| Retirement planning is one of the essential | | | | But don't think that IRAs are perfect for |
| cornerstones of a successful financial plan. | | | | everyone. There are some disadvantages. If |
| We all have to face retirement eventually. | | | | you take the money out of your IRA before you |
| Some of us hope that we will reach it sooner | | | | reach retirement age (59 1/2), you will pay a |
| than most. Through the proper planning, you | | | | 10% penalty and income tax on what you |
| can enjoy a comfortable retirement. | | | | withdraw. You are also only allowed to |
| | | | contribute up to a certain amount each year. |
| Pensions are quickly becoming a thing of the | | | | These limits change yearly, so you should |
| past. The future of Social Security is | | | | check with your CPA or tax advisor for more |
| questionable. Your retirement is dependent on | | | | information. |
| your savings. It is the most important thing | | | | |
| you can save for. | | | | However, there are a few exceptions to the |
| | | | 10% early withdrawal penalty. You may qualify |
| The Individual Retirement Account (IRA) is a | | | | for one, such as purchasing your first home. |
| great investment tool for most consumers. It | | | | |
| features certain tax characteristics that are | | | | So many people don't understand exactly how a |
| beneficial in building your savings. These | | | | IRA works. An IRA is just the account. Within |
| tax benefits are designed to encourage you to | | | | the account is your money. Your money is |
| save for your retirement. Due to this, if you | | | | divided among the various investment types |
| use your IRA early for another purpose, you | | | | that meet your investment goals. The IRA is |
| could face high taxes and a stiff penalty. | | | | simply the portfolio that holds your |
| | | | investments. |
| The investments in IRAs grow tax-deferred. In | | | | |
| other words, you are not taxed on the | | | | You are not limited to CDs for your IRA |
| earnings each year. These earnings are | | | | investments. You can choose from variety of |
| entirely reinvested so that they can grow. | | | | different investment types. For example, if |
| This allows your investments to work harder | | | | you are young, you may have your IRA in |
| and compound quickly. | | | | mutual funds and stocks. If you are close to |
| | | | retirement, you may be moving your IRA funds |
| You are also able to deduct your | | | | into CDs. IRAs do require some basic |
| contributions from your taxable income each | | | | understanding of investing, but it isn't |
| year. This means that you pay fewer taxes | | | | difficult to learn. It can often be helpful |
| during the current year by simply saving. | | | | to find a well qualified and honest financial |
| | | | advisor to help you manage your IRA. |