Arguments for a Roth

The incessant blabber about the nation's deficit and debt might be enough to make you numb.

But if you are blocking it out, take your earplugs out. I want to encourage you to open a Roth IRA right now. Among the reasons for acting now:

Boomers galore. There's never been a generation as gigantic as the 77 million baby boomers, who are beginning to retire.

They will consume massive amounts of Social Security and Medicare money. And the government is likely to turn to you to fund a system that can't afford 77 million retirees. You might prefer to see some Social Security and Medicare benefits cut, but that's going to be a tough argument to win.

In their 20s, 30s, 40s and 50s, boomers thought they could wait to save for their future. And they ran out of time.

Government figures show that half of the people close to retirement age have less than $100,000 saved. That means their savings will provide about $4,000 or less a year to cover basic living expenses. I assume these people will fight to the finish to keep Social Security and Medicare coming.

— Uncle Sam will look for you. I would bet that as these boomers face a retirement crisis, younger Americans with jobs are going to be tapped like never before to devote more money to retirees. That means that if you are postponing saving now because your paycheck is lean, in the future the tax man is going to arrive and pull more tax money from it than he does now. In other words, waiting for the future may mean you have less in your paycheck. So rather than being in a better position to save money, you could be in a worse position than now.

— Social Security and Medicare cutbacks. When you listen to the debate about Social Security and Medicare running out of money, politicians assure people within 10 years of retiring that they will be OK, that cuts won't affect them. It's tough to cut benefits for people on the brink of retiring because they don't have time to save much more.

That means, if you are in your 20s, 30s, 40s and maybe even early 50s, you are likely to see cuts in your Social Security and Medicare. In other words, you are likely to have to give up a bigger chunk of your paychecks to cover Social Security and Medicare payments for people who are already retired.

— Waiting to save is folly. Investing magic works against you if you wait to save. That's because of what's known as the power of compounding, or the ability to turn tiny savings into huge treasures if you start when young. For example, if you started investing about $25 a week in a balanced mutual fund of stocks and bonds at age 22, and kept this up, by 70 you'd likely have close to $700,000. If you waited until 35 to start saving, you'd have to save about $73 a week rather than $25, to end up at about the same point. At 45, it would take about $160 a week. So start saving now.

— Uncle Sam leaves Roths alone. A Roth IRA is attractive because once you put money into it, Uncle Sam promises never to tax you on its earnings. So if you have $1 million at retirement, and taxes are soaring then, any money taken out of your Roth will be 100 percent yours. You won't have to share a penny with the government. This is not the case with a regular, tax-deductible IRA. With a regular IRA, Uncle Sam gives you a tax break during the year you put money into it and stays away from your savings while they remain in the IRA. But when you retire and start withdrawing money for living expenses, Uncle Sam takes his share.

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