Broker Check

She Wants to Go To Disney, He Wants to Fund Their Roth IRAs

| December 05, 2019

From the Rummel Wealth Management Mailbox, where as always these are real questions from real clients.

(Of course the names are changed to protect the innocent.) 

From ”Laura” in Atlas Twp, MI:

Hey Ed, so I want to go to Disney World in February with my husband and two kids, age 4 and 2. Without telling me, my husband decided to fully fund our Roth IRAs for 2019 and now we really don’t have the money to go. I‘m bummed and really wanted to go. What do you make of all this? Please help.

Your question is not that unusual. Perhaps, not surprisingly, I often have similar "discussions with my wife."

The first question is what is the motivation for Disney World? Is this for you or for the kids? If it’s for the kids, curious as to why? They are 4 and 2 and won’t remember Disney even if the pictures and videos survive the transfer to the next cell phone. I’d be more inclined to take a 4 and 2 year old to a kids museum for a day, an indoor water park, day tip to a zoo, or visit a large sporting goods chain that has lots of taxidermy and an aquarium. Save the Disney fund for about 8 to 10 years from now so the kids will remember and enjoy Disney.

The bigger question here is the amount your household should be saving for retirement. Assuming debt other than house is gone and you have 3 to 6 months set aside in savings, the retirement savings goal is 10% to 15% of your total household income. If making that happen, then there’s room to talk about Disney or, better yet, someplace fun and less expensive. College isn't that far off! It's not too early to start thinking about college funding

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