JR Ewing
MuscleHead
- Nov 9, 2012
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If you're not over the income limit for the Roth, it's probably a good idea to just stick to maxing that one out, since that money will eventually be tax FREE, whereas the traditional IRA is only tax DEFERRED, and you will eventually have to pay some taxes on it even if you don't need the money.
One advantage of the traditional IRA is that it can be a good way to lower your taxable income amount each year if need be, since that contribution is considered pre-tax, whereas the Roth is after-tax money.
One advantage of the traditional IRA is that it can be a good way to lower your taxable income amount each year if need be, since that contribution is considered pre-tax, whereas the Roth is after-tax money.
2
2ez
VIP Member
- Feb 25, 2012
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I would ask a financial planner for additional options. Since working in the healthcare industry after 18yrs in the Financial.....
I have seen people's life's savings being snatched due to an illness. They take everything (pension, IRA...etc), but leave enough for your burial. my friend just went thru this with his Mom. Assets were not shifted within the 5yr window, so whatever she had within the 5yrs was up for grabs. His Mom had to go into a Nursing home/Rehab facility at age 63. Life Insurance signed over.
Or, if you have a spouse, they will leave some on the table. consider asset protection instruments. And consider LTC insurance as well. My point is we can save all we can with tax benefits....but if not set up right...it can be snatched too.
A good Investment advisor can explain further. the younger this is started, the better......better premiums.
2ez.....Series 7, 63, 55, 24.....Actuarial Science and Risk Managerment. Now.....a Registered Nurse......someone correct me if i am wrong. my 2cc
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JR Ewing
MuscleHead
- Nov 9, 2012
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Of course you obviously want to have some personal savings, as well as health insurance, long term care insurance, burial insurance, and probably at least a small term life policy.
Having some sort of financial advisor/planner is a good idea once your liquid assets get into the 6 figure range.
Assuming these are already taken care of, an IRA/Roth is generally a good idea for most people, as is a 401k or similar work plan if a decent one is available. And just as a Roth IRA grows tax-free with after-tax dollars, a Roth 401k also grows tax free with after tax dollars, and doesn't have the income limits that the Roth IRA does. And just as the traditional IRA contribution is tax-deductible, the traditional 401k contribution is considered pre-tax and will lower one's taxable income level. And 401k contribution limits are currently over 3 times higher than IRA limits.
If you have accumulated a fair amount of money (or plan to), it is often a good idea to consider putting assets inside of corporate structures and/or trusts - out of reach of such creditors, shielded from lawsuits, etc.
Most wealthy people have very little in their own names. And if they built their own wealth, they got wealthy by investing - either in their own private companies, or in publicly traded stocks, mutual funds, etc. Beyond having enough cash to pay the bills and live comfortably on, hoarding all or most of your cash away in deposit accounts or under the mattress isn't the best idea.
It is generally a good idea to take advantage of such tax-advantaged retirement plans. You cannot have any sort of decent lifestyle living off social security, and I doubt it will be available beyond a few more years anyway.
Putting $100 a week into an IRA and $300 a week into a 401k (hopefully some of that via an employer match) for several decades will likely add up to several million dollars over that time - IF one assumes the same rate of return we've seen in the S&P index over the last half century or so.
Having some sort of financial advisor/planner is a good idea once your liquid assets get into the 6 figure range.
Assuming these are already taken care of, an IRA/Roth is generally a good idea for most people, as is a 401k or similar work plan if a decent one is available. And just as a Roth IRA grows tax-free with after-tax dollars, a Roth 401k also grows tax free with after tax dollars, and doesn't have the income limits that the Roth IRA does. And just as the traditional IRA contribution is tax-deductible, the traditional 401k contribution is considered pre-tax and will lower one's taxable income level. And 401k contribution limits are currently over 3 times higher than IRA limits.
If you have accumulated a fair amount of money (or plan to), it is often a good idea to consider putting assets inside of corporate structures and/or trusts - out of reach of such creditors, shielded from lawsuits, etc.
Most wealthy people have very little in their own names. And if they built their own wealth, they got wealthy by investing - either in their own private companies, or in publicly traded stocks, mutual funds, etc. Beyond having enough cash to pay the bills and live comfortably on, hoarding all or most of your cash away in deposit accounts or under the mattress isn't the best idea.
It is generally a good idea to take advantage of such tax-advantaged retirement plans. You cannot have any sort of decent lifestyle living off social security, and I doubt it will be available beyond a few more years anyway.
Putting $100 a week into an IRA and $300 a week into a 401k (hopefully some of that via an employer match) for several decades will likely add up to several million dollars over that time - IF one assumes the same rate of return we've seen in the S&P index over the last half century or so.
JR Ewing
MuscleHead
- Nov 9, 2012
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Retiring with $3 mil or more liquid in income-producing investments (corporate and muni bonds, stock dividends, perhaps some in REIT's, maybe an annuity or other insurance products, etc) will allow one to have a more or less "guaranteed" low 6 figure (or upper 5 figure at worst) income stream for life.
tommyguns2
Senior Moderators
Staff Member
- Dec 25, 2010
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So much good info there JR!! When it comes to long term financial planning, slow and steady wins the race.
Put as much into your 401k as possible, especially when you're at a company that has a matching program. When I started right out of school, I worked for a big company that matched $0.50 on the dollar for the first $4,000 you put annually into your 401K. That's a guaranteed 50% return immediately! In those cases, I would definitely do that.
Another good thing about having a solid long term financial plan in place is that it makes you more emotionally able to spend some of your money without feeling that you're being irresponsible. For example, if you're executing your financial plan and none of your assumptions have changed, and you have extra money laying around, you may feel a lot more comfortable getting your spouse a present or taking the family on a vacation. Or even better, giving that money away to some people you know that have a need, etc.
Put as much into your 401k as possible, especially when you're at a company that has a matching program. When I started right out of school, I worked for a big company that matched $0.50 on the dollar for the first $4,000 you put annually into your 401K. That's a guaranteed 50% return immediately! In those cases, I would definitely do that.
Another good thing about having a solid long term financial plan in place is that it makes you more emotionally able to spend some of your money without feeling that you're being irresponsible. For example, if you're executing your financial plan and none of your assumptions have changed, and you have extra money laying around, you may feel a lot more comfortable getting your spouse a present or taking the family on a vacation. Or even better, giving that money away to some people you know that have a need, etc.
TenaciousA
TID Lady Member
- Mar 31, 2013
- 1,240
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Save like a mofo...but as stated, traditional 401K is taxed at time of divestment, which can fuk you and move you up a bracket. The $$$ you have in your assets, on average, doubles every 7-10y depending on how aggressive you are/how the stock market performs, and like JR said good idea to plan for 2-3M in savings upon retirement.
A good financial planner is worth the initial investment for you, your spouse, family, parents, etc, especially if you'll be executor of any estates, wills, powers of attorney, etc. Your company MAY offer this benefit (or legal benefit) with your benefits package so get after it! NEVER too late to start.
A good financial planner is worth the initial investment for you, your spouse, family, parents, etc, especially if you'll be executor of any estates, wills, powers of attorney, etc. Your company MAY offer this benefit (or legal benefit) with your benefits package so get after it! NEVER too late to start.
RAIDEN
VIP Member
- Feb 22, 2012
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Tommy, you mention put as much possible into your 401k as possible. If we learned anything from 2008 crash when everyone's 401k got obliterated, wouldnt it be wise to not be so aggressive with a 401k in case it was to happen again? I know people whose 401k was destroyed, I'm assuming most people felt the hit in theirs right? I'm not an expert in these matters, but was just thinking out loud.
graniteman
MuscleHead
- Dec 31, 2011
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