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FINANCIAL FOUNDATION: The Building Blocks for Success
with Rick Blanke, AIF®, Financial Advisor
Blanke Schein Wealth Management

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Blanke Schein Wealth Management is a group of investment professionals registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

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This document was created for informational purposes only; the opinions expressed are solely those of Blanke Schein Wealth Management and do not represent those of HighTower Advisors, LLC, or any of its affiliates….(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

When planning for retirement, it’s important to consider the type of individual retirement account (IRA) that will work best for your financial goals. Two popular options are Roth IRA and Traditional IRA.

So, what’s the difference between the two?

Traditional IRA:

A traditional IRA allows you to contribute pre-tax dollars, meaning the money you contribute is deducted from your taxable income. This can help lower your taxable income for the year, potentially reducing your tax bill. The earnings on your traditional IRA contributions grow tax-deferred until you withdraw the money during retirement. At that point, you’ll be required to pay taxes on the distributions.

Roth IRA:

A Roth IRA is funded with after-tax dollars, meaning you pay taxes on the money you contribute. The money you contribute grows tax-free, and when you withdraw the money during retirement, you won’t be required to pay taxes. Additionally, there are no required minimum distributions (RMD) with a Roth IRA, meaning you can withdraw money at any time without penalties.

So, which one should you choose?

The answer largely depends on your personal situation and financial goals. If you expect your tax rate to be lower during retirement than it is currently, a traditional IRA may be the best option. This will allow you to receive the tax benefit now and pay lower taxes on the income when you withdraw it later.

On the other hand, if you expect your tax rate to be higher during retirement or if you’re in a lower tax bracket now, a Roth IRA may be the better option. By paying taxes now, you’ll avoid having to pay taxes on your distributions in retirement and can benefit from the tax-free growth of your investments.

It’s also important to consider your eligibility for each type of IRA. For example, Roth IRA contributions are limited based on your income level, whereas traditional IRA contributions are not limited by income.

Ultimately, it’s always a good idea to consult with a financial advisor to determine the best retirement savings plan for your individual needs.