Time for ‘Gen-Xers’ to put IRAs to work - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Time for ‘Gen-Xers’ to put IRAs to work

Print
Font Size:
Default font size
Larger font size

Related Stories

Posted: Saturday, March 30, 2013 9:49 am

If you’re a “Gen-Xer,” born between 1965 and 1980, you’ve still got many years to go until you retire. At this stage of your life, what can you do to help build resources for the retirement lifestyle you’ve envisioned?

Besides having time on your side, you’ve got another key advantage in saving for retirement — specifically, you probably haven’t reached your peak earning years. This helps you in at least two ways. First, of course, it means you should be able to increase your retirement savings in the future. And second, it might mean you’re still eligible to contribute to one of the most effective retirement accounts available — the Roth IRA. When you invest in a Roth IRA, your earnings are distributed tax free, provided you’ve had your account at least five years and you don’t start taking withdrawals until you’re at least 59 1/2. For the 2013 tax year, you can put in up to $5,500 to a Roth IRA; when you reach 50, you’ll also be able to make “catch-up” contributions (currently, the catch-up limit is $1,000).

However, the ability to make Roth IRA contributions is limited by income. For 2013, you can make the full contribution to a Roth IRA if you are single and your modified adjusted gross income (MAGI) is less than $112,000. Above this amount, your contribution limit will be gradually reduced, and if your MAGI reaches $127,000, you won’t be able to contribute at all. If you’re married filing jointly, the lower limit is $178,000 and the cutoff amount is $188,000.

Of course, if you have to consider these income limits, you’re making a reasonably good living, and you may well be on a career path that will take you to even greater earnings — which is why you should think about putting in as much as possible to a Roth IRA while you’re eligible.

If your earnings are already over the limit for the Roth IRA, you can still contribute to a traditional IRA. Your contributions can grow tax deferred, which means your money can accumulate faster than it would on an account on which you paid taxes every single year. Taxes are due upon withdrawal, and withdrawals prior to age 59 1/2 may be subject to a 10 percent IRS penalty.

But what if your income level is such that you could contribute to either a Roth IRA or a traditional IRA? Which one should you choose?

There’s no “right” answer for everyone. The Roth’s tax-free distributions may be more attractive to you than the tax-deferred growth potential of a traditional IRA if you expect your tax rate to be higher in the future. However, depending on your income level and whether you have access to a 401(k) or other retirement plan at work, your traditional IRA contributions may be fully or partially tax-deductible. But these types of calculations are not easy, so before making the traditional-or-Roth choice, you’ll need to consult with your tax advisor.

In any case, now is the time to capitalize on your Gen-X status and use the years ahead to invest consistently in an IRA and other tax-advantaged retirement accounts. As an investor, time is your greatest ally — so take advantage of it.

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Kim DeVoss, CFP. Reach her at (480) 785-4751 or Kim.DeVoss@edwardjones.com.

More about

More about

More about

  • Discuss

Pedal Haus Brewery opening in downtown Phoenix? Not exactly

Perhaps this helps explain the abrupt closure and expansion of Pedal Haus Brewery in Tempe: The Phoenix Business Journal reports Pedal Haus ow…

Published: July 1, 2016 - 12:58 pm @ http://mouthbysouthwest.com/2016/07/01/pedal-haus-…

GOP senator: Lynch should formally hand over Clinton probe

Floor Action feed By Jordain Carney Sen. Kelly AyotteKelly AyotteGOP senator: Lynch should formally hand over Clinton probe The Trail 2016: Me…

Published: July 1, 2016 - 12:57 pm @ http://thehill.com/blogs/floor-action/senate/28628…

Almost There to air on PBS in July

Throughout July and beyond, PBS stations around the country will be broadcasting the national television premiere of Almost There, Dan Rybicky…

Published: July 1, 2016 - 12:56 pm @ https://www.kartemquin.com/news/almost-there-to-ai…

Asian megastore H Mart coming to Mesa next summer

H Mart, a New Jersey-based chain of Asian megastores, will make its Arizona debut next year in the former Albertson’s on the southeast corner …

Published: July 1, 2016 - 12:28 pm @ http://mouthbysouthwest.com/2016/07/01/asian-megas…

What’s New on Amazon: July 2016

At the beginning of (and throughout) every month, Amazon Prime and Amazon Instant Video add new movies and TV shows to their libraries. Some o…

Published: July 1, 2016 - 12:25 pm @ http://www.vulture.com/2016/06/whats-new-on-amazon…

Would You Pay $25 a Pound for Vegetables?

My husband and I have been trying to garden for a year now.  I say trying because we recently relocated to Tucson, Arizona, and gardening here…

Published: July 1, 2016 - 12:08 pm @ http://www.beatingbroke.com/25-a-pound-for-vegetables/

Phoenix metro area July 4th events

Fabulous Phoenix 4th July 4, 6pm - 10pm (fireworks at 9:30pm) Steele Indian School Park 300 E. Indian School Road Phoenix AZ 85012 Event Hotli…

Published: July 1, 2016 - 11:58 am @ http://www.fox10phoenix.com/news/arizona-news/2655…

Lynch Will Accept FBI Recommendations on Clinton Emails

Attorney General Loretta Lynch acknowledged Friday that her private meeting with Bill Clinton has "cast a shadow" over an FBI-led investigatio…

Published: July 1, 2016 - 11:56 am @ http://www.nbcnews.com/news/us-news/lynch-will-acc…

Film Guide: What Movie Should I Watch This Weekend? (July 1, 2016)

To help sift through the increasing number of new releases (independent or otherwise), the Weekly Film Guide is here! Below you’ll find basic …

Published: July 1, 2016 - 11:55 am @ http://www.indiewire.com/2016/07/movies-opening-ju…

'One game isn't going to define me': Former UA kicker Alex Zendejas gets 2nd chance with Rattlers

In 2009, Alex Zendejas hit a 32-yard field goal as time expired to lift the Arizona Wildcats past archrival ASU in Tempe. In a fair world, it …

Published: July 1, 2016 - 11:26 am @ http://www.abc15.com/sports/sports-blogs-local/one…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…