In 1974 Connect Four was one of the most popular Christmas gifts and Elton John's Bennie and the Jets was a Billboard number one. As if those two facts weren't exciting enough, the Employee Retirement Income Security Act (ERISA) was also established. Among many things, it allowed individuals to begin contributing to a vehicle called an Individual Retirement Account (IRA).

The IRA encouraged working people to save for retirement in addition to any retirement benefit they may have with their employer. However, some parameters have changed since the idea was first introduced 40 years ago. Originally, an individual was allowed to contribute 15 percent of their pay or a maximum of $1,500, annually. Today, the contribution limit is 100% of earned income or $5,500 ($6,500 if you're age 50 or older) whichever is less. In 1981, IRA's were made available to all taxpayers and the Tax Reform Act of 1986 limited the deductibility of contributions based on one's income level. Despite changes to the contribution limits and deductibility, even 40 years later the IRA remains a key proponent to an individual's retirement.

At the close of business on December 31, 1974 the Dow Jones Industrial Average closed at 616.24, a far cry from the 17,749.31 that the index closed on Friday March 13th of this year. In a time when short-term concerns are causing fluctuations in the market, it is important to note that over the long-term markets are significantly positive--and in this example; 2,780% positive.

Ethan Wade, Financial Advisor


(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).