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When a Necklace is Reckless
by John M. Grund

A few weeks before Christmas, my wife announced that, instead of another piece of jewelry, she'd rather have some help making her Roth IRA contribution for the year.

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This was the same as another man hearing his wife ask for satellite TV because she wants to be able to watch any or all of the 13 NFL games every Sunday. In my marriage, I have thought of myself as the saver and pegged my wife, perhaps prematurely, as the spender. I'm the one who enters every purchase into Quicken the same day; she stockpiles gift wrap.

She explained that she had been thinking a lot more about retirement now that we're expecting a baby, and she had seen the commercials on TV where $13,000 for a necklace today equals $60,000 for retirement later.

My theory is that banks, mutual fund companies and other financial institutions have figured out that the way to get spenders to save is to make saving look like another form of spending one where you just get more for your money. My wife's request was a sudden case of the theory working in practice.

The commercial she saw is from SunAmerica, an insurance company that has become a specialist in retirement vehicles such as variable annuities and 401(k) plans. It launched the television campaign in mid-2000. The three commercials in the series offer three takes on the same theme. The tag line of one is, "At $6,500, this world-renowned designer timepiece could cost you more than $30,000 in retirement savings," and another is, "This $70,000 car might steer you to other options if you knew that money could earn over $326,000 in potential retirement savings."

SunAmerica figures the comparison based on the money growing tax-deferred, as in a Roth IRA or 401(k), at 8 percent annually for 20 years. Since a Roth also provides tax-free withdrawals, the stock market's historical return is closer to 11 percent, and some people have more than 20 years to retirement, SunAmerica's figures are conservative. A $6,500 watch may cost you well more than $30,000 in retirement savings.

Which is why I was happy to help fund my wife's Roth IRA for the year. (I also got her something nice.) In time, the Roth IRA will turn into a veritable Gift of the Month Club that never stops giving.

John M. Grund is senior editor of, a Web site with news, research and tools for investors in small-cap stocks.

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