Retirement Basics: the Traditional IRA (Individual Retirement Account)

In case you missed it earlier this week we published a short update on how the coronavirus outbreak could be impacting your finances. You can find the blog post we’ll be updating regularly here: https://blog.brightdime.com/2020/03/19/coronavirus-covid-19-updates/

We’ve been talking about tax deductions for the last couple of weeks and this is the last time we’ll mention it (for a little while anyway). If you’re looking for a last minute tax deduction and have some extra cash, putting money in an IRA is ideal (eligibility for a deduction is based on your income and filing status). Even if you’re above the limit to take the tax deduction, putting money away for retirement is never a bad idea.

Saving for retirement may be the most important financial goal you’ll ever have. Why? It’s how you’ll need to pay for your estimated 30+ years of unemployment (aka, retirement). Some people think they will rely solely on Social Security, but it was never meant to be the sole source of retirement income. As it currently stands, if you have average earnings (say $50,000/yr), your Social Security retirement benefits will replace roughly about 40 percent ($22,000/yr). The percentage is lower for people in the upper income brackets and a little higher for people with low incomes. Can you live on 40%? 

Read our full article for all the details on the traditional IRA.