Tags: Retirement | retirement | Roth IRA

Are Roth IRAs My Best Retirement Bet?

By    |   Saturday, 13 June 2015 01:42 PM

Roth IRAs are a strong investment for retirees because of their lifelong investment potential and the tax-free estate they could offer to an investor's heirs.

Because they work on invested after-tax income that can be withdrawn, tax-free, at a certain age, analysts describe the Roth as Uncle Sam's best gift because of its earning power and flexibility, including no cap on how long someone might contribute.

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The tax shelter of a Roth IRA can "pay off big," Kiplinger noted of its benefits.

Over a lifetime, a Roth can help set up someone for retirement in a major way. "If a 25-year-old contributes $5,000 each year until she retires and makes an average annual return of 8 percent on her investment, she'll have $1.4 million saved by the time she retires at age 65. And the money is all hers — she won't have to give the IRS a cent of it if she waits until retirement to withdraw the earnings," Kiplinger wrote.

While some tout Roth IRAs as an early-age strategy of investing, they are good for older investors, too, Bankrate noted.

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"For individuals looking for tax diversification in retirement, the Roth IRA is one of the few buckets they can create that ensures that they have a stream of tax-free income in retirement," Ken Hevert, vice president of personal and small business retirement products at Fidelity Investments, told Bankrate.

Unlike traditional IRAs, Roths allows someone to continue to make contributions well into their retirement years. The Roth also has no required minimum distributions at a certain age, Bankrate noted, adding that someone "can live to 120 without ever tapping" their Roth funds.

"You can continue to contribute until you quit working or drop dead, whichever comes first," Bankrate said.

Best of all, for some, it allows a retiree to pass on a tax-free legacy to their heirs, upon death.

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Roth IRAs are a strong investment for retirees because of their lifelong investment potential and the tax-free estate they could offer to an investor's heirs.
retirement, Roth IRA
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2015-42-13
Saturday, 13 June 2015 01:42 PM
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