2006 Makeover, Step #4: Open your retirement accounts

Posted at 7:16 on Monday May 08, 2006 | Filed Under Introductory Articles

Oh, in case you didn't catch it over the weekend...the 4th step in the 2006 financial makeover is about opening your retirement accounts. Check out The World's Easiest Guide To Understanding Retirement Accounts.

Previously:

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Comments (7)

1.: Ramit-

I just started reading your steps and I'm starting to follow them. Thanks!! I have a couple of questions. When you say to put 20% of your income towards savings does that include the amount going towards retirement? I am currently maxing out my 401(k) so that's 15%. Also, I assume the max of $95,000 for a Roth includes overtime and bonus pay, right? (I feel like that may be a stupid question, but want to make sure). If you're not eligible for a Roth, what suggestions would you have? Thanks so much. Your information is really invaluable.

Posted by Justine at May 8, 2006 10:09 AM

2.: Thanks for the kick in the pants, Ramit. I consider my situation as pretty decent on the retirement account front, because I've been socking money away in my 401k since I was 19 (I'm now 26). However, your post was just the impetus I needed to get that Roth IRA started. I'm now putting about 15% of my income into various savings vehicles, and my wife and I don't notice the lack. Monthly spending truly does adjust to meet incomes, and in a perverse way, it's a great feeling to decrease my monthly "income".

Posted by GHoosdum at May 10, 2006 06:08 AM

3.: I came across this site yesterday and I'm starting to put your advice into action. I'm setting up a higher interest account for short term savings as well as Roth IRA. I'll probably start with something like the Vanguard Index Fund and go from there.

Great site and great information!

Posted by Ben at May 11, 2006 11:24 AM

4.: "makeover" eh, Ramit? Sort of a money makeover? More comprehensive than that? My bad. A Total Money Makeover, maybe? At least try to be original - www.daveramsey.com

Posted by thrillhouse at May 15, 2006 11:00 AM

5.: Uh, I didn't even think about his stuff before doing my makeover, and the word fit. And now that you point it out, I'm pretty sure Dave Ramsey doesn't own the word "makeover."

Posted by Ramit Sethi at May 15, 2006 11:06 AM

6.: its cool, don't sweat it, Ramit - his stuff is much better anyways + its actually proven to work

Posted by thrillhouse at May 15, 2006 03:18 PM

7.: Hi Ramit,
I'm new to your blog and I'm really enjoying it. Not sure if my question fits into this "makeover" series but I had to ask . . .

I have been out of school for a few years now (I am 26). Although I try to stay on top of planning for my future, I don't have much to show for it other than meeting my employer's modest match on my SIMPLE IRA (through Schwab, have no idea how to invest the money, I'll have to comb through your blog for inspiration).

In Korean culture it's understood that your children will take care of you when you stop working.

My parents, who have made their living running small retail spaces since they moved to America, have never been able to save much or plan for retirement.

I am an only child so all eyes are on me!

To be completely honest I am starting to get REALLY worried about how I will make/save enough to support them when they reach retirement age (ideally within the next 5-10 years).

I know this is something that might seem so completely foreign to some of your readers (I realize many people just don't have that kind of relationship with their parents) but it seems like a looming responsibility that many people fail to adequately prepare for.

I have no idea where to start!

Posted by candice at June 6, 2006 01:29 AM

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