"Riding Out the Storm"-Retirement Saving Scenarios
Thursday, March 19, 2009SUSIE GHARIB: With rising unemployment and companies continuing to cut their payrolls, we know it's getting harder to ride out the financial storm. We recently heard from James who has some of his money temporarily in cash and is looking for help as he saves for retirement. James wants to know if he can jump-start his simple IRA account by deferring a very large portion of his pay to the account for just a month or two. He wants to put his money to work generating tax-deferred income right away. So we checked in with Jason Zweig, personal finance columnist at the "Wall Street Journal" and asked if this sort of jump-start is permitted.
JASON ZWEIG, PERSONAL FINANCE COLUMNIST, WALL STREET JOURNAL: Yes, you can jump start your simple IRA and you should. This would be an excellent way to keep that cash from burning a hole in your pocket. You can contribute up to $11,500 to a simple plan in 2009 and up to $14,000 if you are at least 50 years old. Even if that eats up most of your early paychecks this year, it's still worth while. Any taxes on the earnings and growth of the account will be deferred until you reach retirement age while the stock market is holding a fire sale right now. So this jump-start can indeed give you a head start on saving for retirement. So go for it. Years from now, you'll be glad you did.
GHARIB: To share your thoughts and ideas or to comment on what others are doing, please visit the "Riding Out the Storm" section of our website.
