Individual,Retirement,Account, finance, share, loan An Individual Retirement Account Can Protect Your Retirement
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Investing in an individual retirement account (IRA) is one of the best ways to plan for your retirement. If you are under the age of 40 then you know that the odds of social security being around to help you during retirement are slim and none. This is because the system is fatally flawed and neither political party has the gumption to make any serious attempts to fix it. So you already know that you are going to need to plan and save for your own retirement. An IRA is a great way to do this as you get to decide how much to save, how aggressively you want to invest, and which type of individual retirement account you want to invest in. When you are considering investing on your own for retirement you should know that there are two types of IRAs available. You have the traditional IRA or a Roth IRA each have their own qualification for eligibility. The main difference between the two is the way you pay taxes on the money. For instance the traditional type you put pretax money into the account but after you retire and begin to take distributions you will pay taxes on the amount you withdraw. The Roth account works the opposite way. You take your after tax money and invest it and then when you begin to withdraw your money there is no taxes taken out. You will need to decide which tax benefit works best for your particular situation. The federal government does limit how much of a contribution you can make in your retirement account each year. It is currently at $4000 per year but this tends to change so make sure you check each year. Many IRA accounts are managed by the brokerage account, bank, or insurance company that you open the account through. Most of the money, near 47%, of your money will be invested in mutual funds. The rest is divided up through foreign equity assets, money markets, hybrid funds, and bond investments. Some brokerage accounts will customize your account for you so that while you are long way off from retirement you can take a bigger risk and earn more money and as you get closer to your retirement age you invest in safer, less risky investments. There is one downfall about investing in an IRA and that is the fact that you cannot withdraw your money, except for a few exceptions, before your retirement age without paying a penalty on the amount you withdraw. Some of the exceptions include paying for health insurance premiums, a deposit on a home, or education expenses for you, your spouse, or grandchildren. When you are planning your own retirement you may want to consider an IRA. This is a great way to save your money so that you can plan your retirement. If you are unsure about the tax implications with your individual retirement account sit down with your accountant and look the pros and cons of each type of IRA before you invest. Article Tags: Individual Retirement Account, Individual Retirement, Retirement Account
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