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Retirement lessons learned

August 13th, 2008 at 01:33 pm

Last night at dinner DH and I were discussing our finances. For the first time DH expressed that he was worried about our retirement. Honestly, I couldnt have been more pleased! Now, let me preface all of this by saying DH and I are 25 and we currently have about $17,000 in our Roth IRA. We have maxed out both of our accounts for the past two years and already have 2009s contribution saved. Maxing out the accounts equates to between 15 and 20% of our gross pay. Even if we only did this for the remaining 40 years of our work life and earned 6%, wed have over a million dollars. In reality, when I start working (if not before) well open 401(k) accounts and probably even taxable accounts to save even more for retirement.

DHs main fear stems from the fact that our Roths have been losing money. I try to tell him that eventually the markets will go up and we will make money. So far we have lost about 1300 dollars. Ill fully admit that part of it is my fault. In January we deposited the entire amount and didnt dollar-cost average. Before I did it, I was torn as to what was the best way. Looking back, dollar cost averaging would have been the way to go. However, I also heard the advice that by doing it in a lump sum, I would have the entire year for the whole amount to grow tax-free. I showed my naivety and thought the economy would bounce back quicker than it did. Oh well, lesson learned. I have faith that eventually the market will go up and well make money. And youd better believe well be making monthly or bi-monthly contributions for our 2009 contributions!

3 Responses to “Retirement lessons learned”

  1. momsents Says:

    Wow, I think it is awesome that you and DH are planning for your retirement, and are off to a great start. I am nearing 40 and DH and I have over $100K and we worry. Just keep plugging away and doing your dollar-cost averaging. You have managed to achieve this before you have started your professional career, to boot!

  2. Broken Arrow Says:

    Well, if your hubby is anywhere near your age, you've got lots and lots of time for the economy to bounce back up.

    Please don't be surprised if the economy in the span of up to a decade. The dot com bust still reverberates to this day, and what was that, back in 2000?

    But again, you have so much time that it actually won't matter too much whether you DCA or lump sum. Just so long as you guys keep plugging it in.

  3. Aleta Says:

    We did the same thing some years ago and the stocks went way down that year. The only thing you can look at is that the money that you invested is not in your savings account earning interest that will be taxed at the end of the tax year.

    I'm starting to think that just investing monthlyh is the best way. How far can it go up or down within that time frame?

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