What's an IRA?

IRA sounds like some kind of undercover agency that is run by the FBI to protect the President’s dogs. Doesn’t it? Well, unfortunately it’s not a secret agent program for presidential puppies, it is something that we can benefit from.

IRA= Individual Retirement Account.

An IRA is a special savings account you can open to help you save more money for retirement. There are three main types of IRA, Traditional, Roth and Rollover. 

As Fidelity.com so eloquently put it;

  • In a Traditional IRA, you make contributions with money you may be able to deduct on your tax return and any earnings can potentially grow tax-deferred until you withdraw them in retirement.1 Many retirees also find themselves in a lower tax bracket than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.
  • With a Roth IRA, you make contributions with money you’ve already paid taxes on (after-tax) and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.2
  • A Rollover IRA is a Traditional IRA intended for money "rolled over" from a qualified retirement plan. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA.

Fool.com really breaks down an easy strategy for young adults to begin investing in an IRA, saying;

Even contributing $300 each year to an IRA now is far better than sitting on the sidelines until every factor is aligned perfectly. 

Investing isn't just for people with loads of money sitting around. It's for us up and coming young adults too. If you want more information about IRA's, ask your financial institution on where you should start. If you are a member of Michigan First Credit Union you have access to a financial planner though Michigan First Wealth Management who can help you make the right decision for your financial future. Check out MichiganFirst.com for more information! Being a member of Michigan First has some serious perks! 

 

Keeping it Fresh, Young & Free,

Ebeth