I'm 22 and I already have one of these Roth IRA accounts since I was 19. I'm not even out of college yet and I'll be contributing the maximum amount this year.

I hope my friends know about this. I feel luckly that I'm already ahead on my retirement savings and I don't even work at Wal-Mart. My parents didn't start one until they married. If people think the economy is getting worse I feel people aren't trying hard enough with some effort.

My child is retiring to Florida as soon as his treehouse sells.

All contributions to Roth IRAs can be taken out, free of tax, at any time, and earnings can also circumvent the IRS toll as long as your kid waits until age 59 1/2 to begin taking out profits

What's the over under on when they start taxing these?

I'm currently paying into his education fund and his life insurance/housebuying fund. At what point does the kid start paying his own way? :P

darkscout: All contributions to Roth IRAs can be taken out, free of tax, at any time, and earnings can also circumvent the IRS toll as long as your kid waits until age 59 1/2 to begin taking out profits

What's the over under on when they start taxing these?

On the off chance you're not joking...unlike traditional IRAs, you pay taxes on the money you contribute to a Roth IRA the year you earn it (and contribute it to your Roth IRA). When you take out the contributions later, you've ALREADY paid income tax on them.

So, the answer to your question is...never. You already paid income tax on them.

StoneColdAtheist: So, the answer to your question is...never. You already paid income tax on them.

I own stocks that I bought with money that was already taxed, but I'll still have to pay capital gains tax on any gain when I sell them. There's nothing to stop the law from being changed so that gains from a Roth become taxable.

StoneColdAtheist: darkscout: All contributions to Roth IRAs can be taken out, free of tax, at any time, and earnings can also circumvent the IRS toll as long as your kid waits until age 59 1/2 to begin taking out profits

What's the over under on when they start taxing these?

On the off chance you're not joking...unlike traditional IRAs, you pay taxes on the money you contribute to a Roth IRA the year you earn it (and contribute it to your Roth IRA). When you take out the contributions later, you've ALREADY paid income tax on them.

So, the answer to your question is...never. You already paid income tax on them.

The earnings and growth (AFAIK) are currently tax free as long as you wait until retirement.

How optimistic are you that the US government won't change its tax policy regarding retirement savings in the next ~50 years?

Funk Brothers: I'm 22 and I already have one of these Roth IRA accounts since I was 19. I'm not even out of college yet and I'll be contributing the maximum amount this year.

Then you must have someplace you're getting money from that the majority of college students do not, By far the biggest problem with this is that choosing between food, rent, and your retirement account, one of them isn't immediately important.

Funk Brothers: If people think the economy is getting worse I feel people aren't trying hard enough with some effort.

And...........no. Getting sick of this line of bullshiat as well. Seems to fit in well with the "You should have known the economy was going to tank by the time you graduated when you started college!" or "You're a lazy deadbeat whom no one should ever lend money to because the house you could while you were employed is unafforable now that you're out of work." It's not a matter of trying hard.

As a child with parents entering retirement, I'm more worried about them having money for themselves. I wish they'd put away $2000 for themselves when I was 13. I'll take care of myself. And probably them in a couple years. They're financial idiots.

Sounds nice in theory, but if you invest your Roth assets in bad investments or you time it poorly, you could end up with very little benefit at all. 5 years ago, the S&P 500 was worth more than it is today. It used to be fairly common that if you invested in your money in U.S. equities long term, you could expect a return of 8-10%. I have a feeling those days are gone. Dollar cost averaging used to be the strategy to use when investing a large chunk of money. But when everything is trading sideways for years on end, that strategy doesn't make a bit of difference.

darkscout: All contributions to Roth IRAs can be taken out, free of tax, at any time, and earnings can also circumvent the IRS toll as long as your kid waits until age 59 1/2 to begin taking out profits

What's the over under on when they start taxing these?

As others are saying, it depends on how likely Congress is to mess with the tax code. A direct tax, assuming the current code doesn't change very much, is not a huge likelihood. An indirect tax, such as "means testing" for Social Security and Medicare is more likely.
("Congratulations, you did a great job saving for retirement, so you don't get the Social Security payouts you were expecting." This is already happening in a way to "high-income" retirees, by taxing SS benefits)

Also (Disclaimer: I have not read the details), Herman Cain's "999" and most of the "flat tax" ideas would seem to eliminate any tax deductions or shelters. The national retail sales tax ("fair tax") would eliminate the entire income tax code, so the whole idea behind a Roth instead of a conventional IRA goes away.

So the Roth shelter thing is a bit of a gamble. How much depends on how likely radical tax code change becomes.

StoneColdAtheist: On the off chance you're not joking...unlike traditional IRAs, you pay taxes on the money you contribute to a Roth IRA the year you earn it (and contribute it to your Roth IRA). When you take out the contributions later, you've ALREADY paid income tax on them.

So, the answer to your question is...never. You already paid income tax on them.

Yes. I know how it works. My question was, as Unobtanium stated, how long until some congressman goes. "Hey now... We have people not really saving in their 401k as much as their Roth." and another chimes in "Yeah, there are people pulling out and living on a ton of money, TAX FREE!". Then a third gets the idea "Lets tax these bastards.".

It'll probably be 3 congresspeople that are in their early 30s or 40s that are running around in diapers right now. That had no idea everyone was going "Look, do a Roth It'll be magical when you hit 59.5, 65, 70, 90 (another thing they can change)."

Unobtanium: How much depends on how likely radical tax code change becomes.

Taxes, change? When has that ever happened?

M-G: StoneColdAtheist: So, the answer to your question is...never. You already paid income tax on them.

I own stocks that I bought with money that was already taxed, but I'll still have to pay capital gains tax on any gain when I sell them. There's nothing to stop the law from being changed so that gains from a Roth become taxable.

Actually, people who use after tax dollars to invest in assets that may appreciate in value (like stocks) are a a disadvantage to you, so I don't see what your point is other than the tax code is already screwed.

darkscout:

Unobtanium: How much depends on how likely radical tax code change becomes.

Taxes, change? When has that ever happened?

I'm too tired/lazy to look it up right now, but for a while we were pretty close to a flat tax system (3 or 4 marginal tax rates), but they started messing with it and it's all gone to pot.

I could go on, but it's past my bedtime and this could turn into a threadjack and/or a flamewar, neither of which I am in the mood for.

Unobtanium: I could go on, but it's past my bedtime and this could turn into a threadjack and/or a flamewar, neither of which I am in the mood for.

This was not the sarcasm you were looking for.

How to give a child retirement security.

Don't be poor & have babbies.

Sergeant Grumbles: Funk Brothers: If people think the economy is getting worse I feel people aren't trying hard enough with some effort.

And...........no. Getting sick of this line of bullshiat as well. Seems to fit in well with the "You should have known the economy was going to tank by the time you graduated when you started college!" or "You're a lazy deadbeat whom no one should ever lend money to because the house you could while you were employed is unafforable now that you're out of work." It's not a matter of trying hard.

I have met a variety of friends. A majority of them have graduated from college and started working full time at entry level jobs. They're doing quite well for themselves because they knew connections and networked, they have experience before applying, and were able to market their degree to prospective employers. You have to be aggressive out in the job market.. Then there are people who were absolutely shy and really did nothing during college life that they find themselves unemployed.

I'm currently studying for the GRE. I want to go to Grad School. I want to get into a urban planning program for graduate school. I am not giving up my dream. If I don't get the score I want, I'm going to Los Angeles in April for the American Planning Association's yearly Conference and network. I also want to go back to ROFLCon again at MIT next year to meet my friends, network, and listen what people say about internet memes. If all hope fails, I'll just go back to my job at the startup company I'm working at and keep studying for GRE until I get a decent score.

This country is having a crisis of confidence and a lack of willpower by our own people. We have allowed a complacent of entitlement and instant gratification. Rome wasn't built in a day and people believing that starting out with $100,000 for a job is rather silly to me. Countries that are well off create and make things that people want. Germany is a great example, so is Japan, and even the United States. Our country's decline has been inevitably delayed again. I just supported a local restaurant or a local farm that needs my money to buy new equipment to expand their production line in my community or state.

Krieghund: $10,000 is not going to go very far in 60 years. With a 3% inflation rate, it will buy the same amount of stuff that $1738 will buy today.

You can get yourself and your SO a cup of coffee every single day for the whole year with that kind of money.

If you had put money in an index fund 43 years ago (was doing some calcs and computing how much an average person starting at 22 and retiring this year had put into SS hence the 43 (22 + 43 == 65) ) each dollar would be worth 93 dollars today.

That's even with the 2008 crash losing about 30%.

Prices have not gone up 93 fold since 1968

If you take into account the time value of money people retiring today are looking at getting back 1/2 to 1/3 of the money they put in using median incomes, if you assume that the money was invested in the stock market.

(Average male gets back about 280k and a female about 310k. Those figures are from memory but should be ballparkish)

Never started my own savings and investment plan until after my second divorce when I was 38. Blue-collar military enlisted puke saving ten percent every month. College on the G.I Bill during a break in service. Fifteen years later I have half a million in the bank.

If I *had* had children, I would have put $2,000 a year in an IRA in their name every year from birth to twenty-one. When I kicked them out of the house I would tell them, "I made you a millionaire in your retirement. Your job is to figure out how to make it from here to 65."

Or maybe I would have spent it on cheap bourbon and sluts.
Certainly not on graduate tuition.

Funk Brothers: If I don't get the score I want, I'm going to Los Angeles in April for the American Planning Association's yearly Conference and network. I also want to go back to ROFLCon again at MIT next year to meet my friends, network, and listen what people say about internet memes. If all hope fails, I'll just go back to my job at the startup company I'm working at and keep studying for GRE until I get a decent score.

See...... you're doing it again. Where are you getting this money? That startup job you were lucky enough to land? Not everyone is so lucky. Not everyone has that startup to go back to.

My choices were:
a) Get a job.
b)Do nothing, because I had no money. There is no going to Los Angeles. There is no attending a conference to network. There is working a minimum wage job so I don't starve, and not going anywhere because gas and hotels are expensive.
There was none of this going to college either, because my choices were:
a) Work a McJob to pay rent and take out loans to cover tuition
b) Don't go to college

This isn't lack of willpower. It's lack of ability. I would have jumped at the chance to get out and network, but working two McJobs to keep rent and student loans properly paid leaves one with with barely enough time to sleep properly. So I always have to scoff at the idiots like yourself that seem to think that the only thing we're missing is a little hard work, completely ignorant of how fortunate you've been.
So unless you have something to say aside from the usual "I knew the right people and had time to form connections", kindly cram it up your ass.

Don't have one, spoil a nephew.

pcwolf: Never started my own savings and investment plan until after my second divorce when I was 38. Blue-collar military enlisted puke saving ten percent every month. College on the G.I Bill during a break in service. Fifteen years later I have half a million in the bank.

If I *had* had children, I would have put $2,000 a year in an IRA in their name every year from birth to twenty-one. When I kicked them out of the house I would tell them, "I made you a millionaire in your retirement. Your job is to figure out how to make it from here to 65."

Or maybe I would have spent it on cheap bourbon and sluts.
Certainly not on graduate tuition.

You could always adopt. Me, for example.

It's really simple.

Figure out how many years you are willing to work and how long you are expecting to live. Whatever that ratio is, save that ratio of your income. And you will be fine.

Example
Work from 22 to 65 (43 years)
Live until 75 (10 years)

You should save 23% of your salary.

This is a very, very simple approach. And it's really easy to understand. Forget about compound interest and always getting 7% on your investments for a while. That might happen. It certainly could. But do you want a retirement that *might* happen? Or one that will? You are, quite literally, saving for a 10 year vacation. It should take a lot of money.

That's great advice.

Krieghund: CujoQuarrel:

If you had put money in an index fund 43 years ago (was doing some calcs and computing how much an average person starting at 22 and retiring this year had put into SS hence the 43 (22 + 43 == 65) ) each dollar would be worth 93 dollars today.

That's even with the 2008 crash losing about 30%.

Prices have not gone up 93 fold since 1968



The money as invested in the article would also be worth a lot more than $10,000. It's just that the authors decided that the theoretical kid would withdraw $10,000 a year from that retirement account after he hit retirement. In 60 years that will be a token yearly income.

You sound like you're upset about Social Security. I'm just glad the baby boomer generation has something to fall back on in addition to their mutual funds that lost 30% of their value in 2008.

Not upset per se. Was wondering if I was really going to be 'taking out more' than I had put in as a lot of people here keep saying. Got some years to go till retirement but I've already put in 2x the value of what I will get out in the end. Of course some of us gotta put in more so that those who can't put in any can have some.

But when my time comes to draw I'm not going to feel guilty at all.

CujoQuarrel: Not upset per se. Was wondering if I was really going to be 'taking out more' than I had put in as a lot of people here keep saying. Got some years to go till retirement but I've already put in 2x the value of what I will get out in the end. Of course some of us gotta put in more so that those who can't put in any can have some.

Depends on how long you live. There's a good chance if you're in your 20s or 30s today that you'll live to over 100 years old. 30 years of social security is a fair amount of change. Typically it's poor people and minorities who die before they can really collect their "share" of what they paid in. Of course, you may be poor, a minority, or have a family history of early death.. if so then whoopsie, you should've been born to a wealthy family with good health.

An extra $160/mo? Sure why not.

I'll just add that to the $500/mo I need to save right now for her college (I don't but that's what the financial calculators all tell me I need to be saving based on a modest 6% annual growth in her 529 plan), $800/mo for daycare and since she's a girl and at some point I'd like to do my fatherly part and pay for a decent wedding (say $20K) so I should throw in $25 a month into some other investment. Oh, and the little life insurance policy I took out (another $25).

So what are we up to now without spending a dime on clothes, food and other necessities? Let's see, that's rougly $1500.00 a month to give your child the things a middle class child could reasonably expect plus now a headstart on retirement. And I'm leaving out the ungodly amount we pay for a family health insurance plan.

Not really going anywhere with this. Just some random whining.

Jesus, that did not at all read like a sales pitch. And you farkers are usually such a skeptical lot.

These people really hate the idea of pensions, don't they?