Jewish World Review Nov. 6, 2000 / 8 Mar-Cheshvan, 5761
I don't wanna save for retirement!
DEAR BRUCE: I am sick and tired of guys like you screwing up my life. I'm 23 years old, married for a year, and we have no kids, but one is on the way. My wife and my mother are constantly on my back about saving money, IRAs, 401(k)s and in general squirreling away money for my old years.
I would like to live now. I don't want a sports car when I'm 40 years old and over the hill. Every time I try to buy something, whether it's a boat, a cycle or something else, my wife and my mother come down like a cloud. They love to quote people like you who write columns that say this is not wise. Stay out of my life. Just because you are an old geezer and don't want to have any fun is no reason why others shouldn't. -- T.N., via e-mail
DEAR T.N.: What an interesting letter. I'll bet that when you were younger and things didn't go your way, you stomped your feet and held your breath until you turned purple. As a matter of fact, you probably still do. The only shame in this is that you are married. You are still a little boy who wants instant gratification. You are fortunate that your wife is more mature.
There is no reason why you should give up everything now for future years. A story that is probably close to your mental age, the one about the grasshopper and the ant, is one that you should take to heart.
In the meantime, please offer my sincere condolences to your wife. She's grown up and married to a little boy. What a tragedy! By the way, this "old geezer" still flies his own plane and has a boat docked off of the backyard, and is having a great, active life.
DEAR BRUCE: Nine years ago my 26-year-old uninsured brother received an $80,000 default judgment against him for an accident that had happened two years earlier. To make a long story short, he now owes the insurance company, including interest, $120,000. He has almost lost his $30,000 home and has had his utilities turned off. He offered the attorneys for the insurance company $15,000, the amount that he could take out as a loan against his pension but was laughed at. The lawyers suggested that he take out a $40,000 loan and ask his relatives for $25,000.
He will never qualify for the loan, and there are no wealthy relatives. Would you suggest that he quit his $17 an hour factory job, which includes benefits for him and his three children, in an attempt to satisfy this judgment? He is still young. He knows that his current employer would not rehire him. -- L.C., Whitehall, Mich.
DEAR L.C.: It was clearly irresponsible of your brother not to be insured, but there are limits to how much someone should be punished. I'm surprised that no one has recommended to your brother a personal bankruptcy. I am very reluctant to tell someone to do it, but on the other hand, this judgment will never get paid at this rate, and that's the purpose of bankruptcy -- to give someone a second shot. I would urge your brother to at least talk to a bankruptcy attorney.
DEAR BRUCE: I got a late start on retirement. I do have $44,000 in a 401(k), but I have left that employer, so it doesn't grow except by the ups and downs of the stock market. Could I move this money into CDs? Will I have to pay taxes if I make this move? And can you please tell me what Roths are? I am so uncertain. I am currently in a South Carolina retirement plan, a 403(b). -- L.D., St. Matthews, S.C.
DEAR L.D.: You mentioned that your 401(k) is not growing since you moved, but what you mean is that you are no longer making contributions. If the 401(k) is invested reasonably well, in the next 20 years that $44,000 will grow substantially in a tax-sheltered environment. The overwhelming likelihood is that it will grow quite nicely, as will your 403(b).
Yes, you can move the 401(k) over by rolling it into a self-directed IRA. I would try to discourage you from investing in CDs, since they pay such a tiny bit of interest. Over the long pull, I think that you will find that your money will appreciate substantially in both the 401(k) and the 403(b), to which you should be making the maximum contribution. You also might wish to take $2,000 of after-tax dollars and put it into a Roth IRA. While you will get no immediate benefit, your $2,000 in savings will then grow totally tax free, which is a deal that you should not pass up each year. You will be very pleased with that when you
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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