More individuals are turning to IRAs, or Individual Retirement Accounts, as a way to plan for their retirement and their financial needs in the future. There are options for IRAs, typically through either a traditional IRA or a Roth IRA plan, which have been used by numerous workers over the past years as a way to begin saving money for their retirement.
While many employers have offered 401(k) opportunities, economic setbacks and unemployment has created a great deal of difficulty in this area. Some workers, in worst-case scenarios, saw a great deal of loss in their 401(k) plan or had employers who were no longer able to contribute to a 401(k) at their job.
This type of retirement planning account has been helpful for many, but Roth IRAs and traditional IRAs are being used by numerous men and women who are either employed or self-employed, as a way to save for their future. While there are numerous individuals who feel that an IRA is an excellent strategy when it comes to planning for one’s financial needs in their later years, these types of IRAs differ in ways which may be beneficial or unhelpful to an investor, depending upon their situation.
One of the main focuses in IRAs is taxation. While traditional IRAs allow for contributions to be tax deductible, investors will have to pay taxes on their earnings when they begin to withdraw funds later in life. Yet, Roth IRAs often do not allow for contributions to be tax deductible, but the investor is allowed to withdraw their earnings tax-free when they reach a specific age.
Some investors have used a combination of both Roth and traditional IRAs, but financial advisers often suggest that individuals take a look at their financial situation and their projected needs before they make a decision on which account is best for them. While traditional IRAs can be rolled into Roth accounts in some cases, there are many who feel that investors in IRAs need to make their decision early and simply stick with their IRA account so that any unnecessary fees or charges can be avoided.