Now more than ever, you can't afford to wait to save for your retirement. But what's the best way to make the most of tax benefits available to retirement savers? An IRA can be a critical tool to maximize your retirement savings and protect your investment income from tax.
In the following video from The Motley Fool's series on retirement investing, sponsored by TD Ameritrade, Fool consumer finance expert Dayana Yochim talks to Dan Caplinger, the Fool's director of investment planning, about the basics of the IRA. Dan goes through the tax benefits that IRAs offer, with some IRAs offering upfront tax deductions that cut your tax bill, while others offer tax-free growth throughout your lifetime. Dan notes that all IRAs share the benefit of tax deferral, where interest, dividends, and capital gains aren't taxable as long as money stays in the retirement account. Dan does caution, though, that early withdrawal penalties can make it hard to get at your money once it's in your IRA, so you'll want to consider your long-term needs before committing money to an IRA. Nevertheless, the IRA is extremely useful and flexible and can make a huge difference in your retirement security.
The other financial resource in retirement
Having an IRA is critical, but you also have to consider the impact that Social Security has on your retirement finances. In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.