What if you can't put money in a 401K?

[oreo]

I'm working through a temp agency (for the last year) and they don't offer a 401K at all. So I'm going to contribute the $5000 I can to a ROTH but I think that is all I can do for the year, right? I have extra cash (currently sitting in a savings account). I'm going to put some money in my HSA but what do others do for retirement in this situation? Just invest the money and it just isn't in a retirement account?

I figure there must be others in this situation too and I'm curious what they do.

[Savoir Faire-Demogague in NJ]

What does your entire financial picture look like?

And to directly answer your question, yeah, you can put $5000 into a Roth. Incidentally, you can still fund your Roth for 2010.

[oreo]

This message has been deleted.

[phil5185]

Just invest the money and it just isn't in a retirement account?
I figure there must be others in this situation too and I'm curious what they do.

Before IRAs and 401k's were invented we invested our retirement money in brokerage accounts. After those inventions the younger generations seem to have forgotten that avenue.

You need to build wealth for pre-59 1/2 as well as after age 59 1/2. We use a SP500 Index Fund, it grows tax deferred and will receive the favorable capital gains tax rate on the profit if/when we sell. Or if we allow it to be inherited the tax will be waived.

The retirement accounts are not magic, the only difference is their tax status. With a Roth you pay tax now instead of when you sell, with an IRA you get a tax break at the front & pay the tax when you sell. And with a taxable account you pay cap gains tax.

Tax Code cannot be predicted, it changes continually and sometimes drastically - so you need to diversify tax status (just as you diversify investments). So you need to use all 3 account types, you don't want to reach age 65 and find that you are 100% in the wrong fund. Eg, what if the US changed to a federal sales tax - the tax free Roth feature would be worthless.

[Savoir Faire-Demogague in NJ]

I'd put the kibosh on extra mortgage payments and put it into some sort of regular monthly savings/investment plan, preferably into a variety of stock index funds.
Your net worth is pretty light.
You guys are also perfect candidates to have a fee for service financial planner take a look at your financial picture.

[oreo]

Thanks for the input. We were already planning to speak with the financial planner at our credit union so we'll continue with that plan. I'll also research S&P500 index funds. I know my SO has some of his money in those but I don't have anything in the yet.

[lynnerself]

Are financial planners at credit unions just like those at banks? If so, be very careful of what they try to sell you. A bank's "financial planner" is usually just a salesman for loaded mutual funds or other products. I don't what the status of a planner at a credit union is.

[bobosensei]

We recently opened an S&P500 Index fund with vanguard. We try to put as much money as possible in there after retirement options are maxed out.

[phil5185]

A bank's "financial planner" is usually just a salesman for loaded mutual funds or other products. I don't what the status of a planner at a credit union is.

Similar to banks - be careful not to be 'sold' one of the toxic commission generators - no loaded funds, no annuities, no life insurance.

[oreo]

Since everyone is heavily touting the S&P 500 index, are there any "bad" ones of these? I have a brokerage account with Schwab. Do you think their S&P 500 index is as good as others? The fees are quite low I think. The symbol is SWPPX.

I think I'll just listen to what the financial planner says. I'm not going to buy anything at the credit union anyway. I just use them for paying my bills.

[DVM gone riding]

I have a brokerage acct with schwab and money in their S&P 500, it has done well this last year, no complaints.

[Plain Old Petunia]

A bad index fund is one which charges too much. According to Morningstar, the expense ratio of SWPPX is .09%. That's fabulous. Thumbs up for SWPPX.

[Peace77]

You can put funds into a ROTH IRA for 2010 (if you do it before April 18th)
and you can put funds into a ROTH IRA for 2011.

A paid for house can also be part of your retirement package.