Wednesday, January 12, 2005

New IRA Contribution Limits This Year

If you are a U.S. citizen over the age of 50, you may contribute up to $4,500 to an Individual Retirement Account this year. Your over-fifty spouse can do the same. Last year it was $3,500. If your are under 49, your limit is $4,000 up from $3,000. Next year the limits are raised again. See here.

I once tried to convince a twentysomething guy to open a Roth IRA and contribute whatever he could year by year. Despite the unparalleled rigor and clarity of my arguments, it was soon evident that I wasn't getting through to him. Well, he'll wake up eventually, at age 40 perhaps, at which time he will regret the time he wasted and come to understand that it is not so much the money paid in that counts as the time that the money has to compound.

Most people pay their own tuition in the School of Hard Knocks. The wise, however, get someone else to foot the bill.