An IRA (defined in “What Is an IRA”) has many benefits, when you can put as much money into the plan as possible without going into debt to support yourself at your current income level. Even if you can’t put additional money in every single year, it is a wonderful way to put money aside in an account that will grow over time, for your retirement, without being taxed until it is removed. Some IRAs can also even help you with tax deductions.
There are a few different options outlined below to give you a general overview, but you should also talk to an investment manager to help you figure out which one is best for you.
While all of these accounts have their benefits, they are designed for different people under different circumstances. If, for example, you have chosen to invest but you need as much money now as you can, the Traditional IRA would be the best option as it is tax-deductible. If you are comfortable financially while contributing the maximum per year ($3000 until 2004 for Traditional and Roth), the Roth is a smart decision because although it isn’t tax-deductible, it does allow you to take the money out tax-free upon retirement. Whichever you decide, it is a pretty safe way to invest your money for retirement.
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