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My second post

 Okay, so last time I wrote about how I’m trying to get a better handle on my finances. And, lo and behold, shortly thereafter my IRA statement came in the mail. Usually, I don’t pay too much attention to those because I can never figure out what all the numbers mean. But this time would be different, I decided. I would bring it to work, call the financial planner who had assisted me in establishing a simple IRA last year, and ask him to explain it to me (believe me, this statement is really complicated.)

  So, I stuck the envelope in my biking backpack (I usually bike to work, which  could be construed as a good financial decision if you’re creative and expansive enough with your definition of that ). Then, guess what? I left it in there for about three weeks. Actually, it’s still in there.  Why? Because I have better things to do at work–or at home for that matter–than figure out my finances. Okay, so let’s face it. I chickened out. I mean, do I really want to go admitting to someone I know on a professional basis that, ‘Sorry, I have no idea what my IRA statement means, and everything you’ve been saying to me about it for the last year hasn’t made much sense”? Uh, no.

  I needed to go about this differently. So I did what all people do when they chicken out on face-to-face contact. I Googled IRA. Aha! Of course–there is a website designed specifically for people like me! It’s called www.ira.com, and it has frequently asked questions on it. And guess what? I knew the answer to the first question! (What is an IRA? An individual retirement account.) Easy. Now I think I can do this.

Question #2, a little harder. How does an IRA work? Most of this I knew too. You contribute money which accumulates tax-free and there are disincentives for withdrawing funds before the assumed retirement age of 59 1/2.  Wait a minute! Someone’s assuming I’m going to retire in eight and a half years! There are two ways of looking at this shocking piece of information, I realize.  A) I have 8 1/2 years before I have to open up that envelope, or B) I better get cracking because I have only 8 1/2 years to figure all this out.

I’m leaning toward A. For one thing, I’m not buying that 59 1/2 retirement thing. And, for another, even if I had the option to retire so young, I know myself. I would procrastinate a decade before doing it anyhow.

  The next question I read dealt with the different types of IRAs that are available. This was pretty interesting. My husband has been talking about Roth Ira for years and I thought it was a friend with an unusual name.  (Really, I’m just joking about that.) 

After that there was a page about rules and regulations that included words like annuity that were way more than I wanted to deal with on a Friday afternoon. So, the last question I looked at included the Uniform Lifetime Table, which defines the distribution period for an IRA, based on a person’s age. You probably had to read the regulations page to know what that really was all about, but I found it intriguing anyway. It starts at age 70 and goes all the way to 115+. The distribution period is 27.4 (I’m guessing they’re referring to years)  if you’re 70, and 1.9 if you’re 115+.  Wow! This is definitely a website for optimists. It’s written by people who believe they will retire at 59 1/2, live to be 115+ and still have another 1.9 years left.

I quit reading while I was feeling so good about things. But for my next post I plan to look at the page on ira.com about “catch-up contributions.”  I have a feeling I might need that.

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Categories: Uncategorized
  1. July 15, 2010 at 3:17 pm

    Just wanted you to know your column inspired me to learn the difference between a Simple IRA (which you have) and a Traditional IRA (which I have). I did this on Google, also, by the way – God forbid I should have to talk to an actual human being. Seems I can’t take a distribution until age 70 (without penalty), so the 59 1/2 thing caught my attention right away.

    So thank you for that learning experience…

    Now, if only I had enough money to make a contribution! That would be something.

    • July 19, 2010 at 11:05 am

      Well, thanks for reading it! I still think I need to talk to an actual person fairly soon–I’m beginning to realize that my tendency to procrastinate is not a good trait for a blogger.

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