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)

RELATED FAQS

  1. What types of investments are allowed in a provident fund?

    Read about the types of investments allowed in various provident funds around the world, including the Indian, Malaysian ...
  2. How does a provident fund compare to U.S. Social Security?

    Find out how provident funds compare to the U.S. Social Security program, including examples of income limits and contribution ...
  3. How are benefits from a provident fund taxed?

    Find out how benefits are taxed under the various provident funds around the world, including the Indian Provident Fund and ...
  4. What type of asset allocation should I use if I am already retired?

    Understand the importance of asset allocation during retirement years, and learn what mix of stocks, bonds and cash is commonly ...
RELATED TERMS
  1. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  2. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...
  3. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
  4. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  5. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  6. Contingent Annuitant

    Someone designated by an annuitant to receive the annuitant’s ...

You May Also Like

Related Articles
  1. Retirement

    Does it Make Sense to Have an MLP in ...

  2. Stock Analysis

    When Will Google Get Its Mojo Back?

  3. Retirement

    Top Tips for Rebalancing 401(k) Assets

  4. Professionals

    Few Target-Date Managers Invest in Their ...

  5. Professionals

    Debunking 5 Robo-Advisor Myths

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!