Our 2007 Goals Status, Part 1: Contribute 50% to Roth IRAs
Posted on December 05, 2007 by Him and tagged goals, retirement, roth ira
About a year ago we made some financial goals for ourselves. Since 2007 is coming to a rapid close, I thought we'd look at those goals and see how we did, and how we made it happen. I'm going to tackle them out of order just because that's how I feel like writing about them.
The first goal I'm going to examine is contributing 50% of the maximum allowed amount to our Roth IRAs. As the 2007 Roth IRA maximum contribution amount is $4,000, that amount is also equal to 50% of total contributions for both of our accounts. When we first came up with this goal, Her's Roth IRA had a paltry $1,695.85 in it, so we decided to allocate all of our contributions to her Roth IRA account to bring it up to about where mine is.
Last year, Her moved her Roth IRA holdings from Merrill Lynch to Vanguard. At the beginning of the year, she requested automatic deductions twice a month to total $4,000. Since I am paid twice a month, we had it coincide with my paydays, so it was like an automatic payroll deduction in that we never even saw that money. Easy as pie. (Except that I've never baked one [but Her has]).
Status: Will be completed this month.
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Her | Dec 7, 2007 | Reply to Annie
No, you don't sound like a lunatic, and actually I did have trouble with the automatic deduction process. The fund I wanted to purchase shares of has a minimum initial investment, and I didn't realize that when I se4t up my automatic contributions. The money was never transferred to the fund (because it wasn't enough for the minimum) but nobody bothered to tell me. When I noticed, several phone reps couldn't figure out the problem and assured me it would resolve itself. Obviously, it didn't, and 2 months later I finally got a rep who quickly identified the problem and changed me to a fund with no minimum. So my advice is to use the automatic feature, but don't forget to to watch over it and make sure it goes as planned.
Annie | Dec 6, 2007
Ooh, I've been wanting to ask someone about this! Is Vanguard good about pulling the cash at the same time each month? I've been irrationally & insanely paranoid about this -- worried that they would pull it twice in December because of holiday weirdness and then I would end up overcontributing and have to fix that. Typing it out, I know I sound like a lunatic, but I had something like this happen once with a fellowship payout (money technically came at the end of December, so I ended up with an extra-large and unanticipated tax burden). At the moment, I save up and then contribute manually. This has made sense up to this point -- I'm very young, so when I started my Roth last year I had to save up before I could start it. But now I know it would be smarter to go to an automatic system.
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