Hands down, Roth IRAs are the single best retirement account in America. They offer both a tax break now, as well as in retirement. If you have any interest in saving for your future, then the Best place to start roth ira are the way to go.
Reasons You Should Consider A Roth IRA
The most obvious benefit of investing with a roth ira is that your withdrawals are tax-free once you turn 59 1/2 years old and have had those roth ira funds invested for at least 5 years. That’s pretty sweet, considering you get to withdraw your money (and earnings) without having to pay any taxes on it.
But that’s not the only benefit. A roth ira also has no income limit as a traditional IRA does, meaning that if you’re a high income earner then you might still be able to make a contribution to one.
While there are many different types of retirement accounts, Roth IRAs stand out from the crowd because they offer tax-free withdrawals. In addition, there are no income restrictions in order to contribute. As long as you make below $110k (married filing jointly), you can contribute up to $5,500 per year ($6,500 if over 50).
Having that said, Roth IRAs are not without their own set of downsides. First, they’re only available if you’re over the age of 50. For younger people, the yearly contribution limit is lower. In addition, if you’re a high income earner (which many are) then you might not be able to contribute at all to a Roth IRA.
While these issues might seem like deal breakers for some, there are definitely benefits to making a contribution anyway. For example, if you make above $110k and come up short on the contributions for your year, then that money will be rolled over into the next year’s contributions or moved into your 401(k).
But for the majority of you, a Roth IRA is definitely something you should consider, especially if you’re under 50. For example, if you’re 25 years old and contribute $6,000 a year, then in 40 years (when you’re 65) that’s $250k. If that money is invested properly and earns an average of 8% per year (which is a reasonable expectation), then in forty years, that’s $3.8 million dollars!
That’s not too bad for making simple yearly contributions to an account when you were 25 and investing your money wisely over the next forty years.