Should you open an individual retirement account (IRA)?
Do you ever think of older friends and relatives who have retired and wonder how they can afford to pay bills, travel and do other things with their time? Well, unless they won the lottery or inherited a large sum of cash, they probably spent the better parts of their lives working hard to save for their later years. No matter how young or old you are, it’s never too early or late to begin saving for your retirement. Some employers may offer a retirement program as a benefit. However, your financial security is not the responsibility of your employer, so it’s important to make sure you’re saving for your later years even if a special retirement account is not offered as a benefit of your job.
Your employer does not offer a retirement benefit
An IRA will allow you to save independently with many of the same benefits as an employer-funded 401(k) or 403(b) account. Or, if your employer does offer a retirement account as a benefit but you would like to save even more or manage your savings separately, an IRA with a strong financial institution like EECU is a great alternative to supplement your savings.
You could use a tax break this year
Certain IRAs offer appealing tax advantages when you make contributions up to your annual limit determined by the IRS. For instance, when you make contributions to a Traditional IRA, the contribution is tax-deductible the year you contribute, and you only pay taxes on the amount when you withdraw it during retirement.
You want to make sure your retirement savings are secure
If you have investment accounts, you’ve probably been told more than once to “diversify” your portfolio. An IRA is one piece of the equation that could make your savings more secure. Many retirement accounts such as 401(k)s invest your deposits into stocks, bonds and mutual funds, which may lose value. An IRA with EECU acts similarly to other savings tools in that it is insured up to $250,000 by the National Credit Union Administration, and does not carry the level of risk associated with a constantly-changing stock market.
This article is not intended as tax advice. For information about deductibility and your taxes, please consult your tax advisor.