sumner wrote:Tiago Splitter wrote:sumner wrote:K-JD 2L here- i was reading through the thread and noticed people were accounting for 5k a year into an IRA. just for my own education, is that really necessary? does a 26 year-old need to be dumping 5k into his IRA per year?
Are you asking whether you should be putting money into an IRA instead of paying down loans? Or are you asking whether you should be saving at all?
If it's the first question, there are arguments going both ways and either is justified. If it's the second, yes, saving is good. IRAs just give you tax advantages not available in traditional savings accounts.
yeah this is independent of any debt questions. I know I'm one of the few 23 year olds with an IRA I just wasn't planning on putting that much money in it per year at this point in my life. I figured it would be more prudent to put that money in a savings account for a down payment or a wedding.
It just seemed like a lot so I was wondering if that was the norm.
You can withdraw the principal from a [roth] IRA without penalty any time, so if you were otherwise going to be saving/investing, there's no reason not to use a [roth] IRA as the vehicle up to the limit.
Everyone has different burdens, lifestyles, levels of frugality, goals, etc. It's probably smart to always shoot for a minimum of 5% to 10% of your income saving for retirement to get in the habit, but certainly there's no rule that you need to be aggressively planning to retire as soon as you start your first job.
I am though. Still planning to retire by 30.