Unfortunately, recent surveys have uncovered the fact that most Americans are not preparing for retirement. For many, this could mean having to work well into your 60s or living uncomfortably in your senior years.
One problem is that fewer companies are offering things like 401k accounts that help to set you up for success. The good news? You can take matters into your own hands.
IRAs, or individual retirement accounts, make it easy to set aside assets over time that will help you in the future. There are many types of IRAs to choose from.
Read on as we discuss some of the IRA options that you may want to consider.
A traditional IRA has earned this title because it is the oldest and most widely-used kind of IRA account. A traditional IRA allows you to deposit money now and access potential tax breaks. So long as the money remains in the account, interest is not taxed and when you do make withdrawals, those withdrawals are taxed at your tax rate at that time.
If you believe that you will fall into a lower tax bracket after retirement than you do now, a traditional IRA is right for you.
A Roth IRA does not grant you access to tax breaks in the future, but any future withdrawals are not taxed, either. In many cases, you can even withdraw money from your Roth IRA before retirement without receiving any penalties. (This is an important distinction from most retirement accounts, including 401ks.)
If you believe that you will fall into a higher tax bracket after retirement than you do now, a Roth IRA is best. When you fall into a higher tax bracket, you’re typically going to be hit with a higher tax rate, which can put a huge dent in retirement funds pulled from anything other than a Roth IRA.
A self-directed IRA can fall under the traditional or Roth category, meaning that the tax rules that we’ve mentioned above will apply. However, this is one important distinction when it comes to self-directed IRAs. In a self-directed IRA, you can own assets other than cash, including gold, privately held companies, and more.
Take a look at the best gold IRA companies. If you are investing in gold or plan to, these companies will help you to turn those assets into a great retirement plan.
Which Types of IRAs Will Help You to Reach Your Goals?
If you haven’t started planning for retirement, it’s not too late. Learning about the types of IRAs and choosing the one that’s right for you can go a long way toward building your wealth, no matter how close to retirement you are.
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