Retirement advice for a young man
Hello,
I’m trying to provide some guidance for my nephew who just opened both a tIRA and ROTH through his city-agency retirement plan this year. Would you advise someone who’s trying to get a jumpstart on their retirement savings to contribute initially to a ROTH or tIRA? I see the pros and cons with each retirement strategy but I’m not sure which will be most beneficial in the long run. (He could also contribute in any ratio to the two plans.) All all his contributions are going into a fund that tracks the stock market at this point.
I would greatly appreciate your opinion. Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2019-12-24 00:04
It depends on several things. Are you sure these are IRA accounts, and not an employer plan like a 403b? If they are IRAs, contributions can still be made for 2019 up to 4/15/2020, so which year does he plan to contribute for? Is he single and just getting started with a modestly paying position?
Permalink Submitted by Philo ZRock on Tue, 2019-12-24 01:51
These are only IRA accounts. he will be enrolling in a pension plan and likely a TDA within the next year. I’m not concerned about 2019 since he earnings/contribution are at a bare minimum. He’s single and at the lowest tax bracket at this point. Our plan is for him to be able to bring up his contribution % as long as he lives with his family and has very little overhead at this point (other than rent, phone bill, and car insurance.)
Permalink Submitted by Alan - IRA critic on Tue, 2019-12-24 03:14
He should start with Roth IRA contributions. When he reaches the 22% bracket, then he could switch to TIRA contributions as long as he can deduct them.