The Roth IRA: For You, For Me, For Everybody
Look, I'm not a big joiner, but when I saw Jeff over at Good Financial Cents tweet about starting a movement that increases the awareness and usage of Roth IRA's, I couldn't say no. It's just too important to start saving in a Roth IRA at the earliest possible time you can. As soon as my son has earned income, you can bet I'm opening a Roth IRA for him.
I opened my Roth IRA as a grad student back in 2000. Since that time I've scrimped and saved every penny I could to make sure I maxed out the amount I could contribute every single year. Over the past 5 years, I've been doing the same thing for my DW's Roth IRA too since she's been at home with our son. At this point, we're sitting on over $80,000 that the US Government can never tax again. It has not been easy for us. For 2011 contributions, I wasn't able to actually finish the contributions until February of 2012. It's a lot of work to save that much, especially if you're participating in your company's 401k program and trying to max that out too (which you should).
For 2012, the amount I need to save looks like this:
Roth's for DW and I: $10,000
If you take into account the taxes you pay prior to earning the $10,000 for the Roth's, then you're basically taking about $30,000 off your base salary to do this. It's a huge savings goal, but it's worth it. And, it leaves you diversified regarding the effect of US tax policy. No one knows how US tax policy is going to change, but if a large portion of your nest egg is untaxable, then you can rest that much easier.
Roth IRA – Just do it and do it now! Join the movement! Check out more stories at Roth IRA.com.