When it comes to saving for retirement, it’s no secret that Americans are statistically lacking in preparation and execution. Between rising inflation rates and evaporating federal assistance programs, a gap is widening for the future’s elderly citizens. America’s Retirement Plan was created to provide the best retirement planning tools to encourage you and others to both save and invest money for better financial stability. Our long-term investment strategies take advantage of different types of accounts to give you the best chances at achieving wealth. We offer several avenues to help you follow through with your retirement savings plan. Today, we’ll look at the differences between Traditional and Roth IRAs and how they can help create financial security. Our retirement planning software helps to create the perfect platform for your wealth, and these IRAs are both options for investing.

Traditional IRAs

This individual retirement account (IRA) is ideal for reducing your taxable amount for any given year. When investing for retirement, this traditional option lets your contributions come out before you are taxed on your income. The untaxed currency goes into an account that grows until you are able to make withdrawals at age 59 ½. However, you are required to start taking your minimum required distributions (MRDs) by the time you are 70 ½ years old. In either case, your distribution payments are then taxed the standard income amount. Additionally, your yearly contribution is limited to $5,500, or $6,500 if you are at least 50 years old and need to catch up in savings. Overall, this account is beneficial for its deductibility of contributions and tax deferment until later on investment earnings.

Roth IRAs

These individual retirement accounts are similar to the traditional format, except in the taxation phase. Roth IRA contributions are taxed up front, meaning that you cannot put the money away without paying the required tax amount. The benefit, though, is that your payment distributions will be tax-free when you retire. Roth accounts are handy in that you can withdraw money anytime and are not required to take distributions at 70 ½. It’s important to follow the rules, though, to avoid any costly penalties. As long as you are at least 59 ½ years old and have had the money in your account for at least five years, it should be yours free of charge. When planning for retirement, this option can be very useful if you are currently in a lower tax bracket than you will be in at your retirement age. This way, the amount paid in taxes up front is lower. While offering so many benefits, it’s important to note that working with Roth IRAs can be tricky based on individual circumstances.

While there are eleven types of IRAs, Traditional and Roth accounts are the two most commonly utilized for the average citizen. Next time, we’ll look deeper into the differences between these two retirement options. Each version holds different pros and cons, so it’s important to seek out professional help to find the safest investment options. America’s Retirement Plan is your source for obtaining financial security in a convenient, effective platform. Our retirement planning tools make the entire process simple — shop, save and invest. Contact us today to learn more about our innovative program or to sign up and begin your journey to an enjoyable retirement!