What is the best option for someone with no retirement savings at 38 years old: a traditional IRA or a Roth IRA?

I am 38 years old and my yearly salary is $32,000 I don't have any retirement savings. What is the best option: a Roth IRA or a traditional IRA?

Retirement, IRAs
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February 2018

At your current salary a Roth IRA would be to your advantage since your tax bracket would reflect a lower bracket with your income.

With a Roth IRA you will:

  1. Reduce your tax rate risk: The risk that taxes in the future could be higher than they are today. Once it is converted, any withdrawals from the Roth account after five years and achieving the age of 59.5 will be tax-free. 
  2. Eliminate your Required Minimum Distribution: Once you turn 70.5 years of age the government wants your tax dollars so badly that they require you to take these funds out of your traditional IRA every year. If you forget the IRS will impose a 50% penalty. 
  3. When withdrawing funds from your traditional IRA, the income counts as provisional income, whereas when withdrawing funds from your Roth IRA, the distributions have no Social Security tax. Roth IRA distributions do not count against income thresholds that may cause Social Security benefits to be taxed.
  4. Your heirs will receive your Roth funds tax-free. 

Read more: Income Taxes and Your Retirement Accounts | Investopedia https://www.investopedia.com/advisor-network/articles/income-taxes-and-your-retirement-accounts/#ixzz55tLa5sX9 
 

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