To open an IRA or not to open an IRA, that is the question

August 20, 2014

Is opening an IRA the right thing for you? Kurt Schindler, Certified Financial Planner from Popular, explains how to decide.

Everyone’s talking about IRA accounts and banks launch offers, especially in this time of the year. The question is, is it worth it? We’ll explore whether it’s worthwhile for you, and what’s the best way of saving up the money to take this important step in your life, if it’s right for you. If it’s not right for you, we’ll explore other mechanisms for saving for your retirement. Remember that it’s never too late and it’s never too early to think about your retirement.

How do you determine if it’s right for you? Ask yourself the following:

  1. Are already saving for yourself? If you’re not, an IRA is right for you. If you can’t save the total amount in one installment, there are products that allow you to save over time. There’s no excuse!
  2. Do you have something saved for your retirement?  If the answer is no, the IRA is right for you.

Note that I’m talking about your savings and I haven’t even mentioned taxes, because the most important thing is to save for yourself. The tax break is a bonus, an additional reason; the immediate benefit and the excuse we need to open an IRA.

Something new that you should consider is opening your 2011 IRA right now.  If you think about it, you open your IRA late, meaning, you open the account for 2010 in 2011. You’re losing a whole year of compound interest! And it’s not only a year lost, if you open an IRA for 20 years, you could be missing out on up to $6,000 in compound interest!

Take advantage of the social security cut this year to get ahead on your IRA from now on. I invite you to break these habits and save for your future.