Grow Financial Federal Credit Union

Watch Out for Fraudulent Activity learn more

"Individual Retirement Accounts" text over a photo of a man working on a laptop
February 11, 2021

Saving for Retirement: You Need to Consider an IRA

You’ve probably heard about IRAs. Maybe you’ve considered adding an IRA to your retirement savings plan but aren’t sure where to start. Or maybe, you already have a 401(k) or other retirement savings plan through your employer and think that’s all you need. We encourage you to consider the potential benefits of adding an Individual Retirement Account (IRA) to your portfolio.*

What is an IRA?

An IRA is one of the best tools for saving money for retirement. What makes it so great? There are built-in tax benefits to incentivize you to prepare for retirement.

You can choose how the money in your account is invested, such as stocks, bonds, mutual funds, index funds or other assets. You also have flexibility with your investment strategy. For example, you could opt for a more aggressive growth strategy earlier on in your working career, then shift to more stable investments as you approach retirement.

The two main IRA varieties are Roth IRAs and Traditional IRAs. The main difference is when you pay taxes:

Roth IRAs are after-tax contributions, so you can’t deduct them on your taxes now. However, you won’t pay any taxes when you retire and take qualified distributions from your account, assuming tax law related to Roth IRAs remains consistent.
Traditional IRAs are tax-deductible now, then when you retire, distributions from the account are taxed as regular income. Read more about the tax benefits of Traditional IRAs.

IRAs also have annual contribution limits, as well as penalties for early withdrawals, and may have additional rules based on your income. Learn more about the rules and limits for the current tax year or consult a qualified tax professional.

Why do you need an IRA?

Everyone needs a safety net for retirement, particularly if you want to maintain, or even improve, your lifestyle when you retire. If the historical performance of the market tells us anything, time is by far the biggest asset when it comes to saving for retirement. The earlier you get started, the better. Plus, even if you’re already saving money through an employer-sponsored plan, like a 401(k) or pension, that alone might not be enough to cover your living expenses during retirement, especially if you want the option to retire early. Opening an IRA and contributing to it regularly throughout your working life can ensure you’re prepared for a long and happy retirement.

How do you open an IRA?

Opening an IRA is simple and painless. You can open an IRA through a financial institution, like Grow, or through a brokerage. We’re here to help you choose which type of IRA is right for you. Learn more about opening an IRA with Grow.

Questions? Call our IRA specialists at 800.839.6328, ext. 2693.

*Certain restrictions apply. Not all taxpayers are eligible. Consult your tax advisor.

 


Posted In: