I’m 25 and working a not-so-exciting city job that offers a pension for retirement. I’ve got one year left until I’m vested. On top of that, I have a Roth IRA where I only put in about $1500 a year. I just started this last year!
Now, my question is, if I wanted to open a retirement account with a bit more risk, what do you suggest? My wife and I are hustling to pay off debts with her income, like student loans, credit card debt, and a car loan! I don’t plan on starting this new account until after we’re debt-free, which should be about a year from now. But I wouldn’t mind opening it and putting in the minimum amount until then.
Sincerely,
Future Saver.
Response from THE MONEY MINDER:
Hello there,
Hey there,
It’s great to hear that you are actively thinking about your financial future and exploring options for retirement savings. Firstly, congratulations on being just a year away from being vested in your pension—this is a significant milestone! It’s also commendable that you and your wife are dedicated to paying down debts, as that is crucial for long-term financial stability.
Given your current situation of focusing on debt repayment, it sounds like a wise decision to hold off on opening a new retirement account until after your debts are paid off. Once you have cleared your debts, you can start thinking about the next steps for investing in a riskier retirement account. When the time comes, you may want to consider a diversified investment portfolio with a mix of stocks and bonds to potentially yield higher returns over the long term.
In the meantime, you could continue contributing to your Roth IRA as you have been doing. Even though it’s a modest amount, consistent contributions can add up over time, especially with the benefit of compounding interest. Once your debts are settled, you can then explore further retirement account options and gradually increase your contributions as your financial situation improves.
Remember, it’s all about finding a balance between saving for retirement and managing current financial obligations. Taking a methodical and realistic approach will set you on the path towards a secure financial future.
Best of luck on your financial journey!
Farewell from THE MONEY MINDER.
