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