{"id":1691,"date":"2022-06-15T23:42:07","date_gmt":"2022-06-15T23:42:07","guid":{"rendered":"https:\/\/blog.ark7.com\/?p=1691"},"modified":"2024-01-24T17:11:43","modified_gmt":"2024-01-24T17:11:43","slug":"basics-of-an-ira-ultimate-guide-to-retirement","status":"publish","type":"post","link":"https:\/\/ark7.com\/blog\/learn\/in-depth\/401k-and-iras\/basics-of-an-ira-ultimate-guide-to-retirement\/","title":{"rendered":"Basics of an IRA: Ultimate Guide to Retirement"},"content":{"rendered":"
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Millennials have faced two financial crises before the age of 40, leaving many wondering, how will I save for retirement?<\/span><\/p>\n

If millennials want to retire by the age of 65, they need to save nearly half of their paycheck. Others say to retire comfortably you should be saving around 75% of your pre-retirement income. However, 50%\u00a0of millennials believe all they need is $300,000 to retire in comfort\u2014a small fraction of what most experts estimate they need.<\/span><\/p>\n

So, how do you achieve that in today\u2019s challenging economic environment? For most, income and contributing to a 401(k) alone won\u2019t cut it.<\/span><\/p>\n

What other options do you have?<\/span><\/p>\n

The short answer is, savings and growth from investments and passive income\u2014which we\u2019ll touch on shortly.\u00a0For now, the main focus is on where you put that investment money, and an IRA is a viable option.<\/span><\/p>\n

What Is an IRA?<\/b><\/h2>\n

IRA stands for Individual Retirement Account. This option is essentially a savings account that offers significant tax savings. Contributions may be tax-deductible and withdrawals are tax-free.<\/span><\/p>\n

An IRA is not an investment in itself. This idea is a common misconception. Instead, think of an IRA as the basket that holds bonds, mutual funds, stocks and other assets.<\/span><\/p>\n

There are different types of IRAs and for millennials, a Roth IRA is a beneficial choice, as this option could set you up for success later in life.<\/span><\/p>\n

The Benefits of an IRA<\/b><\/h2>\n

The primary benefit of an IRA is that you have more investment options. For example, although a 401(k) is a great way to save for retirement, it’s not enough for many. The same is true for pensions. That is why it’s important to know your options and act on them sooner than later. The more you know, the better you can prepare for retirement by <\/span>saving the most on taxes<\/span><\/a> and choosing the best investment options for you and your investment plan.<\/span><\/p>\n

When you have an IRA, you gain the power of flexibility. For example, you can use IRA money to purchase your first house or to start <\/span>investing in the real estate market<\/span><\/a>.<\/span><\/p>\n

Overall, the main benefits include:<\/span><\/p>\n