When did you start your Roth?

[klarose]

I planned on contributing 10% of our income to a Roth starting in Jan. But when I mentioned it to husband he said no way.

He thinks we are young and should be using our savings on other "more important things."

I know it's important to start young, but he is just not on board.

I will be contributing anyway. But I've cut it back a bit so I'm only contributing about 7.5% as a compromise.

My question is, when did you start contributing. I want to start ASAP, I know the sooner the better.

But we are in our low 20's. Most places say something like starting at age 25.

So really anything we save now is just "extra" right? Is it a huge deal that I will only be contributing 7.5%?

[disneysteve]

Your husband is wrong. Plain and simple.

I started my retirement account when I started working.

My wife started her retirement account when she started working.

My daughter, who just turned 18, started her Roth earlier this year after filing her first tax return while she was still 17.

You are never too young to save for retirement. The earlier the better.

I'm not aware of any place that says not to start until you are 25. They may use 25 in their illustrations because 25 to 65 is a nice round 40 years but if you can start at 22 or 20 or 17, that's even better.

[bjl584]

I started mine in 2003. I was 25. The earlier the better.

[TheKayla]

I started mine at 22 (24 now), and while I'm contributing even less (because of massive SL debt which interest rates are between 6-8%) I really wish I could be contributing more. If you're able to, and have all your bills covered, are able to pay extra on any debts you have covered, contribute as much as you can. You're on the right track to be contributing to it asap, and your husband is wrong. If there are other pending debts with high interest rates, I can see keeping it lower while still so young just to get those out of the way, but you should be at least contributing something. Right when I get my debts paid off I'm going to try to go all the way up to 20% to play 'catch up' and hopefully keep it there.

[MonkeyMama]

Do you mean a ROTH in addition to some other retirement savings, or is your question really when did you start saving for retirement?

We started saving for retirement when we graduated college (age 22). The beauty of this, is that the earlier you start saving, the less you have to save. I'll look for an article that explains this, as you will need something like that probably to convince your husband.

For us, we have always put a minimum 10% to retirement. Having started in our young 20s, I find the 10% rate more than ample. The later you start, and with smaller starting percentages, the bigger percentage of salary you have to commit for rest of your life.

To be fair, I don't think I was eligible for my 401k until I was 23, so it's possible we did not put one penny into retirement until age 23.

As an aside, we did not contribute a penny to a ROTH IRA until we had children. The tax break was too good for the 401k and regular IRAs. We converted them all to ROTHs when we dropped to one income and started to pay -0- in income taxes. I share because putting 10% into a regular IRA and generating some immediate tax savings might be a better sell for your spouse. I don't think I personally could have funded a ROTH in my 20s - would have tied up too much cash flow with not getting those immediate tax breaks. In theory ROTHs are probably best, but you can only be stretched so much when you are just starting out. ETA: Are you paying any income taxes and are you getting a tax break? Don't do a regular IRA if you aren't paying income taxes in the first place. Just checking.

I am doing a quick google search for article and they suck, so hopefully I find something.

[bjl584]

I should clarify.

I started my ROTH at 25.

I started saving for retirement via a 401K and taxable savings at 22.

[MonkeyMama]

Found a good one!

http://www.nbcnews.com/technology/when-30k-worth-more-90k-when-you-save-retirement-your-6C10111142

[klarose]

I agree completely that the earlier the better, I've read all the articles, and the beauty of compound interested.

I'm just wondering, how much will it really affect me if I only put 7.5% instead of 10% for a couple years?

Neither of us have any 401k options or anything for retirement offered from our jobs. So we'll be doing it alone.

We have no debt beside the mortgage. But at this point if I put 10% into a Roth that leaves us with $100 or less a month for any other savings, including an EF. We just don't have the extra cash flow.

[klarose]

It will only take as a year to complete our EF if I only put 7.5% to the Roth.

Then we have to save for and pay for a remodel. But in the mean time we will be getting raises.

Of course I'm just beginning to free lance, so in the future there is a big chance of side income, which I can always contribute.

I see no reason we couldn't start doing the 10%+ by the time we are 23. In the mean time, I will put in what I can.

How would you handle the situation?

[TheKayla]

We have no debt beside the mortgage. But at this point if I put 10% into a Roth that leaves us with $100 or less a month for any other savings, including an EF. We just don't have the extra cash flow.

You should contribute what you feel comfortable with so you can still afford your bills and have an EF. Just make sure your bills and living expenses don't include anything unnecessary if you're too the point of having/wanting to lower your retirement contribution -- have your priorities straight. If you feel like you'd truly be struggling with cash flow, then leave it lower for now, and plan on upping it in the future. It's important to keep retirement as a priority though.

[kork13]

I started my Roth IRA when I was 20, and have maxed it out ever since (I'm now 27). I would strongly recommend that you don't waste your young, lower-earning years by skipping out on the Roths. By loading up your Roth IRAs as much as possible while you're in your early 20's, you'll have more than 45 years of compounding earnings that will be able to work for you. For every $5k you don't contribute now in your early years, that's nearly $100k you're giving up in retirement.

I would set the goal of at least 10% and stick to it. Over time, try to raise it up to at least 15%. You see 25 y/o as a common starting point just for simplicity, and a recognition that MOST people don't start saving for retirement until age 25-30. Unfortunately, your husband's attitude is exactly the reason that is the case. But believe me, a whole lot of good can be done in just these first few years. Not only do you start your savings on course for the future, but you also build the habits that you need to be successful. Start saving while you're young, and doing so will be a lot easier when you're making more money & seeing so much more to spend it on.

[klarose]

Can't cut the budget anymore. Already living on a bare minimum.

We didn't even have tv until last week, when my parents gave us an antenna, for free local tv.

We feel like we finally made it to the 21 century now. lol

No internet, or memberships to anything, no smart phones.

Actually I'm not sure how long we can keep up with this bare lifestyle. Of course we will go as long as we can, but the facts are, a web designer can only live without internet for so long.

[klarose]

Now you guys are changing my mind back again.

Do I cut saving for an EF to save for Roth? At this time my goals for next year are...

$2,000 Towards Roth & $3,000 Towards EF.

or

$2,500 Towards Roth & $2,500 Toward EF.

So we are only talking a $500 difference.

Of course if I get any extra income I can always do both! But I don't want to depend on that.

[disneysteve]

I'm just wondering, how much will it really affect me if I only put 7.5% instead of 10% for a couple years?

But at this point if I put 10% into a Roth that leaves us with $100 or less a month for any other savings, including an EF. We just don't have the extra cash flow.

You can't save money you don't have.

When my wife and I were first married, we were saving 6% of our take home pay. As our incomes went up and our debt went down, we increased that number to 7%, then 8%, then 10% of take home. Then we switched to 10% of gross, then 12%, then 13%, etc. We are now at 23% of gross at a minimum and most years actually are at 25% or more.

Do as much as you can as soon as you can.

[MonkeyMama]

@Klarose - I think that sounds fine. You just have to weight the cost/benefits of your situation. What is important is to make it a priority and stick with it through thick and thin.