Saving for retirement is one plan that often falls by the wayside in this country. Unfortunately, more and more Americans are simply neglecting proper retirement planning. When you couple this with the uncertainty of future government-funded programs, things begin to look grim. is here to provide you with the retirement planning tools you need to create financial stability in a painless, modern way that makes investing easy. Our team utilizes proven, long-term investment strategies and the newest technology to ensure the best chances for financial success. Individual Retirement Accounts (IRAs) are one method that can create a retirement savings plan that comes with the benefits you need to thrive. Today, we’ll continue building off of last week’s installment, which looked at traditional and Roth IRAs and what makes them different. Remember, saving for retirement is one of those activities that falls under “the sooner, the better,” so contact America’s Retirement Plan today to see how we can start building your future!

Tax Incentives

Many Americans utilize IRAs for their quality tax breaks. The main difference here stems from when you receive these tax benefits. Generally, the tax benefits break down like this:

  • Traditional IRAs feature contributions that are deductible on tax returns during the year in which you made your contribution. Remember that monetary withdrawals from this account are taxed after retirement as regular income.
  • Roth IRAs provide no tax incentives now, yet they can pay big after retirement. You’ll avoid being taxed when withdrawing but will have to be taxed when contributing funds.

Income and Age Limits

Your age and how much you earn during a calendar year can help you decide which IRA style is right for you. Traditional IRAs can be utilized by anyone under 70½ who holds an earned income. Roth IRAs do not have an age restriction. However, Roth IRAs are only available to those that fall below the income limit. As a single tax filer, your modified adjusted gross income must equal an amount less than $133,000 to be eligible to contribute to your account. Couples with a modified adjusted gross income (MAGI) of at less than $196,000 are able to contribute to their Roth IRAs. Contribution limits are phased out for couples at $186,000 while single filers must make a MAGI of $118,000 in order to exceed the standard annual contribution limit of $5,500.

Retirement Income Considerations

Which IRA you choose can be selected based on how much income you plan on making after retirement. This is due to a couple of reasons, the first being which tax rate you want to pay. Paying taxes on a traditional IRA now may prove to be a smart move if the tax rate is much higher when you retire. Many experts have predicted that today’s low rates will equate to higher rates in the future, making a Roth IRA a smart choice.

Which federal tax bracket you fall into during retirement will also help you decide which IRA is more beneficial. Factors such as income, Social Security, available tax deductions, tax credits, and more paint a picture of what your overall tax status will be after retiring. Those who jump to a higher bracket after they exit the workforce can lose more income when those taxes are assessed upon withdrawal from an account. These factors can be assessed by our experienced team and top-notch retirement planning software!

Additional Benefits

There is a plethora of varying benefits for people who qualify. Traditional IRA contributions are not taxable, lowering your overall taxable income and therefore adjusted gross income. When a person’s income amount drops, they may now qualify for other helpful tax incentives that were previously unavailable. This can be very beneficial for parents and students.

Traditional IRAs can also be helpful for citizens who require financial assistance for a variety of reasons. Up to $10,000 can be taken out of your traditional account without incurring the 10 percent penalty if you meet certain requirements. Withdrawals can generally be used for:

  • First-time homebuyers who need assistance financing their purchase.
  • Aspiring students who need finances for educational expenses.
  • People on disability who require financial support.
  • Medical expenses that are not reimbursed in certain situations.

There are many considerations that go into your retirement savings account. Working with a quality investing company to optimize your chances of gaining financial success is a great way to enjoy your life once you are out of the workforce. America’s Retirement Plan is here to provide just that. Our quality team and retirement planning tools provide the assistance you need to build stable, reliable strategies that have a long track record of success. After 20 years of helping people reach their financial goals, we’re here and ready to help you. With a versatile collection of methods, investing for retirement will be rewarding and fun. Contact us today to see how we can help you get started!