It is day 5 of the 30 day challenge and I decided to go big! I increased my Roth IRA contributions from 3% to 6%. I may be stretching the budget a bit, but better to stretch now than wait in my opinion. Again, I figure I will find things I am wasting money on and cut them out completely. Do I really need new underwear? 😉
What is a Roth IRA you may ask? A Roth IRA contribution, unlike a regular IRA, does not give you a tax deduction that year for the amount invested. Instead, that money can be withdrawn tax free at a later date. These make sense if you believe taxes will be higher in the future when you are in retirement. You are giving up a tax deduction now for one in the future. I personally believe taxes will be higher because I do not think the Government will be able to afford all the future entitlement programs, and the only way to afford them will be to raise taxes. I think this is a matter of simple math. People are living longer and there will not be enough workers to sustain them on social security. Remember people working now have money removed from their paychecks and that is what is used to pay retirees alive now. It is not a savings account that the Government keeps for people. It is redistribution of a part of current workers wages today to fund older folks in retirement. So, the government will not have the revenue to support the huge numbers of people that will be alive from the ages of 70-120!
So, what can you do today to improve your financial situation? We are on day 5 of 30, making small adjustments each day to improve our financial situation. This whole exercise is to illustrate how just one small action a day for 30 days could transform your wealth building potential. What will you do today? Join us and share your ideas, we would love to learn from you!