If you’re looking to plan your retirement, it is important for you to contribute to your IRA. When you are able to contribute to your IRA on a regular basis, it will become easier for you to save a significant amount of money for your retirement. The main question which remains is how much should you contribute for your IRA.
How much should you contribute?
You need to understand that the ideal answer is that you should contribute as much as possible. You need to ensure that the maximum limit is up to $5500. You should contribute that much in an ideal case.
You need to understand that when you’re faced with various expenses, you can reduce this amount. Moreover, there are other retirement plans like 401(K) as well. That is why; you have to look at these plans as well. Both of these plans complement one another. You have to ensure that you are contributing a significant amount of money to 401(k) as well. When you are able to do that, the companies will be matching every dollar which you put in 401(k) as well. You have to keep this factor in mind and thereafter think about contributing to IRA.
You need to also understand that IRA can help you in growing money at a faster pace. That is why; you should never ignore contributing to the IRA.
You need to also understand that there are different types of IRA accounts.
Types of IRA accounts:
You have to choose between the traditional IRA account and the Roth IRA account. Traditional IRA account provides you with growth with tax-deferred. You only pay the tax when you’re withdrawing the money. On the other hand, when you are opting for Roth IRA, you will be contributing the after-tax money. They offer you the tax-free growth on your investments as well. As a result, you will not have to pay the tax even when you’re withdrawing them. This is one of the main advantages of Roth IRA.
When should you start contributing?
You need to keep in mind that rather than procrastinating on this decision, you have to start contributing as soon as possible. Only when you are contributing as soon as possible, you will be able to get the compound interest on the investments as well.
What should you do when you do not have $5500?
If you do not have $5500, you should actually set up automatic payments from your account. This will ensure that you are regularly contributing to your IRA account.
Thus, when you are contributing to your IRA account, you will be able to plan your retirement quite easily. You have to start as soon as possible. Keyword: Roth IRA, traditional IRA, retirement, IRA, what is an ira, ira stands for, ira roth, open an ira account, ira vs 401k, what is an ira rollover, difference between ira and 401k, best ira