Investing at Home

For many people, investing for retirement means contributing to a 401(k) or similar plan at work.

But IRAs can be a simple and effective way to save for retirement, either on their own or as a supplement to another retirement program. You can contribute up to $5,500 to an IRA each year; however, your contribution cannot exceed 100 percent of your earned income. Also, if you're over age 50, you can contribute an extra $1,000.

There are many varieties of IRAs that can help you reach your retirement goals. Here are four main categories and how they can work for you.

  • Traditional IRA
    A traditional IRA allows you to contribute up to $5,500 into a tax-deferred account and deduct your contribution from your current income taxes in most cases.
  • Roth IRA
    Roth IRAs allow your contributions and earnings to grow tax-free. Unlike traditional IRAs, contributions to Roth IRAs are not deductible from current income tax, which is another major difference between the two plans.
  • Rollover IRA
    When you change jobs, you may have money invested in your employer's retirement plan. A rollover IRA allows you to move those assets from your employer into a traditional IRA. It also helps you avoid the penalties and taxes accompany a lump-sum distribution from the plan.
  • Spousal IRA
    Even stay-at-home moms and dads can put money away for retirement. You can invest up to $5,500 in a traditional or Roth IRA, as long as the working spouse has enough earned income to fund the IRA.
  • Not FDIC Insured
  • No Bank Guarantee
  • May Lose Value