PHOENIX - Saving for retirement is like diving into an alphabet soup of acronyms with everything from ATRA and ERISA to COBRA and even QSLOB.
But even if it doesn’t seem to make sense, it’s all about dollars and cents – your money.
So here’s a name that sounds familiar… Individual Retirement Account.
There’s the traditional and the Roth IRA.
So what’s in a name? Don’t think David Lee but William V. as in the former Senator from Delaware who had a lot to say about retirement savings in the 1990s. That’s why his name is on the law.
“Do you want the tax break now or is it going to be more favorable in retirement.”
David Jones with LPL Financial through Desert Schools told me that’s the main difference between the two financial products.
If you go the traditional route then you get tax breaks every year but you’ll have to pay taxes when you use the money.
“For many young people, the Roth IRA with the tax deferment and tax free withdrawals at retirement can be very powerful,” Jones said.
So the Roth route could provide retirement peace of mind if you can afford to delay deductions now.
As always, consult a financial planner for any specifics.
“We could be in retirement 20,30,40 years so you've got to have a pool of assets that you feel that you're going to be able to provide a steady stream of retirement income that you don't outlive,” Jones said.