What is the best advice you have for starting your own retirement account when one is not offered by your employer?

Asked by Jill

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Answered by Richard Eddy, Financial Adviser in La Verne, CA
If your employer doesn't offer a retirement plan, an IRA or Roth IRA are good options. Although they are more limited in the amount of money that you can contribute each year, they can still be a valuable tool in retirement planning. With an IRA, you make contributions (up to the annual limits) that are tax deductible in the year that you make them. The money then grows on a tax-deferred basis, where you would then pay taxes on the distributions later when you take income in retirement.

A Roth IRA, on the other hand, gives you no tax deduction now, but allows you money to grow on a tax-FREE basis, meaning that you would pay no taxes on the distributions when you draw income in retirement.

So which is a better option? Well, that depends a lot on what your current marginal tax bracket is now, and what you suspect it will be in retirement. Often, a mix of IRA and Roth IRA contributions makes sense, but please consult with a qualified financial planner for help with this question as it pertains to your specific situation. | 10.13.15 @ 19:51
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