According to a new survey by TIAA-CREF; “Eighty percent of those surveyed said they are not contributing to an IRA, up 4 percent from last year. Close to half also lack basic understanding of what IRAs are and how they are used.” To the extent that these respondents represent the investing public, many people are overlooking the IRA as a retirement savings tool.
“Many individuals are still missing out on the long-term savings benefits of IRAs, simply because they don’t understand what they are and how they work,” says Dan Keady, CFP® and director of financial planning for TIAA-CREF. “By allowing savings to grow on a tax-deferred basis, an IRA can help give your current retirement savings a boost no matter what stage of life you’re in. Even if you’re on a tight budget or just starting to save, if you start small and invest wisely, that amount should grow over time.”
IRA contribution details
In the interest of providing you the reader some information about the contribution limits for IRAs here is a great chart showing the rules for IRAs for the 2013 tax year (a chart for 2012 follows).
Many of you might still be in a position to make a 2012 contribution. Here is the same chart for the 2012 tax year. For those of you who are self-employed note that you can still start a SEP-IRA for 2012 and you have until the date that you file your return, including extensions, to fund it. Check with your financial or tax advisor to determine if you can still contribute to an IRA for 2012.
I would encourage you to take a look at your situation to see if an IRA contribution (in any of it’s variations) makes sense for you as a retirement savings tool. As always I encourage you to discuss this with your tax or financial advisor if you use one.
Please feel free to contact me with questions about IRAs or about your overall financial and retirement planning needs. Check out our Financial Planning and Investment Advice for Individuals page for more information about our services.
Check out our Resources page for links to a variety of tools and services that might be beneficial to you.
My thanks to the folks at Greene IRA Success for their permission to use these great charts