Money Tree's Financial Planning Software Blog

Financial Planners – Have you heard about the Roth IRA Movement?

Posted on Tue, Mar 27, 2012

There is a Roth IRA Movement going on, all thanks to Jeff Rose, CFP® with his blog post and efforts to get others involved:

http://www.goodfinancialcents.com/roth-ira-account-movement/

With this post, he has started an event that has drawn lots of attention with over a 150 financial writers all working together to share the same message:

OPEN A ROTH IRA AND MAKE CONTRIBUTIONS... Today!

Jeff shares a chart that illustrates the importance of saving at a young age by comparing two investors, which first caught his attention in his college finance course.

Saver  1: “Super Saver Parker”
Started saving at age 25 to a Roth IRA with contributions of $2,000 per year for 10 years.  Super Saver Parker’s total contributions amount to $20,000.

Saver 2: “Super Slacker Saver”
Started saving at age 35 to a Roth IRA with contributions of $2,000 per year for 30 years.   Super Slacker Sloane’s total contributions amount to $60,000. 

Using the same assumptions as his charts, I quickly plugged the numbers into Silver Financial Planner to illustrate the results.

Illustration 1 - Saver 1: “Super Saver Parker”

RothIRA1With contributions of $2,000 per year from ages 25-35, assuming an 8% return, the Roth IRAs projected balance at age 65 is $327,359.

Illustration 2 - Saver 2: “Super Slacker Slone”

RothIRA2With contributions of $2,000 per year from ages 35-65, the Roth IRAs projected balance at age 65 is $254,432.

Even though Saver 2 contributed $40,000 more to the Roth IRA, thanks to Saver 1’s early contributions Saver 1’s Roth IRA account balance is projected to be worth over $70,000 more at age 65.  

It is very interesting to read the variety of discussion topics when it comes to Roth IRAs. RothIRA.com has compiled a list of blogs posting articles on the Roth IRA movement:
http://www.rothira.com/roth-ira-movement-bloggers

Money Tree Software wants to thank Jeff Rose, CFP® for his energy and hard work to start this movement and we are happy to share it with our readers.

Tags: Financial Planning

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