Help with Retirement for Young couple.

[ThriftyMom1007]

Hi. My first post! So glad to have found this board.

My husband and I have been married 6 years and we are both still in college and have one young daughter.
When we graduate we will have high degrees and *hopefully* be making wonderful money. However, as of now, we have nothing set aside for retirement. We are (26 and 27 yo).

Our current places of employment really don't match anything in terms of 401k plans. So we are thinking that we would open some sort of personal retirement account. Can someone explain to me * IN SIMPLE TERMS* what the best way of doing this would be?? And how much do you need to invest to actually accumulate any savings?

Thanks.

[sweeps]

In simple terms, go to Vanguard's web site (www.vanguard.com), and sign up for a Roth IRA. Invest your money in the 2035 Target Retirement Fund. If you need help, you can call Vanguard at 877-662-7447.

Assuming you meet the qualifications, both you and your husband can contribute $4000 to the Roth IRA. Also if you do this before April 17th, you can contribute $4000 for the 2005 year. This means if you have the money on hand, you can immediately boost your retirement savings from $0 to $16,000.

It's way too difficult to say how much you need to put towards your retirement. There are numerous calculators on the web to help you guess, but that's all it is -- a guess -- because no one knows what the future holds. Having said that, the more you invest and the earlier you invest, the better. Good luck!

[34saving]

Yep. Definitely do a Roth. Right now you're paying basically nothing in taxes, so now is the time to pay taxes on your retirement income (not when you retire.) Vanguard is a great place to get started.

[Ima saver]

I agree. I have my roth Ira in Vanguard's Index 500 account.

[flash]

Originally Posted by Sweepsplayer

In simple terms, go to Vanguard's web site (www.vanguard.com), and sign up for a Roth IRA. Invest your money in the 2035 Target Retirement Fund. If you need help, you can call Vanguard at 877-662-7447.

Assuming you meet the qualifications, both you and your husband can contribute $4000 to the Roth IRA. Also if you do this before April 17th, you can contribute $4000 for the 2005 year. This means if you have the money on hand, you can immediately boost your retirement savings from $0 to $16,000.

It's way too difficult to say how much you need to put towards your retirement. There are numerous calculators on the web to help you guess, but that's all it is -- a guess -- because no one knows what the future holds. Having said that, the more you invest and the earlier you invest, the better. Good luck!

Sweepsplayer, you always have great answers! The Vanguard target is outstanding.

Just a note of encouragement. DH and I made it through grad school -- I think we actually saved more back then -- did the post docs and all the requirements to make the grade, started with lowly tech positions, and yes, we did finally make the big time, succeeded, and retired when we were 40.

Don't worry about working it all out now. Just go with the flow, trust that it will happen, and don't try to force it. People who TRY to climb the corporate ladder too hard usually don't. People who are smart enough to seize opportunities as they arise do.

[TBH]

Hey, good for you for thinking about this!

I may be way off here, but if you're both in college and have a kid, you may not have 16 grand lying around to fully fund two Roths for 2005 and 2006.

You can still save for retirement even if you don't have a lot of extra cash at this moment.

I agree that opening Roths for both of you is the best move. Vanguard's target retirement fund also sounds like a good bet. I'm a Fidelity customer, not Vanguard, but I suspect Vanguard will also let you open an account without very much $$ for an initial deposit if you sign up to autodeposit $50/month. If you can manage to autodeposit $50/month for each of you, that's only $600/year each. This is not enough, really, but it's something. You've got to start somewhere.

Another approach, rather than a set dollar figure, is for you and your spouse to commit, today, to putting aside 10% of every dime of income you each earn from here on out. You can inch this upwards later on when you're out of school and more gainfully employed, but just so you get in the habit of saving, 10% might be achievable. If you can't manage 10%, start with less, but make a commitment to raise the percentage gradually every year til you get up to a healthy level.