There are two types of IRAs that you should also consider investing in for retirement savings. A Roth IRA is one in which you invest money that you’ve already paid taxes on. This means that you can pull that money out after you’ve reached the age of 59 1/2 without having to pay any taxes.
The other type of IRA is a traditional IRA account. This works similar to a 401k account. You may want to consider this type of account if your employer doesn’t offer a 401k or doesn’t match your contributions. It works by you investing money into it before taxes. When you do retire, you will be required to pay taxes on the amount that you pull out.
Which type of account that you decide on will depend on your financial situation later in life. You will need to speculate on your tax burden once you’ve reached retirement age to determine which account would work in your best interests.
The rules of retirement have changed. You need to get ahead of the game so that you can retire in the lifestyle in which you’ve grown accustomed. This means that you need to have a plan in place for your retirement years. Don’t make the mistake of waiting too long to start saving for retirement like so many other people. Even if you’re older, you still have time to catch up and start investing for your long-term financial goals.
This article has been republished with permission from Modest Money.