn, they would likely be around the same.
Posted on 12/11/12 at 2:20 am to wegotdatwood
Roth IRA since you are only 24. Go with Traditional as you get older for tax diversification IMO.
If you need some motivation to save, do a TVM problem with PV= $1.4 mil (around 40k/yr in today's dollars for 35 yrs would be reasonable given your income IMO) and assume 2-3% inflation.
That said, you get to give at least half of it away once Texas goes blue in a couple decades.
If you need some motivation to save, do a TVM problem with PV= $1.4 mil (around 40k/yr in today's dollars for 35 yrs would be reasonable given your income IMO) and assume 2-3% inflation.
That said, you get to give at least half of it away once Texas goes blue in a couple decades.
Posted on 12/11/12 at 8:06 am to acgeaux129
I'm also looking into a Roth. I'm 1 yr out of college and put 5% into my 401k to get my employee match and usually save 1.5k a month in cash after all expenses.
Who is the best company to go with to open a Roth?
Who is the best company to go with to open a Roth?
Posted on 12/11/12 at 9:16 am to wegotdatwood
1) if you company has a 401k and matches, then contribute up to what they match. Will not get a better ROI than with the match
2) if young, contribute the rest of your available funds for retirement into a ROTH up to the contribution limit
3) once ROTH maxed out, and you still have monies available for retirement then traditional IRA or 401k
2) if young, contribute the rest of your available funds for retirement into a ROTH up to the contribution limit
3) once ROTH maxed out, and you still have monies available for retirement then traditional IRA or 401k
Posted on 12/12/12 at 12:36 pm to TheIndulger
quote:
A Roth would be good because you can withdraw the original money you put in without penalty. As far as how much you would earn, they would likely be around the same.
Think about tax brackets, too. Unless the rules change (they always could, but how do you predict?) money you take out of the Roth after retirement will be tax free. If your own tax rate goes up significantly by the time you retire, (and that does seem fairly likely) that can make the Roth even more attractive compared to the traditional IRA.
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