Why Invest In Something You Can't Touch Until You Retire?

Why Invest In Something You Can't Touch Until You Retire?

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• The Ramsey Show (Highlights):

[HamiltonRb]

I think for many people, if you have an account that you can easily access over the years, you probably won’t have a retirement

[davidfoulk]

On a side note, it seems like yesterday I was 18 and now I’m 58 so yes, put away every dollar you can for as long as you can Period!

[jeanc]

There is no greater security blanket in your 50's than to know you've done the right things when you were young so you can enter retirement knowing your financial needs will always be met.

[buildingwithtrees]

I appreciate Dave making his statement at the end. I graduated from the system. And do just exactly as he said he does.

[ddellwo]

Way too many people don’t have the self-control required to keep from constantly sticking their hand in the cookie jar if given the chance. For this reason, putting retirement funds in a “hands off” vehicle that can’t be easily tapped every time “Buffy” thinks she deserves a vacation makes a lot of sense!

[frugalprepper]

I am doing a Roth and a Traditional IRA, but men in my family don't live long and I am planning on retiring before I reach the age where I can withdraw them. I know my family gets the money, but I want to have fun and live life a little before I die. That is where my mutual funds come in and rental properties. I have enough to retire early and it will be plenty to get to my withdrawal age for the others

[BrandonMinguez]

The point of not being able to touch the money now when you want it, is so you have money to touch when you retire when you need it.

[Aki-lljg]

This is deceptive and I fell for it too. If we think of the 200$ as income, then you can choose to pay tax on it before or after you invest in a retirement account. If you pay tax before investing, then the 200$ is going to be less, say 160$, and your new investment is 160$. Where as, if you didn't pay tax on it, then you would investing the flat 200$. The "tax free growth" comes at the cost of cutting the principal investment, which scales the account by the amount of tax you paid before you put it in. -- The only thing that matters is what the percentage of tax will be vs. what it is now. Roth can be more appealing as you already know the percentage while a 401k/traditional you must pay it later and who knows what the tax rate when you are pulling it out.

[MattyVice]

I have 50k in my retirement accounts now at 29. Proud of myself

[TheDjcarter]

Not to mention you DO NOT have $2.2M if you took out $10k here and$30k there along the way.

[nathanallen]

Time value of money is the reason why you buy and hold forever

[anap]

Not in the uk. You save upto 20k a year and any income you make in a stock and shares ISA is tax free. If you are a couple its 40k! A year

[nousernamesarevalid]

Its so the money is there when you retire. if its easily accessible, do you really think it will still be there for you when you retire? No, someone worried about their retirement being easily accessible will access it.

[lateboomer]

If your house and your car are paid for (by retirement) you probably won't need as much income as you might think and will pay very little (if any) taxes.

[dababycar]

Because most callers on the show are terrible with money but wise people can make investments outside of retirement accounts

[mathisnotforthefaintofheart]

Because the name already says it, it is for retirement. Same idea we teach children to put coins in a stone-made piggy-bank that can only be opened (to access the money) when you BREAK it. Which is what you don't want to do because once it's broken, the cute piggy-bank can't be used again. This is a good way to teach children early on the meaning of saving. And the piggy-bank lesson is a wise one, because most adults can't save, seems like

[moneybee]

Having that money invested in a way where you *KNOW* it's set aside for retirement removes temptation to tap into those funds earlier. There certainly is value in that!

[BubbleMania]

If taxes are really a problem, the UAE and Malaysia are good places to be. East Europe is also an option. You could also get a house outside the US to not need to pay the US property tax.

[Freakagomy]

I like most of what Dave says (in every one of his shows), and thank you to the team for the good advice and stellar content he and his team provide. That said, his math in this video is a little bit off, or at least its ignoring the major benefit of a traditional IRA - that is, the present value of the money saved by NOT paying taxes on it for the year it is earned.

In most cases if an individual were to invest the money saved on taxes along side their traditional IRA, in a non-tax-sheltered brokerage account, the traditional IRA strategy wins out over the long term. This is obviously more true the more an individual earns (i.e. the higher his/her tax bracket).

Not saying that always makes the traditional IRA right for everyone, but I think it's somewhat strange to ignore the very benefit that's provided by this alternate approach.

[acooper]

I see this topic come up a lot. A lot of younger people say they don't want to wait til there 65/old until they can enjoy their money. I'm just going to put majority of my money in the retirement accounts and then after that put my money in taxable accounts, so if I need to make a huge purchase if I don't have it in cash, I can have that as an option.