An Individual Retirement Account (IRA) is one of the best available planning tools for your fiscal future. It gives you the opportunity to save for retirement, while receiving special tax privileges.
The most important key to a successful retirement savings strategy is to start early. Many people, strapped for cash or eyeing a major purchase, tell themselves they can make up for lost time by making higher contributions in future years. Unfortunately, money doesn’t work that way. Thanks to the power of compounding, cash invested today has a disproportionate impact on your wealth accumulation in your retirement years.
You can also make contributions for 2008.
IRA contribution limits for 2008 are $5,000 and $6,000, respectively.
Alternatively, start small. But at least start.
Of course, you may not be in a position to make full contributions immediately. You can simply start by putting away small sums of money. Choose a level of saving that you can consistently make over a period of time. Then, increase it when you can.
Time is money – start today.
We’ll help you keep more of your earnings while reducing your taxes. Call us today to help build your tomorrow by investing in an IRA.
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Save $40 every two weeks* |
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Account value at retirement if
you start saving at age 25 ► $360,439 |
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Account value at retirement if
you start saving at age 35 ► $154,981 |
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Advantage of starting 10 years earlier ► $205,458 |
*This illustration assumes the hypothetical investment earns an 8% average annual return rate, compounded every two weeks. The return is shown for illustrative purposes only and is not intended to predict the returns of any particular investment, which will fluctuate with market conditions. Your actual results may differ. Regular investing does not ensure a profit or protect against loss in a declining market. The Social Security Administration has set the full retirement age at 67 for all persons born after 1960.
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Contribution amount
Every two weeks $40 $80 |
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Reduction in
take-home pay |
$30 |
$60 |
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Account value
in 10 years |
$15,945 |
$31,891 |
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in 20 years |
$51,389 |
$102,778 |
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in 30 years |
$130,174 |
$260,347 |
This example is for illustrative purposes only and does not reflect the results of any particular investment, which will fluctuate with market conditions. An 8% average annual return rate, compounded every two weeks, is assumed. The take-home-pay example assumes 25% paid in income taxes for 2006 and does not include exemptions, itemized deductions, Social Security and state taxes. Your paycheck may reflect different amounts. Retirement plan distributions of before-tax contributions are subject to ordinary income tax and, if applicable, to an additional 10% federal tax penalty on early withdrawals. Regular investing does not ensure a profit or protect against loss in a declining market.
The tables in this article were taken from an American Funds pamphlet