What is an IRA and how do I start saving?

woman finances saving money


GRAND RAPIDS, Mich (WOTV) – If you’re finally looking to get settled in your financial life, you may want to consider ways to build wealth over the long term. But that checking account alone isn’t gonna cut it. It’s time to examine the options out there.

Why invest in an IRA?
Many financial experts 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 both a 401(k) and an IRA to 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.

Peace of Mind:  All savings accounts, including IRA accounts, at Option 1 Credit Union are Federally insured by the National Credit Union Administration (NCUA). It’s a great way to diversify your retirement planning and keep your investment secured.

In a 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 also find themselves in a lower tax bracket than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate. Traditional IRAs are also great for people who are self-employed or otherwise don’t have access to a 401K. Like a 401K, your contributions are deducted from your taxable income.

A Rollover IRA is a Traditional IRA intended for money “rolled over” from a qualified retirement plan. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA.

With a Roth IRA, you make contributions with money you’ve already paid taxes on (after-tax) and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.

IRA Certificate of Deposit: IRA Certificates are available with a minimum deposit of $500.

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