[syndicated profile] thesimpledollar_feed

Posted by Trent Hamm

Nadine writes in:

Does it make sense to use a Roth IRA as an emergency fund? It seems like I could contribute money to it, have it build tax free for a while, then I take out the contributions in an emergency and just keep those earnings for retirement. Why not do this?

Well, as you can see from the title of this article, I don’t actually think this is a very good idea. While Nadine’s point is accurate – you can, in fact, withdraw your contributions from a Roth IRA without penalty and just allow the earnings to build – that’s a really bad idea outside of an absolute emergency.

Here’s why.

Reason #1: You Lose Most of Your Retirement Gains

Let’s say you contribute $5,000 at age 25 and decide that you’re going to leave it in there until age 65. You put it into a hypothetical investment that earns 7% per year.

You check that account at age 65 and what’s in there? $74,872. Sweet!

Now, let’s look at an alternate scenario. You put $5,000 in there at age 25, just as before, but then you withdraw your $5,000 contribution at age 30 because of an emergency. What happens then?

Well, you peek in there at age 65 and… you have $21,489. Wow.

Because you took out that original $5,000 at age 30, you lost $48,382 in investment growth in that account. You tossed away what amounts to most of a year of living expenses (depending on inflation).

Here’s the core principle to remember here: If you withdraw your contributions early from your Roth IRA, you give up a lot of tax-free growth.

“But can’t I contribute more later to put the money back?” Unfortunately, no.

Reason #2: You Lose Your Contribution Window, Too

As of right now, each year, a person is allowed to contribute $5,500 to a Roth IRA (or $6,500 if they’re over age 50), provided their income makes them eligible (most Americans are). Once you reach that limit for a given year, you can’t contribute any more.

Furthermore, once a year passes by, you lose that contribution window. You can no longer make contributions for 2013 or 2014 or 2015. The calendar keeps marching forward, and as it does, you lose out on opportunities to contribute to your Roth IRA.

Those contribution windows are valuable. You only have so many windows to contribute during your working career. Between the ages of 25 and 65, you basically have 40 such windows (and that assumes that you’re within income limits on all of them).

So, let’s say you withdraw $10,000 in contributions from your Roth IRA. That’s the equivalent of just throwing away two of those contribution windows. You can never, ever get them back. They’re gone forever. You’ve effectively permanently reduced the amount you can ever contribute to your Roth IRA by $10,000.

Let’s put that in perspective. From ages 25 to 50, you have a total of $137,500 in contribution windows, and from 50 to 65, you can contribute a total of $97,500, giving you a total of $235,000 in contribution windows. You can only ever contribute that much to your Roth between 25 and 65, period.

Whenever you choose not to contribute up to the cap in a given year, you lose some of that total window. Didn’t contribute for the first five years? You can only ever contribute $207,500 total, because those first five years are lost. Only contributed $1,000 a year for the first decade? You threw away $45,000 of contribution windows that you’ll never get back.

The same thing is true when you withdraw your contributions. You’re effectively losing a contribution window you can never get back. If you contributed $5,000 when you’re 25 and then take that money back out when you’re 30, you’re not going to “gain back” the opportunity to contribute more. You’ve not only taken $5,000 out of that account, but you’ve lost some of the total that you’ll ever be able to contribute to the account. You can’t just put the $5,000 back without eating your current contribution window. The old one is gone forever.

What if you want to “make up” that $5,000 withdrawal later? You can, but by doing so, you’re effectively gobbling up a later contribution window. If you withdraw $5,000 in 2017 and then decide to put it back in 2020, you’re eating up $5,000 of your 2020 contribution window, leaving you with only $500 in fresh contributions that year.

Here’s the core principle: Your contribution windows are a limited resource, and withdrawing your contributions wastes those contribution windows. This might not be a big deal if you’re not using your Roth IRA to its full extent… but if you’re not using every drop of that Roth IRA contribution window, you may be making a mistake anyway (that gets into retirement planning issues that are outside the scope of this article).

There’s a final reason why simply taking money out of a Roth IRA to solve a problem might be a bad idea…

Reason #3: You’re Taking an ‘Easy Way Out’ of Your Financial Situation

When a financial emergency occurs, it’s often easiest to simply look for available pools of money and use those to solve the problem and then move on with life. The problem, of course, is that this really doesn’t solve the problem at all. The short-term problem – whatever the crisis of the moment is – is solved, but you’re left with a big, ongoing, long-term problem – a lifestyle that’s stretching your means – along with a new problem – a reduction in your retirement savings.

In short, if you’re tapping your Roth IRA in an emergency, you’re introducing a new long-term problem without really solving the one that already exists. Sure, you’re getting rid of the short-term issue, but you’re facing a lifestyle that’s pushing your means to sustain it while also facing a retirement for which you’ve just tapped some of your savings.

What’s the solution, then? First of all, if you’re in an emergency where tapping your Roth seems like a good solution, use other resources instead. Leave that Roth alone and try to find a different way to solve that challenge. Your Roth should be your last resort.

When the immediate crisis passes, step back and take a deeper look at your life. If you’re making financial choices that led to you considering tapping out your Roth, you may want to consider different choices.

Are you spending less than you earn? If you’re not doing this, you are going to constantly run into financial trouble in your life. There are simply times in the course of life where you are going to have more financial demands than you expect and it’s during those moments that you need to draw on your resources. If you aren’t preparing for this constantly during the easy times, the hard times are going to be very hard, indeed. As is often noted, winter is coming.

Do you have an actual emergency fund, one that’s large enough to handle most major emergencies? Do you have a pool of cash on hand that could help you bear the brunt of a sudden job loss? What about the transmission failing in your car? What about both? What about a sudden death in the family that necessitates emergency travel? What about identity theft that causes your accounts to be stolen and your credit cards to be closed? These things can and do happen. Are you prepared for them?

Are you earning up to your potential? In other words, are you doing everything you can to succeed in your career so that you can easily move on to higher paying jobs and pull in more income? This is perhaps the most important aspect of all if you’re struggling to spend less than you earn and are only covering the bare necessities. The only way out of that conundrum is to improve your earnings and that requires a serious focus on your career.

The key thing to remember is this: a situation where you’re even considering pulling contributions out of your Roth IRA is an indication that you’re living a life that’s full of financial missteps. You’re likely spending as much as you earn (or nearly as much). You likely don’t have an emergency fund, either. Part of this might be fueled by a job that doesn’t pay well, which is another thing that you can be working on. Correct those missteps. That desire to tap your Roth IRA is a warning shot.

Some Final Thoughts

First of all, if you’re ever in a position to even consider tapping your Roth IRA in an emergency, you need to step back and take a bigger look at your finances. Your Roth IRA is for retirement; if you use it in an emergency, you’re damaging your retirement savings plans. Instead, you should have other emergency protections in your life – namely, a cash emergency fund.

If you’re in this situation, start by considering all other options first. Have you investigated other methods of paying down debt? Do you have some unused belongings you could sell to pay for the emergency? Can you borrow something for a while, such as borrowing a ride or a car for a few days until you figure things out? Is there an alternate strategy you can use for a while, like using the bus instead of your car?

Your Roth IRA should be your emergency fund of absolute last resort. You don’t just lose the contributions from your retirement savings, you also lose the many years of earnings that those savings will generate and you lose some of your window of opportunity to contribute to your Roth IRA. It’s not worth it.

Related Articles:

The post Why You Shouldn’t Use a Roth IRA as an Emergency Fund appeared first on The Simple Dollar.

[syndicated profile] icanhascheezburger_feed
a photo of an unborn elephant in the womb - cover for a list of unborn animals still in the womb

Producer Peter Chinn used a combination of dimensional ultrasound scans, tiny cameras and computer graphics to create these truly mesmerizing images. But lets face it… They are still a bit creepy. 

He did this project for a National Geographic documentary that aired several years ago. Now mind that they are not actual photographs, this is digital images in what the unborn baby relatively accurately looks like.

Submitted by:

Tagged: pictures , unborn , newborn , animals
[syndicated profile] obsidian_wings_feed

Posted by Ugh

by Ugh

Things are going swimmingly here in the State of Denmark 'Merrica. The Post, the Times, detail Trump's efforts to subvert Mueller's investigation (Josh Marshall comments here).  Meanwhile, the GOP congress continues in its attempt to undo the ACA and tell anyone depending on it - plus anyone caught in the collateral damage - to go fnck themselves, happy to let Trump keep on keepin' on.  Jeff Sessions, fresh off being essentially told by Trump that Trump wishes he hadn't picked him, continues on his merry southern way to make life hell for the non-white population.  I am Jack's complete lack of surprise.

Whatever. This ship be sinkin', can the last rat turn out the lights?

Open thread.

UPDATE: wrs: "the POTUS is a crook. a criminal, a shady dealer, a serial bankrupt and fraudster. he's a creep, a bully, an abusive misogynistic sexual predator. he's profoundly ignorant and has no interest in changing that."

[syndicated profile] evilhrlady_feed

Posted by Evil HR Lady

Does your company have a bunch of “affinity” groups? For instance, a women’s group, a gay group, or an African American group? Lots of companies do. The idea is that if you bring people who share characteristics together they can help each other succeed.

Bloomsberg Businessweek reports that Deloitte is moving away from these affinity groups.

With diversity progress stalling in parts of corporate America, Deloitte is beginning to shift away from traditional approaches built around gender, race, or sexual orientation and instead working to get a broader buy-in, particularly from white males. After 24 years, WIN, the women’s initiative at Deloitte, will end. Over the next 18 months the company will also phase out Globe, which supports gay employees, and groups focused solely on veterans or minority employees. In their place will be so-called inclusion councils that bring together a variety of viewpoints to work on diversity issues.

To keep reading, click here: Deloitte Says It’s Time To End Affinity Groups

The post Deloitte Says It’s Time To End Affinity Groups appeared first on Evil HR Lady.

when the sun burst through the sky

Jul. 21st, 2017 10:05 am
musesfool: Stephanie Brown as Batgirl (can't hardly wait)
[personal profile] musesfool
I spent last night reading fic where Jason and Cass turn out to be biological siblings, not just adopted siblings, and squee!, that is one of my favorite Batfamily tropes. Plus, there was some awesome Jason-Cass-Steph bonding which I feel canon has repeatedly cheated me out of, even though they would get along like a house on fire (literally, probably, given Jason's involvement and enjoyment in blowing things up). Plus there is some hilarious snark at poor Tim's expense that made me laugh out loud repeatedly. Oh Tim. (There will be recs at the end of the month as usual, but here and here for those of you who are impatient and also not following my pinboard.)

Also, yesterday, my consolation birthday present arrived - a beautiful red patent leather Love Moschino tote bag (wow, there were three left in stock when I ordered mine and now there are none! I'm glad I got there in time!). During the whole epic search for a new bag, I coveted a red patent leather bag, but couldn't find one (or, rather, couldn't find one that was less than, like, $800 and while I'm profligate, I'm not that profligate), since I guess they aren't in style right now? Except it's red patent leather so I can't imagine how it could go out of style? But whatever. On a whim on Wednesday, I checked Zappo's to see if there were any available, and lo and behold, there it was. It's beautiful. It's big and kind of unwieldy (and unpleasantly sticky against the bare skin of my arm in the heat), but I don't care, because it's gorgeous.

Bosses 1 & 3 both admired it as I unpacked it from the box, and they were like, "Are you going to save it for special occasions?" and I said, "Hell no!" (note: I did not actually say "Hell no!" I just said, "no! I bought it so I could use it! Because it is beautiful!") And I recommend to all of you to use your beautiful and special things rather than waiting for some mythical special occasion to crop up, because frequently, you will be waiting forever and never get to enjoy the beautiful thing you bought for yourself. Using a special bag/wearing your beautiful new shoes/opening that expensive bottle of wine - they can all make a regular occasion special, and I recommend you do that rather than wait for some occasion arbitrarily deemed "special" enough to break out the fancy lipstick or whatever. Live your best life whenever you can, people!

sholio: Starlord with raccoon on shoulder (Avengers-GotG-Starlord with raccoon)
[personal profile] sholio posting in [community profile] fanart_recs
Fandom: Guardians of the Galaxy
Characters/Pairing/Other Subject: Peter Quill, Yondu Udonta
Content Notes/Warnings: none
Medium: digital
Artist on DW/LJ: n/a
Artist Website/Gallery: Skidar on Tumblr (artist's tagging is somewhat haphazard, but most of their other fanart can be found under the skidar-art tag)
Why this piece is awesome: Since the new movie came out, there's been a ton of excellent art about kid!Peter and Yondu, so it was hard to pick one to start with! I went with this one because it's very cute and lively with wonderful details, and I could totally see them getting into a situation like this.

Link: Don’t let the baby Terran wander unsupervised

Blech Summer.

Jul. 21st, 2017 08:37 am
oracne: turtle (Default)
[personal profile] oracne
We are having a run of very hot, very high-humidity days like Philly does gets, but usually they don't last more than a few days. It's been a bit more than that this summer. Do Not Want.

I want autumn and wearing layers and pulling out things made of wool.

Speaking of wool, I am wearing new sneakers made of wool today, for which I paid full price and I don't care because my poor arthritic foot bones are loving them so very much. The tops are soft! The insides are soft! There appears to be adequate support! They are from Allbirds and I never want to take them off. For the most part, they are not too hot, though I haven't tried them standing in the high humidity all day yet.

I am tempted to buy a pair of the loungers as well, for dayjob wear. (I snuck the sneakers in today because it's Friday and also hardly anyone is here.)
[syndicated profile] macworld_reviews_feed

Posted by Dan Moren

Hey, Apple, where’s the podcast creation app?

That’s what I found myself wondering recently after the company’s GarageBand audio-editing software got a significant revamp. There’s a new coat of paint that brings it into line with the company’s pro-level Logic suite, as well as a few new tricks—not all of which are positive—but what I found more surprising is what’s still missing. 

Apple clearly still intends GarageBand to be primarily aimed at musicians; that’s understandable, given the company’s deep roots in the music business. But I wish it would spend a little more time considering those of us who edit non-music audio, because there are some changes that would definitely improve our lives.

To read this article in full or to leave a comment, please click here

The future of the Finder

Jul. 21st, 2017 04:00 am
[syndicated profile] macworld_reviews_feed

Posted by Kirk McElhearn

This is the last installment of this column, and as such, I wanted to cover one of the most important features on the Mac: the Finder. This file manager, browser, and user interface layer is the tool that people use to launch applications, work with and manage files and folders, and control pretty much everything their computer does.

The early Mac was revolutionary, bringing the desktop metaphor to everyday computers. It wasn’t the first computer to use this type of interface, but it was the first one that was widely adopted. Instead of controlling a computer by typing lines of text commands, it used the WIMP interface: windows, icons, menus, and pointer. (And even before text commands, computers were controlled by punch cards, tapes, and other ways of inputting commands and data.)

To read this article in full or to leave a comment, please click here

[syndicated profile] macworld_reviews_feed

Posted by Michael Ansaldo

Not dead, only in Australia*

Jul. 21st, 2017 11:29 am
oursin: Illustration from medieval manuscript of the female physician Trotula of Salerno holding up a urine flask (trotula)
[personal profile] oursin

Re the current hoohah about Boots the chemist charging well over the odds for the morning after pill, I was going to comment - when posting the link on various bits of social media, to go 'and Edwin Brooks must be spinning in his grave!'

Brooks was the MP who put through the sometimes overlooked but significant 1966 Family Planning Act: as discussed in that post I did some while back on 'why birth control is free under the NHS'.

However, I discovered from googling that - as far as one can tell from The Usual Sources - Brooks is still alive, but moved to Australia. I am profoundly shocked that the Wikipedia entry, under his political achievements, doesn't include that act. We wonder if, in the long history of reproductive rights, it got overshadowed by the more controversial 1967 Abortion Act, or, by the final incorporation of contraception into the NHS in 1974. If I had time on my hands (which at this moment I don't) I would go and try and edit that entry.

*I think this is a quotation from someone? but I can't find a source.

[syndicated profile] macworld_reviews_feed

Posted by Glenn Fleishman

David Farren has a macOS calendar issue. He has two Macs, an iPhone, and an iPad mini, and after using a third-party calendar app for a year, he decided to switch back to Apple’s native Calendar apps in iOS and macOS.

On one Mac and his iOS devices, all went tickety-boo: the entries he’d made in the third-party app for iCloud calendars all appropriately appeared. But his second Mac is throwing up errors.

When I try to prompt it to sync with iCloud, it just brings up a message saying, “Cannot connect to cal.me.com.”

All his preferences are the same on both Macs, and all other iCloud-based sync items properly keep up to date. David’s not alone. It’s easy to find several—but not, say, thousands of—other people having this problem across several years. Apple offers a large array of generic advice, but doesn’t address this situation. (It also has a page of in-depth calendar troubleshooting linked from that FAQ, but strangely it’s noted as no longer being maintained.)

To read this article in full or to leave a comment, please click here

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