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ROTH IRA
So I had posted the other day about opening an IRA through Fidelity (where my 401K is currently). I had said there was a Roth option to contribute to underneath my 401K contribution amount so when I called Fildelity I had asked them about it and I can't remember the reason but they said it was a ROTH pre-tax contribution of some kind...I didn't really understand and it wasn't what I wanted. So anyway I had told them I wanted to open up an IRA and I didn't realize that I needed either to roll money into it from my 401K (having to loose money with the taxes to transfer it), or having $2,500 to open the account (she said we could open an account and make automactic deposits into it with no required deposit but I don't like automating things beacause we may not always have a certain amount of money in there for that). Well I don't want to roll it over to loose some money, and I don't have the $2500 to open it right now as we are saving for other things and it just feels way to overwhelming to save up $2500 for this account that I know is important. We are hoping to buy a house next year and my dad had said to wait until that's done with so we can just save up the $2500-$5000 real quick and open accounts for both of us. I already feel pressured to build an e-fund, vacation, and house fund and then to worry about opening this ROTH as quick as possible just gets me down. We are both 31 and I really want these accounts open and I figure once they are opened we don't always need to contribute a lot to it but it feels like another thing to save for. We would never max those accounts out at $5,500 because we don't even put that much in our 401K's every year.....
So my question is how do you guys contribute to a 401K, pay bills, save for other things and then have money to deposit into a ROTH every year?....it just seems hopeless and like a lot more to save for.... do you have a seperate savings account for it? I guess it just didn't work the way I thought it would (almost like a 401K, never having to see the money be taken out)
Re: ROTH IRA
Deep breath. First of all, great job thinking about this and even making steps to set it up - you are miles ahead of most Americans.
I would check out Vanguard. They tend to have the lowest fees in the industry (some of their mutual funds for IRAs have no fees). And, they only require a modest opening amount to set up. Their opening amount is only $1,000. www.vanguard.com
Another option, if you, DH or your parent is active, retired or honorable separated from any branch of the military is USAA. They have an investment side. www.usaa.com . Again, low or no fees and super easy.
Here's what we do...we take shorter vacations 3-4 days throughout the year to cut down on costs. We Priceline everything at the last minute, then we go back and cancel all our more expensive reservations that we don't end up needing. Also, our trips are not extravagant...we stay in lower cost hotels (basically just sleep there) and we rent the cheapest cars possible (just to get from point A to
.
Wanting to save for emergencies, house and vacations are all great ideas. However, your retirement is a long term investment. And the more you pour into it in your early years, the more you will end up with in the long term when you are 65 or 70. This is to the compounding of interest. Anyway, it's wise to make retirement savings a priority now when you're younger as that money will grow a lot in the next 30-35 years.
Once you get an IRA set up, you can add to it automatically each month from your checking account.
The order of priorty I think you should have would be:
1. e-fund of 3 months expenses to start.
2. Opening amount for IRA.
3. 3 more months of living expenses to e-fund.
4. House savings
5. Vacation savings.
You didn't mention any debts you have like student loans or cars or credit cards. So, that all has to be factored in too.
Post your detailed budget here for more help on ways to save and plan.
MommyLiberty- I will check into Vanguard! I wanted to keep everything with Fidelity but it doesn't need to be that way. $1000 is a lot easier than $2500, even for H and I.
Also, I do try to do cheap trips, we use cheap hotels or stay with family, and we rent the smallest cheapest car we can get. We only travel once or twice a year and we usually don't do the long weekend/day trips because we are tired of things to do in our area (another reason to move)..but I do think we can do better in this dept.
Yea I realize our salaries may drop, but I do have hope LOL! Is Tennessee in tornado zone because there is no way.........
My companys corporate office is in VA that why I would choose it because I really love my company. We are going there in Sept to stay with my former boss to check it out. Cheap trip
I get so traumatized seeing those crazy tornados on the news....I can't imagine living in a place where you could loose all you have in an instant..makes me wonder why people stay there...
Anyway, it would be in the Richmond, VA area so still cheap...I have no desire to live anywhere near DC!!
We save for a house and vacations too, but I make this payment (currently $130 a paycheck) a priority equal to my electric bill-it must be paid. It only wouldn't be in a true emergency. I also get a 5% taxable "match" check each month, and that goes right in. This will allow me to max out the Roth starting with 2014, and then I'll put any overflow into a taxable brokerage account mentally earmarked for retirement.
I like Fidelity, but I do second looking at Vanguard. I'm actually considering switching over and doing the low-cost index portfolio investment approach. We'll see!
You have asked before on The Nest about moving to RIC, right? About neighborhoods and houses? That was months ago... If you are gonna move, then do it. You'll reap the savings sooner by moving down there. Parts of RIC are $$$ for real estate. I would rent for awhile there and get a feel for it.