IRA Explained - Should You Start An IRA?
Saving and debt are closely related. If you are a good saver, then it is unlikely that you will carry much debt. If you are continuously in debt, then it is unlikely that you will be saving very much money.
We all have our own unique personalities, and so too, do we all react to saving and debt in our own unique way. Some people can carry a lot of debt without too many problems. To others, the same amount will cause sleepless nights and a stressful existence.
The Benefits of Saving Now
Whatever your attitude to savings in the present, you need to consider your attitude to saving for your retirement now. How you save now, will effect your quality of life in the future. This is a fact that you cannot get away from.
One way of saving for the future is through an Individual Retirement Account (also known as an IRA). This enables you to set aside money that you can use at a later date. Here are some simple reasons to consider saving in this way:
- Saving helps the future be easier
- If you can have tax deferred saving, you can save more easier
- If you don't see the money, generally is it easier to save it
The advantage of an IRA is, that the money that you pay into the account gives you tax benefits. You are not taxed on the money that you pay into an Individual Retirement Account at the time that you pay it in. Instead, you are taxed on it when you spend it later on in life. The idea behind this is that when you need to spend the money, you will be in a lower tax bracket.
You may need to do a few calculations to make sure that this will apply to you. For a very small portion of people, this does not apply. There are many online calculators that can help you to work out if you are one of them.
There are cases when you can draw out the money without paying tax on it as long as you meet certain conditions. You must be at least 59.5 years of age, or the money must be used for a first home purchase.
There are also IRAs that enable the money to come from your wages, and then get paid straight into your IRA. This helps some people, as they do not actually see the money, and so find it easier to save that way.
Whatever your attitude to saving, an IRA or something similar is something that you need to think about now. It is not something that you can put off and do at a later date.
When opening an IRA, we recommend doing your research first. One thing to take into acount is the fees that brokerage firms charge. Compare Brokerage Fees to know how much it costs toe use a particular trading firm.