Comments on: 10 Reasons to Get Off Your Butt and Start a Roth IRA

By: JoeTaxpayer

JoeTaxpayer — Thu, 01 Jan 1970 00:00:00 +0000

@Ginger – My numbers do make some assumptions. I assume there will be a structure that contains exemptions ($3700 per person in 2011) and a standard deduction ($11,600 MFJ in ’11).
This alone is $19,000 for a couple that comes out of their IRA tax free. You would need $475K to generate this, at a 4% withdrawal rate. Now, I agree to take advantage of your current 10% bracket, as I imagine that once you break out there’s no going back. By the time you are in the 15% bracket and save that first half million $$, you’ll be able to review if these numbers have changed. I like your approach, and think you’ll do fine. My issue is with those who are jumping on the conversion bandwagon, paying tax now at 25% or higher but will retire in 15% bracket.

By: Ginger

Ginger — Thu, 01 Jan 1970 00:00:00 +0000

@Joe, my husband and I expect to have 4 million when we retire in 40 years but for now, I would expect most people retiring to have about 1 million. Not all people are married and that means they could half of what you are counting on, plus you assume the Bush tax cuts never expire. I guess I don’t trust that. My DH and I are saying in Roth while we are in the 10% tax bracket and once we move into the 15% tax bracket we will start saving in our 401ks.

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

Right, just having the account helps your savings mindset.

By: Jenna, Adaptu Community Manager

Jenna, Adaptu Community Manager — Thu, 01 Jan 1970 00:00:00 +0000

It forces you to budget better. If I know I’m not going to get $5,000 this year’s money until I retire, I plan better with my annual budget.

By: Don@MoneyReasons

Don@MoneyReasons — Thu, 01 Jan 1970 00:00:00 +0000

Nice list, but:

I’m not sure “8. Use Funds to Buy Your First Home” is correct though…

I believe that the money withdrawn could be 100% of your contribution (that true with anything) and only a lifetime grant of $10,000 of earnings (to be tax and pentalty free).

By: Ashley

Ashley — Thu, 01 Jan 1970 00:00:00 +0000

I’m current debating if I want to start an Roth IRA or rollover funds from a previous employer into my new employers plan. Definitely going to look at some of this info to help me determine which would be the best route to take.

By: Broke by Choice

Broke by Choice — Thu, 01 Jan 1970 00:00:00 +0000

Thanks for this list, I am sharing it with so many friends. Sometimes I can’t believe the excuses that people give for not maximizing their retirement.

By: Bheem

Bheem — Thu, 01 Jan 1970 00:00:00 +0000

Thanks for long list of reasons to go for Roth IRA. I knew a few of them and have already started the Roth IRA. But didn’t know that was SUCH a good decision until I read this list.

Thanks
Bheem

By: Britt (Your Roth IRA)

Britt (Your Roth IRA) — Thu, 01 Jan 1970 00:00:00 +0000

#4 is a big deal in my opinion. Most 401k plans and other retirement vehicles offer limited investment options with higher expenses ratios than you could get in the open market. Keeping expenses low can really give a boost to your investment returns over the long-term. For instance calculate the extra savings generated by keeping the extra 0.25% to 1.00% you could potentially save by directing your own investments over the course of 30 or 40 years. It’s a lot!

By: Financial Samurai

Financial Samurai — Thu, 01 Jan 1970 00:00:00 +0000

Joe – Doesn’t work for me at all. Saving only $10,000/yr is sorely inadequate for couples to retire on in 30-40 years.

A couple only making $66,000 needs to work on boosting their income.

The contribution cap should be closer to $50,000/yr tax free imo.

Best,

Sam-urai