Self-Employed? How to Save for Retirement with Traditional IRAs
Posted on: 10 May 2017
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Self-employment gives you the freedom to plan your work schedule. However, you still have to save for retirement. A self-employed person does not have access to a 401(k), which means it is that more important for you to put away money. Read on for more info on how to save for retirement with a traditional IRAs.
What Is Traditional IRA?
A Traditional Individual Retirement Account (IRA) works like a savings account. It offers you tax advantages and helps with saving for retirement. Traditional IRA contributions are tax deductible on federal and state tax returns. You are also not taxed when you put money into the account. A traditional IRA is available to anyone with earned income, which is money you get from paid work.
Find an Online Broker
Setting up an IRA means finding an online broker. He or she can help with opening your account. There are certain things you should consider when choosing an online broker. You should look for low or no account fees and low account minimums. If you are a new investor, then you want to choose one with reliable customer support and investor education resources.
After you find a broker, you can open your Traditional Individual Retirement Account. You have to provide personal information like social security number, contact information, employee information and date of birth.
Fund Your Account
You have to decide on how to fund your account. One way you can fund your tradition IRA is by putting down a deposit and a small amount of money each month. These amounts will depend on your online broker, which is something to consider when choosing one.
Traditional IRA accounts also have limits. If you are under 50 years of age, then you cannot put more than $5,500 a year in the account. People who are 50 years and older can put up to $6,500.
You can also invest the money in your account. These investments may include mutual funds, exchange traded funds, CDs, bonds and stocks. If you are under 59, then you will charge a 10 percent penalty for taking money out of the account early.
If you are self-employed, then you should prepare for retirement. You want to enjoy life instead of having to work when you hit retirement age. A traditional IRA allows you to accumulate money in an account, which you can use for retirement. It helps to explore all options when planning for life after working.