Tuesday, April 19, 2011

Quitting Roth Contributions

We contribute $150 per month to my Roth and $100 to Y's Roth IRA.  We're contemplating stopping our Roth contributions because we want to be able to save more money for our house.  I know that this goes completely against PF blogging morals but this is my life. 

I know that I will miss out on compounding interest and opportunity cost.  I know that from an outside perspective it just looks dumb.  However, we want to build the majority of our house with cash so Y can do the work.  A construction loan will put a time limit on us that probably be more costly than the opportunity cost of not contributing to our Roths.

Regarding our retirement, Y has 9% of his pay going into his pension that his employer provides.  He also has $100 per month going into a 457.  I do not currently have an employer sponsered retirement plan but I will in less than a year if I stay with my current employer. 

I have already called to stop my contributions but Y hasn't.  I can always just log on and still contribute any time that I like.

So, what do you think? 

3 comments:

  1. I think you should drop it to something like $20 a month or even $10 instead of stopping it completely.

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  2. I agree with Rafiki...it keeps you doing something, even if it's a small amount, and every little bit can make a difference down the line.

    And hey! I just added you to my blog roll, I'd love to be on yours if you read my blog! :)

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  3. I just wrote a post on this over at my blog... I've stopped my Roth IRA contributions so I can get my full 6 month emergency fund done, so it means not putting money in retirement until August or so...

    For me it makes more sense to have the Emergency fund done because my fiance is currently unemployed still so we only have one income... mine... I'd rather have the safety and security of that Fund to fall back on if we need it... Not cursing my self for putting it some place I can't get to it without insane fees...

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