Retirement questions

[Bright1]

Hi everyone, I'm just starting out in life in the world and has been looking into financial stuff for awhile. I find interest watching Suze Orman show, and even tho I'm a little slow but I'm slowly finding out some things.

I'm 23 years old female. I like the idea of retiring early, maybe. I'm thinking about if I put in $300 a month until I'm 62 yrs old in Roth IRA, would you think that monthly payment would be sufficient without any other sources of income? I normally hear everyone saying put in $100 a month for retirement, but I rather have higher standards for myself and happiness.

& If I would have plenty of extra $, I would be able to pay off a house living in retirement, being comfortable?

Thanks.

[feh]

Hi everyone, I'm just starting out in life in the world and has been looking into financial stuff for awhile. I find interest watching Suze Orman show, and even tho I'm a little slow but I'm slowly finding out some things.

I'm 23 years old female. I like the idea of retiring early, maybe. I'm thinking about if I put in $300 a month until I'm 62 yrs old in Roth IRA, would you think that monthly payment would be sufficient without any other sources of income? I normally hear everyone saying put in $100 a month for retirement, but I rather have higher standards for myself and happiness.

& If I would have plenty of extra $, I would be able to pay off a house living in retirement, being comfortable?

Thanks.

I suggest you click on the link in my signature below.

At your age, it doesn't make sense to make plans for 40 years from now. Instead, focus on living within your means and saving as much as you can. The recommended amount is 15% of your salary; if you can't afford that, simply do what you can with the intention of increasing the percentage over time.

[edg126]

I think that is a good start for now. Quickly plugging it into an investment calculator shows you'd have about 760,000 at retirement if you kept it the same.

It also depends on your current salary and if you expect to make more. I also like dave ramsey's books as a guide. When I accomplish one of my goals, like paying off debt, and not sure where to direct my money to next, I use him as a guide, and he's really inspiring to me to not have any debt and live within your means.

If you are interested in a comparison, I saved about 7% of my pre-tax salary from 2004 - 2011 before I got my ducks in a row, and now save 15% of my pre-tax with an additional 4.5% company match. Once I pay off some other additional things I plan on bumping it up again to add another 6% to my IRA. I want to do whatever I can to retire 'early', but based on calculators it might be a dream to be able to retire before the age of 60. I'm 32 now.

[ua_guy]

FEH has good advice. At this stage in the game, take care of your other expenses first. It's admirable to contribute to retirement funds whenever you have money. Your contributions will be somewhat "blind" for a while until you get a grasp of what retirement looks like for you, and when it will happen. It's often a moving target as life unfolds and you begin to understand the actual cost and scope of your dreams. Starting off with saving 10%-15% of your income is good, as you can, and become more committed to that goal (plus some) as you earn more money.

[SavingSteve]

A savings account will not keep up with inflation. If you are 23 you can accumulate some serious money over 40 years in compounding using an aggressive stock fund. Talk to an accountant about a Roth IRA and if you qualify. The money gets taxed now at today's rate and not later which is great. Imagine pulling out $1M at retirement and having to pay tax on that!?!

It's true you can't know how your retirement plans look but who can? Bottom line is you will need money later and a savings account will under perform the IRA.

I wish I had been serious like you at 23!

[snafu]

I think it's brilliant that you watch Suze Orman on TV and already understand how important it is to start a retirement plan at 23 y/o. Are you working? Does your employer offer a retirement plan? Do they give any matching funds? Find out these facts because it can be like getting free money.

As you know Suze also says not to use credit for ordinary purchases unless you can pay the entire amount by the time the bill comes. Your first step is to write a budget so you know what bills you need to pay each pay day.

You will need to carefully choose an investment for a ROTH. Please pay attention to fees and investment costs because those will slide silently away in salesman's commission every single month. You will see Fidelity and Vanguard Investments are often mentioned here. It is because you can buy these directly from the company without a salesman. They have low fees, are successful and are highly rated. An Index Mutual Fund is a good way to start. It's very efficient to have an automatic, monthly contribution called DCA [Dollar Cost Averaging]. Each month your contribution buys more or less shares [units] depending on the economy.

Looking forward to seeing how you work out your spending plan...called a budget.