Welcome, Travelers, to the Business & Economics Lane on the Black Information Highway and The Mid-South Tribune ONLINE...Welcome, Travelers, to the 21st Century Underground Railroad...

 

Search for:

 

Advertisement

BIH LanesBlack History Main   Main Lane  Adobe ReaderBusiness news Business main

Black Papers Sports

Cocktails

Title VI Manual

Entertaining

Business in the Black

International

Business Help Features

Jokes

Advertisement  

 

 

 

 

How to Successfully Start an IRA

(NewsUSA) - Maybe your company offers a 401(k) plan. But even if it doesn't, you need to get an IRA now. Because IRAs use compound interest and are not taxed by the IRS, contributing even a few thousand dollars a year can create a sizable nest egg.

And yet, according to the IRS, only 10 percent of the people eligible to create and contribute to IRAs actually do so. If you think you can't afford an IRA, you're wrong. Consider that Social Security typically pays $13,000 a year -- unless you can live on that miniscule income, you'll need to find an additional way to pay for retirement.

How do you know if you're eligible for an IRA? "Anyone who earns a taxable income or files a joint return with a spouse who earns an income can contribute to an IRA," explains David Bach, the author of nine national bestsellers, including "Start Late," "Finish Rich" and "The Automatic Millionaire." Bach recently shared his insights about IRAs with the readers of SUCCESS Magazine, where he offered the following advice:

- Start Early and Save Until Retirement. Thanks to the miracle of compound interest, those who start saving early end up with the largest nest eggs. "If you were to start at age 55, you'd contribute a total of $50,000 in the 10 years before you retire, at which point your account would be worth $72,433," says Bach. "By contrast, if you started at 25, you'd contribute $200,000 over the next 40 years, and by the time you retired, your account would be worth $1.3 million."

- Invest Wisely. You can invest the proceeds from your IRA any way that you want, but some moves are wiser than others. Bach recommends "target date" or life cycle funds, which are specially designed for retirement savings. The fund automatically makes sure that you have investments appropriate for your age, acting more aggressively in your younger years and becoming more conservative as you near retirement.

- Know When to Start Withdrawing. Legally, you can begin withdrawing funds from your IRA when you're 59 and a half, but if you're in a high tax bracket, you should put off withdrawals for as long as possible.

###

SUCCESS magazine offers a balanced approach to successful living by covering topics on business, wealth, well-being and philanthropy. Travel to www.SUCCESS.com and search the August issue to read the rest of Bach's advice.