Excuse me if this has been posted as a topic already.

My employer does not do any sort of matching on contributions for any retirement accounts. I was curious what y'all's thoughts are on opening a non-company IRA are. I am contemplating putting 4% of my net into a roth every month. Currently, my wife puts 6% of her salary in a matching SIMPLE plan offered by her work. We are also trying to build an emergency cash fund after some insane expenses (wedding, landscaping, more wedding etc). I am targeting something like $12,000 for our emergency fund, however I don't want to just start an emergency fund and skimp on my retirement account. Basically, I am asking if I should start a ROTH even though my wife has one, and we don't have an adequate emergency fund. We are trying to be an all cash household!

If you need more details, please ask. Sorry if I am not too clear above.

Thanks for all the wisdom that is shared on these boards.

How much of an emergency fund do you have now? From the way you describe things, you have a pretty good grasp on your finances. If that's the case, then save $3000-$5000 for now for your emergency fund. Then maybe save for retirement and continue adding to the emergency fund at the same time. I think you should certainly have your own Roth IRA, even if your wife has some sort of retirement account. We all intend to be with our spouses forever, but the fact is many of us won't be.

How much do you have in your emergency fund now?

I absolutely think you should both be maxing out the Roth and, IMO, that should be a priority over the emergency fund. If you don't put the money in the Roth and miss that window it's a chance that's lost forever. On the other hand, you can always add to an emergency fund.

Also, it might do you good to realize that debt and credit are not evil. They are tools. And, as such, they can be both used well and misused badly. If you learn how to use debt and credit to your benefit you may find that there are many advantages.

There is nothing wrong with being an all cash household. Just make sure you're doing it as part of a plan and not as a result of fear.

Thanks for the advice, greatly appreciated. In our emergency fund we have $2,000 right now, and will be paying off the last of our debt this week. I love investing, so I will be looking to start the Roth shortly, sometimes it is hard to take the leap... Too many variables.

Pf101, we are definately not "scared" about credit cards, we just don't like those money grubbers charging us interest. We will still have credit cards and use them when needed, but we just don't want to carry balances.

Well it is off to work for me. Thanks for the advice!!

That's great to hear. A lot of people have a knee-jerk reaction to credit and debt and just avoid it. But you've thought through your reasons which is excellent. Not carrying a balance is exactly what you want to be doing. Sounds like you're definitely on the right path.

Apart from saving for expenses, emergency fund, and debt payments, having a Roth for both you and your wife is a good idea if your budget allows. You called it a "non-company" IRA which may mean that you're a little fuzzy on IRAs, Roth IRAs, and qualified retirement plans. If so, I would encourage you to read the Roth IRA series of posts at GRS.

But in general, for someone who doesn't get a company match we recommend:
1. Max out your Roth contribution
2. Max out your 401k contribution
3. Invest in a taxable savings account

Rationale: Without a match, you want to first take advantage of the tax-deferral benefits of a Roth while making your own investment decisions. Second, you probably reduce your taxable income by contributing to the 401k, along with the higher dollar-limit for retirement savings and tax-deferral benefits.

Your mileage may vary, based on two factors:
A. Your household income level (Roth qualification limits may mean that you should max out a traditional IRA instead, even if it's non-deductable)
B. What level of savings your budget will allow. For example, if your budget doesn't allow you to max out your IRA, you won't make it to step 2.

Finally, the above steps are not chronological. This means you need a complete budget, including line items for hypothetical retirement savings, before you're able to decide how much you can save and/or have deducted from your pay for your 401k.

Thanks for the tips Tiny. I was using "non-company" to be synonymous with non-matching... Probably the wrong choice of words.

I will be opening the Roth shortly, I was just second guessing myself because of the non-matching part of my situation.

Just to clarify. Are you also suggesting that I max out a 401k after I max the Roth out? I guess I have never thought about having 2 retirement accounts for myself, but it is a thought... I was thinking option 3 of having a taxable investment account might be my decision after funding my Roth. Income limitations shouldn't be a problem, my wife and I make ~$95,000 combined, and I think the limitations for a couple is ~$156,000 if my memory serves me correctly.

Also, I like your idea of setting a budget, and I have been having a rough time doing it. I think I am going to take pf101's advice from an earlier post and try to track each and every penny out the door.

Thanks for everyone's contributions to this site, I stumbled upon it randomly and now it is the first thing I check in my reader in the morning.

Cheers

Hope you don't mind me horning in on your question, radiohead...

I'm also about to open a Roth IRA with Vanguard, as per advice on the other thread. It looks like I have an option to choose between Vanguard mutual funds and stocks, bonds, and non-vanguard funds. Anyone want to give me a rundown on the differences, or a recommendation? What other choices can I expect to have to make for this account?

Max, i think your topic is important enough that it deserves a whole new thread of it's own. It's different enough from radio's question that we don't want to hijack his thread...

No horning done at all. I like when posts lead to other posts. Gives me something else to read!

Just don't think of it as before and after, think of it in terms of priority. You're going to create a budget based on your income and expenses, at which point you'll have this bucket of money(tm- Ray Lucia) called "retirement savings". As you figuratively pour money into retirement accounts, your particular priority is to the Roth IRA. If your bucket still has money left in it after filling up the Roth, start pouring it into the 401k, and so on until you've reached the limit your budget will allow. The literal pouring of money into these buckets may be concurrent.

If your overall finances between you and your wife are combined, you may also want to consider her retirement account options as well. Generally this involves putting 1st priority to contributing in her plan to the maximum match amount. (Then Roth IRA, then back to 401k, then taxable.) Each of you can (and probably should) have a Roth IRA.

As for multiple retirement accounts, although they have the same overall objective (growth for retirement) they have different advantages (contribution limits, tax-deferred growth/withdrawls, etc) so you should combine them to suit your needs. As a result of my own life's ups and downs over the years, I have accumulated funds in 3 retirement accounts: 401k, Roth IRA, & a Traditional IRA. As the year-end approaches and I get a better picture of my tax liability, I may be converting all or part of an IRA which might bring that down to 2.