10. Give every raise you get to your online Roth IRA. You can have any amount diverted from your paycheck to another account that funds your Roth IRA. When you get to $5000 a year in your Roth/IRA go to next step.
So you are out of debt and participate in your companies 401k/403b to the point that you get the match. The next logical tax shelter to take advantage of would be a Roth IRA. Why not just fund your 401k/403b higher? That is the easier path but not the cheaper one. I pay 2-3 times more in annual fees in my employers 401k/403b than I do in my online Roth IRA. I like using an online discount brokerage to house my Roth/IRA and brokerage accounts. They will help keep your costs down and allow you to be more flexible at re-balance time. Here is a link comparing different online brokerages
http://www.fool.com/how-to-invest/broker/index.aspx
No extra money in your budget? There is still a way. Take every raise you are given and have that money deposited in a separate account. This will take some math. If you make $40,000 a year and receive a 2% raise you get $800 more a year. Take that $800 and divide by your pay periods (26 if biweekly) = $30.00 per paycheck. Then set up your online brokerage to pull from the same account and BINGO you have your own retirement plan. You will literally not notice the difference in your paycheck and save more every year. If you do this with every raise (I even tossed in my Payroll holiday) you will hit $5000 (6K if over 50) fairly soon and move on to step 11.
No raises or hope of raises? Well there is one more stone to turn, Withholding. Do you get more than $500 a year in tax refunds? If so, you are giving the IRS a tax free loan on your money. You could adjust your withholding up and boost your retirement by the same amount.
A lot of families count on that refund being there every spring. So talk this over with your family and HR department before making a move.
No comments:
Post a Comment