More individuals are turning to Roth IRAs for retirement saving purposes as there are both positives that can be gained for investors and benefits after an individual retires that could be helpful when it comes meeting costs later in life. While Roth IRAs do have contribution limits, many men and women who used this retirement fund have done so as either a supplement to another form of retirement planning or they can contribute the maximum amount into the Roth IRA each year, more personally manage their retirement account, and build a decent nest egg for their financial needs after retirement.
As reports from sources like the Wall Street Journal have stated, “The retirement savings plans that many baby boomers thought would see them through old age are falling short in many cases,” there is concern as to whether young employees should begin not only saving for retirement but diversifying their retirement plans outside of traditional 401(k)s. This quote from the WSJ is in reference to 401(k) plans that have taken a hit over the past years and are simply not offering the financial security that many retirees need.
Yet, Roth IRAs are one form of retirement planning that has allowed many men and women the options they need to not only find more diversity when it comes to their income after retirement, but Roth IRAs do not require minimum distributions and, even if an investor works into their retirement years, income from earnings can be applied to this retirement account and, if left alone into one’s retirement years, could potentially draw more.
Also, one of the major benefits of a Roth IRA, which has spurred conversions over the past months and have led many to choose this route in terms of their financial planning for retirement, is the fact that earnings that an investor withdraws from their Roth IRA will be tax-free. Understandably, if an investor could build up a sizable sum in their Roth IRA account, they could leave these funds to build into their retirement years and, when they decide to begin taking payments, they will not owe taxes on these funds.
While, again, 401(k)s have been quite popular and one of the more used methods of retirement planning, using other forms of retirement savings can also be beneficial if one retirement fund is simply not enough to meet all of one’s costs after they have moved on from their job. There may be benefits for some employees who are later into their career but have decided to begin saving in a Roth IRA, but an article on Kiplinger.com states that, “The more you can take advantage of tax-advantaged retirement accounts, the easier it is to stretch your savings.” This may seem like common sense to some, but it’s yet another reason that many men and women who are early into their career or are in a position to begin investing in retirement accounts like a Roth IRA may want to consider this course of action as it could make their financial life during their retirement years much easier.