Benefits of Setting Up an Individual Retirement Account

By: Craig Thornburrow

There are a variety of ways to save for retirement these days and opening up an individual retirement account, or IRA, is one of them. If you are surveying your financial options with regard to saving money for your later years in life you will have undoubtedly come across the option of an IRA. There are a few distinct benefits to using this type of financial savings tool to put your money away to be used for a rainy day.

Benefits of the IRA

One benefit of the investment retirement account is that it provides a safe place to keep one's funds for a later day. It is in a compact setup so that you can hold the money and know that it will be there when you decide to make use of it. This is an extremely important benefit as it keeps it separate from savings and checking accounts and is reserved for the sole purpose of being a nest egg for the future.

Another benefit of the IRA is that you can often hold off on paying taxes until a later point in time. This is beneficial in that one may not have the money for taxes in the beginning but upon retirement the tax money may be more readily available. Those who take advantage of saving money via IRAs will find that this tax incentive is a good one. In addition to putting off paying taxes until later some individuals may be able to forego paying taxes altogether if they qualify under a certain category. More information regarding these tax benefits can be received from your financial advisor.

An additional benefit of having an IRA in place is that it will often provide financial self independence for the IRA holder. As opposed to social security and retirement benefits through your employer, establishing an IRA will often bring a much greater amount of money to the holder thereof. Knowing that you have this account in place will allow you to plan adequately for the future.

Choosing the Right IRA

There are a few different types of individual retirement accounts. Some of the more common ones include traditional, Roth and SEP accounts. In order to best choose the IRA which will work for you and your future you should do a couple of things before selecting a certain one. First, read up on the different types of IRAs to see what each one is truly about. Having this background knowledge is the first step to take before speaking to anyone regarding this type of account. Once you have the requisite background information the next step is to contact a financial advisor who can walk you through the various accounts, look at your finances and offer advice as to which one is best for you. The last step is to choose an individual retirement account and be well on your way to financial freedom in the future.

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