Based on the thousands of tips, tricks, and other advice you hear about saving for retirement, it can seem like one of the most complicated processes there is. While there is no one true plan that guarantees retirement savings success, there are some strategies that greatly increase your probability of living a happy and fruitful retirement with little to no worries about ever running out of money. Although IRA’s are a very effective way to do this, they are often misunderstood, which can lead to inaction in utilizing them. To better understand why IRA’s are such a great option to bolster your retirement savings, take just a few minutes to better understand them. Your future self may be glad that you did.
- Difference Between A Traditional And a Roth IRA?
- How Does An IRA Save You Money For Retirement?
- What Are Precious Metal IRA?
- The Advantages Of Using Physical Gold To Save For Retirement
Difference Between A Traditional And a Roth IRA?
Not all IRA’s are created equal. In fact, for proper retirement planning, it is very important that you understand the difference between the two types of them. First, there are Roth IRA’s. A Roth IRA allows future retirees to place money into the retirement savings account once they have already paid taxes on the income they’ve earned. This means the payments going into the account are from your net income. Then, once the money in the retirement account is ready to be pulled out and spent in retirement, you are not required to pay any taxes on it. A traditional IRA can be looked at as somewhat of the inverse of this. The money placed into the account is pulled out of your gross income before you pay income taxes on it. Then, when you withdraw money in retirement, you must pay taxes on the amount you owe. A financial advisor can help you to better determine which type of IRA is best for your unique financial situation.
How Does An IRA Save You Money For Retirement?
Just simply putting money into either type of IRA doesn’t actually save you money for retirement. Once it’s there, you must use this money to purchase assets which you believe will increase in value over time. Due to the wonder that is compound interest, most retirement accounts are worth far more than the sum of all deposits made over someones working career when it is eventually time to retire. These assets can be anything from stocks to bonds and even precious metals such as gold, silver, and platinum.
What Are Precious Metal IRA?
Precious metal IRA involves using the funds from a Traditional or Roth IRA to purchase physical precious metals. Let’s use gold as an example. To purchase gold, simply use some of the funds from your IRA to go to a reputable gold broker. These funds can then be exchanged for gold in the form of either coins or bars depending on the amount you select. This way, instead of having a spreadsheet that shows ownership of a stock, you have tangible evidence that you own this asset which holds very real value.
The Advantages Of Using Physical Gold To Save For Retirement
Perhaps the biggest advantage to utilizing a gold based IRA is that you have a physical asset to back up the numbers on your retirement account statements. Not only does this protect you from the risk of a financial institution going under, but it also hedges your risk of losing value in your retirement savings pool. Unlike stocks, which can fluctuate wildly on a daily basis, gold remains much more stable and retains its value over time. After all, they are called precious metals for a reason. Gold has been considered valuable for thousands of years and will continue to be considered as such well into the foreseeable future. By making gold a part of your retirement IRA, you are setting yourself up for financial success and lessening the worries of your future.
IRA’s that contain physical assets such as gold are a great way to hedge risk and build wealth. Gold prices remain stable and certain for you over time in a financial world that is anything but.