The Professor and I funded our IRA today! There's been a lot of talk recently about Roth IRAs and while intrigued, I still maintain my Traditional IRA with my bank. I've had it for quite some time and still think it serves its purpose effectively.
It gives me another outlet to save for retirement beyond the 401(k) contributions I'm making and the 403(b) contributions my wife is making. That's a hefty amount of money going toward retirement every year! I'm really happy with the wife and I for making retirement contributions even though we are still trying to save for major life purchases and beginnings! It would be easy for my wife to forget retirement and just take the money and save or put into her "car" fund - however, she knows that putting the money away now will grow for the future. I wonder who taught her the value of compounding interest?? Just making this one time contribution will grow to $35,400 without toughing it again and assuming a modest 6.5% growth rate.
The reasons you often hear for Roth IRAs are that money is contributed post tax and deducted without being taxed. Often, people will be in a higher tax bracket in the future than they are now. All of that is nice - but so is increasing the amount of my current year tax refund! In addition, I do not expect to be able to contribute into the IRA for too many years as income grows beyond the limits, so this resource won't be my sole area of future income, its only 1 aspect of it. Paying taxes when I'm in my 70s won't have the same effect as receiving the approximately $900 extra in refund this year.
I have no problem with a Roth IRA, however, I'm not a fan of people claiming that it is the only IRA suitable for people. There is no single model that fits everyone. Every individual has to decide what is right for them. Right now - for my family - the Traditional IRA is a perfect choice for us. I'm really excited about making the contribution and watching it grow. Plus, it also energizes me to build the savings back up!!
Coach
It gives me another outlet to save for retirement beyond the 401(k) contributions I'm making and the 403(b) contributions my wife is making. That's a hefty amount of money going toward retirement every year! I'm really happy with the wife and I for making retirement contributions even though we are still trying to save for major life purchases and beginnings! It would be easy for my wife to forget retirement and just take the money and save or put into her "car" fund - however, she knows that putting the money away now will grow for the future. I wonder who taught her the value of compounding interest?? Just making this one time contribution will grow to $35,400 without toughing it again and assuming a modest 6.5% growth rate.
The reasons you often hear for Roth IRAs are that money is contributed post tax and deducted without being taxed. Often, people will be in a higher tax bracket in the future than they are now. All of that is nice - but so is increasing the amount of my current year tax refund! In addition, I do not expect to be able to contribute into the IRA for too many years as income grows beyond the limits, so this resource won't be my sole area of future income, its only 1 aspect of it. Paying taxes when I'm in my 70s won't have the same effect as receiving the approximately $900 extra in refund this year.
I have no problem with a Roth IRA, however, I'm not a fan of people claiming that it is the only IRA suitable for people. There is no single model that fits everyone. Every individual has to decide what is right for them. Right now - for my family - the Traditional IRA is a perfect choice for us. I'm really excited about making the contribution and watching it grow. Plus, it also energizes me to build the savings back up!!
Coach
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