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http://www.washingtonpost.com/wp-dyn/content/article/2008/01/15/AR2008011503410.html?hpid=topnews

And let's not forget highest CPI-U in nearly 2 decades, with the CPI-U clearly way below real inflation for most people.

I am more committed than ever to the principle of retiring with twice as much in assets as the cautious advice givers think necessary.
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I am more committed than ever to the principle of retiring with twice as much in assets as the cautious advice givers think necessary.

There was a program on Oregon Public Broadcasting last night, a rerun Frontline special called "Can you afford to retire?" that was quite horrifying, even though I'd seen it before. One couple tried to retire on less than $150k in a 401(k)! One can watch it online at opb.org.

Personally I'm very far from retirement but I've known for some time that I'm only saving 1/4th of what I'd need to have my current level of income in retirement. There's only so much one can do with a Roth IRA.
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Personally I'm very far from retirement but I've known for some time that I'm only saving 1/4th of what I'd need to have my current level of income in retirement. There's only so much one can do with a Roth IRA.

You're never limited to only investing in a Roth IRA. There are many ways to save for retirement...

Acme
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You're never limited to only investing in a Roth IRA. There are many ways to save for retirement...

Yes, but how many of those are tax advantaged? If one neither works for a company with a 401(k) or pension program nor is self employed and thus eligible for a SEP-IRA, there aren't many options. For the record I am an academic funded by a stipend from an agency of the Federal government; I am not considered an employee of my sponsoring institution, even though they voluntarily provide me with medical benefits.
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<<You're never limited to only investing in a Roth IRA. There are many ways to save for retirement...>>

Yes, but how many of those are tax advantaged? If one neither works for a company with a 401(k) or pension program nor is self employed and thus eligible for a SEP-IRA, there aren't many options. For the record I am an academic funded by a stipend from an agency of the Federal government; I am not considered an employee of my sponsoring institution, even though they voluntarily provide me with medical benefits.


Most tax advantaged retirement plans (except for the Roth) are tax-deferral vehicles. There are a number of ways to accomplish tax deferral without any plan. For example, you could purchase savings bonds and get up to 30 years of tax deferral. Another example would be to purchase equities that gain in value but don't pay out dividends (for example, Berkshire Hathaway) and keep them until retirement. Yet another example would be to purchase tax efficient mutual funds that defer gains for some time.
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Yes, but how many of those are tax advantaged? If one neither works for a company with a 401(k) or pension program nor is self employed and thus eligible for a SEP-IRA, there aren't many options. For the record I am an academic funded by a stipend from an agency of the Federal government; I am not considered an employee of my sponsoring institution, even though they voluntarily provide me with medical benefits.

Well, you can save for retirement in taxable accounts. That's how most folks did it before these new substitutes for pension plans got invented. Of course, if you're a typical academic living off a grant, being able to put money into a Roth is a pretty good achievement.

Have you talked with what I still like to call "Personnel" (I believe ours call themselves Human Resources). It's possible there's some angle. There may also be a way you can do an IRA and a Roth, but I'm probably wrong. I think some other folk here actually know something.
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Yes, but how many of those are tax advantaged? If one neither works for a company with a 401(k) or pension program nor is self employed and thus eligible for a SEP-IRA, there aren't many options.

As they say over on the Tax Strategies Board, "Don't let the tax tail wag the investment dog."

Saving for retirement is your responsibility, regardless of any tax policies to encourage such behavior. I've been excluded from almost every retirement vehicle and I still saved enough to retire early. You can too.

Currently, long term capital gains and qualified dividends get some tax advantage. 15% instead of 25% or 28%.

Vickifool
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Of course, if you're a typical academic living off a grant, being able to put money into a Roth is a pretty good achievement.

I've had a couple things working in my favor: I have no dependents, my stipend has been pretty generous by academic standards, and until recently I was living cheaply (too cheaply) in a moderately expensive area. That said, maxing my IRA contributions have been my highest financial priority (higher even than building an e-fund) for the last four tax years, even though I'm going to have to dip into 2008 earnings or past year savings to fully fund 2007.

That said, I'm 34, so I have some time yet to figure this out. The goal is to get a job where I'm eligible for tax-deferred retirement savings, soon.

Have you talked with what I still like to call "Personnel" (I believe ours call themselves Human Resources). It's possible there's some angle. There may also be a way you can do an IRA and a Roth, but I'm probably wrong. I think some other folk here actually know something.

I have not as I have a low opinion of administrative competence at my sponsoring institution based on past grant application and administration difficulties. The point is a bit moot anyway for 2007 as I overspent last year, implied in the above.
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Yes, but how many of those are tax advantaged?

Are you saying you cannot invest unless the account is tax advantaged? IMO, that would be a silly restriction.

If you don't have access to any other tax advantaged accounts, start investing in a taxable brokerage account. If you *know* you can only save 1/4 of what you need in tax advantaged accounts, then you also know you have to use something else to make up the difference. Taxable accounts are a fine place to put money.

My wife and I end up putting approximately 50% of our savings into taxable brokerage investments. Without this, there would not be any possibility of retiring early.

Acme
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Most tax advantaged retirement plans (except for the Roth) are tax-deferral vehicles. There are a number of ways to accomplish tax deferral without any plan. For example, you could purchase savings bonds and get up to 30 years of tax deferral. Another example would be to purchase equities that gain in value but don't pay out dividends (for example, Berkshire Hathaway) and keep them until retirement. Yet another example would be to purchase tax efficient mutual funds that defer gains for some time.

There are also tax-free/tax-advantaged bonds (muni's, etc).

Splotto
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That said, I'm 34, so I have some time yet to figure this out.

Not really. The earlier you start, the better chance you have of retiring or even retiring early. If you start too late, your chances diminish rapidly.
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Yes, but how many of those are tax advantaged?

Buying an index fund and getting the lower rate on dividends and cap gains is more tax-advantaged than most 401(k)s. Sure, you don't get the up-front deduction, but at low tax rates, that's not worth much anyway.

dan
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