Q: I graduated college in May and started a full-time job in October, making $ 36,000. I also do a freelance job and receive from $ 500 to $ 1000 per month of this. I live at home so I do not have to pay rent or groceries that really helps. Currently I have a little over $ 18,800 in student loans at an average interest rate of 4.45%. I have also discovered Roth IRA.
My plan at the moment is to contribute $ 500 a month to your IRA to make it max, and pay $ 700 a month for my student loans to get them out of the way fast. Or is it better to miss Roth and place these extra $ 500 on my student loans? That way I will be free when I move from my parents' house next year. The stock market has done nothing but fall since I found out my bill, and I read that the same can do this year. But I have also read that it's good just to continue to consistently contribute to the IRA when your debt is not high in order to benefit from the compensated returns.
A: In principle, it is a good idea to start a habit of saving for retirement early and not stopping. What the market does now does not matter. This is what the market is doing in the next four or five decades you need to take care of, and history shows that stocks are outperforming any other investment grade over time.
$ 6,000 that you contribute this year can grow to about $ 1
This means that your other option is not a bad idea either. You do not propose to postpone retirement savings for years while paying a relatively low debt, which would obviously be a bad idea. Instead, what you lose is the opportunity to fund Roth for one year. This is an opportunity that can not be returned – but you can fully fund Roth next year and maybe use some of your freelance money to fund SEP IRA or solo 401 (k). I am 63 years old, born in November 1955. My husband and I were divorced five years ago after 37 years of marriage. I work full time and I plan to continue at least 70 years of age. Am I entitled to apply for limited social benefits to my ex-husband when I am 66 years old and then go to my maximum pension at the age of 70? He has always been a much higher worker than I, and I'm confused whether I qualify for any social benefits. A: You have no right to file a limited application for marital benefits, which will allow you to claim damages based on the compensation of your spouse or ex-spouse, while allowing your own benefit to grow. Congress has abolished the limited application option for people born on or after January 2, 1954. Instead, when applying for benefits, you will be "considered" to apply for your own retirement benefit as well as for married or divorced spousal which you may be entitled to and in essence you will get the greater of both. You can not go on later.
Something to keep in mind: Although your own benefit may grow by 8% each year, you slow down, between 66 and 70 years, marital benefits do not earn such loans with delayed retirement. In other words, there is no incentive to wait after the age of 66 to apply for social security if the marital benefit is the greater of the two benefits you can get. If you do not have a trusted financial adviser who is well aware of your strategies, consider spending $ 40 or more on a service like MaximizeMySocialSecurity.com that can analyze your particular situation and offer the smartest option.
Liz Weston is a certified financial planner and personal financial journalist for NerdWallet. Question? Use the Contact form at asklizweston.com.