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What is the best way to start saving for retirement?
By Tom Dunn | December 24, 2008
hell$ belle$ asked:
I’m 28 and I have a steady job. I support 2 children on a very low income and my employer does not offer a retirement plan. I need to save, but at this point in my life, I cannot contribute regularly. I was thinking of opening an IRA with my credit union, but wanted to know if there is a better option for me.
Dustin
I’m 28 and I have a steady job. I support 2 children on a very low income and my employer does not offer a retirement plan. I need to save, but at this point in my life, I cannot contribute regularly. I was thinking of opening an IRA with my credit union, but wanted to know if there is a better option for me.
Dustin
Topics: retirement planning |
December 25th, 2008 at 8:53 pm
Roth-IRA is the best way to go. You can start one for as little as $1000. Call a mutual fund company like Vanguard, Lincoln, Fidelity, TRowePrice, American funds. They will help you set one up. Given your age I would go with a stock fund, or you can choose a target retirement fund which is diversified between stocks, bonds, and internationals. I would say target retirement funds are the best option because they adjust over time to be less risky and you don’t ever have to change anything around. Just plop in some money and let it compound over years and years.
December 28th, 2008 at 10:33 am
I am not a fan of savings accounts for an IRA. At your age, you want to take advantage of your retirement being approximately 30+ years away. I would argue that you should put your IRA in some type of equity (stock) fund. There are plenty to choose from. Look for one with a low minimum and low or no annual fee. That being said, if you can’t find one that suits your need, I would go ahead and do the CD or money market type IRA until you reach the minimum for a stock fund, and then do a transfer by institution (don’t take the money yourself - let it be institution to institution to avoid any tax withholding).
Here’s a link to low minimum IRAs
and here’s a link to the IRS publication on IRAs.
Hope this helps. Congratulations on taking the long view - it will be rewarding even if it means scrimping for now.
All the best
December 30th, 2008 at 4:48 pm
I agree with the Roth but check out
no annual fees and only $7 per trade.
January 1st, 2009 at 2:55 am
Get a second job, reduce your expenses and do not bring more children to this dying planet and perhaps you will save enough to retire at 78
Buy fluorescent bulbs for all the rooms in your house and buy a 2000 Honda Insight.
Buy Microsoft Money. (It’s only $19.99)
January 1st, 2009 at 8:41 am
Hello-
You can try Sharebuilder for automatic investing. It’s $4 a trade.
You can save $50 or so a month.
You can also get a free guide to financial planning here:
The main thing is to get started.
-Adam