Time for an IRA refresher course!
Even if you sat (read, "slept") through class the first time around, it never hurts to make sure you're making the most of this important retirement savings vehicle. We'll spare you the 50-minute lecture and instead give you the 60-second version of IRAs 101.
0:58: Roth or regular IRA... what's your pleasure?
Your first step is to decide which type is best for you -- a Roth or traditional IRA. Do you want to save on taxes today (with a deductible traditional IRA) or in retirement (with a tax-free Roth IRA)? This calculator will help. And if you are considering converting your traditional IRA into a Roth IRA, first do the math.
0:44: Find a place to invest your cash
A discount brokerage account is a logical place to house your long-term retirement savings. Before you open an account, be sure to compare IRA account fees, and don't overpay for trading commissions. You want the bulk of your contributions to go toward your retirement nest egg, not your broker's.
0:32: Open an account
Setting up an IRA account is usually as easy as downloading the application forms, signing them, and folding them nicely into an envelope with a check to fund your account. You'll receive confirmation of your ability to invest in no time at all.
Consider an IRA as the basket that holds your retirement money. You get to decide what goes in that basket. That means deciding which stocks or mutual funds you want to buy. (Hint: If you're new at this or just don't have the time to evaluate individual stocks, you might want to consider an index fund to get started.)
0:07: Dream of the future
Start thinking about how you'll spend those blissful (and flush!) retirement years. Will you have a view of the beach or the mountains from your porch? Will you be gardening or go-carting in your spare time? What froufrou beverage will you serve? And which guest suite will be available for your friends at the Fool the weekend of Aug. 14, 2023?
Got a few extra minutes to spare? For more on finding the best brokerage account for your money, check out our 60-Second Guide to Choosing a Broker.
Here's some riveting reading -- all you ever wanted to know about IRAs, including a handy glossary. Maxing out your IRA is a big step toward making your retirement dreams come true.
However, you should also check your employer-sponsored retirement plan (i.e., your 401(k) or 403(b)). If your employer matches contributions, make sure you take advantage of that free money. We also make much ado about mutual funds.