It is never too late to start saving for retirement. However, the time at which you start saving could determine which retirement account will provide the best return.
For those who are starting to save for retirement earlier in their careers, a Roth IRA may be the best choice for putting aside savings.
What is a Roth IRA?
An IRA, or Individual Retirement Agreement, is an investment account that offers tax benefits to help maximize retirement contributions.
Unlike a Traditional IRA or a 401K, a Roth IRA does not offer tax incentives in the present. Instead, the benefit comes when withdrawing earnings during retirement when you pay no taxes on your earnings. This allows you to plan on having 100 percent of your Roth IRA’s value to use in retirement, rather than figuring out what you will owe the IRS when you start utilizing your savings.
This is an ideal option for those who anticipate having a lower tax rate today while saving than they will when they retire. It is also an excellent choice if you anticipate that your deposits will have higher earnings as they appreciate over time.
Another advantage of a Roth IRA is that you can keep growing your funds for as long as you like. Other retirement account options such as a Traditional IRA or 401K may require withdrawals to begin once a certain age has been reached.
Beginning your retirement savings can seem daunting when you are first starting your career, but saving early can mean a considerably larger return in retirement.
The money you put into a Roth IRA isn’t completely out of your reach. A benefit of the Roth IRA is that you can access the money you have contributed at any time, for any reason, without tax or penalty consequences. The goal is keep the funds in this account until retirement. However, if you have an emergency, you can feel relieved knowing you have additional resources.
To see the full list of regulations for withdrawing funds from a Roth IRA, please visit the Roth IRA FAQ.
Get Started – Open a Roth IRA Today
Start your retirement savings today by opening a Roth IRA today. If you are 50 years old or under, you will be able to contribute $5,500 each year until you retire. If you are over 50 years of age, you are allowed to contribute an extra $1,000, totaling $6,500 in savings to build your retirement investment.
Your eligibility to contribute to a Roth IRA decreases as your income increases. To qualify for a Roth IRA, your individual modified gross adjusted income must be less than $117,000. Married couples who file jointly are ineligible for a Roth IRA if they make a combined income totaling more than $184,000.
We invite you to learn about the various savings account options, including retirement account options, available through Bank of Internet USA. One of our friendly banking experts would be happy to explain your options to you and help you find the savings solution that is best suited to your unique financial needs and goals.