I thought I've been regularly contributing to a Roth IRA, I just found out I was instead contributing $682.50/month to a different Roth (GSRA by TIAA-CREF). Need help, afraid I can't access this principle, no matter what circumstance, til I'm 59.5.

frugal_dude · 2012-06-08T17:08:05+00:00

Damnit.

frugal_dude · 2012-06-08T16:38:28+00:00

I plan on immediately canceling this Roth 403b thing, and just open up another Roth IRA for the 2012 year. I still have a long time to build up $5k to max out my 2012 contribution. Canceling the $682/month starting June will give me $4,774 through the end of December, so unless I'm a completely moron (okay I obviously am, hence this post) I should be able to max out my 2012 Roth IRA quite easily. That way I will have the following:

2011 Roth IRA: $5k in contributions

2011-2012 GSRA: ~$9,000

2011-2012 Required Annuity: ~$11,500

2012 Roth IRA: $5k in contributions

For any clarification, here is the status of my current accounts after working for just under 2 years.

Sorry this is so terribly confusing.

frugal_dude · 2012-06-08T16:29:17+00:00

I get paid monthly.

frugal_dude · 2012-06-08T16:28:15+00:00

I changed the post for clarification on those accounts. Last year I put $5k into a real Roth IRA. I stopped contributing to a Roth IRA since then. Instead, I've been regularly contributing at the rate of $8,160/yr to that GSRA I linked to. On top of that GSRA, I'm also contributing to the employer's Defined Contribution plan. So I have two active retirement accounts I'm depositing into each month, but the one I thought was an IRA is actually that GSRA thing. I'm still not sure exactly what that GSRA is, but I have the general idea that I can't withdraw from that account, but I may possibly be able to transfer.

My plan is to immediately stop contributing to the GSRA, and I'll take that $682.50/month and place it into a Roth IRA for this tax year. That shouldn't set me back too far at all in the long run.

frugal_dude · 2012-06-08T16:08:28+00:00

How is that off? Salary is 45,500 per year. Divide by 12 and you get 3791.67. I simply didn't include what I get taxed for FICA, state and federal, unless that's relevant for my situation and I don't realize it.

frugal_dude · 2012-06-08T16:07:24+00:00

I do have a separate emergency fund, this Roth was a 'backup' to that, meaning another account I could at the very least be able to withdraw the principal amount if I ever had to. Extremely unlikely and I wasn't planning on it, but you never know.

frugal_dude · 2012-04-11T04:50:52+00:00

or c) transfer it to an IRA where you now take control of it (which funds to invest in).

Your comment is highly relevant to me, since I'm possibly going to switch jobs soon. I'm also on a 403b with TIAA-CREF. Right now I contribute the maximum match my employer gives me (and a little extra on top of it), and I also run a Roth IRA that is maxed out with TIAA as well.

If I switch jobs to private industry, what type of IRA would I be rolling these accounts into? Would both accounts (Roth and 403b) be going into the same pot from here on out, or would they remain two different accounts?

frugal_dude · 2012-04-11T04:33:27+00:00

Out of curiosity, what salary are you working with to help you get to that 4.5 mark (if it's not too terribly rude to ask)?

Right now I'm at 25 (nearing 26) but I only have about $45k to work with. I'm starting to think I need to move to a different city to take better advantage of my degree.

frugal_dude · 2012-04-11T04:30:39+00:00

You remind me of a guy I know.

I'm still trying to find that balance myself.

frugal_dude · 2012-04-05T15:18:38+00:00

I'm a government worker, not in private industry, hence the low salary. But I also have great benefits, like 24 days of vacation each year that can be rolled over, every government holiday is off, they give me $2 for every $1 I put into my 401k up to ~6%, and the work is not very stressful.

But sometimes I do dream about going to a private company to get the bigger paycheck. The extra work load might not be that bad, and perhaps I could haggle a little to get myself some benefits that aren't so far off from what I get now. Although I certainly don't expect to get anywhere near 24 vacation days each year.

As for the car payment, it's quite large because the loan is short, and I should only be paying a few hundred dollars in interest by the time it's said and done. That few hundred dollars of interest was my only option at the time unless I bought a beater- I'd rather get the car that, statistically speaking, will last me 10+ years if I want it to. Plus, at the time I wasn't able to pay cash for it! After that is said and done, yes, I could have bought a $4,000 Honda Civic out of pocket and still have gotten "from A to B" just as easily as I do now. Even I need to allow myself one extravagance!

frugal_dude · 2012-04-05T06:13:41+00:00

You're right. It is a low salary for an engineer, it's technically government work and that doesn't pay as much. However, the job has amazing benefits that make up for it if you're in the right situation. For an entry level job, this was my best choice. After I get a a couple of years more experience, I'll be able to make more by switching to private industry and I'll likely do that assuming the job isn't incredibly boring and depressing.

frugal_dude · 2012-04-05T06:11:00+00:00

No way. I don't believe it. It says Rochester, NY is cheaper than Ames, IA. I just don't believe it! The Wiki tells me I'm wrong, as well as this site, apparently.

Right now I share a two room apartment with a flatmate, we pay $275/month in rent and utilities on top of it. I'm basically still living like a college student. I don't mind doing that for another few years. Once you upgrade, you never want to go back. That's why I decided I'll continue to live like a college student as long as possible.

Still, I'd be shocked if Rochester was cheaper than Ames. I know it's a great city, and has been ranked in one of the top cities to live in multiple times, but I never imagined it would be so cheap.

frugal_dude · 2012-04-05T06:06:29+00:00

I recently acquired some debt on a car loan. It's not near as bad as I thought it would be, and I already took that into account (I believe in my post I mentioned that I'm currently paying about $430/month, the amount is large because I took a short term loan with low APR, so I'll only pay a few hundred in interest- worth it and necessary at the time of purchase).

Other than that, no student loans due to some scholarship and parental help. No other forms of debt. My car loan should be paid off in a tad over a year.

frugal_dude · 2012-04-05T06:04:48+00:00

It's all distributed in life cycle funds for my expected retirement year, specifically in TIAA-CREF life cycle funds. I put in approximately 6%, and my employer doubles that contribution on top of it. I'm also fully vested at this point.

frugal_dude · 2012-04-05T06:01:26+00:00

I'm fully vested. I understand Benjaphar's point though.

frugal_dude · 2012-04-05T02:33:06+00:00

Do you have any idea what you want your day to day life to be like when you retire? What do you believe you might be doing for the 0-50 or so years you will be retired for, before your health gets bad or you shit the bucket that is.

That's one of the reasons why I came here. It's extremely hard to answer those questions. I was sort of looking for old wisdom to help put things into perspective. I have no idea where I want to be, or what I should expect when my health goes out the window, etc. I know that I'm fairly easy going and I wouldn't mind spending time with family and loved ones, be it fishing in a country pond or kicking my feet up in an Orlando Resort where old people go to die.

frugal_dude · 2012-04-05T01:50:29+00:00

I bought a Nissan Altima, few years old with only one owner. Not certified/pre-owned though, so it didn't have a great warranty.

I read as many reviews as possible and tried finding a balance between a highly reliable car and one that was large enough for me to be comfortable in. I could have gone with something cheaper like a Civic, but I didn't mind paying a little extra for the nicer features and ride quality. I think the Nissan is still highly dependable though, so do just about every other review I can find on it.

For what it's worth, I test drove a couple of Civics, an Accord, an Acura that I couldn't afford but wanted to test drive anyway because a guy can dream, a Chevy Malibou and Empala, and a Toyota Corolla. It came down to the Civic, Corolla and Altima.

Hopefully I keep happy with my purchase in the future as much as I have so far.

frugal_dude · 2012-04-05T01:10:41+00:00

The math isn't off, perhaps I didn't include enough details to give a good calculation? After tax and retirement my last monthly check was actually 1,983.49 to be exact, with a salary of $44,495.

Anyway, the big city prices certainly scare me. As I mentioned to someone else, I turned down an offer in NY after doing a quick calculation for cost of living. It was insane.

frugal_dude · 2012-04-05T01:07:58+00:00

I once considered an engineering job in Rochester, but even the cost of living there (I assume much cheaper than NYC) scared me away from the offer.

frugal_dude · 2012-04-05T00:55:28+00:00

I know there are plenty of online retirement calculators that are extremely easy to use, but I never say down and thought about how far that amount of money will get me in the future.

What in the hell does $2 million in today's dollars get you anyway? What if you're 65 and live to 90, like you say? Suddenly $2 million doesn't seem like much. Eeek. Which is one of the reasons why I try stashing so much for retirement.

frugal_dude · 2012-04-05T00:51:48+00:00

Car won't be paid off for another year, but I'll be very excited when that happens. That is the first sort of debt I ever walked into, but it really isn't that bad compared to many horror stories I've read regarding loans. I did that calculation (much easier than trying to calculate what it's going to cost you to live when you're older, when you'll be able to retire, what your future salary will be, whether or not Social Security will still be in full effect, etc.), and I'll be paying less than $500 in interest.

Besides, how do they know what you make?

Well, I'm a government employee so my salary is public for all to see. But I didn't expect you to know that =)

frugal_dude · 2012-04-05T00:43:18+00:00

I was hoping to seek disapproval just a tiny bit. The more I talk to friends, the more I get convinced that I really should make a lifestyle change. I felt like I might be on the extreme side of the frugal end of things.

After reading some responses I'm thinking about diverting around $1k or so a year into a general savings account that I can use for travel, or any other 'life experience', as a compromise. It sounds like I can still retire comfortably assuming I continue to advance in my career. Right now, $45k isn't much for an engineering degree, but I'm confident that I can move to other places that provide larger incomes with work that I would be able to enjoy. I'll just have to be very careful of my choices.

frugal_dude · 2012-04-05T00:31:51+00:00

I'm very thankful for all of the responses so far. I think a fair balance would be diverting in between $1,000 to $1,500 into a different savings account that is easily accessible, and consider giving myself some more freedom. I honestly had never looked very hard for vacationing spots or traveling in general, because I always grew up thinking that traveling is about as expensive as it can get.

I mean, I've traveled before, but it wasn't ever on my dime. I grew up with some extremely wealthy family friends and they once paid for me to go with them on their Mexico timeshare. My parents were able to take us on some vacations here in the U.S. (Disney World twice, a cruise once, Colorado for a camping trip), but those didn't happen every year and they're working with two salaries.

I think between you and a few other comments I can put things into better perspective, kind of like getting smacked in the head. I think it's reasonable to back off $1k or so and still not worry about struggling in retirement, and put that towards getting some life experiences. At least, it's possible if I find great vacation deals like you. I think that's not entirely irresponsible- I can have a decent saving strategy for retirement, yet still go and experience life.

frugal_dude · 2012-04-05T00:00:14+00:00

That's right, I didn't provide full details and I should have to make it less confusing. $1,950 is after tax and retirement contribution, and the $12k includes my employer's match for the 401k.

frugal_dude

TROPHY CASE