- Joined
- Jul 24, 2013
Null said:If he tucked a fraction of his welfare income into a 401K account he could conceivably have a tidy sum upon reaching an elderly age. No effort required, aside from showing restraint.
Originally I discounted this idea completely because the contribution amounts would be minuscule. But as a thought exercise I ran some numbers to see just what he would generate money wise.
Data used
Years until retirement: 34
Yearly income: $9,600
Yearly ROI: 7%
With a monthly contribution of $50 from his tugboat, at age 65 Chris would see 82,342 in a Roth IRA.
If he bumped it up to $100 he'd have $164,684.
At $150, he'd have $247,026.
Now this may look fine and if you were in his shoes with a house that was paid off and enough money to get food and whatever that might be able to work for you, but Chris is both incredibly greedy and incredibly impatient. There's no way he'd wait 34 years to collect his money even if it would be in the six figures and there's no way the house they're in now is going to stay standing for that long. There's also no way he'd contribute to an IRA without someone like Barb taking his money and doing it for him and explicitly not telling him about it because he'd scheme to cash it out at a huge early withdraw penalty or managing it for him once he did hit the proper age.
Now, for you forum goers: you might want to look into 401K's with your employer, or an alternative like a Roth IRA.