IRAs for 20-somethings?

Munchkin03 · #1 03-15-2005, 04:54 PM

Do any of the GC finance gurus have any knowledge about retirement plans for 20-somethings? I've heard so much about the target retirement plans, and a lot of it seems to be conflicting, so I wondered if there were any real live 20-something investors with real information or legitimate sources that aren't a result of Google research..

I'm visiting a few financial planners later on this week, and I've done a lot of interweb research, but I still don't want to be taken by some guy who just wants to get a large initial investment from me.

Rudey · #2 03-15-2005, 05:16 PM

There are 2 IRAs: Traditional and Roth. Traditional is better but you can only open one if you make below a certain income.

http://www.fool.com/ira/ira.htm?source=LN

If you're looking for a broker to handle the IRA account, most do it for free, but they make their money off the trades you make in that account.

-Rudey

agdbirmingham · #3 03-15-2005, 06:03 PM

Are you employed? Does your company offer any kind of 401-k or retirement savings plan?

Munchkin03 · #4 03-15-2005, 06:31 PM

Quote:

Originally posted by agdbirmingham
Are you employed? Does your company offer any kind of 401-k or retirement savings plan?

In my field (Architecture/Conservation), most of the employers are small businesses that do not offer much in the way of retirement benefits.

Eventually, I will work for a larget company that does offer 401(k) or retirement savings plans, but I'd like to get started now.

Rudey, do you know anything about Vanguard's Target 2045? I know there are others like it, but Vanguard sounds the best for me. It doesn't have a contribution limit like the IRAs do.

Rudey · #5 03-15-2005, 06:37 PM

Quote:

Originally posted by Munchkin03
In my field (Architecture/Conservation), most of the employers are small businesses that do not offer much in the way of retirement benefits. Eventually, I will work for a larget company that does offer 401(k) or retirement savings plans, but I'd like to get started now.

Rudey, do you know anything about Vanguard's Target 2045? I know there are others like it, but Vanguard sounds the best for me. It doesn't have a contribution limit like the IRAs do.

I don't know about it that much but that is a fund. It's not an IRA. Think about it like this.

An IRA is a type of brokerage account essentially. You can invest in anything traded publicly within that IRA account. One of the items you can invest in is the Vanguard fund you mentioned.

I don't make investment recommendations to people, but I don't think anyone should invest in one fund, one company, one sector, or one product group.

-Rudey

bruinaphi · #6 03-15-2005, 08:29 PM

Rudey is more of an authority on this than I am but I don't think that there is an income limit if you do not participate in a retirement plan at work. If you do participate in a retirement plan at work and make $50,000 I believe that you can still make a fully tax-deductible contribution of $4,000. I think that your ability to contribute to a traditional IRA and an in-office retirement plan is phased out completely between $50,000 and $60,000.

I recommend a book called, "Investment Survival." You can get it at Amazon. It's an easy read and very informative.

aephi alum · #7 03-15-2005, 09:08 PM

There are several ways to save for retirement.

If your company offers a 401(k) or similar plan, that's a great option. Your contributions are deducted from your paycheck, and some companies will match part of your contributions. When you leave the company, you can turn your 401(k) into a rollover IRA if you want. But you say that's not an option right now.

You can contribute to a traditional or Roth IRA. Like Rudey said, you have to make below a certain amount to contribute to a traditional IRA. There is also a maximum income level for a Roth, but it's a lot higher.

If you're self-employed, there are a few types of retirement accounts you can set up, such as a SEP-IRA.

You are very wise to be thinking about starting to save for retirement while you're in your 20s.

Rudey · #8 03-15-2005, 09:29 PM

Quote:

Originally posted by HotDamnImAPhiMu
Rudey, you do that stuff for a living, don't you?

Me, I copy shit. For the government, granted, and it's a nice job with security and all that, but still, I copy shit.

Bonus: sounds like I've finally indentified a plus to making no money! I'm not complaining though. It could be worse. I could have kids, or not be a lightweight and have to spend $20 on beer when I go out.

No. I create a product (bonds) on behalf of my firm for an issuer. A financial advisor or broker's job is to take my product and sell/cold call/whatever to individuals.

-Rudey

chideltjen · #9 03-16-2005, 03:41 AM

I was able to open a Roth IRA. They didn't ask me how much I made though. There is just a monthly contribution that is deducted from my checking account every month. (Of course now that I don't really have a steady job, I kinda turned off the deposits.)

But I went to a local financial group and they set me up with Openheimer. I just call OP whenever I need to check something now.

squirrely girl · #10 03-16-2005, 01:29 PM

i don't have much real advice for ya - but i'm 24 and i've had a roth since i was 21. i don't put a ton of money per month into it, but it's steady and i've got time.

-marissa

AKA_Monet · #11 03-16-2005, 11:19 PM

Hey Rudey!

I just rolled over a Symetra 401K plan that my job dropped 'cuz of I dunno, and a USAA TSA that wasn't making any money into a Traditional Met Life IRA account...

Then, I just opened a new Met Life Roth IRA, where I will contribute $100 per month upto $4000 per tax year...

My financial advisor works for Met Life--how much will he be getting off the top?

Also, he wants me to up my ante with a Met Life Insurance Policy VUL... Says the cash in value benefit and the death benefits are good... I have to have a physical for it... It is to complement my husband's State Farm Whole Life policy... Do you think that is wise to get in to right now? I have booty Phoenix Wealth Management Flexible Variable Life Annunity... But, it tain't much...

Lemme know what you think?

HotDamnImAPhiMu · #12 03-16-2005, 11:30 PM

AKA_Monet, he might not want to give you advice over the 'net.... but wow. Sounds like you've got everything taken care of!

SmartBlondeGPhB · #13 03-16-2005, 11:41 PM

Quote:

Originally posted by Munchkin03
Do any of the GC finance gurus have any knowledge about retirement plans for 20-somethings? I've heard so much about the target retirement plans, and a lot of it seems to be conflicting, so I wondered if there were any real live 20-something investors with real information or legitimate sources that aren't a result of Google research..

I'm visiting a few financial planners later on this week, and I've done a lot of interweb research, but I still don't want to be taken by some guy who just wants to get a large initial investment from me.

If he/she is forcing you to do somethg you don't want to do, then you should be concerned.

I am a financial advisor and the FIRST step we do with our clients is sit down and figure out their assets, liabilities and cash flow and all other important information about their situation. THEN we figure out what it going to work for them.

We have regulations to follow and the biggest is to do what is in the best interest of our client........

Rudey · #14 03-17-2005, 02:27 PM

Quote:

Originally posted by AKA_Monet
Hey Rudey!

I just rolled over a Symetra 401K plan that my job dropped 'cuz of I dunno, and a USAA TSA that wasn't making any money into a Traditional Met Life IRA account...

Then, I just opened a new Met Life Roth IRA, where I will contribute $100 per month upto $4000 per tax year...

My financial advisor works for Met Life--how much will he be getting off the top?

Also, he wants me to up my ante with a Met Life Insurance Policy VUL... Says the cash in value benefit and the death benefits are good... I have to have a physical for it... It is to complement my husband's State Farm Whole Life policy... Do you think that is wise to get in to right now? I have booty Phoenix Wealth Management Flexible Variable Life Annunity... But, it tain't much...

Lemme know what you think?

Monet, in all honesty I don't recommend brokers or financial planners to people. SmartBlondeGPhB I hope you don't take offense to that. I truly believe people are smart enough to make their own decisions and unless you truly have a vast fortune that needs daily tending to, it doesn't make sense to even pay 1% to anyone. Plus a lot of info out there is biased where fund pay brokers and whatnot. But that is just me and that is what I do and that's that.

Again, the thing I have seen recommended often is diversification. You can buy into 10 oil funds if you wanted as opposed to putting it all into 1. The other thing others recommend is staying away from funds and investing (not trading) yourself since managers can skim a couple percentage points off the top. I have heard some folks swear by exchange traded funds with great, stable active managers and I think fool.com ranks those funds if that's what you wanted. I personally never thought insurance fit my needs and people at those insurance brokers will sell you everything and anything and act like it's an investment. After all that's how they get their money.

-Rudey

KSig RC · #15 03-17-2005, 03:24 PM

Quote:

Originally posted by AKA_Monet
Also, he wants me to up my ante with a Met Life Insurance Policy VUL... Says the cash in value benefit and the death benefits are good... I have to have a physical for it... It is to complement my husband's State Farm Whole Life policy... Do you think that is wise to get in to right now? I have booty Phoenix Wealth Management Flexible Variable Life Annunity... But, it tain't much...

Lemme know what you think?

Be careful here - fine-tooth comb the policies and make sure this is something solid, many MANY times the largest margin products offered are life insurance policies (as in, the sale will make the broker the most money).