Some Americans have no retirement savings at all and this will cause serious problems in the future. Individual retirement accounts (IRAs) offer a smart solution for those looking to grow wealth for retirement and gain tax benefits along the way.
Depending on the situation, an IRA can mean the difference between enjoying retirement and struggling to get by. Here are some ways an IRA can save you from a risky retirement:
More money to cover emergencies
Never going to work again will not protect you from all of life’s struggles. You’ll still have medical bills and repairs to pay for. Investing in an IRA on top of your work-sponsored retirement plan means you will have access to more money during emergencies. Start investing an IRA early and be consistent if you want to reap the full benefits.
Tax-free money in the future
With a traditional IRA, most make tax-deductible contributions and then pay taxes on the distributions later. With a Roth IRA, the opposite is true. When you invest in a Roth IRA, contributions are made with after-tax dollars and distributions are tax-free down the line. If you have several accounts with different tax treatments, it’s a great way to diversify your retirement assets.
Investing dollars where it makes sense
Investing enough in your employer-sponsored 401(k) is a good idea, but it’s good to look closely at your plan before maxing it out. Large expense ratios and management fees will eat away at your returns and cost you a lot of money over the years. When you have an IRA, you decide which firm and investments earn you money. Shop around for the best places to get an IRA based on ongoing costs, investment choices or any other criteria tamiflu generic.
Use your IRA as a dream-fulfilling fund
After working your whole life, you should be rewarded. Opening a traditional or Roth IRA and contributing the maximum every year will allow you to set aside money to travel and enjoy life. This dream fund can not only protect your retirement, but it can make it a lot more fun as well.