Retirement Savings Basics For a Secure Financial Future

Saving for retirement is an important part of every persons individual financial management plan, but many people tend to put off thinking about it for decades longer than they really should. Fortunately, it is never too late to start saving, and the better informed investors are about Individual Retirement Accounts, or IRAs as they are usually known, the better off they will be in the long term. Visitors to http://www.insurance-andmore.com can find out a lot more on this and other related subjects.

(PRWEB) December 5, 2004 -- The difference between an IRA and an ordinary investment account is that there are special tax advantages, but restrictions on the account apply. Individuals can only contribute up to $3000 per year to their IRA, or $3500 for people over fifty who want to jump start their retirement savings program. These limits are set to rise over the next few years, to $5000 in 2008, or $6000 for people over fifty. The contributions must be made from money which has been earned in the year the contribution is made. No tax is payable on the earnings from the investment as is grows, but the funds cannot be withdrawn until a certain age has been reached, usually fifty nine and six months, or penalties apply.

A Roth IRA is a special type of account. Contributions are not tax deductible, but investors can make tax free withdrawals after the age of fifty nine and six months, so long as the account has been established for more than five years. The basic difference between this type of account and a traditional IRA is that investors pay the taxes while they are building the investment, in return for freedom from tax when they retire. People who have begun saving for retirement late in their working life are most likely to gain a financial advantage from choosing a Roth IRA over a traditional IRA.

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