When is too old to start a Roth IRA?

Dear Dave: I’d like for my husband and I to begin investing. We have nothing saved right now, and our household income is just $25,000. We’ll have our house paid off later this year, but even though we’re both just 40 he says it’s too late in life to start investing. How can I convince him? — Margaret

Dear Margaret: Too late? What does he want to do, dig a hole in the backyard and wait for the end? Let’s do some figuring.

Right now, fully-funded Roth IRAs would be $4,000 each, or $8,000 a year combined. You’d have to tighten your belts on your income until the house is paid off, but if you start now you can end up with more than a million dollars by the time you’re both 70. Does that sound too late to you?

I think your guy has fallen for the tired old line that the working man can’t get ahead. But we just proved that with a little work and little saving he can.

You guys can retire wealthy, Margaret. Don’t give up! — Dave

Compensating sales reps

Dear Dave: I’m starting a business and have a question about compensating my sales people. What type of plan do you think is best? Is a full commission model better or would a base salary with a commission bonus structure work? — Rob

Dear Rob: I have a bunch of folks here at my company who do sales and marketing for me. Depending on what they are selling and what the lead-time is, I put them on a “Survival for All” plan.

These folks have a base compensation, or draw, that’s small. I make sure they have enough to get by each month, but if they want to make any real money they have to get out there and make something happen.

In my case it’s a non-refundable draw because I don’t borrow or loan money. Its non-refundable meaning that if they crash and burn and after 90 days and haven’t made a dime, then I eat that amount. This makes me hire more carefully to make sure I get quality folks working with me. This is my favorite way to pay employees. I would even put the receptionist on straight commission if I could figure out a way to make that work!

I had a salary job once for about three weeks and it drove me nuts. I have to be able to set my own limits as to how much I make. In your new business, you may have to deal with someone who would panic in a straight commission setting, and that may affect performance. Some people can’t perform unless they are relaxed, so the base plus commission structure gives them a bit of security.

Other options are available, but you have to pick the one you are comfortable with. Just make sure it helps create an atmosphere in which your people can excel! — Dave

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