Monday, February 20, 2006

 

5 Reasons to Get an IRA

Motley Fool has an article citing 5 reasons to get an IRA, I like all of the reasons:

1. How else will you retire?
2. Lower Taxes - especially with a Roth IRA
3. If you don't put money in an IRA, you'll spend it - This is so true, I'm a big proponent of putting money away where I can't touch it, it seems to grow ever so much faster that way.
4.
You want more control over your investments.
5. IRA assets can be shielded from creditors - Take that debt collectors!!

I have a question for anyone thats reading this, how many IRA's should you have? I have a Roth IRA and a defined contribution plan through work, but I'm feeling the need to put more money away for retirement, but I don't want to go overboard. Or is it even possible to go overboard?

3 Comments:

Blogger AnnMarie said...

You can have as many IRA accounts as you want, but the contribution limit is TOTAL. If you have two IRAs (say a Roth and a regular), you can put $4000 TOTAL in them, not $4000 in each.

Does your workplace offer a 401K or a 403B or a 457 plan? All of those have much higher limits than an IRA does. (I don't know what a defined contribution plan is....) Most folks have ones of these plus an IRA. If you want to do other saving for retirement, which isn't frowned on, of course, you'd just have a regular brokerage or DRiP account and simply tell yourself not to dip into it until retirement.

8:43 AM  
Blogger kassy said...

I used the wrong terminology, its a 401A plan and my employer (the State) determines what my contribution is.

Thanks for clearing up about the IRA's.

1:28 PM  
Blogger Tiredbuthappy said...

No, I think you were right, Kassy. I've heard 403b, 401k, accounts etc called "defined contribution plans". Usually they're called this to differentiate from "defined benefit plans" which are traditional pensions. So basically your employer is saying they'll commit to the amount they're going to put IN to your plan, but they're not responsible for how much you can expect to get OUT.

Somebody correct me if I'm wrong. I often am.

1:42 PM  

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