I am so lost. Retirement options...where do I start?

[nikiz628]

I do not know why, but for some reason, when it comes to retirement, I just get extremely confused (I am probably making it harder than it is, but that's not uncommon for me). H works, I am a SAHM. We will both turn 29 this year- and we do not have any type of retirement account set up yet (which is driving me insane). His employer does not offer any type of 401k, etc.

I get very overwhelmed when I start researching all of the options for retirement. What does YM suggest as far as where we should begin? What type of account(s) is/are better? I know that there are a lot of variables for these answers...but I figured this was a great place to give me a starting point because I definitely want to get something going before we turn 30. TIA!

[bobosensei]

How much money do you make a year and what do the rest of the finances look like?  Do you have credit card debt, own a home, have rentals or other income streams, etc?

Without knowing the whole picture, I think most advice would be to open roth IRAs for yourself and your husband.  I assume that you make under the income limit because I've never known a person making 6 figures that didn't have access to some sort of retirement plan at work.  I like the motley fool for beginners.  Go to www.fool.com to start learning about investing.  I love the people on this board, but their advice is no substitute for researching and learning on your own.  You'll hear conflicting things, and you just have to be able to know what is best for your situation.  Eventually you will get there, just take things one step at a time.  Ask questions, but do your own homework too.

PS How is your DH with finances?  Is there something that is holding him back from wanting retirement accounts?  Does he not understand what to do or does he not think it is important?  There is only so much you can do on your own.  If he is working at cross purposes it will be difficult for you to save.

[Shooby]

It doesnt' have to be complicated. Just pick a Roth IRA and start contributing as much as you can on a regular basis that buys mutual funds.

[gooddecisions]

Today is the perfect day to get started and opening up a Roth couldn't be easier. Go to investor.vanguard.com and follow the steps to open a Roth IRA account. I think it's still $1000 to open the account. If you want to keep it simple, you can pick a target fund or a mutual fund. Good luck! 

[Shooby]

Yes, the Paralysis of Analysis. Just do it.

[Deleted]

It might help if you tell us what your biggest roadblocks are. Finding money to put aside in the first place? Or do you have some savings but it's sitting in a checking account?

[tcu2003]

Aug 7, 2015 7:07:17 GMT -5 Shooby said:

Yes, the Paralysis of Analysis. Just do it.

This! Just open accounts with Vanguard or Fidelity. You can invest in the S&P500 or equivalent fund until you decide what other things you might want to invest in.

[ArchietheDragon]

Open a ROTH IRA at Vanguard.    

Invest it in Vanguard Target Retirement 2055 Fund (VFFVX) (you will need to deposit $1000 initially to open it). 

Set it up so that it you autoamtically contribute to it every month.  You can do this by linking it to your bank account. 

Set it and Forget it.   

[Deleted]

Well, the most obvious answer is IRAs for both of you. I'd just go to Vanguard, set one up and start auto contributing.  A Target fund would be the easiest solution to get your started.  Whether you go Roth or Traditional depends on your tax situation.

[garion2003]

What sort of employer does your husband work for?

[myrrh]

Do you have a high deductible health plan, and could you open a Health Savings Account?
Can you start a side business and contribute to a Solo 401k?
How big is the employer? Is there any chance of talking to boss/HR about starting a 401k plan?
Otherwise definitely contribute to Roths for both of you (you can call one a spousal IRA) and save in a taxable account.

[nikiz628]

Aug 7, 2015 2:20:48 GMT -5 bobosensei said:

How much money do you make a year and what do the rest of the finances look like?  Do you have credit card debt, own a home, have rentals or other income streams, etc?

Without knowing the whole picture, I think most advice would be to open roth IRAs for yourself and your husband.  I assume that you make under the income limit because I've never known a person making 6 figures that didn't have access to some sort of retirement plan at work.  I like the motley fool for beginners.  Go to www.fool.com to start learning about investing.  I love the people on this board, but their advice is no substitute for researching and learning on your own.  You'll hear conflicting things, and you just have to be able to know what is best for your situation.  Eventually you will get there, just take things one step at a time.  Ask questions, but do your own homework too.

PS How is your DH with finances?  Is there something that is holding him back from wanting retirement accounts?  Does he not understand what to do or does he not think it is important?  There is only so much you can do on your own.  If he is working at cross purposes it will be difficult for you to save.

- We do not have any credit card debt, but we are aggressively paying down our student loans. We do own a home, and we also have 1 car loan.

- Obviously, not making over 6 figures. We are under the income limit for a roth.

- DH is definitely on board, but like me, wasn't exactly sure where to begin. We made really stupid financial decisions when we were younger, and we are both very cautious and trigger shy on things now. Not always a bad thing, but it can get frustrating.

I am definitely going to check out that website- thank you so much for the info!

[nikiz628]

Aug 7, 2015 6:56:42 GMT -5 gooddecisions said:

Today is the perfect day to get started and opening up a Roth couldn't be easier. Go to investor.vanguard.com and follow the steps to open a Roth IRA account. I think it's still $1000 to open the account. If you want to keep it simple, you can pick a target fund or a mutual fund. Good luck! 

Thank you for the link- checking it out now!

[nikiz628]

Aug 7, 2015 7:07:17 GMT -5 Shooby said:

Yes, the Paralysis of Analysis. Just do it.

Story of my life lol.

[nikiz628]

Aug 7, 2015 7:44:16 GMT -5 @athena53 said:

It might help if you tell us what your biggest roadblocks are. Finding money to put aside in the first place? Or do you have some savings but it's sitting in a checking account?

I don't think we have any issue finding money to put aside, it was more of what do we do with it? Right now, we just sock it into a generic savings account until we can figure out the "best" option.

[Plain Old Petunia]

I agree with all those who said Target Retirement fund at Vanguard; I believe that is the best choice.

However, if you don't have 1k to get started, please be aware you can open IRAs at Betterment with any dollar amount.   Like Vanguard, they offer a nice diversified mix at a low cost (not as low as Vanguard).

[nikiz628]

Aug 7, 2015 7:49:37 GMT -5 garion2003 said:

What sort of employer does your husband work for?

Family owned company (literally has 6 employees).

[bobosensei]

I like vanguard too.  DH and I have roths through our bank, USAA, but my rollover IRA is with vanguard along with our taxable investments.

[nikiz628]

Aug 7, 2015 9:45:14 GMT -5 myrrh said:

Do you have a high deductible health plan, and could you open a Health Savings Account?
Can you start a side business and contribute to a Solo 401k?
How big is the employer? Is there any chance of talking to boss/HR about starting a 401k plan?
Otherwise definitely contribute to Roths for both of you (you can call one a spousal IRA) and save in a taxable account.

I really should've quoted these all in one response, instead of individually..I didn't realize I was going to respond to so many.

He has discussed this with his boss before, and for a moment it looked like something would happen, but nothing ever came about. His boss gives them a TON of perks (competitive salary, free health insurance, company vehicles, etc). I guess he drew the line at retirement options...

[Plain Old Petunia]

Aug 7, 2015 10:34:27 GMT -5 nikiz628 said:

Aug 7, 2015 7:49:37 GMT -5 garion2003 said:

What sort of employer does your husband work for?

Family owned company (literally has 6 employees).

Are they interested in starting an employer plan for their employees? The costs of administering a 401k plan can be off-putting to a small employer. However, they could establish a Simple IRA plan at Vanguard for $0 with $0 on-going costs. The employees pay $10 annually per mutual fund until they reach an account balance of 50k; then they pay nothing (other than expense ratios of the fund(s) they choose).

The employer is required to match employee contributions. They will choose to either match 100% of the first 3% each employee contributes, OR  2% of salary for each employee whether they contribute or not.  They are allowed to suspend the match temporarily if times are tight.

The business owner is allowed to participate too.

Despite the name, a Simple IRA is an employer plan.  Employees can contribute up to 12.5k for 2015 (additional 3k if age 50 or over) and these contributions do not count towards the employees IRA limit of 5.5k (additional 1k age 50 or older).

[nikiz628]

Aug 7, 2015 10:43:31 GMT -5 Plain Old Petunia said:

Aug 7, 2015 10:34:27 GMT -5 nikiz628 said:

Family owned company (literally has 6 employees).

Are they interested in starting an employer plan for their employees? The costs of administering a 401k plan can be off-putting to a small employer. However, they could establish a Simple IRA plan at Vanguard for $0 with $0 on-going costs. The employees pay $10 annually per mutual fund until they reach an account balance of 50k; then they pay nothing (other than expense ratios of the fund(s) they choose).

The employer is required to match employee contributions. They will choose to either match 100% of the first 3% each employee contributes, OR  2% of salary for each employee whether they contribute or not.  They are allowed to suspend the match temporarily if times are tight.

The business owner is allowed to participate too.

Despite the name, a Simple IRA is an employer plan.  Employees can contribute up to 12.5k for 2015 (additional 3k if age 50 or over) and these contributions do not count towards the employees IRA limit of 5.5k (additional 1k age 50 or older).

I am going to relay this info to my H, to share with his boss. Thank you!!

[HoneyBBQ]

Another vote for a targeted fund. They won't out perform some of the other funds, but it's an easy one stop shop.

[Tiny]

I think you can even open up His and Hers  iras (Roth or traditional or some combination).  You could sock away up to 11K for 2015!  

[MN-Investor]

I agree with the other posters - start out by investing in a target date fund. Just go for it. You can always make changes once you've learned more. The important thing is to get your money working for you.

I strongly recommend Bogleheads. They are a large group of folks who follow John Bogle's (founder of Vanguard) advice - live within your means, invest in low expense ratio index funds in an asset allocation you can live with, and rebalance periodically. The Bogleheads site has a very informative wiki and a very, very active forum with some very knowledgeable posters.

[Bluerobin]

Here is another consideration.  If you plan to retire early, you may want to put something away that is NOT in an IRA.  That way you could access it before you turn 59 and1/2.  That is what I did and retired early.  Of course, the Roth is very important. 

[Deleted]

It's good that you're actually putting money aside.  A lot of people spend everything they make and then some. 

Since it sounds like you're starting with zero knowledge, I wanted to explain what a target date fund is.

In general, the younger you are, the more you should hold in stocks rather than bonds.  Stocks have a much higher average return over the long run but they zigzag from year to year.  Bonds will be more stable but carry lower returns (in the form of interest).  A Target Date Fund will have a mix appropriate for your retirement year (let's say it's 30 years from now, so you select a 2045 Target Fund).  The mutual fund company will gradually change the mix to fewer stocks and more bonds as you get closer to retirement.  They rake off a fee for managing it, of course, but Vanguard's fees tend to be lower than most companies. 

These funds WILL go down in bad markets.  If you trust your fund company, hang in there and don't panic and sell out.  Instead keep sending them more.  One of the reasons my investments recovered so well from the financial meltdown was that I kept investing, so I bought good investments at bargain-basement prices.    Eventually everything recovered.

Also- make sure you have money you'll need in an emergency in something simpler like a checking account.  I've known well-educated people who had their kids' college savings 100% in stocks when the kids were about ready to send out applications.  The market crashed and they were MOST unhappy. 

You and your husband can do this.  My parents funded their retirement on Dad's job as a manager in the steel industry before anyone had ever heard of 401(k)s.  He was a metallurgical engineer, so no background in finance, but he started buying stocks in his 30s.  Mom called it his "play money" but she meant that it wasn't the grocery money.  He made a few mistakes but was young enough to recover from them.  He also had the disadvantage of no info available on the Internet and only the high-priced major brokerages such as Merrill Lynch to do his trades.  I retired at age 61, also after years in middle-management jobs.  You're starting to think about this a lot earlier than most people!

[nikiz628]

Aug 7, 2015 14:49:23 GMT -5 @athena53 said:

It's good that you're actually putting money aside.  A lot of people spend everything they make and then some. 

Since it sounds like you're starting with zero knowledge, I wanted to explain what a target date fund is.

In general, the younger you are, the more you should hold in stocks rather than bonds.  Stocks have a much higher average return over the long run but they zigzag from year to year.  Bonds will be more stable but carry lower returns (in the form of interest).  A Target Date Fund will have a mix appropriate for your retirement year (let's say it's 30 years from now, so you select a 2045 Target Fund).  The mutual fund company will gradually change the mix to fewer stocks and more bonds as you get closer to retirement.  They rake off a fee for managing it, of course, but Vanguard's fees tend to be lower than most companies. 

These funds WILL go down in bad markets.  If you trust your fund company, hang in there and don't panic and sell out.  Instead keep sending them more.  One of the reasons my investments recovered so well from the financial meltdown was that I kept investing, so I bought good investments at bargain-basement prices.    Eventually everything recovered.

Also- make sure you have money you'll need in an emergency in something simpler like a checking account.  I've known well-educated people who had their kids' college savings 100% in stocks when the kids were about ready to send out applications.  The market crashed and they were MOST unhappy. 

You and your husband can do this.  My parents funded their retirement on Dad's job as a manager in the steel industry before anyone had ever heard of 401(k)s.  He was a metallurgical engineer, so no background in finance, but he started buying stocks in his 30s.  Mom called it his "play money" but she meant that it wasn't the grocery money.  He made a few mistakes but was young enough to recover from them.  He also had the disadvantage of no info available on the Internet and only the high-priced major brokerages such as Merrill Lynch to do his trades.  I retired at age 61, also after years in middle-management jobs.  You're starting to think about this a lot earlier than most people!

Thank you so much for taking the time to break that down for me. I really appreciate it!