Sending a Little Extra to Retirement
My husband and I found ourselves in the fortunate position to get rid of our $70 a month cell phone bill. My parents were generous enough to put us their plan (and give us iPhones!) for Christmas. To me, the financial nerd, the most exciting part of that is the fact that we can actually get rid of a bill. You don’t get that chance very often.
So we have decided to put that $70 a month into our Roth IRAs. A very responsible thing to do. I’ll openly admit I don’t put enough in our IRAs. I know I should be maxing it out. I’ve just been focused on paying off the rental property instead. I still want to crush that debt, but I don’t want to leave tax free money on the table either. I think this is a good deal. It will bring our annual contributions up to $2,640. Not enough but it’s going in the right direction at least.
Our maximum contribution would be $5,000 per person, for a grand total of $10,000 per year. We still have $7,360 to go. But you know, it’s not just going to jump up there by itself. We will build it slowly by putting a little more away each year until it reaches the max.
The beginning of the year is the perfect time to get started on sending a little extra. I’m glad we were able to cut our budget and make good use of it. Could you do the same? Even if it’s $10 more a month. That adds up over time. If you do what you can each year then after a while you are saving a significant amount!
My husband brought up the Roth IRA idea. I thought it was great and quickly agreed. And then he threw out that we should wait until Congress decides if it’s going to extend the Social Security tax cuts. If they don’t then we will need that extra money to cover us in the budget since we will have less take home pay. I thought that was pretty ironic. If we have to pay more into Social Security we will be forced to save less for our own retirement. This was my exact argument in my article about Social Security.
I’ll admit I have no memory of what we did with our extra take home pay when they initiated the tax cut. I trust it went to good use though.
Are you maxing out your retirement accounts? If not, are you planning to add anything this year? Do you need help getting started?
Ashley
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Comments
We max out our RRSP’s every year which is our Canadian version of a ROTH. It is definitely nice to see the balance grow each year. This year we have a little extra so we are going to boost our TFSA.
I max out out my 403B, IRA and Roth IRA. My extra savings goes for travel since I already accelerate my mortgage.
We don’t max out our IRA right now. We did in the past, and we will again in the future. This year was just a little less predictable than past years.
Congrats on the iPhone! Wow, you’ll be able to blog from anywhere now. After slashing our cable and landline bills this year, the cell phone account is my next target. The monthly plan for just the two of is outrageous. There must be a better way.
iPhone! Haha it feels like we were just talking about this! Let me know if you need any help and/or app recommendations.
I’m not maxing out my retirement accounts, although I plan to add to my Roth before the deadline for 2011 hits. I do add a minimal amount to it automatically via automatic withdrawals, but it’s nothing to get too excited about.
We are definitely maxing out our IRAs. It is hard to know what might happen in future, but with the information we have now, we should plan accordingly.
I don’t factor SS into my retirement. If I have it, that’ll be a nice bonus. Hope for the best, *prepare* for the worst – that’s my motto.