Search Real Time Economics1 March 15, 2013, 10:35 AM Secondary Sources: Wealth-Building, Dollar, Gold Biography A roundup of economic news from around the Web. Wealth: Annie Lowrey notes the younger generation lags in wealth building. A new study from the Urban Institute finds that Ms. Brady and her peers up to roughly age 40 have accrued less wealth than their parents did at the same age, even as the average wealth of Americans has doubled over the last quarter-century. Because wealth compounds over long periods of time a dollar saved 10 years ago is worth much more than a dollar saved today young adults probably face less secure futures for decades down the road, and even shakier retirements. Dollar: Dean Baker says that the value of the dollar doesnt say anything about the strength of the U.S. economy.
Building wealth: Best moves if you’re 25 to 34
It’s a no-brainer.” He suggests maximizing your contribution. Currently, the contribution limit is $17,500; $23,000 for those 50 and older. If you’re truly motivated to build wealth, after maximizing your 401(k), contribute to an IRA. The contribution limit is $5,500; $6,500 for those 50 and older. (The tax deductibility of IRA contributions may be limited if you contribute to a workplace plan and your earnings exceed certain levels.) If self-employed, set up a retirement plan that will allow you to invest as much as possible. Investing in a tax-sheltered account such as a Solo 401(k) cuts taxable income now and enables you to build wealth by deferring taxes until you take distributions.
Steps to Building Wealth
Be courageous. Nearly 40% of Gen Y-ers say they’ll never feel okay investing in stocks, MFS Investment Management reports. Take note: Since 1926, a portfolio mostly in stocks has never lost money in any 20-year period while averaging gains of more than 10.8% a year, vs. 4% for bonds. Get an age-appropriate mix with the target-date fund in your 401(k) or MONEY 70 picks Vanguard Target Retirement 2050 ( VFIFX ) or T. Rowe Price https://www.resume.com/mikedillard Retirement 2050 ( TRRMX ).