IRAs, Taxes, and Savings–Oh, My!
Is there any word more responsible for gray hairs than ‘retirement’? Most sane people would likely agree. There are few things younger people want to worry about less than the dreaded ‘R’ word. But the greatest financial catch-22 of all is that there’s no better time to start saving for retirement than yesterday!
Okay, so maybe it’s too late to start in your 20s–no biggie. Even thirtysomethings and dare we say, fortysomethings, can still save a decent amount before they clock out for their golden years. Now if you’re lucky, you have a job that handles this for you. However, many people have discovered the amazing tax benefits that an IRA can offer. But first, what the heck’s an IRA?
IRA stands for Individual Retirement Account and there are two kinds: traditional and Roth IRAs. Traditional IRAs allow you to defer taxes on your savings, meaning you won’t start paying taxes on it until you make the first withdrawal upon retirement. Furthermore, everything you save in a traditional IRA is tax-deductible.
In contrast, you’ll never pay taxes on any savings you put into or withdrawals you take out of a Roth IRA account. This fact makes Roth IRAs a dream for those who make less money. In fact, you have to meet certain income requirements in order to even open a Roth IRA.
Today we’re bringing you all the pros and cons of these attractive retirement savings options. Read on to learn more about which IRA is right for you.
Infographic designed by: Accuplan Benefit Services