HomeRetirementI want Girl Ninja to be poor when we're old.

I want Girl Ninja to be poor when we’re old.

I’ve blogged many a times over the years about my Roth IRA and the quasi-obsession I have with making sure I always max it out. Since I love my Roth so much, you would think I would be just as eager to open one up for Girl Ninja. Not so much the case. Homegirl ain’t got no Roth. 

Why you ask?

Is it because I hate her and want her to be poor when we’re old?

Is it because I want her to be financially dependent on me so she doesn’t leave me for some other dude?

Or is it that I’m lazy and just haven’t gotten around to it yet?

I pick option D…. None of the above. 

We, the Ninja household, personally believe starting a Roth IRA for Girl Ninja would be overkill. Yes, overkill. Here’s why…

1) I believe investing 15% of our gross investment for retirement is sufficient.

Could we invest 20%, 25%, or 30% of our income? Sure. But why do we need $10,000,000 waiting for us when we are 65? I’m a firm believer there is a such thing as OVER-investing. 15% diversified through a handful of Vanguard Mutual funds should do just fine over 40 years.

2) I believe historical averages will remain relatively consistent.

Sure the markets could tank and the returns we’ve seen the throughout history could go away. But if they do, guess what? My retirement portfolio is going to be the least of my worries. Having food, water, and ammunition would be top of my priority list.

I mean, most Americans don’t put away 3% let alone 15%. I should, by default, be better protected than the vast majority of my peers. If my 15% invested over 40 years can’t get me by in retirement, I don’t think 20% or 30% would have made me any better off. How you invest (diversifying, consistency, etc) is often more important than how much you invest.

3) We aren’t being reckless.

If anything, we are probably saving too much. It’s taken me five years to build up my retirement portfolio, but it’s only taken Girl Ninja and I 2.5 years to amass an equal amount in our savings account. Heck just last week we put $2,000 in to a taxable investment account so we could start saving for shorter terms (10-15 years). Sure, we could have put that in to a Roth instead, but thinking about having some excess liquidity in our 40’s is hardly irresponsible.

I get that many of you worship your retirement accounts and contribute excessive amounts to them religiously. That’s great. You’ll be hella rich when you’re in your 70’s. That’ just not how we roll or what we want for ourselves. Retirement is cool, but so is saving, investing for the short-term, and…GASP… enjoying some of our money in your 20’s.



  1. I guess I can see you would feel that way and I am a firm believer in do what you feel comfortable with. Personally I would (and do) have my wife contribute to a ROTH. Someday you will want kids and your savings rate (on your normal cash) will drop because kids are really expensive. I’m not saying you won’t hit your goals, but your goals may change and you may have wished you saved more for retirement so you can visit your kids more (if they moved to the other side of the country or the world), or take them on trips with you, or *gasp* give them some sort of estate when you die.

    I say all this, but I understand everyone has different goals and life and again I am a believer in do what makes you feel comfortable.

    • I would totally agree with this, if it wasn’t for the fact that our savings rate (not even taking GN’s income in to account since we know she will one day become a SAHM) should still leave us with plenty in our retirement accounts. Should have at minimum a few million waiting for us. My point is that I’m cool with $2.5MM in my retirement accounts instead of having $6MM, if it means we can have more fun in our 30’s and 40’s.

  2. My husband actually brought up this point. I was going all crazy worrying about how we were going to max out our 401ks and ROTH IRAs and he said stop, why are we saving 50% of our income towards retirement accounts that we won’t be able to touch in 40 years???
    We want to buy a house, my husband wants to start a small business eventually, and we want to travel. I think it’s a matter of balance. Right now we are contributing about 15% to our retirement which is more than most people.
    As far as people saying what about kids, bringing your kids to your world travels when you are older, or living them an estate. Umm…I hope I raised my kids well enough to understand mommy and daddy will not give them everything, they will have to work for it. I hope my adult kids have the sense to pay for their own way to trips, cause I’m not funding it. And I hope my kids create their own wealth because we are spending it all before we die!!!

      • The cash isn’t just going to sit indefinitely. We are looking to purchase a home in the $350,000ish range. That means we need $70k for a 20% down payment. I don’t believe any money that is intended to be spent within a 5 year time horizon should be in anything BUT a savings account. By putting 20% down we avoid having to pay mortgage insurance AND we lock in a guaranteed 4% return on that investment, since we won’t be paying interest on that 70k we put down. May not be how you guys would do things, but still think it’s a pretty good plan.

        • I agree with the 20% to avoid PMI. You are able to withdraw up to $10k from a Roth for a first time home purchase, so long as you do not touch earnings from your initial investment or any money that was converted over from another account.

          The positive to this is the potential you have to earn on your money from the stock market. The negative is the potential to lose money in the stock market. Money in today’s savings account/money market/etc… are pretty much losing out to inflation, which I would consider a negative.

          If you have 100k in savings earning little interest, you’re over your target 20% down payment anyways at 70k, so you could be earning on that. What about putting money extra toward your house downpayment? With interest rates for 15 year conventional notes at 2.675% and 30 year’s at 3.0, combined with a mortage tax decuction to bring your effective tax rate to less than 2%, you can do better with your money elsewhere.

          I’m not trying to bust your balls man, just throwing out the way I would think about it.

          • I like this discussion. A good healthy debate.

            $70k for a down payment. $10k to furnish new said house. $20k sitting in an Emergency Fund.

            Totally agree that anything over $100,000 in savings would be excessive. Actually blogged about this a few weeks ago, and oddly enough… just like I’m having people tell me today 15% going to retirement isn’t enough, I had people tell me $100,000 in savings wasn’t enough. No matter what I do, people will always tell me I’m wrong. Haha. (none of this is directed at you by the way, just an observation). Check out the article…


            I guess for me it defeats the purpose of using a Roth IRA if I’m just going to pull money from it. The benefit of the Roth is long term growth and compound interest. Pulling money out 10 years from now pretty much washes away virtually all the benefit. Check out my comment below about why I believe short term investing is the best solution, over opening another Roth.

            • That’s the best part about personal finance man, it’s always unique to that individual. It also makes it more difficult because a cookie cutter solution off doesn’t suffice. After you detailed your allocations for the efund and furnishings (that’s alot of money! haha), I get it. If you’re looking to fill the proverbial (not really) donut in financial planning, a separate investment account seems like a good way to go for you two.

              It’s refreshing to hear someone talking about planning for the years before retirement. I personally forget about it from time to time when getting fixated on our 401ks, roths, etc…

  3. Brian hits what I would consider several essential points. But I do agree you can oversave, and what’s more in slow times it might be a good idea to increase your spending, to do your little part to stimulate the economy. You’ve got easily 30 years or more before retirement, and the only reasonable thing to do in my opinion is to monitor your long-term plans every few years – based on changes in outlook for inflation, social security/Medicare, other tax laws, stock market conditions, whether you receive an inheritance, buying a house, your offspring and their education plans, your estate plan, and that sort of thing.

    It’s common also to see people throw out a “number” you have to have saved before you can comfortably retire. Suze Orman loves this approach. But there are two main fallacies with this approach: one is that it doesn’t take into account what your expenses in retirement will be; the other that it assumes the retiree has no other resources after he/she stops working (such as purchasing an annuity, moving to a less expensive area, part-time work, and so forth). So while it’s good to save a lot while you’re still young, you have to periodically adjust your plans to take account of unknown and unforeseen complications later on.

    • “it might be a good idea to increase your spending, to do your little part to stimulate the economy”

      I think this is the problem we’re trying to solve, and balk at the recomendation to a US population that has an average savings of $25k entering retirement. What a terrible suggestion from someone who usually has well thought out, although cynical, replies.

      • What a lovely comment, especially coming from someone who properly maintains above that “That’s the best part about personal finance man, it’s always unique to that individual.” Quite obviously, my “terrible suggestion” was made directly and specifically to Brandon-ninja, who on various occasions has come across as something of a tightwad (see for instance the Steve Harvey show), and not to the US population as a whole with its meager retirement savings. I continue to maintain that for those who like Ninja are without debt and have a surplus in savings, it makes good economic sense to hoard less and spend a little more. The meal you eat out, the concert you attend, the clothes you buy, etc. – all help keep others employed and thus help a struggling economy. And that well-thought out suggestion, contrary to your other gratuitous and unsubstantiated attack, is the opposite of cynicism.

  4. By choosing taxable investing with your extra savings over GN’s Roth, you are leaving money on the table. You will be paying capital gains/dividend taxes at best, and ordinary income taxes on any gains at worst.
    If you put the money in her Roth instead, you could still withdraw the contributions at any time, but your gains would be tax free if you left them in.

    It’s no big deal, but mathematically, your performance will be lower.

    • Two scenarios:

      1) We put $5K a year in to a Roth for Girl Ninja. After 15 years we have access to withdrawing $75,000. We’d have to let any interest sit until our mid 60’s.

      2) We put $5k a year in to a taxable investment account for 15 years that earns us a reasonable 3% return. We end up with a balance of $93k. After taxes this would be around $88,000. (If we earn 4% on this investment we end up with $100k.)

      So yes we will pay taxes on our taxable investing account overtime, but we still end up $13,000+ more liquid than had we put it in a Roth. This is more desirable for us since we ARE already saving 15% of our gross income for retirement.

      To each his own I suppose.

  5. Great post! Always nice to see your point of view in how to balance personal finance. It’s always been such a sticking point for me. In my case, I grew up relatively poor and endured many setbacks in life. That’s why I’m so paranoid when it come to money. I’m happy (and always envious :P) that you have not encountered any major setbacks like I have, but know that life events can change your viewpoints drastically as they did to me, in a bad way I think…

  6. This is an interesting perspective, and one that I have trouble relating to. During the last 6 years my dad found himself out of work for the first time in his life and things were scary for my family. I decided then and there to become financially independent and I’m currently a bit disattisfied with our 75% savings rate (I feel like there is absolutey some fat to trim). I guess I also think there is no need to upgrade my lifestyle, so what would I do with the extra money? I’d much rather put it into savings, essentially buying us a little bit of freedom.

    Still, I’m interested to see if your perspective changes at all once you have kids. Good luck!

  7. I agree with Ninja’s approach, but for slightly different reasons.

    My goal is to attain financial independence by 45 (I’m 29 now). Saving and investing 65-75% of my income will get me there, but if I invested all of that money in retirement accounts, I still wouldn’t be able to retire until 65+ because I wouldn’t be able to access my money in my 40s without paying severe penalties. For someone with my goals, I have to save in retirement accounts (I currently max out my 401k) and invest a sizeable chunk of my after-tax income in taxable investment accounts. This approach ensures that I’ll have liquidity when I need it.

    Folks on the “9-5 til 65” train should follow conventional wisdom and shovel money into retirement accounts. But those who desire more flexibility and/or have an eye on early retirement, must utilize both types of accounts.

  8. We are going after the Roth IRAs hard. We know we can withdraw the funds if things got really dire, so in a way it’s not like it’s totally locked away for retirement. There are limits to how much we can contribute each year, and what if we reach the income phase-out point? So yah.

    That, and my husband’s employer still doesn’t have a 401k set up so our IRAs are our only tax-benefited retirement location.

    I think it is important to enjoy your finances in the present, but I think it is prudent to bulk up retirement accounts while young. Most people don’t say oh darn, I wish I didn’t save too much!

    • What is your retirement investing rate or your combines gross income? We would probably do exactly what you are doing if both of our employers didn’t offer 401ks with matches. You can bet your bottom BOTH of our Roth’s would be maxed out as a result.

  9. Best graphic ever !! And all great reasons. No reason to over-invest, you only really need so much at retirement !!

  10. I can see not wanting to invest more, but you should be investing equally to accounts in either of your names. So if you only want to do $5000 to a ROTH each year, you should do $2500 to one in your name and $2500 to one in hers. Similarly, juggle your other retirement contributions so that half are in each of your names.

    My husband’s dad, unbeknownst to her, was putting all her retirement contributions in accounts in his name, and so she can’t retire even though she’s older than he is because none of the money is in her name and he won’t give her access to his. I’m not saying you’d do the same, but Girl Ninja should really be making sure that she has access to half of all assets.

  11. You should be funding a retirement account for Girl Ninja at 100%. You may decide she will be SAHM. During those years she will be unable to fund anything. What if you die tomorrow? After having kids? As perfect as your life is now, divorces happen. DO NOT stick your head in the sand! Divert a portion of Ninja’s to Girl’s. Keep the total 15% if that is your comfort zone.

    • 1) Divorce is not an option. Ever. I know people will hate that I say this, but they’ll just have to deal with it. And 50 years from now when we are still happily married I’ll say told ya so. p.s. even in the event of a divorce WA state provides that she will have access to 50% of all money acquired after marriage, which in our case is virtually everything, retirement accounts and all.

      2) Death. That is what life insurance is for. My retirement accounts do no good in the even I die in my 30’s. She still wouldn’t have access to those accounts until she was of retirement age. Life insurance, however, would give her $1,000,000+ depending on our policy, for immediate use.

      3) Girl Ninja will be a SAHM. That’s what she wants, and that’s what we’re planning for. That’s why we are saving so aggressively right now, so we can be set up for the day she stops earning a paycheck. And even if she is a SAHM, we can still fund a Roth IRA for her if we so choose. Only one of the two spouses has to work to fund BOTH Roth’s.

      • Well responded sir… I like your way of thinking.

        I wish more bloggers were preaching this message that people should ENJOY their money as well as save. Maybe a new niche market of PF blogs to guide the obsessive savers is required?

      • Not sure why people are bringing up death or divorce. They are marital assets which will be split equitably (if you are in an equitable distribution state) or right down the middle if you are in a community property state which I believe you are. Death – she gets everything anyway (Note: CHECK YOUR BENEFICIARY STATUS).

        But I was thinking about Reason E:
        – Because you are loading up her teacher pre-tax dollar qualified account? This allows 60 year old ninja (probably a big slower and with more gray hair) to decide whether to take post or pre tax dollars depending on the tax rates 30 years from now

  12. I think you should take advantage of every opportunity to put aside money for the future. Particularly in a tax deferred and tax free account.

  13. What about the fact that women live longer than men statistically? Chances are she’ll need money even after you are gone.

  14. I believe that we cannot estimate how much money we will need after our retirement. But as far as my husband and I are concerned, we have decided to max out our Roth IRA each year. Furthermore, we also have a separate retirement savings account. We also put into our savings account each dollar that comes our way, as well as every penny that we save from our utility bills and grocery expenses. Every centavo counts!

  15. […] also, read Ninja’s recent retirement post and their decision to invest about 15% of their income towards… It kinda made me feel not so alone, you […]

Comments are closed.

Related Content

Most Popular