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Subject:  Re: Honest IRA/Roth Comparisons Date:  3/30/1998  12:01 AM
Author:  Rayvt Number:  2486 of 88538

<<Sorry Ray, but that answer is outright wrong. Even if you're in an employer's retirement plan, all or some of an IRA contribution may be deductible. It depends on your income level.>>

_may_. Yes.

<< And most people *can* qualify for deductible IRA contributions (the stats on average family income for the U.S. solidly supports this).

And the people who qualify *can* afford to do it. It just takes some financial discipline. I doubt that you'd tell me that a family earning $40k (the *beginning* of the nondeductible phase-out range for 1997!) can't afford $2k for an IRA.>>

Yes, that's exactly what I'm telling you. I think the data gathered by the US government bear me out.
Back-of-the-envelope estimates:
$40,000 annual income, family of four.
Fed tax= $4,500 ($10,000 std deduction)
State = $1,200 (flat 4% of AGI)
FICA = $3,000 (7.5% of $40,000)
Total taxes = $8,700

Housing $12,000 (est $1000 per month)
food $5,200 ($100 per week, $25 per person per week)
utilites $2,400 ($200 per month, gas, electic, phone)
clothing $2000 ($500 per person per year)
car $4,800 ($400 per month, payments & insurance)
Total major expenses: $26,400

Left over cash, $4,900 ($40,000 - 8,700 - 26,400)

Minor & misc expenses can easily consume that remaining $4,900--I didn't account for any credit card payments or any other loan payments, or any other savings (such as saving for college expenses for the kids).


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