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April 6, 2018
Why an IRA?
Why an IRA?
Maybe retirement is so far away you’re not even thinking about it. That doesn’t mean you shouldn’t start saving for it. Regardless of your age, it might be time to consider opening an IRA, or individual retirement account. 1
Why an IRA? Well, the name pretty much says it all. Get potential tax breaks as you save to fatten your retirement nest egg. A good deal? Most definitely. A tad confusing? Also, definitely.
But learning about them now can set you up for success later. You could retire earlier—spending less time in the office and a lot more by the pool.
What’s so good about IRAs? Like we said, potential tax breaks. Big ones. The biggest? There may not be any taxes on the interest and dividends the account earns as you not-so-patiently wait for retirement. That’s not the case with most other savings accounts, where you have to report earnings and, yeah, Uncle Sam will want his cut.
What choices do you have? Most folks go for either Traditional or Roth. The difference comes down to taxes again, because you’ll have to pay some. It just depends on when. Now or later. The choice is yours.
Traditional is the pay later option. Your contributions may be tax deductible during your working years, which means you can save more for your golden years.
Roth is just the opposite. Here, your contributions are made with after-tax dollars during your working years, then after you hang it up, you could be done. The withdrawals you make in retirement may be tax-free. There may also be opportunities to make qualified withdraws without taxes or penalty before you retire.
That all sounds nice. So what’s the catch? Well, the government does have a few rules. For one, a limit on the amount you can contribute every year. Right now, that’s capped at $5,500 if you’re under 50, but if you’re 50 or over, it bumps up to $6,500, letting you put more money away the closer you get to retiring. 2
How do you open an IRA? Piece of cake. Any Grow Financial store can help you set it up. Then just sit back, let your money grow and start making plans for those leisurely days ahead.
Federally Insured by NCUA.
1Certain restrictions apply. Not all taxpayers are eligible. Consult your tax advisor.
22018 IRS contribution limits.
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