Your Time Has Come

For the record, I love Audioslave.

Today is my last day in the office at work. From now on, I'll be telecommuting half time from wherever I happen to be. My last day has been stellar so far, but I am definitely looking forward to 5:30.

In other non-interesting-to-anyone-but-me news, I maxed out my Roth IRA for 2006 today. Yay for retirement accounts when you are 23!

Really though, 23 is probably the time a Roth IRA makes the most sense. Since it grows tax free and allows tax free withdrawals at retirement, it is relatively easier to predict final value than a taxed account. Also, since it is after tax money there isn't the headache of dealing with paycheck withholdings and changing employers. If you are older, say in your 50s, the regular IRA setup makes more sense tax-wise, because you contribute pre-tax money. However, in your 20s, contributing post-tax (especially since income tax rates are at historic lows) and enjoying tax free growth totally makes sense.

This year the contribution cap is $4000, and while you can withdraw contributions at any time without penalty, you cannot touch your earnings until you are 59.5 years old. Assuming that the cap grows with inflation, you earn a decent 8% return annually, and you max it out each year until you are 59.5, you can celebrate your 60th birthday with a cool $1.23 million dollars (around $400k in today's dollars). That won't buy you a mansion, but I figure that is not a bad deal for a relatively small annual contribution. Living on the interest alone would be an improvement on my current standard of living.

Not to mention, if you take a little risk (i.e. Invest in stock indexes rather than money market accounts and CDs), you might achieve a yeild higher than 8% ... like say 10 or 12%. This nets you $1.94 million or $3.13 million respectively. And, if you are Warren Buffett, you earn 21.5% annually with your mad skillz, giving you a silly $42.55 million on retirement day.

I'm sure everyone is dozing off about now. Or maybe just skipping paragraphs until they don't see dollar signs. I'm honestly just a big fan of the Roth IRA (and the 401k provided there is employer matching) and thought I would pimp it out a bit. So class dismissed, enjoy your weekend!