I am at least a year away from starting an IRA. I know, at 39, I should have had this done by now, and boy don't I kick myself for not starting an IRA when I began working at age 16. But, I don't think that I have done things much more differently than many other people, and there are those out there ten years older than I, still in debt, and with no retirement (or other) savings.
But, I am a year away, because the emergency fund it the key for this year. As you have read, my goal is $20,000 in emergency fund holdings this year. That is pretty close to six months of expenses, and, quite honestly, will be more security than I have ever known in my financial life!
My 401K at work is not all that great. There is a profit sharing portion, that we receive regardless of our contributions. Then, I believe that there is a 50% match up to a total match of $1000. I am not eligible for it yet, but I will be in July. Of course, I will be throwing in enough money to get that $1K match.
Then, IRAs for my wife and I will be started. I hear so many people talking about how great a Roth IRA is, and yes, tax free gains are great. However, I worry about that a bit. How long will a Roth stay tax free?
Think about it. With all of the class envy that seems to be increasing, and the socialist trends that want to transfer wealth from one group to another, can't anyone other than me see a Roth IRA being a target of this? Especially with Social Security in doubt?
"Wow, you have accumulated over $1 million in your Roth IRAs, and you have close to that in your after tax investments. You have done so much better than everyone else has! We don't care that you have saved a large percentage of your income for a long time, it just isn't fair that you have all that money, and get a HUGE tax break as well! You don't need us to subsidize your retirement at government expense (don't even get me started here!) with all of these tax breaks. Therefore, we are going to tax a portion of your Roth gains. Of course, it will be on a sliding scale, just to make it fair."
Or, perhaps they will just pass a law making the full amount of the gains taxable? I don't think that anyone can say with any certainty that this will not happen. This is the government we are talking about here! All it takes is to make a law, and with a government that is challenged to take more money to keep growing, and the increasing attitude that they are entitled to the money, am I the only one who can see this happening?
My hunch is to take the tax break now, with a traditional IRA, as long as I qualify. I always thought that the money now, that you can get now, is better than something that you might get in the future.
Unless I am really missing something?