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Author: spsullivan Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76421  
Subject: WHAT THE HELL SHOULD I DO? Date: 7/25/2000 8:53 PM
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Hello,
I am 23 years old, and I am a teacher, it will be my second year teaching and I have invested in stocks but now I want to start my retirement portfolio.
I am wondering what is the best plan I should use, one of them has to be better for me when I am 60...
I used the calculator and it told me an IRA would pay me more monthly then a roth ira, I am a math teacher and I do not see how that is possible. I would think a roth would be better because it taxes before not after...
Please let me know what someone thinks I should do, should I also start a 403B?? I have read all documents at the fool.com about retirement, but still a little confused!
thanks so much!!
Shawn
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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23657 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/25/2000 9:07 PM
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Hello,
I am 23 years old, and I am a teacher, it will be my second year teaching and I have invested in stocks but now I want to start my retirement portfolio.
I am wondering what is the best plan I should use, one of them has to be better for me when I am 60...
I used the calculator and it told me an IRA would pay me more monthly then a roth ira, I am a math teacher and I do not see how that is possible. I would think a roth would be better because it taxes before not after...
Please let me know what someone thinks I should do, should I also start a 403B?? I have read all documents at the fool.com about retirement, but still a little confused!
thanks so much!!


Use a little better judgenent in the use of language in your subject line.

Math and finance are not the same but as you learn pass a little financial knowledge to your class.

The answer is a ROTH.

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Author: rhecker One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23664 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/26/2000 8:36 AM
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One example of how it should be very clear that a traditional IRA would pay more than a Roth would be to assume that while you are working and making contributions you are in the 15% tax bracket, and when you retire and taking distributions from the IRA you are in the 28% tax bracket.

You say you have read all documents at the fool.com about retirement... I just wanted to suggest you read the 13 steps of retirement planning, just in case you missed it:
http://www.fool.com/Retirement/Retirement.htm

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Author: rhecker One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23670 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/26/2000 1:26 PM
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One example of how it should be very clear that a traditional IRA would pay more than a Roth would be to assume that while you are working and making contributions you are in the 15% tax bracket, and when you retire and taking distributions from the IRA you are in the 28% tax bracket.

Oops.... I think I got that backwards. It should be contributions at 28% and distributions at 15%. Then a traditional would make more sense.

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Author: jtmitch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23673 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/26/2000 2:23 PM
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Relative your question about 403(B)s: Read the literature your school system has very carefully. Many 403(b)s are variable annuities . While annuities are not necessarily all bad, you should know exactly what you are getting into, what expenses are associated with them and what the penalties may be if you want to move the money elsewhere before, say, 5 or 7 years. A lot of school systems, hospitals and similar non-profits have not done their employees any favors in the 403(B) vehicles they have made available to them.

jtmitch

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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23684 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/26/2000 6:00 PM
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Let me tell you, I am not a millionaire but I am working on it after reading your board. I will be there soon but my problem is my son. He is 17 and feels that he needs a new car because everyones else has a parent that bought them a new car. He says he can't get a girl friend because he drives a used car & a 1993 Honda dual sport motorcycle with 2000 miles because he looks like a freak! He thinks we should buy him a $12,000 car because we are rich (net worth of $100,000 to $150,000 he thinks) How do we handle this? I try to talk to him and explain that his father and I had to earn our own cars. I never tell him our net worth but we have our own business. We live below our means which he thinks is working all the time and never doing anything. He also works for us part time. His net worth at 17 is $3,500 but he got mad when I told him this because being worth this much he thinks he owes himself a new car!



I think it is a better assumption that his retirement tax rate will be equal to or higher than his current rate. College educated, teacher (pensions) and knows at a young age that it pays to save.



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Author: BGPenhollo Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23707 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/27/2000 8:53 AM
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rhecker posted...

"One example of how it should be very clear that a traditional IRA would pay more than a Roth would be to assume that while you are working and making contributions you are in the 15% tax bracket, and when you retire and taking distributions from the IRA you are in the 28% tax bracket.

Oops.... I think I got that backwards. It should be contributions at 28% and distributions at 15%. Then a traditional would make more sense. "

Back when I was 23 and IRA's 1st appeared the major selling point was that taxes in retirement would be lower than they are when one is working.

I guess I knew intuitively that at retirement, I would be making more and spending more and my standard and cost of living would rise and like the other boats in my finances taxes too would rise. Being within 6 to 7 years of potential retirement, I can see (and hope) that I will be paying considerably more in taxes percentage wise than when I was 40.

I would have selected Roth if I had the opportunity back when I was in my twenties. It all depends whether one sees their income, standard of living, and taxes increasing over the next 20 to 30 years. If so, the Roth is probably a better choice. If not, then traditional.

BGP

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23710 of 76421
Subject: Re: WHAT THE HELL SHOULD I DO? Date: 7/27/2000 9:52 AM
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Definitely Roth. If you're good at investing/saving, at worst you'll be in the same tax bracket pre/post retirement. Chances are you'll be higher since you're starting so young. Do the 403(b), every little bit helps.

JLC

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