A:

It is never too late to start saving for retirement. Even starting at age 35 means you will have more than 30 years to save.

The type of IRA you choose is usually determined by your individual circumstances and preferences. A Roth IRA is usually preferred by individuals who do not qualify for tax deductions associated with Traditional IRA contributions and/or by individuals who want their IRA distributions to be tax and penalty free. (Distributions from a Roth IRA are tax and penalty free if certain requirements are met.)

Individuals, who are eligible to receive a tax deduction for Traditional IRA contributions may prefer to take the deduction now and realize the benefits up front as opposed to later on.

For the 2007 tax year, you may contribute up to $4,000 to either a Traditional or Roth IRA. Alternately, you may split the $4,000 between the two. Most financial institutions will allow you to contribute small amounts periodically (weekly, monthly, etc.) until you reach your desired amount, provided the total amount does not exceed the contribution limit.

Annuities are also a good means of saving for retirement. The most appropriate choice varies among individuals because everyone's situation is different. To be sure you choose the retirement vehicle that is best for you, you should speak with a financial advisor.

To learn more about how much your savings can grow over 30 years, read Compound Your Way To Retirement.

This question was answered by Denise Appleby
(Contact Denise)

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