You Can't Borrow Your Way Through Retirement

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MaryAnn,
Since you chose to save for college for your kids, instead of saving for your retirement, perhaps your children owe you some financial help in your retirement years.

Steve of DC 11:00PM June 17, 2010

...Could some one make a real explanation about where is the 401K money of people and who has trusted on wallstreet financial advisors before???

Joaquin R. of CA 6:16PM June 17, 2010

Didn't see any logical discussion as to WHY you can't borrow your way through retirement. Just stated as though it were an obvious fact. Why can't a person die having borrowed (and spent) as much money as possible from other people? Aside from the moral misgivings, it seems like a desirable end. You don't want to die rich, you want to die having just spent you last dime, but better yet having spent your last dime and every last dime any one else would lend you!

x1134x of AZ 2:18PM June 17, 2010

I was a single mother with two children whom I instilled to go to college. My Thrift Savings Plan allowed me to send them to college. Now I am retired with a small pension in an economy where even a part-time job is hard to find, and my husband is out of work. Being an independent contractor, he does not have access to unemployment benefits.
Financial advisors make it sound so easy based on factors of people who live above the poverty level and who have never struggled to make ends meet. I have struggled all my life, mostly alone, and have worked hard all of my life to give my children necessities---not frivolities. I have an IRA but I cannot contribute anything to it because I have to use my pension check to pay the bills and even that is not cutting it. How about advising me on that---someone who lives in the real world.....

MaryAnn Parrish of PA 2:03PM June 17, 2010

I'm another financial advisor, and EA Esparza's comments are absolutely correct, balance the before-tax and after-tax savings while in your accumulation years. good luck!

LH of NC 11:16AM June 17, 2010

As a financial advisor, first thing is that it really depends on a number of factors in your personal situation. Therefore, having someone look at your overall financial picture will give you the best direction.
That said, if you have been investing for about 15 years, you are likely in your 40's?, maybe 50's. So, you likely have a considerable time ahead of you before retirement. The fact is that if taxes are going up in the short term, you need to counter longer-term tax concerns with some balance on the short term. Therefore, you may need to continue to invest pre-tax as it lowers your overall taxable income now. But, you should start to balance that with ROTH savings as well, if you haven't already done so. Perhaps scaling back on your 401K if you need room for a ROTH contribution would be good. If you have discretionary income, though, put some contributions toward a ROTH, up to $5000.00. If you are 50 or older, you can contribute an additional $1000.00. That way, when you retire, you will likely have some tax hit but you can balance that with ROTH tax-free distributions at that point too, giving you an overall lower tax rate. Thanks!

EA Esparza of MN 11:06AM June 17, 2010

I've been told that beginning a Roth IRA vs. a Conventional IRA hinges on length of time before retirement.
What do I need to know to determine which is best for me? I have been invested for about 15 years at 10% of my income. My employer matches 4%. Given the economic climate, I foresee increased taxes in the near future. As a country, we have reduced taxes while increasing expenditures and tax breaks to various entities. Something has to give and I feel increasing taxes is the logical next step. Is it better, under such circumstances, to be in a conventional investment or a Roth? Is it better to have taxes assessed on the relatively smaller amount I am investing or on the proceeds upon retirement?

Jim Case of OK 10:29AM June 17, 2010