Are you investing your money the right way? Are you investing your money at all?
An Individual Retirement Account (IRA) can help you take advantage of the best investment weapons at your disposal, but where does one start? You may be asking yourself things like “do I really need one?” or maybe even “what is it anyway?” If so, you’re in luck – we have the answers you’re looking for.
What is an IRA?
In the simplest of terms, an Individual Retirement Account is a retirement account that allows an individual to set aside tax-deferred income* for retirement. Depending on your tax rate now and during retirement, IRAs are a great retirement option.
Do you have an earned income? You can open an IRA! There’s no minimum age requirement to open an IRA, but once you reach age 70 and ½ you are no longer eligible to contribute to an IRA.
What is a Roth IRA?
The main difference between a Traditional IRA and a Roth IRA is how contributions are taxed. Contributions to a Roth IRA are made after taxes are paid. When you pull out your contributions, under the right circumstances, you won’t have to pay any taxes.
Check out the chart below. Assuming both Ben and Arthur’s investments have the same rate of return, Ben ends up with $800,000 more than Arthur, who contributed $62,000 more than Ben ever did – all because Ben made the decision to invest early.
Traditional IRA vs. Roth IRA?
Whether you have questions regarding account types or steps to ensure your long-term financial security, TBK Bank is here to help! Check out our website or follow along on Facebook for more long-term financial tips.
*Consult your tax advisor