vania-janet/multiturn-rag-retrieval-data huggingface dataset:
This answer comes from my interpretation of Publication 590 (2011), Individual Retirement Arrangements (IRAs) and particularly What Are Qualified Distributions? section. Please consult the sources yourself or with the help of a qualified professional before doing anything. First, note that due to the rollover loophole, you can take out the money and repay it within 60 days. Missing the deadline would mean paying the taxes on the withdrawal in addition to a 10% penalty. As per JoeTaxpayer's notes below, this applies to the earnings on the account only. The contributions themselves can be withdrawn without penalties (thanks, Joe!).  Second, you might qualify to withdraw 10k for a qualified first-home house purchase. Qualified, in this case, would mean first-time home purchase by yourself, your spouse, your child, parent, or grandchild, made within 120 days of withdrawal (see first home in the above document). Finally, nothing is mentioned about the withdrawal affecting your yearly contribution cap. Any new money coming into the account is new money counted towards the contribution cap (except for the 60 day loophole).  To answer your question then: you can make up the money only under the first scenario (60 day loophole). Qualified withdrawals allow you to avoid the penalties, but as far as I can tell, do not affect the contribution cap. There are a few other details that may depend on your age, reservist status, health, etc. Read the document carefully to see if any of those apply to you.
You should open one of these and start contributing, but only after you have fully utilized the employer matching with the 401k. The IRA won't give you that 100% ROI that the 401k will. Keep in mind that retirement investments are pretty much ""walled off"" from your day-to-day financial life. Money that goes into a retirement account generally can't be touched until retirement age, unless you want to pay lots of taxes and penalties. You generally don't want to put the money for your house down payment into a retirement account. One other thing to note: Your 401K and your IRA is an account that you put money into. Just because the money is sitting in the account doesn't necessarily mean it is invested. You put the money into this account, and then you use this money for investments. How you invest the retirement money is a topic unto itself. Here is a good starting point. If you want to ask questions about retirement portfolios, it is probably worth posting a new question."
There's a bit of working backwards that's required.   This is a summary of a spreadsheet I wrote which helps to get to the answer. What you see here is that at age 25, one might have saved about a half year's salary, assuming they worked 5 years. The numbers grow exponentially to at 65, about 15 years salary saved. This will allow a withdrawal of about 60% final income each year using the 4% guideline. More will come from Social Security in the States to get closer to 100%. The sheet start with assumptions, a 10% per year rate of saving, and an 8% annual return. Salary is assumed to rise 3% per year. One can choose their age, enter their current numbers and their own assumptions. I had to include some numbers and at the time, 8% seemed reasonable. Not so sure today. What I do like is the concept of viewing savings in terms of 'years salary' as this leads to replacement rate. Will $1M be enough for you? Only you can answer that. But the goal of 80-100% replacement income is reasonable and this sheet can be used to understand the goals along the way. (note, the uploaded sheet had 15% saving rate, not the 10 I thought. I used 15 to show a 10% saving along with a 5% match to one's 401(k). Those interested are welcome to enter their own numbers. The one objection I've seen is the increase to salary. Increases tend to be higher in the first 20 than the second, or so I'm told.)
Yes, you should be saving for retirement. There are a million ideas out there on how much is a reasonable amount, but I think most advisor would say at least 6 to 10% of your income, which in your case is around $15,000 per year. You give amounts in dollars. Are you in the U.S.? If so, there are at least two very good reasons to put money into a 401k or IRA rather than ordinary savings or investments: (a) Often your employer will make matching contributions. 50% up to 6% of your salary is pretty common, i.e. if you put in 6% they put in 3%. If either of your employers has such a plan, that's an instant 50% profit on your investment. (b) Any profits on money invested in an IRA or 401k are tax free. (Effectively, the mechanics differ depending on the type of account.) So if you put $100,000 into an IRA today and left it there until you retire 30 years later, it would likely earn something like  $600,000 over that time (assuming 7% per year growth). So you'd pay takes on your initial $100,000 but none on the $600,000. With your income you are likely in a high tax bracket, that would make a huge difference. If you're saying that you just can't find a way to put money away for retirement, may I suggest that you cut back on your spending. I understand that the average American family makes about $45,000 per year and somehow manages to live on that. If you were to put 10% of your income toward retirement, then you would be living on the remaining $171,000, which is still almost 4 times what the average family has. Yeah, I make more than $45,000 a year too and there are times when I think, How could anyone possibly live on that? But then I think about what I spend my money on. Did I really need to buy two new computer printers the last couple of months? I certainly could do my own cleaning rather than hiring a cleaning lady to come in twice a month. Etc. A tough decision to make can be paying off debt versus putting money into an investment account. If the likely return on investment is less than the interest rate on the loan, you should certainly concentrate on paying off the loan. But if the reverse is true, then you need to decide between likely returns and risk.
On the one hand, it's a great idea to open a Roth IRA now, once you've got the cash to contribute. It's a tax designation sounds like it would fit your meager earnings this year. The main reason to open one now rather than later is that some types of withdrawls require the account be aged 5 years. But you can also withdraw the amount you've contributed tax free any time. Student loans right now are pricey, so if you're carrying a balance at say 6.8 percent fixed you should pay that down ASAP. Beyond that, I'd keep the rest liquid for now. Having that kind of liquid cash is extremely reassuring, and many of the biggest returns on investment are going to be in your personal life. More fuel efficient vehicles, energy efficient appliances, computer backups, chest freezers and bulk meat purchases, etc.  One example I see every six months is car insurance: I can pay for six months in full or I can pay a smaller monthly bill plus a small fee. That fee is well above current market rates. You see this everywhere; people searching for lower minimum payments rather than lower total costs. Save your money up and be the smart buyer. It's too damn expensive to be broke.
By not saving some of your income you put yourself at risk of the following: If you are comfortable taking on those risks, then continue what you are doing (I'm not being sarcastic here...some people are perfectly comfortable taking on these risks).  I plan on working until I die so I am not as concerned with saving for retirement but I do save some money for temporary job loss situations. Saving money presents its own set of issues (e.g. Where should I put the money?, Should I invest the money?, What type of investments?).  If you have no interest in researching answers to these type of questions then I would suggest what others have already suggested: have part of your paycheck automatically siphoned into an account that can only be accessed by a trusted family member.
I read an amazing article on whenyou should take early and when you should wait. It really depends on your situation, but this article prodives information as well as examples. Hope it helps! http://customsites.yahoo.com/financiallyfit/finance/article-108227-3275-5-boost-your-social-security-benefits
You are in the perfect window for making an IRA contribution. The IRS allows you to make IRA contributions for last year until tax day. So you know that for 2014 you didn't have access to a 401K at work. You want to avoid making a deductible IRA contribution for this year (2015) until you are sure that you wont have a 401K at work this year. Take your time and decide if the detectible IRA or the Roth works best for your situation. Having a IRA now will be good becasue you have many years for it to grow. Keep in mind that it is not unusual to have multiple retirement accounts: Current 401K; rolled over into a IRA;  Roth IRA... Each has different rules, limits, and benefits. There is no reason to pick one way of investing for retirement becasue you never know if the next employer will have the type of plan you like. I am assuming that your spouse, if you are married, doesn't have access to a 401K; otherwise you would have to consider the applicable limits.
A brief time off, often 7-12 weeks is called a sabbatical. What you propose is far beyond that and unless you have it well planned out, you risk burning through all your savings and perhaps more.  Most of us are planning a retirement and have some idea of the savings needed. You first need to plan this 2-3 year hiatus, and then for both of you to get rehired, and start the savings again. I envy anyone who can manage to do this while they are young enough to enjoy it.
What you put that money into is quite relevant. It depends on how soon you will need some, or all, of that money.  It has been very useful to me to divide my savings into three areas...  1) very short term 'oops' funds. This is for when you forget to put something in your budget or when a monthly bill is very high this month. Put this money into passbook savings.  2) Emergency funds that are needed quite infrequently. Used for such things as when you go to the hospital or an appliance breaks down. Put this money in higher yeald savings, but where it can be accessed.  3) Retirement savings. Put this money into a 401-K. Never draw on it till you retire. Make no loans against it. When you change jobs roll over into a self-directed IRA and invest in an ETF that pays dividends. Reinvest the dividend each month.  So, like I said, where you put that money depends on how soon you will need it.
You can withdraw from CPP as early as 60. However, by doing so, you will permanently reduce the payments. The reduction is calculated based on average life expectancies. If you live for an average amount of time, that means you'll receive approximately the same total amount (after inflation adjustments) whether you start pulling from CPP at 60, 65, or even delay your pension later. People may have pensions through systems other than CPP. This is often true for big business or government work. They may work differently. People who retire at 55 with a pension are not getting their pension through CPP. A person retiring at 55 would need to wait at least five years to draw from the CPP, and ten years before he or she was eligible for a full pension through CPP. Canada also offers Old Age Security (OAS). This is only available once you are 65 years old or older, though this is changing. Starting in 2023, this will gradually change to 67 years or older. See this page for more details. As always, it's worth pointing out that the CPP and OAS will almost certainly not cover your full retirement expenses and you will need supplementary funds.
1) People aren't always going to be able to do their occupation, or their desired hobby. 2) Government assistance, or whatever you want to call it, is available at a certain age. Some people look forward to this and plan to rely on it, but it isn't really sufficient for living off of and keeping the standard of living you will be used to. Therefore, such situations require you to plan using a variety of other institutions to help you in that time. Finally, more is more: if your retirement funds exceed what you need, you can leave something for your family to help them start at a more stable financial place after you are gone.
Is my financial status OK? If not, how can I improve it? Based on the fact that you have $100K in the bank and no debts your situation is OK. You don't have credit card debt or an underwater car loan, though the fact you are thinking about a car and a home shows you have started to put some thought into planning. Is now a right time for me to see a financial advisor?  The fact that you don't mention retirement savings: 401K, IRA, or pension, means that you have not planned for retirement, and you need to do so. The ESPP can be a part of a plan, but if that is you only investment you are focusing too much of your current and future income on one source of income. Is it worthy? It can be. you want to avoid working with a planner that makes money only if you invest in specific investments they suggest. You want to find a planner that takes a fixed fee for developing the plan, and only provides advice on types of investments. How would she/he help me? They will look at where you are. Where you can quickly make adjustments. And where you want to go over the next year, decade, and lifetime. Then they will provide guidance on those steps you should follow.  If your situation changes in the future because of marriage or kids, you can then revisit with a planner and make changes
Though I do think it is important to have a diversified portfolio for your retirement, I also think it's more important to make sure you are at no point touching this money until you retire. Taking money out of your retirement early is a sure fire way to get in a bad habit of spending this money when you need a little help. Here's a tip: If you consider this money gone, you will find another way to figure out your situation.  With that said, I also would rather not put a percentage on this. Start by building your emergency fund. You'll want to treat this like a bill and make a monthly payment to your savings account each month or paycheck. When you have a good nine times your monthly income in here, stop contributing to this fund. Instead start putting the same amount into your IRA instead. At this point you should no longer have to add to your emergency fund unless there is a true emergency and you are replacing that money. Keep in mind that the amount of money in your emergency fund changes significantly in each situation. Sit down with your bills and think about how much money you would need in the event you lost your job. How long would you be out of work? How many bills do you have each month that would need to be covered?
Everybody else has given great answers on what to do, but I just want to add some encouragement. Keep saving.  Learn to live within your means while saving, and things like houses and cars and new electronics will come.  You can always wait a year and save money up for that new TV, but when retirement hits you are out of time.  (I sure wish I had). Keep that retirement money out of sight and (mostly) out of mind. Great job saving and keep up the good work.
You will normally have somewhere to designate which tax year you are contributing for when you make your contribution (either online or at the bank).  This designation is only required from Jan 1 - Apr 15 of each year, as any contributions before / after those dates will necessarily be for the calendar year that you contribute. You must make sure that your tax forms (1040 and anything else) show your total contribution for the tax year.  If you've put $1000 into your Roth IRA during the calendar year for 2010, and then you put in $2000 in March 2011 (but designated for 2010), you need to show the IRS that you put $3000 into your Roth IRA. As stated in another answer, the advantage is increasing the overall contribution limit in your lifetime.  If you open a brand new Roth IRA in March 2011, you can contribute $5000 for 2010 and another $5000 for 2011.  If you open the same account in May 2011, you are limited to only $5000 for 2011.
So how does your income work with all of this? Simple, until you've saved 6-12 months of your expenses (not salary) in an FDIC or NCUSIF insured savings account, you have no free income. If you don't have savings to save yourself when bad things happen, you will start having more stress (what if something breaks? how will I survive till my next paycheck? etc.). Stress reduces your life expectancy. If you have no free income, and you need to buy a car, you need to buy the cheapest car that will meet your most basic needs. Consider carpooling. Consider walking or biking or public transit. You listed your salary at ""$95k"", but that isn't really $95k. It's more like $63k after taxes have been taken out. If you only needed to save ~$35k in favors, and the previous data was accurate (it isn't, do your own math): Per month you owe $2,875 in favors (34,500 / 12) Per month you gain $5,250 in favors (63,000 / 12) You have $7,000 in initial capital--I mean--favors You net $2,375 each month (5,250 - 2,875) To get $34,500 in favors will take you 12 months ( ⌈(34,500 - 7,000) / 2,375⌉ ) After 12 months you will have $2,375 in free income each month. You no longer need to save all of it (Although you may still need to save some of it. Be sure recalculate your expenses regularly to reevaluate if you need additional savings). What you do with your free income is up to you. You've got a safety net in saved earnings to get you through rough times, so if you want to buy a $100,000 sports car, all you have to do is account for it in your savings and expenses in all further calculations as you pay it off. To come up with a reasonable number, decide on how much you want to spend per month on a car. $500 is a nice round number that's less than $2,375.
"Another thing that ""retirement"" lets you do is do what you love without worrying about making enough money to live on by doing it.  For example, volunteering your time or starting your own business.  These are much easier to do when you don't have to worry about getting paid. Having a source of income provides a lot more freedom to pursue what you love."
I'll offer another answer, using different figures. Let's assume 6% is the rate of return you can expect.  You are age 25, and plan to retire at age 65.  If you have $0 and want $1M at retirement, you will need to put away $524.20/month, or $6,290.40/year, which is 15% of $41,936.  So $41,936 is what you'd need to make per year in order to get to your target. You can calculate your own figures with a financial calculator:  480 months as your term (or, adjust this to your time horizon in months), .486755% as your interest (or, take your assumed interest rate + 1 to the 1/12th power and subtract 1 to convert to a monthly interest rate), 0 as your PV, and $1M as your FV; then solve for PMT.
A matching pension scheme is like free money. No wait, it actually IS free money. You are literally earning 100% interest rate on that money the instant you pay it in to the account. That money would have to sit in your credit card account for at least five years to earn that kind of return; five years in which the pension money would have earned an additional return over and above the 100%. Mathematically there is no contest that contributing to a matching pension scheme is one of the best investment there is. You should always do it. Well, almost always. When should you not do it?
You aren't in trouble yet, but you are certainly on a trajectory to be later. The longer you wait the more painful it will be because you won't have the benefit of time for your money to grow. You may think you will have more disposable income at some point later when things are paid off, but trust me you wont. When college tuition kicks in for that kid, you are going to LAUGH at those student loan amounts as paltry. The wording of your question was confusing because you say in one place that you have no savings, but in another you claim to be putting away around $5k/year. The important point is how much you have saved at this point and how much you are putting in going forward. Some rules of thumb from Fidelity: (Based on your scenario) Take a look at your retirement account. Are you on track for that? It doesn't sound like it.  Can you get away with your current plan? Sure, lots of people do, but unless you die young, hit the jackpot in the stock market or lottery, you are probably going to have to live WELL below your current standard of living to make that happen.
Is it worth saving HSA funds until retirement? Yes Are there pros and cons from a tax perspective?  Mostly pros. This has all of the benefits of an IRA, but if you use it for medical expenses then you get to use the money tax free on the other side. Retirement seems to be the time you are most likely to need money for medical expenses. So why wouldn't you want to start saving tax free to cover those expenses? The cons are similar to other tax advantaged retirement accounts. If you withdraw before retirement time for non-medical purposes, you will pay penalties, but if you withdraw at retirement time, you will pay the same taxes you would pay on an IRA. I should note that I put my money where my mouth is and I max out my contribution to my HSA every year.
Then: (do these in whatever order)  35 is not mid-life.  You're on the tail end of the age to get started on retirement planning. Being single, relatively young, and a great income level, you are ideally situated to consider FIRE'ing yourself. (Financial Independent, Retire Early).  The basic idea is to invest a large chunk of your income and establish your comfort level balancing frugality and comfort.  There's a table on one of the FIRE websites that shows a graph between % of income saved and the number of years it takes to save enough to be financially independent.  If you can go over 50% savings, you can get down to about 10 years.  In this case, financially independent is where you can live on a safe percentage of withdrawal from your savings without depleting the savings.  At that point, you no longer need to work for a paycheck.  You would only do so to extend the savings, increase the safe withdraw rate, or because you want to do something that makes you feel productive.
"Do both. The Roth should be started ASAP so you can start on the 5 year maturity period. Even if you already have the Roth started, it doubles as an emergency fund, so putting money into it couldn't hurt. Student loan interest is tax deductible, so your ""real"" interest is probably around 4.7%. However, this is still a good reason to pay them off soon."
It is normally a bad idea to cash in retirement accounts to buy a house, in your case it is a horrible idea because you are way behind on saving for retirement. Other fallacies in your reasoning:   My advice, increase the amount you are saving for retirement considerably, and also put some money aside to save for a down payment on a house. Buy the house when you have enough non-retirement money to afford the down payment. If you can't wait that long, buy a house you can afford. It may help to think of it this way: Visualize yourself as a 65 year old retired person with very little income, and living on your retirement account. Would you as a 39 year old ask that person to give you $175,966 (the amount you are talking about withdrawing compounded annually at 6% interest for 25 years with no additional contributions) so that you could put a down payment on a house? Because that is what you would be doing. When you hit retirement age would you kick yourself for making such a decision? Because unless you die young, that person is sitting out there in your future needing that money to live off of. Don't take this the wrong way, but the tone of your question seems like you are looking for support to make what you already know is a bad financial decision.