Planning for retirement became much easier in the 1990?s when the Roth IRA was introduced, and it is still a preferred method of saving money that millions of Americans choose each year. There are plenty of advantages associated with using this system, most notably tax savings and flexibility in terms of withdrawing and early spending. However, there are some limitations as well that everyone should be aware of before making the decision to invest.
So, let?s talk about the downside of having a Roth IRA first. The biggest weakness in the plan is that you can only contribute $5,000 per year unless you are older than 60, where you can go up to $6,000. If you are married, you can put more into your joint account. In all actuality, this really has little impact on the average American worker, so a 5k per year investment in the Roth IRA is more than enough to pad your retirement portfolio, especially if you get in early and start investing now. The more time you have, the more money you can earn.
Another limitation to the Roth IRA is that there are income limits as well, and right now, you can only earn a little more than 100k per year, unless you are married, in which case the limit is well over 160k. However, again, for most working families this is well within reach and makes a powerful investment tool that everyone that earns a paycheck should consider.
Finally, the Roth IRA can only be funded through earned income. That means that any other income generated besides that from working is not allowed. This ensures that the government is getting their cut before you start to obtain the benefits of your investment. However, it can be beneficial to you later down the line as your tax liability is minimized when you want to start taking money out of your account.
There are a lot of little things that are important to understand before you make the plunge into this fantastic program, and you should consult a financial planner to discuss your current income and goals to see how they will impact your retirement savings options. However, the benefits to having a Roth IRA tend to far outweigh the drawbacks, and it provides a simple, safe and easy to manage fund that can help make you much more financially comfortable when you decide to stop working in the future.
Designed to be fully accessed at age 60, you can also take money out early without being penalized as long as you wait the initial five year period after you open up your Roth IRA. Again, a professional advisor will be able to walk you through all of the technicalities and highlight the terms that will be most applicable to your own needs. Don?t wait too long to start planning for the future, and explore your options today and see what this investment opportunity can do for you and for your overall retirement goals.
Are You Looking To Change Your Life & Experience Financial Freedom? At Virtual Assistant Live We Show You How...Source: http://theboardmagazine.com/2011/06/retirement-planning-is-easy-with-a-roth-ira/
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