As a young adult, you’re probably juggling a lot. In the midst of moving into your own apartment, saving up for a house, dealing with car repairs, and paying off student debt, it can seem like retirement isn’t much of a priority. But the simple truth is that time will always pass more quickly than you think it will, especially as you grow older. The sooner you start saving up for retirement , the more comfortable and secure you’ll be later on. You have many retirement savings options, including IRAs. Talk to a credit union member representative about your plans.
What is an IRA?
This acronym stands for Individual Retirement Account. In other words, it’s a savings account that is intended specifically for retirement savings. IRAs are opened through financial institutions. You’ll transfer money to your IRA during the coming decades, and these funds will be used to invest in stocks, bonds, and mutual funds.
Why should I open an IRA? Can’t I just invest the money directly?
Yes, you certainly can add stocks, bonds, and mutual funds to your portfolio without opening up an IRA. However, IRAs have their own special benefits. Up to the limits established by the Internal Revenue Service (IRS), your contributions to your IRA are tax deductible. This means your quarterly or annual tax liability is reduced. The funds in your IRA are also tax-deferred. This means you won’t owe taxes on the gains until you withdraw the money.
What’s the difference between Roth IRAs and traditional IRAs?
These are the two main types of IRAs. They differ primarily in tax breaks. With a traditional IRA, the money you contribute for any given year is tax deductible for that year. With a Roth IRA, you pay income taxes on the money now, before it’s transferred to the account. This means your contributions aren’t tax deductible, but you won’t pay any taxes on the money you withdraw during your retirement.
At GCS Credit Union , we do much more than just online checking accounts and auto loans. We also offer personalized financial guidance for our members, including retirement planning. Call (618) 797-7993 to join our credit union near O’Fallon, and ask us about our traditional and Roth IRA plans.