Seven Reasons to Save With an IRA


Seven Reasons to Save With an IRA

Posted by Infinite Wealth Advisors, LLC
9 years ago | June 8, 2015

Senior woman hugs her beagle dog in countryside

Are you already saving for retirement via a 401(k) fund, and you want to make sure you have enough to retire? Or are you self-employed, and you need to find a way to provide a comfortable retirement income? Whatever your situation, an Individual Retirement Account is often the answer to your retirement planning dilemma.

Your company doesn’t provide a retirement benefit. If your company does not provide a pension or access to a 401(k) fund, then you have to plan for your own future. An IRA is a great way to enjoy certain tax advantages while saving for retirement, and you can take it with you if you ever change jobs.

You work for yourself. Being your own boss is exciting, but it’s also scary. You don’t have the usual company resources to provide you with a retirement savings vehicle, so you have to investigate your options and make your own plans. If you’re self-employed, you should consider opening a Solo 401(k) or a Simplified Employee Pension IRA (SEP IRA). Just remember to open and fund the account during the year for which you want to reap the tax benefits.

You want access to a variety of securities investments. A typical 401(k) allows you to choose from a list of fund options. Most investors are happy with these options, but some want more choices. An IRA usually offers a greater selection of investments.

You want try investing in non-traditional assets. Speaking of that greater selection, an IRA allows you to invest your money in non-traditional options such as real estate, precious metals, or private equity investments. Keep in mind that as director of your fund, you are responsible for the consequences of these decisions.

You’re already saving, but you worry about whether it’s enough. You may already have a 401(k), but you’re rightly concerned about someday outliving your money. If you’re already saving the maximum allowable amount in your current retirement plan, you can save even more by opening an IRA. Each year you can stash $5,500, or $6,500 if you’re age 50 or older, in your IRA.

You might be in a higher tax bracket after retirement. If you’ve done the math and have realized you may end up in a higher tax bracket after retirement, you have somewhat different tax concerns than many retirees. If you save after-tax dollars in a Roth IRA now, you can take tax-free distributions once you retire.

You want access to your funds. It’s usually a bad idea to withdraw money from a retirement account before you actually retire. However, knowing that you have access to your money in an emergency may offer you some peace of mind. In certain situations, you can withdraw funds from an IRA, without fear of being charged a penalty.

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