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As of June 30, 2002 I will be debt free! I can now start seriously to begin to save for my retirement and get the ball really rolling in my favor.

I have some questions I'd like your input on regarding my retirement funding. I know that the combined knowlegde here will help me get to where I want to be. But first some background info:

Marital Status: Single
Health: Very good
Housing: Rent
Debt:$0 (as of June 31)

Gross Annual Salary: $36,509.
Net Salary: $24,464. (Insurance, Gym, FICA, 401(k) etc. take a toll)
Gross Monthly: $3,042.
Monthly Take Home: $2,038.

ING Account: $175.

Retirement Accounts
Monthly 10% into 401(k): $304.
Current Total in 401(k): $4,975.

8.5% Employer Contribution:$258
Current Employer Total: $4,321.
(I'll be fully vested in this as of August 31st)

Obviously, with my debt gone, I can either a) spend more or b) save more. I prefer the latter. First thing I obviously want to do is set up an emergency fund. Given my current situation, I will need about $2000. That covers my rent, etc., for about three months.

I was thinking about upping my 401(k) contributions to 15%. However, I have heard that it might be a better deal to open up a Roth IRA, because even if though is taxed now, it will not be taxed later on when I need all the dough I can get my hands on.

I am not the greatest mathematition, so here's what I have come up with:

If I up my 401(k) to 15% that is a 5% increase over what I am doing now. Over one year, that will equal $1,825. over what I put in now. I can put $2,500 into a Roth per year.

Then there is the taxes situation. Being a single male, I get popped by the Feds, Missouri & the city of Saint Louis. Obviously I am at a pretty high bracket. Every month they take out $438.00 for a total of $5,256 per year. It equals 14% of my gross and is 22% of my take home pay.

So what in the world is a better deal, a Roth or my 401(k)? Is it wiser for me, givem my current life status to take the tax relief now, or later? That's the part I am having difficulty figuring.

Thanks way ahead of time!

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