An IRA is a financial account established at a financial institution that enables you to save tax-free or tax-deferred for retirement.
The three main types of IRAs each offer different benefits:
Traditional IRA
Earnings can grow tax-deferred until you withdraw them in retirement, and contributions may be tax deductible. Tax deferral is advantageous because the money may be taxed at a reduced rate, which benefits retirees who often find themselves in lower tax brackets after retirement.
Roth IRA
Contributions are made using post-tax funds. If certain requirements are met, retirement withdrawals are tax-free, and investments may grow tax-free as well.
Rollover IRA
This option allows you to transfer funds from a qualified retirement plan into a traditional IRA, such as a 401(k) or 403(b).Rollovers involve transferring eligible assets from an employer-sponsored plan into an IRA.
The tax advantages of an IRA, whether regular or Roth, can accelerate the growth or compounding of your assets compared to a taxable account.
According to the estimates of many financial experts, you might require up to 85% of your pre-retirement income in retirement. To build up the necessary savings, you need more than just an employer-sponsored savings plan, such as a 401(k). You have the option to make contributions to both an IRA and a 401(k).
An IRA can help you:
Contact Hecht-Stout Insurance Agency today at 1715 Woodside Drive Dunlap, IL 61525 to learn how IRAs can enhance your retirement planning and secure your financial future. We are here to help you maximize your retirement savings!
