Coach Jean explains how IRAs work, the difference between traditional and Roth accounts, and why you should max out your contribution. For 2024, that's $7,000, or $8,000 if you're 50 or older.
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Hello everyone and welcome back to the new retirement YouTube channel where we empower you to take financial wellness into your own hands. I'm Coach Jean and today's video is going to be all about individual retirement Accounts, also known as IRAs. If you're looking to secure your financial future, this is a must watch. If you've been following our Playbook series, you know this is Play five on our savings prioritization list. If you're new to the channel or or to this series in particular, I recommend that you watch the first five videos in the series where we break down each of the plays. Let's get into the topic at hand. So what exactly is an ira? An Individual Retirement Account is a tax advantage saving account designed to help individuals save for retirement. It's a powerful tool that provides you with control over your investments and potential tax benefits, just like the 401 types we discussed in a prior video. There are two main types of IRAs traditional IRA and Roth IRA. The key difference lies with when you pay taxes on the contributions and earnings. With a traditional IRA, you get a tax deduction upfront, but you pay the taxes when you withdraw during retirement. In contrast, a Roth IRA is funded with after tax dollars and qualified withdrawals are tax free. In 2024, the annual contribution limit for an IRA is $7,000 with an additional catch up contribution of $1,000 for individuals 50 or older. It's crucial to be mindful of these limits to maximize your retirement savings. Let's discuss some of the advantages of contributing to an ira. Aside from the tax advantages, other significant benefits of contributing to an IRA is the investment control. Unlike the employer sponsored plans, IRAs give you the freedom to choose your investments, allowing you to tailor your portfolio to your risk tolerance and financial goals. IRAs also provide flexibility. With a Roth IRA, you can withdraw your contributions, not earnings, at any time without penalties. Providing a level of accessibility that can be valuable in an emergency earnings growth is a compelling reason to invest in an ira. Over time, your contributions have the potential to grow through compound interest. If you're interested in funding an ira, you can contact a financial institution or investment provider, open an IRA account and start making contributions. Be sure to stay within the annual limits. Contributing to an IRA is a powerful step towards securing your financial future. Whether you choose a traditional or Roth ira, the benefits of tax advantages, investment control, flexibility and earnings growth make it a smart move. New Retirement's financial planning software can help you forecast the growth of your savings and investment accounts, allowing you to peer into the future and visualize your retirement options. Thank you for joining us here at New Retirement. If you found this information helpful, don't forget to like, subscribe and hit the notification bell for more financial insights. Until next time, take control, plan wisely, and make the most of today.
