Saving for retirement

rivkadrMay 21, 2008

I could use a little advice. My current job has no 401k program. My husband and I together make exactly $166k, which if I understand things properly, is the exact cut off point which prevents me from contributing to a Roth IRA on my own. My husband, who does have a 401k program through his company is contributing to that, but I'd like to be tucking away something as well.

What are my options, then, at this point? I'm a little clueless about this stuff, so point me in the right direction, please.

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Establish a Traditional IRA account. I believe you can both establish separate IRA accounts, allowing you as a couple to put aside $4K each (if under age 50) or $5K if 50 or over, annually.

Any additional amounts you can save should be in separate taxable investment accounts. Any savings are better than none, obviously; so don't let the after-tax issue deter you.

Any brokerage can set up automatic monthly deductions from your checking or savings accounts that allow an easy way to contribute without hassle. You'll want the lowest cost brokerage and funds, which means Fidelity, Vanguard, etc.

Make sure you can allocate your contributions into at least 2-3 different funds to give you a balanced portfolio. Or, pick a low-cost target date fund, although I don't personally like them. It's difficult to evaluate past performance on them, and many trail the market averages.

Good luck to you going forward!

    Bookmark   May 21, 2008 at 7:37PM
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Is the $166k your gross income or your adjusted gross income?

Roth IRA limits are based on modified AGI, not gross income.

The IRS website explains it all.

    Bookmark   May 21, 2008 at 9:53PM
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$166k was the limit for 2007. The phase-out in 2008 goes up to $169k, so you should be able to make a partial contribution this year. And, as harriet pointed out, the limited is based on modified AGI, not gross income.

    Bookmark   May 22, 2008 at 6:16AM
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Is your husband maxing his 401k? Or at very least contributing enough to get a match from his employer?(if there is a match)..before opening an account , this would be the 1st move i'd choose

    Bookmark   May 22, 2008 at 9:41AM
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