The company I work for froze our pension. I have a 401k with a decent company match. I add to my savings every week, but with nothing more being added to my retirement. I was thinking about reducing the amount I put into the savings and starting an IRA. Can you add to an IRA on a weekly basis? Is this the best way to supplement my retirement?
2007-01-14 10:43:47 · 5 answers · asked by zart 2 in Business & Finance ➔ Personal Finance
Why not just keep investing in your 401K, or even increasing your investment. As long as they have a decently low cost plan with decent investment options, it's just easier all around to do that.
2007-01-14 11:29:18 · answer #1 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
First you need to be putting as much into your 401K program that you can to be sure you are getting all the matching funds - this is free money. Also, unless you are very close to retirement, you should be pretty aggessive with how you invest that money. If you've invested all you can in that, and you have a 3-6 month cushion in savings then you should definitely start an IRA. Now the question is a traditional IRA or a Roth IRA. Since your 401K money will be taxed when you withdraw it during retirement, you need some tax free money then too. A Roth is funded with money that you pay taxes on, but when you withdraw it you don't pay taxes. So I suggest you start a Roth IRA. You can choose which mutual funds to invest in and can make good money on it. The limit for 2007 is $5000.
2007-01-14 10:54:54 · answer #2 · answered by mamasbooks 2 · 0⤊ 0⤋
What the above answers don't explain is that you can't have an IRA when you have a 401k. If your employer offers a 401k, you can't open a deductible IRA. Even if you don't participate in the 401k. Even worse, you can't open an IRA if your spouse has a 401k (you can if your income is very, very low, but if it is, there's little chance you can afford both a 401k and an IRA).
So, if you have a 401k offer at work, take the match. Max it if you can. If your income is below certain limits (90k AGI or so for a single), then a Roth-IRA is a very good secondary option.
2007-01-14 13:23:37 · answer #3 · answered by Quixotic 3 · 0⤊ 0⤋
Roth IRA
2007-01-14 10:50:44 · answer #4 · answered by SS LAZIO 4 · 0⤊ 0⤋
Depending on the amount involved - you may want to check with a Trusted financial counsellor.
2007-01-14 10:56:33 · answer #5 · answered by smiling_freds_biz_info 6 · 0⤊ 0⤋