If you want to ensure your financial well-being after retirement, you should consider investing in an Individual Retirement Account (IRA). Pension funds and social security just aren’t secure anymore. But what kind of IRA should you choose?
The answer to this question depends on a variety of factors. While traditional IRAs allow you to defer taxes, your earnings are tax-exempt with a Roth IRA. All you have to do is wait at least five years and until you are at least 59.5 years old to withdraw funds. Even if your investments earn you a vault full of money, you won’t owe Uncle Sam a penny. However, unlike the traditional IRA, you still have to pay taxes now on that portion of your yearly earned income you invest. So which tax benefit is more advantageous for you?
Choosing the retirement option that makes the most sense for your economic circumstances requires a lot of careful thought and planning, and we pride ourselves on providing expert guidance to our clients.
We recommend a Roth IRA to clients contemplating early withdrawal or wishing more flexibility than a traditional IRA offers. With a Roth, there are some circumstances when you can withdraw your initial investments (though not the profits) without penalty before either of the qualifying time periods is up. And first-time homebuyers can be allowed to withdraw up to $10,000 of their IRA profits penalty-free regardless of their age, as long as the money derives from investments that have been in the IRA at least five years.
If you are interested in learning more about Roth IRAs and other investment options, give us a call at 401-433-1111 or contact us via email at hdaigneau@allstate.com, and we can arrange an appointment at your earliest convenience.
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