Getting Started on an IRA

Uncategorized / Tuesday, December 1st, 2015

Today I bring you a sponsored post from Lear Capital.


If you are somewhere in your mid-20s, this is probably the time that you have begun to think about how the rest of your life is going to turn out. There is a lot that can happen in life, and anyone who has an ounce of common sense knows this. We plan for today and tomorrow, maybe socking away a little cash in a rainy day fund. However, a lot of people make the common mistake of not planning for the eventuality that they will grow old. Do you have a retirement account? When this question is asked, some people don’t know how to answer. The usual answer is “um, I’m still too young to be thinking about that.” Well, it is time to face the harsh truth. Time is slipping away from you. There is no stopping it. You can avoid the truth all you want, but it can’t be denied that you are getting older every day.

Don’t wind up full of regrets

Do you want to grow old and then realize that you didn’t do anything to secure your future? You don’t want to be the person who hits 60 and suddenly ends up bitter and full of regret for a lifetime of money poorly spent. Instead, focus on yourself right now, while you are in the prime of your life, and get started on saving up for your retirement. There is a lot that you can do right now that will ensure your financial security after you retire. The first thing to do is get a retirement account. If you already have one with your employer, good for you. However, if you want to have more control and security over your future and what accounts your retirement funds are in, you should consider getting an Individual Retirement Account (IRA). If you don’t have a retirement fund already, there is never a better time to start than right now.

Talk to the pros

There are two main types of IRAs that you can invest in when you start on the path of saving for your retirement. Each of these types has its own set of pros and cons. Some IRAs even allow you to buy gold and silver to increase the security of the funds in them. What you need to do is make sure that you pick one based on what you think will profit you in the future. If you aren’t sure about what to choose, have no fear, and do NOT rush into a decision. Take your time and consult with a financial advisor. These people are very experienced and can analyze the state of your finances right now, and then predict which account will be most profitable for you in the future. The types of IRAs are Roth and Traditional IRAs.

30 Second Introduction to IRA Types

With the Roth IRA, you pay regular income tax on every dollar that you contribute to the account. When you retire, the withdrawals that you make from the IRA are exempted from taxes. This can be useful if you expect to be in a higher tax bracket after retirement than you are right now. With the traditional IRA, you are exempt from income tax when you contribute to the account, but you must pay income tax on the dollars you withdraw after retiring. This is better for the people who expect to be in a lower tax bracket then than they are now. If you start saving for retirement when you are in your 20’s and in a low tax bracket (like most of us are), you will pay your regular income taxes on your IRA contributions and can watch those funds grow in your IRA tax free. Hence Roth IRAs tend to be a great choice for younger investors. If you already have retirement funds in a 401K with your employer and leave the company, you can choose a Rollover IRA which is a Traditional IRA because those 401k funds were already put aside pre-tax so you will have to pay that tax when you withdraw them.

Blog articles about retirement can be a dime a dozen so make sure you get yourself informed and talk to a professional to make your decision as to what IRA type is best for you. The best perk about an Individual Retirement Account is that it is individual. You get to pick the fund type, you can choose how aggressively you want to invest, and you have a wider selection of funds than through the limited selection tied to your employer’s plan. Whatever you choose to do, make a choice to plan for retirement today.