Retirement planning is something that many people start thinking about in their 20s or 30s. If you start planning for your retirement at this age, you will have plenty of time to save money. Saving little by little can yield a plentiful retirement fund for you when you reach this point in your life, and investing in a traditional IRA is one option. Here are three benefits of investing in this type of account.
1. Your Money Grows Tax-Free
One huge advantage of investing in an IRA is that it provides a way to let your money grow tax-free. Each year, you can contribute up to a certain amount of money. Your money will never get taxed while it is in your account until you retire and begin taking withdrawals. Work-sponsored retirement programs work like this, but there are few options that offer tax-free growth. If you want to avoid taxes on your retirement savings, you should consider using an IRA.
2. You Can Write Off Your Contributions
When you use a traditional IRA for your retirement savings, you can write off your contributions. You cannot contribute as much money as you want each year, but you can contribute up to a certain amount. If you are under 50, you are free to contribute up to $6,000 each year. For people 50 and over, the limit is $7,000. The good news is that you and your spouse can each have your own IRA account, so you can both contribute up to these limits. After putting money into your account, you can write the contributions off on your taxes, lowering your adjusted gross income (AGI). A financial advisor can help you understand this more if you have questions.
3. You Have Complete Control Over It
The third benefit of a traditional IRA is that you have complete control over it. You will not have an employer controlling where you put your money or how much you contribute. You can choose a financial advisor to use for the account, and you can choose where you put the money. You can also choose the frequency of your contributions.
If you need a way to invest for your retirement, a traditional IRA might be a good option. If you would like more information about IRAs, talk to a financial advisor. An advisor can help you decide what types of investments to use for your retirement savings.
Reach out to a financial planning advisor to learn more.
