Individual Retirement Accounts

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Individual Retirement Accounts

Why consider an IRA? Even if you have other retirement options through work — like a pension or 401(k) — an individual retirement account is an easy way to prioritize savings.

IRAs are tax-advantaged accounts that can hold investments, such as mutual funds and other investments. You tend to get more flexibility with an IRA than a typical 401(k) plan, but you also get fewer guarantees than other retirement products, such as annuities.

Our experts can discuss various IRA types and how each option might fit your financial and retirement plan.

And that’s where an annuity can help. They’re insurance products designed to provide you with a way to accumulate tax-deferred savings while you prepare for retirement and a steady stream of retirement income.

An individual retirement account (IRA) is an investment account that allows you to save for retirement in a tax-advantaged way. The Contributions to some IRAs may be tax-deductible, or withdrawals may be tax-free.

A 401(k) or pension may not provide enough retirement income. However, putting money in an IRA can help you prepare for retirement, save on taxes, and access investment options your workplace retirement plan might not offer. In addition, your savings may grow faster in an IRA than in a taxable account.

Types of Individual Retirement Accounts

An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis.

The 3 main types of IRAs each have different advantages.

Traditional IRA

You make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. Many retirees find themselves in a lower tax bracket than pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.

Roth IRA

You make contributions with money you’ve already paid taxes on (after-tax). Your capital may grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.

Rollover IRA

You contribute money “rolled over” from a qualified retirement plan into this traditional IRA. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA.

Additional living expenses coverage

Covers additional living expenses if your home becomes uninhabitable due to a covered loss.

Whether you choose a traditional or Roth IRA, the tax benefits allow your savings to potentially grow or compound more quickly than in a taxable account.

Many financial Professionals estimate that you may need up to 85% of your pre-retirement income in retirement. An employer-sponsored savings plan, such as a 401(k), might not be enough to accumulate the savings you need. Fortunately, you can contribute to a 401(k) and an IRA. An IRA can help you:

Supplement your current savings in your employer-sponsored retirement plan.
Gain access to a potentially wider range of investment choices than your employer-sponsored plan.
Take advantage of potential tax-deferred or tax-free growth.