Individual Retirement Account - IRA
Individual retirement accounts or IRAs were introduced in 1974. These accounts allow workers to contribute to a retirement account. There are different variations of the accounts that offer different tax benefits and features, but these accounts can be very helpful in saving and preparing for retirement.
To of the most common forms of these accounts are Roth IRAs and Traditional IRAs. The primary difference between these two accounts is that Roth IRA contributions are post-tax, but withdrawals are generally tax-free and Traditional IRA contributions are often tax deductible, but withdrawals are taxed. These accounts generally have limits on how much can be contributed per year, with amounts that change regularly and also allow for larger contributions for people over certain ages. When most people try to determine which of these accounts may be better for them, the key is taxes. If you think your current tax rate will probably be lower than you tax rate at retirement, then you will probably be better off with a Roth IRA. But if the opposite is true, than a Traditional IRA may make more sense.
As with any retirement account, the key is to use them. Determining which retirement account or accounts makes sense for you can take some time, but you should be committed to saving for retirement. These types of accounts can allow you to make those savings work harder for you by avoiding some of the taxes would impact your savings in a non-retirement account.