The individual retirement account (IRA) has become a standard tool for long-term financial planning; for many investors, it is an ideal way to build a retirement nest egg and ultimately set the table for long-term financial security. Something that is important to remember is that simply establishing an IRA is not sufficient; for that matter, even making yearly contributions does not guarantee that you’re using your account for all it’s worth.
Really getting the most out of an IRA requires further steps to be taken. For some examples, consult our list below.
How to Use Your IRA
Make sure you have an IRA custodian who you feel comfortable working with. A good financial advisor is invaluable, and can provide you with guidance as you strive to invest your money properly and plan for a stable and steady retirement. As you interview different financial planners, ask them what kind of services they can provide beyond basic IRA custodianship; also make sure they are people you feel like you can communicate with effectively.
Consider consolidating your retirement accounts. If you have a separate retirement account—for example, an employer-sponsored 401(k)—then it may be beneficial to think about combining those accounts into one, which makes account maintenance much simpler. This is something to talk about with your advisor, as it may not always be the best solution for everyone.
Ask your advisor about spousal IRAs. This allows you to have a retirement account even for a spouse who does not work outside of the home—for example, a stay at home parent. Even low-earning spouses may be eligible for a spousal IRA.
Take advantage of catch-up contributions. If you’re over the age of 50, you may have the option of making some “extra” contributions to your IRA. Again, this is something to chat about with your financial advisor.
Ask about converting your Traditional IRA into a Roth IRA. The differences between the two are significant enough that it’s worth taking some time to ask your advisor about them, and to see if making the switch is a good move for you.
Above all, of course, it is smart to maintain the basic, healthy habits of IRA stewardship: Save money; make the maximum allowable contribution each year, if at all possible; and keep in regular contact with your financial advisor.
To learn more about the Stonepath Wealth Management team’s IRA advisory services, don’t hesitate to contact us directly.
