Fidelity March 28 #FidChats: Last Dash For 2018 IRA Contributions

Fidelity March 28 #FidChats: Last Dash For 2018 IRA Contributions

by Julie Jason on Mar 28, 2019

Thank you to @Fidelity for hosting their Thursday, March 28, 2019 #FidChats on tax season and saving for retirement, and for inviting me to be a panelist. Also, thank you to all the panelists for joining the conversation: @Kiplinger, @HerMoneyMedia, @Jeanne_Fidelity  @Experian, @andreacoombes, @RetireRevised, @Elle_CM, @CHLebedinsky, @arioshea

In case you missed it . . .

 

@Fidelity: Q2: Contribution limits for IRAs increased another $500 this year. Any tips for saving the extra money to get closer to hitting the new maximums? 

@RetireSecureNow: A2: This is easy. You can either consume $500 each year on stuff. Or you can put it to work. An extra $500/year invested in a stock index fund for 30 years (total $15,000) turned into between $67,000 and $280,000 (1934-2018). History tells us to save and invest.

@RetireSecureNow: A2: If you have a job, you can choose to use some of your pay to make purchases of consumer goods. Anything left over creates “savings.” When you have savings you can to put that money to work for you by making investments. Think back to last year. Where did $500 go?

 

@Fidelity: Q3: What inspiration can you share with Millennials who are putting off saving for retirement? 

@RetireSecureNow: A3: If you are a Millennial with student debt obligations, does that keep you from starting to invest for retirement? Don’t wait. Have 2 simultaneous goals (debt payments and investing). If you don’t invest now, you lose the leverage that time gives you (compounding).

@RetireSecureNow: A3: If you wait to start saving for retirement, you’ll lose the leverage that time gives you. You don’t want to regret, as many retirees do, that you didn’t start saving early enough. https://www.forbes.com/sites/juliejason/2018/10/27/are-you-an-influencer-do-you-know-someone-who-just-started-working-you-can-make-a-difference-today/#64be1b3a3e24

 

@Fidelity: Q4: Any tips for helping people decide which type of IRA is right for them: Roth or Traditional? 

@RetireSecureNow: A4: If you qualify for a Roth, do that first. Tax free is better than tax-deferred, hands down. For more information, enjoy reading Section 2, “401(k)s and IRAs: The Working Years” in Retire Securely. http://tinyurl.com/y9bf42c6 

@RetireSecureNow: A4: Roth IRAs can get children and young workers on the road to building retirement wealth slowly but surely. A Roth IRA allows growth to occur free from the drag of taxes during the investment period and when withdrawing money after retirement.

@RetireSecureNow: A4: If you are considering a Roth IRA, remember that you need to qualify. Look up current income limits here: https://www.juliejason.com/blog/retirement-contribution-limits-increased-2019

 

@Fidelity: Q5: Scenario: You want to buy a house, but you’re a little short on the down payment. Do you tap into your Roth IRA to help lessen the shortfall? FidChats

@RetireSecureNow: A5: No. Taking money out of your Roth IRA for any reason other than retirement is a bad practice; you don’t want to endanger your tax-free retirement nest egg. https://www.juliejason.com/blog/market-math-engaging-young-workers-save-retirement

 

@Fidelity: Q6: Sometimes “baby steps” are all it takes to get started and make planning easier for the future. What small steps would be most helpful for people looking to save more? 

@RetireSecureNow: A6: Step 1: Be asset-aware. You use assets (earnings/savings) to pay for things. Once you consume those assets, they are gone. They cannot be put to work. https://www.forbes.com/sites/juliejason/2018/10/27/are-you-an-influencer-do-you-know-someone-who-just-started-working-you-can-make-a-difference-today/#64be1b3a3e24

Step 2: Be time-alert. Time creates wealth-potential for everyone, since time fuels compounding (interest-on-interest). Time is an asset that you lose (or use) each and every day. You cannot replace lost time. 

Step 3: See yourself as an “investor.” An investor leverages time and opportunity. A “consumer” directs assets to short-term “wants.” 

@RetireSecureNow: A6: Pretend you will retire on Monday. How long will your money last? To get you started on this exercise, enjoy reading “Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad (Revised 2017).” https://www.juliejason.com/julie-jason-s-books 

 

@Fidelity: Q7: Take a wild guess: A $5,500 IRA contribution today could be worth $______ in 30 years?

@RetireSecureNow: A7: No guess needed: If history repeats itself, expect a stock index fund investment of $5,500 held for 30 years to grow to between $100,000 (8.6%) and $412,000 (13.1%) (all 35 yr. holding periods, 1927-2019).

 

 

To follow along with the next #FidChat, follow me on Twitter at @RetireSecureNow

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To learn more about investing at any stage of life to prepare for retirement, be sure to check out my latest book, Retire Securely: Insights on Money Management from an Award-Winning Financial Columnist on Amazon, now available as an eBook and an audiobook.