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Best retirement fund for self-employed father

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actuarygirl13
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Best retirement fund for self-employed father  Reply with quote  

My father just turned 51 and has no money saved up for retirement. He's been self employed and has always made ends meet. I recently graduated from a top university making 70K+ a year. I have about 100K in student loan debt, but I also want to start contributing to a retirement fund for him (I contribute to my person 401K monthly already). I want to start off small - about $50-$100 a month in contributions.

My questions - what would be the best fund to contribute to? I'm thinking a Roth IRA as my dad will have to pay minimal taxes when he starts receiving payments. At the same time, I'm wondering if there is any tax advantage for contributing to a specific fund.

Any thoughts or input would be appreciated.
Post Sun Dec 27, 2015 3:03 am
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littleroc02us
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Here's the reality. If he doesn't contribute any money and you bring $100 a month to the table in an aggressive growth index fund for the next 20 years earning 11%, that's only 85k. That really doesn't do much for his retirement. Is there something you can pick up that is contributing to his inability to not be able to save for retirement. A new car, to expensive of a home, debt, toys, etc.... Does he not make a good salary. There's got to be a reason he doesn't have disposable cash at the end of the month.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Sun Dec 27, 2015 4:23 am
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goldsnhearts
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If he is going to have a low income when he retires, then a Roth won't help. Better to fund a traditional IRA, have him get the tax deduction now while he is working, and then draw on the funds later when he will pay very little if any tax. I found an article that is slightly dated, but the concept is sensible http://www.retirementincome.net/tax-savings/ira-vs-roth-ira-taxes. Remember that the IRA needs to be in his name and that the tax deduction will appear on his tax return. Hope this helps! Smile
Post Tue Jan 19, 2016 10:06 pm
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